Can Lean Hurt a Hospital Financially?
I'm happy to announce a future podcast with John Toussaint, release date TBD. If you have any questions for him about the Lean efforts at ThedaCare or his new role, let me know.
In this article, Dr. Toussaint says:
“By streamlining â€” and working to continuously improve â€” operations, ThedaCare has saved $27 million the past three years, Toussaint said.
‘We've seen a 5 percent improvement in productivity,' he said. For certain cases, he said length of stay at the hospital has been reduced by 20 percent, costing patients and insurance companies less.
Right now, though, Toussaint said the health systems aren't set up to reward providers for cutting costs. In fact, the opposite is true.
‘Our reward for providing better quality at a lower cost is $2,000 less per case from Medicare,' he said.”
The payer system is still very much based around a “piecework” system — you do the work, you get paid. If you're doing the right thing for the patient and don't do work, you don't get paid. That's a messed up incentive. Another leading Lean hospital, Virginia Mason, has faced this same problem.
I'll be sure to ask him about this in our podcast discussion.