Lots of Summits, Any Progress on Fixing Health Care?


Ah, summits. I once watched Coach Pat Summitt's Tennessee Lady Volunteers take a 35 to 2 lead against my Northwestern Wildcats in the first few minutes of an NCAA basketball tournament game. That was too big of a deficit to overcome and we lost the game, even though it was a tie score the rest of the way, basically. Reading the paper, it makes me wonder about the deficit that the United States is in and what the future of healthcare looks like.

How did I start talking about basketball? Oh right, “summits.” Focus, Mark, focus…

I'm participating today and tomorrow in a healthcare executive summit to discuss Lean methods in healthcare with a number of CEOs, physicians, and other senior hospital leaders. It will be a combination of those who are already having success and some who are just learning and starting with Lean. I'm expecting some great discussion and knowledge exchange.

That event is why I cannot attend the Lean Enterprise Institute's Lean Transformation Summit in Atlanta, where healthcare is sure to be a topic from two perspectives:

  1. the manufacturers who are having to pay more for healthcare every year for their employees and
  2. how do we use Lean to improve healthcare?

There have been a lot of summits at the White House lately, including a “Fiscal Responsibility Summit” (the same day a larger federal budget was proposed, go figure) and there is a Healthcare Summit being held today at the White House, as well (here is the official site for that).

Coincidentally, my Lean summit is in D.C…. just a mile or so from the White House. My ego isn't big enough that I upset to be left off the Obama administration's invite list… but I have to wonder and ask if ANYONE with a Lean perspective is there? Is there a SINGLE person in that room who knows about Lean and how it can help?

Summits are fine… but are we taking action and making progress? Will the actions we take actually lead to progress? And how do we measure progress?

The lead editorial in Wednesday's USA Today (that makes it yesterday's USA Today) talks about the summit and our federal budget.

The stark reality is that “the health care problem,” as it is known, is really two conflicting problems: lack of insurance coverage and exploding costs. Addressing the former but not the latter is a prescription for failure.

I don't think it's really part of our Lean scope to address challenge #1, unless we are able to reduce costs enough to use the same budget amounts to cover more people and provide more care. Controlling exploding costs is squarely in the Lean domain and that's one aspect of what so many of us are working on in healthcare today.

The editorial also states:

“Obama's plan would throw yet more money at health care….”

Where's the fiscal responsibility in that?

Many of our political leaders still seem stuck in the mindset that the only ways to provide more care is to spend more money. They also believe that the only way to improve quality is to spend more money. And this money comes from where?

The good news is that Lean can help. It's not a cure all, but it can help, if we get serious about spreading Lean and driving operational improvements in ALL of our hospitals.

When we hear politicians talk about reducing healthcare spending, they mean two one of two things:

  1. Reduce services
  2. Slash prices

Like it or not, the one way of controlling costs is to ration care, to deny care. This happens in the UK, where an organization (ironically called “NICE“) decides what treatments are not cost effective because you are too old.

A recent infrastructure to do this research in the U.S. was established in the recent “stimulus” package (pardon my quotation marks). It's sounds good on the surface — conduct clinical research to determine what health care methods are most cost effective. Sounds good — until that research is used to deny care (except for the rich who can fly to India or the Caribbean with their doctors in tow). In the UK, the elderly could not get cataract surgery until they had already gone blind in one eye. To me, this is not “adding value,” this is rationing and the denial of care, although Democrats deny this will ever happen in the U.S.

The other method that Medicare and Medicaid are fond of (two organizations that pay 47% of our country's health bills for seniors already) is cutting payments to physicians and hospitals. In the old auto industry, this was called “beating up on your suppliers and it didn't lead to success for Ford, GM, or Chrysler. Just because you have economic power over your suppliers, you can arbitrarily say “I'm going to slash what I pay you by 5 or 10% each year. What else are you going to do?” The federal government does the same thing, by just slashing the price paid. This does not mean that costs are any lower, you've just bullied the supplier into a lower profit margin. What creativity does that take?

This is pervasive in other industries. When I worked for Dell, they would squeeze the supplier that warehoused and delivered parts “just-in-time” to the factories, paying them so little that suppliers kept going bankrupt or exiting the business, leaving Dell to scramble and quickly find a new supplier (one who was apparently naive enough to think Dell would learn it's lesson or one arrogant enough to think they could succeed unlike the others).

Dr. Deming preached about the need for collaboration between customers and suppliers. You don't beat up your suppliers, that's short-term thinking. The long-term thinking was to partner up, working together to find TRUE cost improvement that could be shared by both parties. Toyota practiced this with their suppliers — look at their results. Look at the Big 3 and their supplier base? Whose approach seems better in hindsight?

Some would make the argument that by slashing prices, you're “forcing” the supplier to find ways to get more efficient and to cut costs to maintain their profit margins. Is it playing out that way in health care? If prices are going to be cut, I'd rather see the federal government act more like Toyota and less like the Big Three (I'm sorry, “Big” Three or the “Detroit Three” as they're now known).

Why can't the government be a partnering customer and find ways to support Lean education for hospitals? Can hospitals that Lean is a way to truly cut costs — focusing on process and quality improvement instead of just laying off employees (another example of traditional business thinking).

Can get more industry partnerships (like the famous one in Pittsburgh) where manufacturers can lend their process improvement expertise to health providers to reduce costs AND prices in a Toyota/Deming style approach? The auto makers, for all of their business problems, even go out and help hospitals in the Detroit area and Toyota helps a hospital in Kentucky. We need more of that — manufacturers need to be a good customer and work together with their health suppliers. We don't want the hospital getting “beaten up” even if they have doctors and an emergency room!

Another opportunity is to get hospitals, especially those that don't compete with each other, to cooperate and share Lean methods with each other. This is no time to be selfish with your ideas and improvement success stories. A hospital in Alabama should be able to partner with a hospital in Alaska — using the phone and internet to work in a collaborative way. Each hospital shouldn't have to re-invent Lean on their own.

We have to work together, in many ways, to cut the true costs of healthcare. Again, cutting costs is different than cutting prices. With Lean, hospitals are improving quality AND reducing costs. They're doing so in a way that is better for the patients, better for the staff (by having a less stressful work environment) and is good for the hospital's bottom line.

ThedaCare, a health system in Wisconsin, has estimated that they save more than $5,000,000 a year thanks to Lean. If we multiply that by 5,000 hospitals in the U.S., that comes to $25 billion dollars. That might be a drop in the bucket compared to the over $2 TRILLION (2 thousand billions) that we spend each year. But the potential might be greater than $5M per hospital. ThedaCare doesn't claim to be perfectly Lean — they still waste in their processes that can be removed.

I hope our nation's leaders can wake up and learn that there is a better way. Dr. Deming tried teaching us decades ago and Toyota has continually demonstrated how their approach results in better quality at a lower cost. Isn't that what we want in our healthcare system instead of pushing an industry (or a country) to a point where it cannot be bailed out??

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Mark Graban
Mark Graban is an internationally-recognized consultant, author, and professional speaker, and podcaster with experience in healthcare, manufacturing, and startups. Mark's new book is The Mistakes That Make Us: Cultivating a Culture of Learning and Innovation. He is also the author of Measures of Success: React Less, Lead Better, Improve More, the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, and the anthology Practicing Lean. Mark is also a Senior Advisor to the technology company KaiNexus.


  1. Mark, Mark, Mark, if we are going to discuss an organiastion such as NICE it would be very useful if you posted facts as opposed to Limbaugh like sound bites.

    Fact: The National Institute for Clinical Excellence approves treatments and pathways based upon a combination of clinical outcomes (evidence based medicine), FDA and other testing results, and a financial figure calculating the value of a Quality Adjusted Life Year.

    So, today in the news there are 2 new cancer drugs, one for Breast Cancer manufactured by GSK and another for GI Tumors both of which NICE has determined do not provide good enough outcomes relative to the cost. Age is not a or the consideration, Quality adjusted life years are.

    NICE is one of, if not the only, national organiastion that has taken on the role of examining the evidence base for medicine and making a determination as to what treatments, procedures and medications provide “value for money”.

    Now we can have a long debate about what may or may not be value for money but given that in the US system 90% of a persons healthcare expenditure occurs in their last 2 years, that the baby boomers are just retiring and expect to receive any and every treatment that may or may not be worthwhile and that conversations about palliative care are few and far between (Wachter has blogged about this) the resources are as finite in the US system as anywhere else.

    NICE do not make decisions based upon a persons age, they make them based on clincial outcomes, the impact on a patients quality of life and the drugs cost.

    Basing clinical decisions on evidence, impact and cost in my mind can be no bad thing unless of course you are suggesting that management decisions should be based on fact, data and analysis but that these same principles should not apply in the treatment of patients.

    Andrew :)

  2. Andrew –

    I hesitated before bringing “NICE” into the discussion… but healthcare has been politicized long before I brought politics into the discussion.

    Before you label me an incurable “dittohead”, realize I am trying to learn about the proposed changes to our health care system here in the U.S. I have read the book by Sen. Daschle that appears to be the blueprint for these coming changes.

    There really is no debate about this clinical effectiveness research approach, and that troubles me as a citizen. The Daschle book said basically that this is too important to debate and it should be rammed through in a budget measure, which is basically what was done here.

    The public is not debating it or getting much information from the media.

    We should be debating these issues and let people discuss what care can be allowed or will be given. We have a love for “choice” here and the idea that the government is going to tell MDs what they can or cannot do is troubling to many people either because 1) they can afford the care and want to pay for it or 2) they’ve paid a life time of taxes and expected to get some return on that payment (maybe foolishly so). Who decides “worthwhile”? There are many in the U.S. (including those who voted for Obama, I’m sure) who would be uncomfortable with the government deciding things like this.

    I read quite a lot of criticism of NICE when I was in the UK last summer, so it’s not just Limbaugh and right-wingers that take issue with the approach, is it?


  3. Also, you said:

    “Basing clinical decisions on evidence, impact and cost in my mind can be no bad thing unless of course you are suggesting that management decisions should be based on fact, data and analysis but that these same principles should not apply in the treatment of patients.”

    The question is what values that are behind the decisions. Toyota has data that say they don’t need workers at their San Antonio plant now, but their values say they will pay the people anyway and train them for the long term.

    So I think it’s a bit of a nonsensical argument to say I’m opposed to data, fact, and analysis.

    What if data said it was not cost effective to keep severely handicapped babies alive??

    Our values say that we provide them care and they are entitled to life, regardless of what it might cost to keep them alive.

  4. No Paul O’Neill, no Dr. Donald Berwick, no Dr. Atul Gawande, no Dr. Paul Pronovost, no Dr. John Toussaint, no Jim Womack…

    No lean thinking in the room??

    Will former Michigan Gov John Engler, representing the National Association of Manufacturers, say anything about Lean?

    What a missed opportunity, I bet.

  5. Actually the criticism of NICE comes from either patients or family members denied a specific treatment or procedure, or big pharma who take them to court in about a 1/3 of cases.

    As to the comparative effectiveness research, bureacrats and admin staff are making decisions about what you can or can not have on far less evidence than that required by NICE.

    There are a couple of issues here, one is the cost effectiveness issue or any given treatment and its outcomes, the other is the ethical ramifications of such a decision.

    We can keep people alive today that we could not 1, 2 or even 5 years ago.

    I was in a ortho unit last year where a patient with late stage dementia had fallen out of bed and fractured her hip.

    She did not know who she was, would not be able to participate in any rehab and her quality of life IMO was very poor.

    DO you operate?

    WHat is your objection to fundamentally looking at the outcomes versus cost of a given procedure and saying “these work and are proven” and we will fund them and “these do not work well enough based on the current evidence and outcomes but we will not stop you from using them but we will not fund them”.

    I’d have thought decisions based on good clinical evidence not simply anecdote and opinion?

    There is an great article about this on THCB, I’d have a look at it.

  6. Andrew — email me or post a link to that article, what is the THCB?

    So in your scenario… do you operate? Who do you want to decide?

    If a family or the patient sign a DNR or decide not to operate, that’s probably very reasonable and maybe moral and ethical.

    But the government making that decision is something that seems somewhat distasteful.

    You are right, nobody has a bottomless bucket full of healthcare money. Some individuals, if wealthy, may choose to exhaust their money on what some might consider “wasteful” care, but it’s their right to choose that.

    We need some serious societal debate about these ethical issues, rather than sneaking things through and having people wake up one day to find a health regime in place that they didn’t expect or understand.

    You are combining a few scenarios — the broken hip example is altogether different than your question:

    “WHat is your objection to fundamentally looking at the outcomes versus cost of a given procedure and saying “these work and are proven” and we will fund them and “these do not work well enough based on the current evidence and outcomes but we will not stop you from using them but we will not fund them”.”

    I have no objection to questions like “does a person with back pain get an MRI or physical therapy?” Does a heart patient get medication or a drug-eluding stent or a regular stent?

    It’s different in the more extreme life-or-death scenarios. When the UK government denies cancer treatment to people based on this quality of life years index… the elderly have less potential life ahead of them, so I think it might technically speaking not consider age, but realistically speaking, the algorithm must consider age. There’s more value to treating a 30 year old than an 80 year old, that’s the issue right?

  7. I’d love to continue this debate, just got in from a night out. Will post details tomorrow.

    Ethically I think its correct to not operate. Litigously, not operating is not a choice, you have to otherwise you will inevitably be sued for not doing “everything possible”.

    I’ll post more tomorrow nit THCB is The healthcare blog, matthew holts blog. Will post the link to the post tomorrow.



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