Paul O’Neill Talks ThedaCare, Lean Healthcare on CNBC


Here is about five minutes of video (no longer available, sadly) of Paul O'Neill (former CEO of Alcoa and former Treasury Secretary) talking about the power of Lean healthcare on CNBC.

O'Neill talks about leading organizations like Virginia Mason, Intermountain, ThedaCare, and others who have PROVEN that Lean methods (“or the Toyota Production System or Deming or whatever flavor of that you like”) can improve quality and reduce costs.

Check out my earlier podcast with O'Neill… but read on for more on his CNBC appearance.

O'Neill said, “This is not a debatable thing, it's a doable thing.”

2018 Update: What's Going on at ThedaCare?

One of the hosts asked, “Is this like a Six Sigma thing?” and O'Neill sort of brushed that off. It's not a Six Sigma thing.

He talked about last Friday's USA Today story about the increase of C. diff infections in hospitals (causing 30,000 deaths a year in the U.S.) and how “it's unforgivable… we know how to prevent that… but it's very fundamental stuff. So, all of our policy conversations up here… instead of paying attention to how we can simultaneously reduce cost in a monumental way and improve outcomes for the population… I have tried hard to get any politician of any note to be interested in fostering the pursuit of excellence in health and medical care.”

He's tried to get Republican VP nominee Rep. Paul Ryan, who is 100 miles from ThedaCare, to go and see (sounds like he hasn't).

O'Neill talks about the need to challenge the conventional wisdom that being better than the national average is OK. We need to refine processes to improve care. We can save a lot of lives.

How to do this “is published, it's out there.”

The host asks, “So the healthcare personnel need to wash their hands more?”

O'Neill: “That would be a really good idea.”

The host says, “These all sound like things where you have to hire a great manager, and you need the manager to hire people who are willing to go by the book.”

That CNBC bias isn't surprising… they are the network of the heroic CEO who did it all her or himself in a company. The host is blaming the people (managers and staff) instead of understanding this is a systems problem. Good management matters, but great managers will be defeated by a bad system.

The host assumes there is a bell curve, where some people just won't do what's necessary… instead of understanding that everybody can be excellent when we have great systems and processes.

O'Neill says, “95% of the places in the country aren't doing the things we know how to do to improve.”

The host asks if we have laws that say you have to wash your hands, and O'Neill correctly points out we don't.

Ah, if we could just legislate quality.

The host mutters, “I think laws would work” (that's an ignorant statement). They would not work

Sort of like we have laws to prevent financial sector fraud and malfeasance? How's that working for us?

What does O'Neill think would work? He thinks transparency is important. He proposed to President Obama's people that he do this:

  • He gets on national TV and (“instead of demonizing the insurance companies”) and say “next week, I'm going to order the VA hospitals and the U.S.-based military hospitals to post on the internet every morning at 8 a.m. the newly identified hospital-acquired infections….”

And he got cut off by a commercial break…

Your thoughts?

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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. Hi Mark

    Paul O’Neill has a long track record of building systems to actually meet the needs of everyone involved. He turned Alcoa upside down, but improved workforce morale and performance while at the same time improving customer satisfaction. He helped build a successful and highly comoetitive company, by focussing it on doing the right things not just doing a lot of things.

    History has shown that the more government through law tries to fix industry problems is that all we get is even higher costs. Sarbanes Oxley won’t stop another fraud from occurring, but it has dramatically increase accounting costs, which bye the way add nothing to the end product or service any organization produces. The same hold true in many other fields more laws mean just more costs none of which will provide any extra value to anyone.

    The fact that so many people do not follow what are already known best practises says that our systems are preventing them in some way (I doublt that 95% of healthcare providers do not want to improve the way their patients are looked after). And the proof is in the fact that those organizations that do fix their processes can not only improve their productivity and performance, but also the quality of the service they offer.

    The real truth is that in a great system even a poor manager (I do not recommend hiring them, but they do exist) will be able to do a good job.

    I like the transparency suggestion, it would bring attention to poor systems, though it would also add a lot of wasteful legal issues.

    • I agree that 95% of health systems want to improve (that’s probably about 100%). Whether they think improvement is possible is another story. Paul O’Neill is right that people shouldn’t be satisfied with being “better than average” in a peer group of organizations that, collectively, falls far short of their potential. That potential is zero infections, etc. You have to believe it’s possible (we have evidence of that now) and you know to know HOW it’s possible (also documented, as O’Neill said).

      I think the “well, these problems are bound to happen” talk is self-defeating and gets in the way of improvement more than arrogance or other bad traits.

      I agree that, in a great system, even an average manager and average employee can do well. Toyota said they get great results by having good people (not poorly trained ones) in great systems.

      The CNBC guy thinks it’s all about HIRING great people. You can develop most people into being great, if you work at it.

  2. I’m still really hung up on the CNBC guy saying there should be a law about hand washing.

    There are plenty of real laws and regulations on the books about restaurant cleanliness and food sanitation practices… another area where people can get sick and die if things aren’t done properly.

    I was watching an episode of Bar Rescue last night… and shows like this (Kitchen Nightmares, etc.) show restaurants and bars where the staff seem completely ignorant about good hygiene. Last night, it was a woman touching raw chicken and then handling cooked foods with her bare hands. Hello, salmonella.

    There are restaurant inspectors… but clearly they can’t prevent every single problem that could occur. Maybe they eventually shut down the filthy places, but people still might get sick first.

    I don’t see how criminalizing a lack of hand hygiene would help… if there are still bad systems that make it hard for people to do the right thing, patients will still get sick and die. How often will the hand hygiene police be willing to shut down a dirty hospital where patients are getting sick and dying from preventable infections and errors???


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