My Comments on #Lean Healthcare in These Challenging Times
Thanks to Dodge Communications for interviewing me for their blog: “Improving healthcare–there's no instant pudding.”
I was, of course, citing the late great Dr. W. Edwards Deming and his “There is no instant pudding” admonition. Hospitals and health systems are facing a lot of pressure right now, especially with lower reimbursements. Lean is powerful, but healthcare leaders who expect a quick fix will be disappointed.
Part of the interview:
Dodge: It sounds like the ACA, much like Toyota's WWII dilemma, is a catalyst for hospitals really examining their processes. But more holistic approaches, like Lean, are competing for a hospital's attention. For example, there are groups out there pushing the latest technology for efficiency or new marketing programs. Do you see hospitals turning to Lean instead of these other approaches?
Graban: Yes and no. Lean is a powerful strategy but it's not a quick fix. So much of what Lean is built upon is W. Edwards Deming's philosophy. He had a saying that “there is no instant pudding.” Those quick fixes, silver bullets, generally don't exist, or have a short-term effect and a bad outcome long-term. There's never going to be a shortage of sellers and buyers for quick-fix, cost-cutting solutions.
Financial results are of course important, but we have to look at the long term, not this quarter's financials. That's really tough for a lot of people to do because there's serious pressure. You tend to see cost reduction with Lean, but as an end result of these other things that come with it–like improving quality, reducing wait times and making a more positive work place. Lean's definitely a more sustainable approach to cutting costs.
For example, I've worked with a number of hospital labs. Some have realized a 25-30% productivity improvement through Lean. Once they achieved that improvement, they didn't lay off 25-30% of their people. What they did was take on additional lab testing volume so they could do that much more work with the same amount of people. Because of Lean, these people aren't running around stressed–they've improved quality and eliminated waste and reduced turn-around time. They can do more work with the same amount of people. That's the kind of reduction that goes along with greater quality and service.
In general I think there are far too many hospitals in this environment that are going strictly after cost cutting and ignoring process improvement.
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As part of a progressive healthcare system, we are constantly faced with doing the right thing overall for the customer, avoiding readmission, avoiding the need for surgery, avoiding the services that give marginal value vs. getting paid to do those things mentioned above. We are living in a mixed incentive world, where we still get paid to do more but we all understand that doing more is not the value proposition. We need to resolve this issue. When done, this will accelerate America’s response to meeting value though improving quality (or benefit) and reducing cost (burden) and it will happen quickly. Aligning vision, goals and incentives takes away ambiguity. Until this happens it will be a mixed bag of results. It’s as if we got paid to add on fenders, and all the parts of a car but all that is wanted is one bill for the car as a whole…..
Yes — there are some payment reform efforts that I think are a move in the right direction (not reimbursing for “never events”) but some of the actual improvement work is outpacing payment reform.
I know one hospital that thinks it can reduce readmissions far faster than the payment reforms are kicking in. So, they’ll avoid readmission penalties, but they’ll also really hurt their revenue the next few years. It’s a tough discussion of short-term and long-term goals — what’s financially viable and what’s right?
ThedaCare has reduced early elective C-sections, which has reduced NICU days, which is great for the patient and family… but the financial benefits go to the payers and ThedaCare gives up revenue.
This is all a very complicating thing to sort out. I hope we’re fixing it more than we’re breaking it, as Americans.
In the years past in healthcare, it was FTE reduction, now it is FTE redistribution. It is key to run as efficiently as you can. Changing times.