While the full impact of healthcare reform is still unknown, hospitals will be under tremendous reimbursement pressure from insurers and the government. Hospitals will need to improve their operational efficiency and productivity in order to maintain their cost ratios and returns for their owners and investors.
To deal with these cost cutting pressures, further cost reductions in administrative, maintenance or nursing staff are unlikely, as they affect the overall care process. Accordingly, the best opportunity for cost reductions, without jeopardizing patient care, is to look for alternative methodologies not often associated with the healthcare industry.
Lean and Six Sigma are the most widely used process improvement approaches in industry. These approaches have saved companies billions of dollars by improving their manufacturing, service, distribution and back-office transactional processes. Lean focuses on the elimination of waste and the improvement of overall cycle time within a process. Six Sigma focuses on the elimination of variation in processes.
While Lean and Six Sigma have been widely used in industry in general, there is still an enormous opportunity for the healthcare industry to utilize these two methodologies to streamline processes and concurrently improve quality.
According to an ASQ study, 53 percent of hospitals report some level ("minor," "moderate" or "full") of Lean deployment, and 42 percent of hospitals report some level of Six Sigma deployment. Few hospitals participating in the study reported "full deployment" of either Lean (4 percent) or Six Sigma (8 percent).
Within the healthcare system there are two primary types of processes that can be greatly enhanced by a Lean and Six Sigma approach. In the first process, patient care, the focus is on the patient (the “customer”). The patient “value stream” defines all the activities that a patient must go through in order to receive healthcare. The second process is the transactional process, traditionally known in businesses as the back office process. The transactional “value stream” defines all the activities required by the healthcare organization in order to support the patient value stream.
So then, how can Lean apply to healthcare?
First, let’s define value-added activities versus non-value-added activities. A value-added activity is an activity that changes the fit, form or function of a product or an activity for the first time. On the other hand, non-value-added activities, or waste, are activities that add costs but no value to the process.
When attempting to improve processes, most organizations make the mistake of trying to improve the value-added activities. Can you imagine trying to improve the utilization of an operating room by trying to figure out how to get the surgeon to cut faster? Lean focuses instead on the non-value-added activities. How can we eliminate waste from processes so we can have more time to do value added activities?
While we might find some waste within the operation itself, the largest non-value-added activity is the changeover of the operating room. By reducing the changeover time we can increase the number of hours the operating room is available for value-added-activity: operations.
Using quick changeover techniques (similar to what pit crews use in car racing) one can distinguish preparatory work that can be done while another surgery is going on (preparing a patient for surgery) and separate out activities that can only be done when the operating room is empty (cleaning the operating). The more operations a hospital can schedule, the more potential revenue it can generate.
“LeanSigma” methodologies can also increase revenue in other ways. One key metric being measured in many hospitals is LWBS (Left Without Being Seen). Due to long waits in emergency rooms, many patients leave before being treated, resulting in lost revenue for the hospital. Therefore, eliminating waste in the process and reducing the wait time can significantly reduce this from occurring.
Typical results achieved include reductions in operating room changeover time of 35 – 45 percent, and reductions in LWBS from 8 – 10 percent to less than 1.5 percent.
In order to achieve significant and rapid improvement, LeanSigma process improvement methodologies can be employed, trained, and rolled out quickly in order to rapidly drive bottom-line results. By focusing on non-value added activities, teams can achieve significant cost savings in a short time and sustain those gains while actually increasing patient care.
Fred Langer, a managing director of Getzler Henrich & Associates LLC, is a 25-year manufacturing expert and leads the firm’s LeanSigma practice.
Julien Renaud is a senior director and seasoned turnaround professional that specializes in implementing LeanSigma manufacturing strategies and methodologies for a variety of organizations and industries.