Keen to Be Lean

Desperate to cut costs, hospital CFOs are turning to an unlikely source: the "lean management" principles championed by manufacturers.

Think Big, Start Small

Lean is undeniably a big-picture approach, but success depends on starting small. One key is to assemble cross-functional teams composed not only of those who know a process intimately, but also those who are only tangentially involved or perhaps wholly untouched by it.

The team analyzes the existing process and then looks for opportunities to remake the physical layout, standardize the steps inherent in that process, or shift responsibilities. If there are too many patients waiting on beds in the hallway, for example, maybe the answer is to build a bigger ER. But wait: Is the ER really maxing out its capacity? If not, then the answer may lurk further down the value chain. Maybe patients can’t get into rooms because an inefficient discharge process creates a bottleneck. That’s exactly what happened at one hospital, which mulled an $80 million expansion to its maternity ward but then found that once a nurse was dedicated to the discharge process, the existing facility could keep up with demand.

 Finance vs. management accounting

At Denver Health, which owns a 477-bed hospital and eight outpatient clinics, and which also has oversight of the public-health department, 911 medical-response services, and the poison-control hotline, the embrace of lean now entails as many as 10 weeklong “kaizen events” a year. CFO Peg Burnette says the success of those meetings hinges on one factor: preparation.

About six weeks beforehand, support staff for whichever group is meeting (each of the company’s 14 value streams has a steering committee and an executive sponsor) begin pulling data that will enable the group to map a process from start to finish. Burnette, who serves as executive sponsor for two value streams — information technology and the revenue cycle — says that the team members spend the first day imagining an ideal goal. On the second day they mull over what is realistic. By the third day, they are running experiments to see what can work. On the fourth day they finalize the solution and create “standard work” — defining and documenting the most efficient manner for performing each key step in the new process, down to the production sequence and the quality checks. On the last day, the group reports out to the executive staff and leadership. Team members meet quarterly to track the outcomes of their efforts and then annually to make sure they stay on target.

They measure success based on metrics, but not necessarily financial ones. Some are quality measurements, such as the reduction of certain kinds of infections. Others are based on improving time performance, a big issue in health care. ThedaCare, for instance, wanted to reduce the time from “door-to-balloon” — the minutes between a patient’s arrival at the ER with chest pains and catheterization. “The faster the blockage gets cleared, the less damage gets done to the heart,” says Graban of the Lean Enterprise Institute. Or, as the hospital likes to put it: “Time is muscle.”


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