Revolutionizing Health Care with Lean Management
By J. Michael Rona
Partner
Moss Adams
Original Publish Date: March 6, 2018
Miraculous things happen in medicine in the United States every day, but health care remains a key issue for Americans because it can often be expensive, hard to access, and frequently unsafe with highly variable quality and patient and staff satisfaction.
Adopting lean management has the potential to solve these problems and make health care a more satisfying and less costly experience for patients as well as health care workers.
Background
The health care debate often centers on four distinct themes:
- Cost
- Access
- Quality of care
- Who’s to blame for its current state, including insurance companies, lawyers, drug makers, the government, or patients
The industry itself is rarely the focus of the debate. When asked, hospitals often point to a lack of resources, but enough money exists in the health care system to implement necessary, reasonable changes.
New Health Care Delivery Management Systems
Extrapolating data on small-scale applications of new methods for managing health care delivery systems shows there are billions of dollars available through the elimination of defects and waste. This indicates the root cause of sustained issues with US health care isn’t money—it’s today’s health care management paradigm.
While it’s understood that managing the cost of inputs—supplies, equipment, and drugs, for example—as well as payment systems can dramatically reduce the cost of health care, the current paradigm often doesn’t succeed. Accordingly, a sustainable improvement in the value of health care can only be realized once a new method of managing for value is implemented.
Understanding Lean Management
Lean management is a fast-moving and long-term approach to running an organization. It supports continuous improvement through the systematic achievement of small and large incremental process changes that improve overall efficiency, quality, and value to patients and other stakeholders.
The Toyota Production System (TPS) is an example of lean management put into action. It’s been widely adopted in industries that have struggled to provide value in competitive marketplaces, such as:
- Automobile manufacturing
- High technology
- Aerospace
The implications of this on a broad scale are enormous. In the pursuit of perfect (also referred to as zero defect) health care, lean management can help your organization improve quality and safety, access, and patient and staff satisfaction as well as reduce costs and improve margins.
Case Study: Virginia Mason Medical Center
When senior executives at the Virginia Mason Medical Center in Seattle, Washington, first applied the TPS to the center’s health care processes in 2000, early findings showed strong improvement in a number of areas. Specifically, they realized a 50% average improvement in:
- Access
- Cost reduction
- Throughput
- Waits and delays
Virginia Mason Medical Center also realized dramatic improvement in:
- Defect reduction
- Safety
- Clinical outcomes
Despite predictions of unsustainability, results continue to be validated and expanded within Virginia Mason and several other large US health care systems. Because of this, many reputable organizations in health care are currently either testing or considering what lean management could accomplish.
This demonstrates that a shift to the TPS-inspired management paradigm in health care makes it possible—without adding resources or costs—to improve key areas, such as quality and safety of the product as well as customer and staff satisfaction.
Meeting the Needs of the Customer
This level of improvement is possible when processes are specifically designed to meet the needs of the customer—something that Toyota exemplifies. The principles that drive Toyota, commonly called The Toyota Way, are based upon two pillars:
- Continuous improvement
- Respect for people
Toyota’s respect starts with the customer. The company cares deeply about the needs and wants of its customers and refuses to provide an untested or unsafe product. It also strives to anticipate what its customers will need and want.
Because Toyota relies on its people to constantly improve their work and methods, it’s also committed to ensuring its workers are appreciated and have the necessary training, equipment, and environment.
At the center of this commitment to people and improvement is the concept of standard work, which is the discipline of having the people who do the work design and implement reliable, repeatable processes. This concept has massive potential for the health care industry.
Standard Work at Virginia Mason
At Virginia Mason, the idea of standard work was initially resisted. This changed when it became clear the lack of standard work was the root cause of many issues, such as:
- Errors, defects, and waste
- Poor performance and morale
- High costs
- Customer dissatisfaction
Once Virginia Mason adopted the TPS and systematically trained its leaders and staff, it began to see both an elimination of waste and an increase in process improvements. At the same time, the hospital began to work toward zero defects in all of its processes.
Today’s Leaders
Since Virginia Mason’s pioneering work based on TPS, many health care organizations have changed the way they lead. Some of these systems—including the Zuckerburg San Francisco General Hospital, San Francisco Department of Public Health, and University of Kansas Health System—have stayed the course for years. These entities have experienced sustained improvement on strategic and operational levels beyond what traditional management methods were able to attain.
Looking Forward
Leadership that’s willing to divest from the current health care paradigm and embrace a new customer-driven, forward-thinking concept—such as TPS—will have the potential to make the biggest impact on the future of health care in America.
Toyota’s Vision and the Future of Health Care
In the July–August 2007 Harvard Business Review, Mr. Katsuaki Watanabe, president of Toyota, was asked about his vision for Toyota. He replied, “I want Toyota to come up with the dream car—a vehicle that can make the air cleaner than it is…a vehicle that can drive around the world on just one tank of gas. In my vision for the future, the most important themes are the environment, energy, safety, and evoking emotions and comfort.”
This is a remarkable vision from a man who makes cars—what would that vision look like from a health care leader? It may include goals, such as:
- Creating a health care system that knows its patients and customers so well that it’s more concerned with their health than they are
- Providing health care that’s affordable to everyone
- Creating a system in which employees can excel every day, not hindered by worry over making errors or being exhausted when they go home
Pursuing this type of vision may eventually lead the health care industry to widely adopt a management system that works successfully in other industries. But first, leadership must commit to making small improvements every day until health care looks drastically different from what it is today.
When Toyota started making cars, they weren’t very good at it. In 2018, Toyota has become the largest auto company in the world. How has Toyota done it? Watanabe explains, “We just do whatever we believe is right, trying every day to improve every little bit and piece. But when 70 years of very small improvements accumulate, they become a revolution.”
J. Michael Rona has more than 35 years of transformative health care leadership experience. He guides health care organizations—from major health systems to large medical group affiliations—through the implementation of lean principles via the Toyota Management System. He can be reached at (206) 302-6927 or mike.rona@mossadams.com.
About Moss Adams
With 2,900 professionals across 25-plus locations in the West and beyond, Moss Adams provides the world’s most innovative companies with specialized accounting, consulting, and wealth management services to help them embrace emerging opportunity. Discover how Moss Adams is bringing more West to business.
Assurance, tax, and consulting offered through Moss Adams LLP. Investment advisory services offered through Moss Adams Wealth Advisors LLC. Investment banking offered through Moss Adams Capital LLC.