Category Archives: Lean methodology

Lean Healthcare and the Great Reform Debate

I have to apologize to anyone who may have expected greater consistency in my posts. This is by far the longest I’ve gone without posting something new. Frankly, I and my partners have been buried under the weight of healthcare clients and we’ve been busy closely monitoring the Healthcare Reform debate. As healthcare tips the scales at nearly 17% of US GDP (and climbing fast) it is easily one of the most important facets of our collective experience that can and will benefit from workflow and process improvement. Whether the object of analysis and re-engineering is the health plan and the manner in which they process claims or run their customer contact center/call center or your local hospital and the manner in which they handle lab specimens, patient scheduling or operating room supply management, there is tremendous room for improvement.

Health Care Improvement – What Are We Talking About?

I’ve been involved in health care for twenty years and can assure you that the conversation hasn’t evolved much. What we’re talking about is a dire need to improve the following:

  1. Access to Services. This can mean access to affordable care, access to insurance coverage, access to culturally-relevant care, gender-specific care, quality care, or access to professionals and facilities in remote areas.
  2. Quality of Care. Quality refers to assurances that providers of care are educated and properly trained and licensed, assurances that quality measures are taken, and continuous efforts to improve quality deficiencies exist. This is a big bucket. Clinical outcomes and patient satisfaction are measures of quality. Safety issues are addressed by quality assurance and quality improvement initiatives.  Errors (common in our healthcare system) are also addressed by quality measures.
  3. Cost Effectiveness and Efficiency. This third facet involves delivering effective care (that which produces the best possible outcome) at the lowest price.  Performance-based reimbursement or Pay-for-Performance initiatives are capitalizing on this notion. In order to drive prices down and create margins of value, providers and payers alike need to eliminate wasteful practices, leverage efficiencies and drive their costs down.

No matter your political affiliation, the US doesn’t fare as well as we’d like to think along those three dimensions. We have significant access issues (hence the cry for universal coverage), rather serious patient safety concerns (infant mortality, secondary hospital infection, and medication error scores are all poorer than we care to admit), and extremely troublesome cost and efficiency problems (our healthcare costs 5-6 times that delivered in other affluent, developed countries yet delivers outcomes and quality scores ranking us in 37th place).

Lean Healthcare Machine

If nothing else, the healthcare debate in congress and the media this year could benefit from the rational and reasonable application of Lean methodologies. Frankly, “Lean Sigma” which controls for variation, quality and waste is an ideal antidote to much of what plagues us. Fortunately, the EMR and health information exchange impetus is going to lead some in the healthcare delivery system to adopt techniques and strategies that will drive waste and variation out of their practices. They will be among the more sophisticated who know enough to improve processes before automating them. Nothing is more wasteful than automating a bad workflow. Sadly, there are some who will buy EMR and practice management software off-the-shelf and try to implement it without first analyzing and re-engineering their business and clinical processes. And that will prove to be our Achilles Heel as we move forward with HIT.

I propose a National Leaning of Healthcare Initiative prior to attempting to describe the Reform solution and prior to spending $20 Billion on electronic medical records systems. I propose we take some time and apply some much less expensive strategies that answer more compelling questions first.

The Leaning of America: How BPM Can Play A Vital Role

I’m not sure what industry you work in but my chosen field – healthcare – has been on the short-list of sectors that are under a microscope AND looking at significant investment (stimulus is such a loaded term these days!). There are others: automobile manufacturers, education, border patrol, banking and finance. I frankly love the position the President has taken. He is asking for accountability and demanding an end to wasteful practices. While it’s still way too early to judge his performance, I believe he will continue to push for efficiency and better throughput and outcomes for our money.

Lean Healthcare

I have worked on all sides of this equation. As a healthcare provider in non-profit, social service, for-profit and government agencies. As a healthcare payer (insurer) in managed care and other insurance models on both the public and private sector sides. Let me assure you, there are mountains of waste to recoup in every corner. I will not suggest that a single-payer system is the answer (though it may be) but I will assert that there are scant examples of healthcare organizations in this country who run truly efficient and high-quality shops. Our system irrefutably, immutably wastes money. Our care costs much more and produces a poorer outcome than that of our global counterparts. Now that we are in a global economy, any country that can keep its workforce healthier than ours at a lower cost has a competitive advantage.

Healthcare is the last industry to “automate the shop floor”. Frankly, it’s ironic. So much information and so many processes can be automated. This country lags far behind other industrialized nations in the adoption of electronic medical records. Today, the New England Journal of Medicine reported that only 1.9% of US hospitals use a fully functioning electronic health record, for instance.

Prior to automation, however, so much can be accomplished using BPM methodologies, particularly as they relate to Lean and aspects of Six Sigma. Anyone who has ever worked in the field can attest to the waste and now, more than ever, we need to work together to eliminate all of the waste we can no longer afford. Healthcare is rapidly approaching 20% of our GDP. That’s not only astronomical, it’s unnecessary.

Wherever you are, whatever you do, whatever your motive, please spread the word and get into action. BPM and Lean methodologies can have a profound impact on the way things are done today so that tomorrow will be cost effective. If you’re not excited about the impact you can have, you should be!

Lean Markets Pulling For Rapid Process Improvements (RPI)

The economic news this morning is not so good. The Institute of Supply Management (ISM) manufacturing report sent the market into another free-fall today (down 425 points at the moment, following last week’s massive rally). The ISM index stands at 36.2% which may not mean much to the lay-person. The important indicator here is that anything below 50% is bad news and 36.2% is as low as it’s been in more than a quarter century. This is a report that measures factory output based on orders for manufactured goods. Only two sectors performed well: apparel and paper. European and Chinese factories are reporting similar output and demand for their goods. We all know how this is playing itself out for Ford, GM and Chrysler. They have a shot at financial support that will bode well for thousands of suppliers and – frankly – millions of employed people. For the remainder of the manufacturing community, there may not be a bail-out. What are small businesses and manufacturers to do?

Time is of the Essence

MarketWatch reports that economists now admit the recession began at least a year ago. Could have fooled me. Experts tell us we can rest assured that it will endure at least another year – maybe two. That said, small business and small manufacturers are faced with the need to get lean very quickly. There is no time for hemming and hawing and this is not the time to simply lay people off. Your path forward is as complex as the path that got you here. No silver bullet. Your costs are a reflection of (among other things) executive pay, labor, benefits, space, utilities, supplies, suppliers, marketing, hardware and – to a great extent – your business processes.

Those of you who are familiar with Lean Methodology or who might be familiar with a consultant who specializes in Lean may now be thinking: “This is the time for it.” I commend you. I agree that Lean can and will deliver the elimination of costs associated with waste in your processes. However, bear in mind that Lean can involve between 6 and 12 weeks’ time for execution.

Lean Liposuction?

Lean is a bit like a diet. You have new habits to learn and you glean life-changing insights from an examination of how you did things in the past. Lean is a lifestyle and it creates a certain culture. I want to suggest that you consider the Lean equivalent of liposuction or getting your stomach stapled. It’s quick, it’s dirty, but it works. It’s commonly referred to as Rapid Process Improvement or RPI.

RPI Works and Works Fast

An RPI event requires: 2-3 days; a core business process suspected of carrying waste (extra fat) and whose repair would make a big cost difference; a team of subject matter experts and decision-makers; the willingness to be brutally honest and trim the waste. In that brief 2-3 days time, the process can be articulated and modeled and business rules can be captured. Basic performance measures can be identified and the team can brainstorm ways that waste can be eliminated from the value stream without any adverse impacts. New, future-state process models can be developed and basic simulations can be conducted to assure you and your customers that quality concerns haven’t been introduced or exacerbated. You want the results to be faster and better.  Once you’ve nailed the future state, a solid RPI process involves mapping your implementation and measuring results over the next 3 to 12 months. Hint: measuring cost savings from the get-go is a must. Remember your baseline!

RPI Now

Rapid Process Improvement should be near or at the top of your list of things to do in the next 4-8 weeks. The small business owner and small manufacturer have got to make the time and prioritize events like this until all of the low-hanging fruit has been harvested. This is not business process management or improvement for the sake of developing software. This is crisis management and RPI may save jobs. Every job saved has an immediate impact on your entire community. A job saved is a person saved and that person may very well be your star player when the economy turns upward in 6 months. Don’t lose them when you could easily trim the fat and waste in your processes.

Lean Process Improvements Demand Lean Workload

I will try to be sensitive to the mixed feelings and opinions on this topic. However, our economic crisis is growing worse daily so it’s time to dispense some tough love. There are mission-critical, core competency processes in your organization that require immediate, exacting and concerted attention and effort in order to eliminate any remaining waste. Eliminating waste reduces your cost and liberates valuable resources making you a bit more profitable. You must be lean or leaner as soon as humanly possible. If you are successful in this endeavor, you will save someone’s job. Perhaps your own. You will contribute to valuable cost reductions while you stimulate innovation and improved competitiveness. Sounds good doesn’t it?

You Have A Problem

Getting lean now must become your singular focus. Organizations of all kinds make the common mistake – all year long though especially in crisis – of heaping too many responsibilities and priorities atop their managers and directors. By over-committing their time, you effectively neuter their ability to affect change effectively. A manager or director who finds themselves assigned to several new crisis management initiatives (en vogue these past weeks) while remaining married to their regular crop of assignments will struggle to decide which task, which meeting, which fire deserves their attention. Your problem is most likely an executive leadership problem.

You Need A Prioritized Inventory

Every manager, director and executive needs to make a list of all their responsibilities. This sounds so silly but in crisis mode, simple thinking seems to be the first casualty so I don’t mind reminding you. Schedule a stand-up meeting and share your lists with one another. Make strategic decisions as to what is priority and what is not. Priority = urgent + important. If a task or commitment is a priority then you must attend to it at the exclusion of something else. You will scratch something off your list being careful to delegate it to someone else or save it on your list of to-do’s for later. You should only have as many commitments as can be effectively executed right now.

Don’t Be An Oxy-Moron – Lean Means Lean

If you hope to pull the right people into the room and effectively execute lean process improvements, you need to know that their participation is a priority; their participation will require that they stop doing something else; and that their participation will require as little wasted time as possible.

Lean Project Waste:

  • over-processing = too much time in meetings talking in a non-value add fashion.
  • transport waste = making people travel to meetings when they could join by phone or video conference.
  • motion waste = the time required to walk from end of the building to another, from the airport terminal to the rental car desk, from the restaurant to the office building. Too many ineffective meetings (be honest!) are cause for many thousands of wasted dollars simply moving around.
  • inventory waste = when too many meetings result in too many tasks and commitments, those tasks tend to pile up and remain “almost done” don’t they? Too many people in the meeting? What does that inventory cost you? Could the extra people be out selling?
  • over-production = too many meetings with too many people who wind up with too many assignments.
  • waiting waste = waiting for the meeting to begin, waiting between meetings, waiting for the meeting to end, waiting for the deliverable that is “almost done”. Assume each manager or director in a meeting costs you $50 per hour. If you have 10 people in a meeting and the non-value add time they waste is roughly an hour (getting there, interrupted workflow, sitting around the table before and after), then you can surmise that your meeting cost the company $500 above and beyond the cost of the meeting. Multiply this number by the number of meetings per day and per week in your organization. Get the picture?
  • defect waste = all the meetings that don’t produce new outcomes, new rules, better decisions or anything that is actually 100% DONE.

Leading Lean Process Improvements

Your organization requires leadership and thoughtful execution of high-priority work. People need to be honest, respectful yet objective and assertive. Here are some suggestions as you move forward:

  1. assign an executive full responsibility for your lean process improvement initiative.
  2. assign multiple project managers and process owners. One each if need be.
  3. clear the deck. show everyone what is not going to get done.
  4. create a common area or new work space for the lean team.
  5. create a dedicated, cross-functional team or circle of excellence and brand their efforts (the “Lean Machine” or whatever)
  6. temporarily contract for missing expertise. Bring a consultant on-board with a limited scope of work for a limited time and negotiate a hard bargain. Buyers rule right now.
  7. eliminate the internal competition for resources. If someone in leadership does not understand that the lean team is committed or does not agree to participate when called upon, send the responsible executive after them. This is serious business. Nip it in the bud.
  8. establish performance metrics, benchmarks and a baseline. Measure what matters most as often as is appropriate and broadcast results. Celebrate victories.
  9. hint: start with sales process improvement. Make that lean and everything else gets a bit easier.
  10. tell your customers. Tell your story and listen to what matters most (adds value) in their minds.

We are living through an unprecedented economic upheaval. One that likely will redefine our business and careers indefinitely. As conditions worsen before they improve, we must focus on those thoughts, words and deeds that add value and move us toward safer shores. I am not advocating working conditions that burn people out, however, time wasted is lost forever. When we look back on this chapter, we want to know that we contributed our very best to the solution. Prioritize and dedicate yourself and your people. Six and twelve months from now, you’ll be proud and happy that you did.