The survival of healthcare organizations depends on applying lean principles. Organizations that adopt lean principles can reduce waste while improving the quality of care. By applying stringent clinical data measurement approaches to routine care delivery, healthcare systems identify best practice protocols and incorporate those into the clinical workflow. Data from these best practices are applied through continuous-learning loop that enables teams across the organization to update and improve protocols–ultimately reducing waste, lowering costs, and improving access to care.
This executive report based on a presentation by Dr. Brent James at a regional medical center, covers the following:
1. How lean healthcare principles can help improve the quality of care.
2. The steps healthcare organizations need to take to create a continuous-learning loop.
3. How a lean approach creates financial leverage by eliminating waste and improving net operating margins and ROI.
This report is a summary from a presentation at a regional healthcare conference by Brent James, M.D., clinical professor at Stanford University of Medicine and former vice president and chief quality officer at Intermountain Healthcare.
In 2018, the quality of patient care falls far short of its theoretical potential. Massive variation in clinical practices undermines the goal of good care for all patients. High rates of inappropriate care where the risk of harm is inherent in the treatment can outweigh any potential benefit. This leads to preventable care-associated patient injury and death due to a striking inability to do what we know works.
Additionally, variations in care generate huge amounts of waste across all segments of healthcare systems, leading to spiraling prices that can limit patient access to affordable care. This challenge has existed for decades, but lean healthcare management principles offer a solution.
Healthcare systems that adopt lean principles can reduce waste while improving the quality of care. By applying rigorous clinical data measurement methods to routine care delivery, these systems identify evidence-based best practice protocols and blend those into the clinical workflow. Data from these best practices are then fed back through a continuous-learning loop that enables healthcare teams across organizations to constantly update and improve the protocols, ultimately reducing waste, lowering costs, and improving access to care and patient outcomes.
The goal of this report is threefold:
There are some basic tensions inherent in the business of healthcare. Clinicians often focus on patient outcomes, regardless of cost. The financial office, on the other hand, responds, “No money, no mission.” Healthcare is still a business.
To resolve that dynamic tension, healthcare systems have tried several approaches. In the 1980s, healthcare organizations used Activity-Based Costing (ABC) systems that had been successful in other industries. At the same time, The Dartmouth Atlas, developed by Jack Wennberg, worked to measure and identify significant geographic variations in care.
In 1986, Intermountain Healthcare localized the otherwise broad approach of the Dartmouth Atlas within its own healthcare system, incorporating ABC principles along the way. Intermountain’s Quality, Utilization and Efficiency (QUE) studies applied rigorous clinical research methods to routine care delivery performance in six clinical areas at the health system’s inpatient facilities on a local level. And yet the QUE studies still identified massive variations among physicians and care teams, even though they all were following Intermountain’s best care protocols.
Variations in care exist both on broad geographic scale and on more localized levels. Five factors contribute to this variation, and each provides opportunities for great improvement.
This last factor is critical to the survival of healthcare systems. In the average system, a net operating income drop below three percent can cause failure. The response of many healthcare systems is to build more hospitals, ambulatory surgical centers, imaging centers, etc. But the financial leverage that the “build mentality” can deliver via increased revenue is just a five to nine percent contribution for each case added. By contrast, the financial leverage from waste elimination is a 50 to 100 percent contribution to margin for each case avoided.
A lean healthcare approach helps organizations generate that financial leverage and improve the quality of care by emphasizing a clinical management method.
“The complexity of modern medicine exceeds the capacity of the unaided expert mind.”
– David Eddy, Stanford University
At the start of the 20th century, medicine evolved into a craft-style model to address the complexity of care at that time. Physicians and nurses were experts, with all the evidence, experience, and memory stored in the human mind. When the craft model was introduced, it worked quite well, producing dramatic improvements in care.
More than a century later, advances in medical science have sparked a quantum leap in understanding of the human organism, health, and disease. The industry has generated petabytes of new evidence, processes, and procedures. But the sheer volume of new information exceeds the capacity of the unaided expert mind to quickly calculate all the variables in a clinical setting.
To address this evolution of medical knowledge beyond the craft stage, healthcare, like many other industries, turned to guidelines. The challenge with guidelines is always variation (in technology, patients, and caregivers). Demonstrating this concept, a National Institutes of Health-funded (NIH) study in 1991 identified large variations in ventilator settings across and within groups of expert pulmonologists. The challenge was the complexity within the lab; there are as many as 40 factors to consider when setting a ventilator. However, studies show that the maximum number of factors an expert clinician can consider at one time is nine.
When the NIH issued the study, the literature on ventilator settings offered evidence for a best practice in only about 20 percent of the cases. In the other 80 percent of cases, doctors and nurses had to determine what was best on their own, because there was no evidence and therefore no best practice. Even when expert consensus is achieved, success still depends on clinicians remembering that information correctly.
That is the fallacy of guidelines. A one-size-fits-all approach is untenable when every patient, every doctor, every nurse, every clinical setting is different. This has been proven in many studies:
Rather than rely solely on guidelines, healthcare systems should use a clinical management method to develop shared baseline protocols. This is the healthcare-specific version of what is known in lean terminology as “mass customization.” In other industries, mass customization combines the low unit costs of mass production processes with the flexibility of individual customization. In healthcare, there are six steps to this approach:
With this mass customization approach, it’s important to have a “thinking mind” at the interface. This is someone who understands that no two individuals are alike and adjustments need to be made accordingly. Variation in and of itself is not bad, but the key to effective variation is standardization. Standards are established on the front end so people can vary around them, then feed that information back through the learning loop to continuously improve the protocol. No longer a standard “best practice,” the protocol becomes an iterative process that constantly improves and communicates the rationale for those improvements with other care team members.
As teams use the mass customization approach to developing and sharing best protocols, team members must understand they will be scrutinized for applying a protocol too much compared to peers who are applying it too little. As the variation is examined in the continuous loop, for divergent team members, either the protocol has something to teach them, or they may have something to teach the rest of the team. It’s amazing how often it is the latter, with team members developing new insights. That is how improvements are made.
When this iterative process is used, protocols may change fairly rapidly. This happened in a ventilator protocol compliance study in 16 large academic medical centers in the U.S. The original protocol, developed with input from those participants, was a flow chart over 40 pages long, with 20 decision nodes per page. Four months later, after applying the lean feedback loop, more than 125 changes were made in the best practice protocol without a single patient achieving full compliance. The chance of survival for the most serious patients increased from 9.5 percent to 44 percent–a startling improvement in clinical outcomes. This same protocol is now used in several hundred large intensive care units around the world, and to this day, not a single patient has achieved 100 percent compliance. Nor should they. Each patient is different. That’s the value of a learning healthcare system. Clinicians can hold theory against reality and validate the best care through a true learning environment.
While delivering best care is the primary goal, the mass customization approach also impacts costs and productivity. In the case of the ventilator, using data to vary the use of the ventilator based on patient need resulted in cost savings of 25 percent. The structure helped decrease physician time to manage the composed cases while physician productivity increased by 50 percent.
Healthcare systems that adhere to a lean approach learn four crucial lessons:
Systems that can leverage lean management principles to reduce waste while improving the quality of care will be better positioned to survive and thrive in healthcare going forward. The healthcare organizations that have leveraged lean systems have achieved success by applying rigorous clinical data measurement methods to routine care delivery performances. This iterative process not only improves protocols and quality of care, but also explains to other members of the care team the rationale for those improvements, so they can further improve.
It is through this dynamic, data-based learning loop that lean management offers the best opportunity for healthcare systems to shape a better future for their systems through waste reduction, lower costs, and improved access to care and patient outcomes.
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