WorldClass Performance Lean in Healthcare Operations A Lean

World-Class Performance Lean in Healthcare Operations “A Lean Guy Goes to the Hospital” Presented Aug 4, 2006 Mark Graban, LFM ‘ 99 Senior Consultant, Valu. Metrix® Services Ortho-Clinical Diagnostics, Inc.

Agenda • The Crisis of Waste in Healthcare • Lean Thinking Principles in Healthcare • Benefits for: – Patients – Employees – Hospitals Business Confidential, © Ortho-Clinical Diagnostics 2006

Mark’s Spaghetti Chart Business Confidential, © Ortho-Clinical Diagnostics 2006

Who Do I Work For? • Valu. Metrix Services (Ortho-Clinical Diagnostics) – Started in 2001 running Lean and Six Sigma pilots in labs – Launched as a fee-for-service consulting business in 2003 • Not “internal consultants” – 100% dedicated to healthcare projects • Hospitals, Laboratory Companies • U. S. , Canada, Europe, China – Application of the J&J “Process Excellence” Model – Project-based approach, lean coaching, “train the trainer” • Goal is to help build a lean enterprise, not to do “kaizen events” Business Confidential, © Ortho-Clinical Diagnostics 2006

In the News Almost Daily… Business Confidential, © Ortho-Clinical Diagnostics 2006

Hospitals Are Dangerous… CDC 1998: 90, 000 killed and 2, 000 injured from hospital-caused drug errors & infections Business Confidential, © Ortho-Clinical Diagnostics 2006

Preventable Errors Abound… “… 3 to 5% of specimens taken each year are defective… blood that isn’t drawn correctly… mix-up with another patient’s sample” Business Confidential, © Ortho-Clinical Diagnostics 2006

Preventable Errors Abound… Business Confidential, © Ortho-Clinical Diagnostics 2006

Preventable Errors Abound… Business Confidential, © Ortho-Clinical Diagnostics 2006

Mass Production or Healthcare? • Large batches • Sub-optimizing one resource • Automation is the answer • Lack of employee input • Lack of standard processes • One-person / Onemachine • Not communicating metrics • Quality through inspection • Lack of leadership • Constant fire fighting Business Confidential, © Ortho-Clinical Diagnostics 2006

Non-Lean, Current Thinking 1. Specify value in the eyes of the provider (or the payer) 2. Identify your department and sub-optimize it 3. Make patients wait for the convenience of the system 4. Ignore some employees and devalue others 5. Continuously fight the same fires in the pursuit of surviving the day Business Confidential, © Ortho-Clinical Diagnostics 2006

Applications of Lean in Healthcare • Laboratories – Reducing Turn Around Times and Errors • Emergency Departments – Reducing diversions, improving flow • Outpatient Cancer Treatment – Reducing patient delays, increasing capacity • Operating Rooms – Reducing changeover times, increasing utilization • Pharmacies – Reducing errors, improving response • Food Service – Reducing wasted food, improving quality Business Confidential, © Ortho-Clinical Diagnostics 2006

Why LEAN Works in Healthcare • LEAN is not a list of tools that applies only to factories • LEAN is a philosophy of management that applies to any system • LEAN rallies people around goals we can all agree on: – Patients and Employees Business Confidential, © Ortho-Clinical Diagnostics 2006

Not About Cutting Heads • Shortages of skilled employees – 51% of hospital med techs greater than 45 years of age, vacancy rate at 11% – Shortfall of 265, 000 nurses expected by 2010 • Do more… – With the same – Eventually, with less Business Confidential, © Ortho-Clinical Diagnostics 2006

Not Only About Cutting Costs • Hospitals are using lean as a Business Strategy – Improving quality – Improving service – Improving employee satisfaction – Growth strategies – “Un-outsourcing” testing work Business Confidential, © Ortho-Clinical Diagnostics 2006

Principles of LEAN Thinking 1. Specify value in the eyes of the customer. – – The customer must be willing to pay for the activity – The activity must change the form, fit or function of the product – The activity must be done right the first time Who are the “customers? ” Source: LEAN Thinking, Womack and Jones 1996 Business Confidential, © Ortho-Clinical Diagnostics 2006

Principles of LEAN Thinking 1. Specify value in the eyes of the customer. 2. Identify the value stream and eliminate waste. 13% of hospital costs are due to controllable waste. Source: Zuckerman, Hadley, and Iezzoni, 1994 Business Confidential, © Ortho-Clinical Diagnostics 2006

Typical Organization is Silo-ed Treatment Center Treatment Clinic Check-In Pharmacy Laboratory Testing Phlebotomy Physician Clinic Business Confidential, © Ortho-Clinical Diagnostics 2006

Value Stream – Anatomic Pathology Patient & MD I Transcriptionist I Pathologist I Specimen Collection I Send to Grossing I Grossing Embed & Cut Processing I I Business Confidential, © Ortho-Clinical Diagnostics 2006 Slide Making Staining I I

Was this an “ER Problem? ” • “…empty beds are available in the hospital, but there aren’t enough nurses to staff them. ” • This is a Value Stream problem! Business Confidential, © Ortho-Clinical Diagnostics 2006

Types of Waste – Lab Examples • Defects • Label on the wrong tube • Overproduction • Drawing all blood at 4 AM • Transportation • Long walks, multiple handoffs • Waiting Time • Tube waiting on centrifuge to fill • Inventory • 50 weeks of supply • Motion • Tech walking 80 ft to the printer • Processing • Time/Date stamps added, not used • Human Potential • Administration not listening to Med Techs or RN’s ideas for improvement Business Confidential, © Ortho-Clinical Diagnostics 2006

Are We Tolerating Waste? • Healthcare = Workarounds – Professor Steven Spear • “Decoding the DNA of the Toyota Production System” (HBR) • “Fixing Healthcare Today From the Inside” (HBR) • Case Example: – 10 -20% of MD orders are missing EVERY DAY • Call and get the order – done? • Tomorrow, we’ll do the same • Problems need to be seen as opportunities Business Confidential, © Ortho-Clinical Diagnostics 2006

Laboratory Layouts Drive Waste Layout is driven by departments Benches interfere with straight-line walking, encourage batches Business Confidential, © Ortho-Clinical Diagnostics 2006

Clinical Laboratory Product Flow Business Confidential, © Ortho-Clinical Diagnostics 2006

Clinical Laboratory Timeline Total CT = 5. 44 hours Business Confidential, © Ortho-Clinical Diagnostics 2006

Layouts Drive Waste of Motion Pharmacist Walk Pattern Med Tech Walk Pattern Miles per Day! Cancer RN Walk Pattern Business Confidential, © Ortho-Clinical Diagnostics 2006

Typical 5 S Baseline § § Unorganized Workbenches Product Flow not Obvious Time wasted looking for things Hoarding of supplies § § § Poor Utilization of Space General Clutter Supply Shortages and “Hidden” Inventories Business Confidential, © Ortho-Clinical Diagnostics 2006

5 S Improvement Examples Business Confidential, © Ortho-Clinical Diagnostics 2006

Principles of LEAN Thinking 1. Specify value in the eyes of the customer. 2. Identify the value stream and eliminate waste. 3. Make value flow at the pull of the customer. Business Confidential, © Ortho-Clinical Diagnostics 2006

Reducing Patient Wait Times • Mass Production Thinking Utilization – Keep expensive assets heavily utilized • Machines Doctors – The tradeoff is waiting time • Cars Patients • Lean Thinking Flow – Focus on reducing Patient Waiting time Business Confidential, © Ortho-Clinical Diagnostics 2006

Outpatient Oncology Patient “Flow” Value Added A • Blood drawn • MD consult • Needle into Port NVA But Required B • Check In / Check Out • Moving from room to room NVA, “Pure Waste” • Waiting for Check In • Waiting for MD • Waiting for Treatment Business Confidential, © Ortho-Clinical Diagnostics 2006

Re-Work Loops Cause Delays Business Confidential, © Ortho-Clinical Diagnostics 2006

Batching Prevents Flow Business Confidential, © Ortho-Clinical Diagnostics 2006

Batching Hurts Quality • Lack of “standard work” and opportunity for “error proofing” – Anatomic Pathology Batch of slides made, 3 patients, risk of mixup? 2 nd histotech labels one slide at a time Business Confidential, © Ortho-Clinical Diagnostics 2006

Batching Hurts Quality • Lack of “standard work” and opportunity for “error proofing” – Pharmacy Business Confidential, © Ortho-Clinical Diagnostics 2006

Flow and Heijunka • You can’t have flow without some amount of “leveling” in the system • “Leveled Production: – You won’t be Happy without it” » From Toyota publication Business Confidential, © Ortho-Clinical Diagnostics 2006

Typical Hospital Lab Not Level 39% of Samples Arrive in Just 3 Hours of the Day TAT expectations are constant Business Confidential, © Ortho-Clinical Diagnostics 2006

Leveling Reduces Peak Costs Shift Business Confidential, © Ortho-Clinical Diagnostics 2006

Principles of LEAN Thinking 1. Specify value in the eyes of the customer. 2. Identify the value stream and eliminate waste. 3. Make value flow at the pull of the customer. 4. Involve and Empower employees. 5. Continuously improve in the pursuit of perfection. Business Confidential, © Ortho-Clinical Diagnostics 2006

Pre-Lean Med Tech Quote: “With all of the automation, I feel like a robot. ” Business Confidential, © Ortho-Clinical Diagnostics 2006

The “Thinking Production System” “Perhaps the greatest strength of the Toyota Production System is the way it develops people. This is why the T actually stands for ‘Thinking’ as well as for ‘Toyota. ’” – Teruyuki Minoura, Toyota Business Confidential, © Ortho-Clinical Diagnostics 2006

What Mistake-Proofing Means to Healthcare The Global Goal: Reduce Medical Errors “Human error is inevitable. We can never eliminate it. ” …. . We can eliminate problems in the system that make it more likely to happen. ” Source: USA Today August 24, 2005 Liam Donaldson WHO World Health Alliance for Patient safety Business Confidential, © Ortho-Clinical Diagnostics 2006

Lean Requires a Cultural Shift • Traditional Approach: – “Naming, Shaming, and Blaming” • Lean Approach: – Supports open reporting of mistakes – Root cause problem solving process – “Anyone can make mistakes” Business Confidential, © Ortho-Clinical Diagnostics 2006

Error Proofing Example • Micrograms or Milligrams? • A medical mistake waiting to happen when written by hand Business Confidential, © Ortho-Clinical Diagnostics 2006

Error Proofing Example Confusing Unambiguous (Lean) Business Confidential, © Ortho-Clinical Diagnostics 2006

MD Resistance to Standard Work Which is More effective? • “… some surgeons make a tiny, mole-sized mark on a patient instead of a big, bold "X”…. I call them passiveaggressive marks…” – USA Today, 4/18/06 Business Confidential, © Ortho-Clinical Diagnostics 2006

Lab Benefits from Lean • • • Productivity improvement >30% Space savings of >450 sq ft Standardized work practices Reduction in Errors and Error Potential Test Turnaround Time (CT) reduced by 50% Business Confidential, © Ortho-Clinical Diagnostics 2006

Hospitals Avoiding Capital Costs • From 60, 000 sq ft to 40, 000 sq ft for new lab – Cost avoidance of $800, 000 • Blood bank in new lab w/o adding 2, 500 sq ft – Cost avoidance of $400, 000 • Hospital food service cancels new building – Cost avoidance of $7, 200, 000 Business Confidential, © Ortho-Clinical Diagnostics 2006

Improving Patient Satisfaction PATIENT SATISFACTION SURVEY SCORES October Hospital System ED 2005 December 2005 60% Overall Rating 96% 62% Privacy 84% 78% Wait Time for MD 96% 61% Likelihood of Recommending 98% Business Confidential, © Ortho-Clinical Diagnostics 2006

Reflections on a Year in Healthcare • Lean is a powerful methodology • People are people • Healthcare people have incredible intrinsic motivation • Humility and asking questions is better than being a know-it-all • Coaching the team to “do lean & be lean” is the only sustainable route Business Confidential, © Ortho-Clinical Diagnostics 2006

A Call To Action • What can you do? – – – Talk to hospitals and doctors in your communities Get involved with hospital boards Encourage employer health plans to push lean Consider a career shift into healthcare Resources: • • • “Good News… How Hospitals Heal Themselves” (DVD/PBS) Hardwiring Excellence (by Quint Studer) www. ihi. org (Institute for Healthcare Improvement) www. prhi. org (Pittsburgh Regional Healthcare Initiative) www. leanblog. org (Mark’s lean blog) Business Confidential, © Ortho-Clinical Diagnostics 2006

World-Class Performance Lean in Healthcare Operations Mark Graban, LFM ‘ 99 Senior Consultant, Valu. Metrix® Services Ortho-Clinical Diagnostics, Inc. mgraban@ocdus. jnj. com www. valumetrixservices. com mgraban@yahoo. com www. leanblog. org