During a presentation I attended recently, the speaker, CEO of a major medical center, addressed his perspective on why hospital reimbursements are lowering as prices in healthcare costs increase. Providers are still being rewarded for higher volumes through current (soon to be old) rules, but they need to start changing care delivery models to focus on improving quality and hitting CMS indicators for value. Since margins are extremely thin right now, it’s difficult to justify investments in technology or care delivery changes that would be beneficial in the long-term, but would negatively impact the bottom line over the short term.
The good news is that eliminating waste, standardizing variable processes, reducing costs due to preventing errors and improving service and efficiency through Lean Healthcare are welcome and achievable changes that inevitably benefit financial performance, regardless of the changing healthcare landscape. Improvements in bottom line financial results (previously associated with higher patient volumes) can be achieved through lowered operating costs, standard work, and supply standardization. Here are just a few examples of how Lean Healthcare can help:
- To improve value and quality, almost all hospitals can improve care delivery through such efforts as reducing Ventilator Acquired Pneumonias (VAPs) and Urinary Tract Infections (UTIs) by focusing efforts to standardize care protocols.
- Most can also reduce adverse drug events or drug interactions through a standardized Medication Reconciliation process, and reduce hospital readmissions through focused follow-up programs to reach discharged patients to encourage adherence to care plans.
- Lean Healthcare can be used to reduce the number of high-cost supplies used in procedures as well as inventory dollars and expired product dollars. Lean Healthcare process re-engineering can reduce the number of handoffs of supplies and drugs, improve pricing integrity, and can also help with the development of evidence-based order sets and standardized medication formularies.
These changes reduce errors and waste, reduce operating costs, and directly improve bottom line performance without any corresponding increase in patient volume. Focusing even on small wins or low-hanging fruit through eliminating steps and non-value-added tasks are just the tip of the iceberg. It will open eyes and minds, leading to continuous improvement and bigger successes later on.
There is never a bad time to engage in performance improvement. Lean Healthcare techniques properly applied to healthcare will result in the same wins that have been achieved in other industries. The move to value-based purchasing and standardized performance indicators means that there has never been a better (or more pressing) time to take the plunge and invest in performance improvement techniques.
Tell us about the Lean efforts in your organization. Have you taken the plunge, or are you just dipping your toes in the water? What results have you seen? How is it helping you prepare for paradigm shifts within the industry?
Today’s blog was written by Alice Mayer, Ph.D, CPHQ, Senior Manager with HPP.
Alice has more than 20 years of progressive and diverse healthcare experience in identifying, developing and implementing high value solutions for better patient care, improved safety, and optimal work environments. She leads Lean transformation engagements for clients at all stages of advancement. She also leads and implements process improvement consulting engagements. Alice has held executive healthcare positions as a chief executive officer and chief quality officer, and possesses a shrewd understanding of critical controls and performance metrics necessary to maximize performance and quality in healthcare delivery.
Alice holds a Ph.D. in Health Services Management from Century University, an MBA from Olivet Nazarene University, and dual undergraduate degrees in Computer and Radiologic Science. Alice is also certified as a Six Sigma Black Belt.
1 Comment until now
Been in healthcare for over 30 years and on the “dark side” for 15. No question that standardization (6-sigma) and reducing waste (LEAN) can impact the bottom line. Maintaining the gain can be a major challenge both in culture and process. Leveraging technology can work as well with the caveat that some technology has a cost which well exceeds its benefit. Because most EMR’s are not cost neutral they result in signficant cost when it comes to medication reconciliation. You noted “bottom line” costs (read $$) over the short term … time is the currency I am most concerned with.
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