As we continue to become more interconnected within healthcare, many organizations are struggling with the cost associated with increased connectedness. In the early days of meaningful use, two independent studies, one performed by the Office of the National Coordinator and the other performed by the Bureau of Labor Statistics, reached the same conclusion: For the average hospital to meet and support the requirements of meaningful use, it would require a 30% increase in IT staffing. This is great news for Applications Specialists and Analysts, but very challenging for healthcare delivery systems, especially as the pressure moves away from fee-for-service in favor of pay for performance and bundled payments continues to escalate.
Many organizations that have chosen to pursue a Lean Healthcare approach understand the importance of including IT within their continuous improvement activities. Fewer have applied Lean within their IT organization. In fact, within many organizations, IT and the core processes involved remain a mystery. However, within these core processes there is often substantial opportunity. Unleashing these opportunities is critical as healthcare systems become more interconnected and experience the corresponding increase in demand for IT support. When faced with the challenge of increased demand for IT support and declining reimbursement, organizations are driven to do the best they can with what they have.
The typical healthcare IT function spends about 80% of its resources on just “keeping the lights on,” so to speak. This allows only 20% for strategic improvement. Present-day demand calls for a split closer to 50/50. Eliminating waste in core processes by applying Lean Healthcare principles to the IT function is a powerful enabler to facilitating the necessary shift.
The IT function within healthcare can be divided into three major segments: Operations, Informatics, and PMO and Administration. Within Operations, Helpdesk, Desktop Support (Break/Fix), and Provisioning often present significant opportunities for the application of Lean principles to eliminate waste, thereby creating more organizational bandwidth for strategic improvement. Within Informatics, this is slightly more challenging, given the nature of the work. However, this work can be classified as either Maintenance, Support, or Projects. The application of Daily Management techniques to Maintenance & Support tasks can provide a substantial lift in overall productivity. Use of Lean tools such as the 3P process can be very effective in driving “defect free” project implementation. The net effect of these tools is a reduction in post-implementation support request, which enables the shift toward 50% strategic improvement.
Within PMO and Administration, there are three critical tasks that must be accomplished to optimize the value of IT effort. First, there needs to be very tight alignment between IT driver goals and the enterprise’s strategic plan. This requires a functional governance structure and process. Second, there has to be transparency into actual resource expenditure compared to planned expenditure. Many organizations do not have the capability to clearly see where project-related resources were applied and how effective the application was. Finally, there needs to be a mechanism for capturing and “banking” the value of implemented projects. I have asked every Healthcare IT member I have worked with the following two questions with the following two results: Do you require a business case with an ROI before beginning a project? Response is yes 97% of the time. Post project implementation, do you have a process for validating and banking the value and savings from the project? Response is no 90% of the time. The failure to go back and validate the business case and ROI often leaves substantial opportunity on the table in the form of unrealized savings.
The downside of the pressures described in the beginning of this post is that many organizations are benchmarking IT without consideration to the value created by IT. This involves asking the question: How does my IT spend compare to others and how can I improve my cost position? A more enlightened approach is to ask: Am I making the right investments? By eliminating waste from the core processes in Operations, additional bandwidth is created to facilitate a shift from 80% just “keeping the lights on” to 50/50, strategic improvement. By applying Daily Management and Lean tools such as 3P to the work of Informatics, implementations are better controlled and are closer to defect-free. These combine to both increase bandwidth and reduce demand for support. Finally, by applying the principles of Hoshin Planning to IT governance and mechanisms to bank the savings of project work, the enterprise can achieve tighter integration between IT activity and the enterprise’s strategic plan, along with improved funding. All of these solutions provide substantial relief to the pressures created by increased demand in light of declining reimbursement.
Today’s blog was written by Bradley Schultz, Principal at HPP.
Bradley brings more than 20 years of consulting experience primarily in the healthcare industry. Prior to joining Vizient, he spent four years as Vice President Operations & Quality for a $160M multi-channel merchant (dotcom). This was preceded by 20 years with GE as a manufacturing engineer, operations leader, healthcare consultant, and regional consulting practice leader. Bradley assists Vizient members in making large-scale, transformational change within their organizations, using Lean, Six-Sigma, and other proven methods resulting in substantially improved operating performance. Bradley is a recognized industry expert in Strategy Deployment, Process Optimization, Change Management, Management Systems, Workforce Development, Executive Coaching, and Value-Realization. Additionally, he has led multiple focused projects in clinical operations and clinical informatics, providing clients a substantial return on investment. Bradley holds a Bachelors in Business Administration from Cardinal Stritch University in Milwaukee, Wisconsin, a post-graduate certificate in Quality Engineering from Milwaukee School of Engineering and his Master of Business Administration from Marquette University, all located in Milwaukee, Wisconsin. He is a Certified Six-Sigma Master Black-Belt and Achieve Global Frontline Leadership Development Facilitator.