World-Class Performance

Lean in
Healthcare
Operations
A Lean Guy Goes to
the Hospital
Presented Aug 4, 2006

Mark Graban, LFM 99

Senior Consultant, ValuMetrix 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

Marks Spaghetti Chart

Business Confidential, Ortho-Clinical Diagnostics 2006

Who Do I Work For?

ValuMetrix 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 2,000,000
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 isnt drawn
correctly mix-up
with another
patients 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 Automation is the

Sub-optimizing one answer
resource Lack of standard
Lack of employee input processes
One-person / One- Not communicating
machine metrics
Quality through Lack of leadership
inspection 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

 Treatment Center
Typical Organization is Silo-ed

Treatment Clinic Check-In

Business Confidential, Ortho-Clinical Diagnostics 2006
Pharmacy
Laboratory Testing
Phlebotomy
Physician Clinic
Value Stream Anatomic Pathology

Patient & MD I

Transcriptionist I
Pathologist

Specimen I
Collection
Send to
Grossing
I
Embed Slide
Grossing Processing Staining
I & Cut Making

I I I I

Business Confidential, Ortho-Clinical Diagnostics 2006

Was this an ER Problem?

empty beds are available in the hospital, but

there arent 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 RNs 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, well 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

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Clinical Laboratory Product Flow

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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 5S Baseline

Unorganized Workbenches Poor Utilization of Space

Product Flow not Obvious General Clutter
Time wasted looking for things Supply Shortages and
Hoarding of supplies Hidden Inventories
Business Confidential, Ortho-Clinical Diagnostics 2006
5S 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
Blood drawn

A MD consult
Needle into Port

NVA But Required

Check In / Check Out
B Moving from room to room

NVA, Pure Waste

ARRIVAL TO LATENESS FOR
TREATMENT TREATMENT Waiting for Check In
PATIENT (HOURS) (HOURS) Waiting for MD
A 2.5 0.42 Waiting for Treatment
B 3.5 1.08
AVG 3.0 0.75

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? 2nd 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 cant have flow without some

amount of leveling in the system

Leveled Production:
You wont 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 Shift 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.

Liam Donaldson
WHO World Health Alliance
Source: USA Today
August 24, 2005 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 passive-
aggressive 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 December
2005 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 (Marks lean blog)

Business Confidential, Ortho-Clinical Diagnostics 2006

World-Class Performance
Lean in
Healthcare
Operations
Mark Graban, LFM 99
Senior Consultant, ValuMetrix Services
Ortho-Clinical Diagnostics, Inc.

mgraban@ocdus.jnj.com
www.valumetrixservices.com

mgraban@yahoo.com
www.leanblog.org