Healthcare Takes Cues From Manufacturers

Sunday Telegram (Worcester, MA)

November 1, 2012

In their quest for efficiency, some Central Massachusetts hospitals are following in the steps of an industry that could not seem more different: manufacturing.

Medical administrators are running lean or Six Sigma initiatives in Worcester and other locations in the state, using management techniques long associated with automakers to ferret out waste and maybe save money.

It’s an arduous process that has been openly dismissed by a large nurses’ union and frequently unsuccessful, according to experts. Yet some administrators say it could prove critical to hospitals as employers, insurers and government push to control medical spending.

“There’s always something new to get at. There’s always more waste,” said Charles E. Cavagnaro, M.D., president and chief executive of Wing Memorial Hospital, a 74-bed hospital in Palmer that is part of the Worcester-based UMass Memorial Health Care system. “Will it get expense out? I believe so.”

Lean and Six Sigma are methods of improving work processes. Lean typically involves identifying the steps used to bring a product or service to a customer and then eliminating those steps that do not add value. Lean is associated with production innovations at Japanese automaker Toyota Motor Corp., which encouraged kaizen, or improvement.

Six Sigma was developed by electronics maker Motorola Inc. in the 1980s to reduce variations in manufacturing that lead to defective products. Experts in Six Sigma earn Black Belt or Green Belt distinctions.

Chip Caldwell, president of the St. Augustine, FL, consulting firm Caldwell Butler & Associates, estimates that 50 to 60% of U.S. hospital and healthcare systems have launched lean or Six Sigma initiatives, up from about 10% just five years ago. That’s partly because healthcare administration is a small industry in which individuals hear or read about others' initiatives, he said, but also because of financial pressures.

“Everyone is expecting reimbursements to drop dramatically,” said Caldwell, who sits on ASQ’s healthcare panel. More people will be insured, he said, but “they’re going to be insured at the Medicare rate, which at today’s rates is an 11% loss in the average U.S. hospital.”

Takes some work

Launching Lean or Six Sigma is no simple task. Cavagnaro prepared by taking an online course from Villanova University, and then in mid-2011 visited ThedaCare, a community hospital system in northeastern Wisconsin known nationally for its lean efforts.

Since then, Cavagnaro said, Wing Memorial Hospital started a process improvement department with three Black Belts. He also took about 25 hospital staffers to ThedaCare in June for a two-day symposium.

One lean effort at Wing Memorial that involved separating patients in the emergency department so some flow faster to care has already reduced patient waiting times by more than 5%, he said. Another focusing on billing for radiology procedures has reduced denials from insurers by more than 80% and brought additional payments to the hospital. “We’re talking about maybe $100,000. But for a small hospital, that’s significant,” Cavagnaro said.

As lean, Six Sigma and other techniques well known in manufacturing have spread to healthcare, so have experts from manufacturing. “What we’re seeing is those organization that moved away from the parochial mindset that there’s nothing another industry can teach us are the organizations that are pulling ahead,” said Ted Stiles, partner and vice president of executive search for Stiles Associates of New London, NH, which has placed Lean manufacturing experts in healthcare jobs.

Kirt Tassmer, director of the Kaizen Promotion Office at St. Vincent Hospital in Worcester, previously worked for Pratt-Read Tools in Connecticut. St. Vincent Hospital has launched lean projects focused on safety, such as getting patients to doctors quicker in the emergency department, or repositioning medical supplies so workers spend less time gathering them, he said.

Bringing lean to healthcare rather than manufacturing, he added, is “just different. I don’t know if I could say it’s harder. We’re so focused on patients, like we should be, that sometimes we don’t see all the other crazy stuff we do to help that patient.”

No choice

John J. Healy, chief executive of the Manufacturing Advancement Center in Worcester, said he has seen some of that crazy stuff, such as thousands of dollars of medical inventory sitting in boxes on hospital floors.

Lean principles have direct applications to healthcare, according to Healy, but healthcare also may be facing the same dire situation U.S. manufacturers faced when they embraced lean rather than shut down. “They’re (hospitals) going to be forced to do something,” Healy said. “Either they change what they’re doing or they go out of business.”

UMass Memorial Health Care in Worcester has trained 2,000 employees in lean and found $13 million in savings during the first year of initiatives, according to Robert A. Klugman, M.D., the system’s chief quality officer and senior vice president.

One of the first projects involved whittling down a 23-step process for discharging patients to a nine-step process, cutting the time taken to send patients home, he said. Another organized supply rooms so a just-in-time strategy can be used to order products such as bandages and culture bottles when supplies run low.

The oncology unit, working with doctors, has rounded chemotherapy doses so fewer vials get opened, barely used and then discarded, Klugman said. “We can’t keep track of all the improvement work that’s going on,” he said. “You hear every day about projects that are going on.”

Nurse pushback

One group not impressed by Lean is UMass Memorial nurses represented by the Massachusetts Nurses Association. “For us, lean means caring for more patients,” said Colleen E. Wolfe, a nurse at the Memorial Campus of UMass Memorial.

“Patients have less time with nurses,” added Wolfe, co-chairwoman of the bargaining unit for Memorial and Hahnemann nurses. Although she also said neither she nor anyone she works with has been directly involved in lean projects.

Failure looms large for lean adopters. Lean experts estimate that only about 20% of healthcare lean efforts will persist and succeed. That’s because top executives do not make it an ongoing priority, because organizations don’t change a culture in which orders flow from managers to workers, or because improvements take place in isolated departments rather than across an entire organization.

“Early on, we weren’t very good at sustainment. We could grab the brass ring. We could ring the bell, but we couldn’t stay there,” said Kathleen L. Sharp, a lean coach for the Lehigh Valley Health Network, a three-hospital health system in Pennsylvania that launched lean programs in 2008 and has been removing chairs from its emergency department waiting rooms as it shortens the time patients spend waiting to see physicians.

Now, the 12,000-worker system regularly follows up on projects. Lean appears to have a role in slowing cost increases and maintaining the system’s operating margins at a healthy 5%, Sharp said. Many Massachusetts hospitals have significantly lower margins. “It’s not just lean,” she said, “but we know we’re part of the equation.”