IDM 404 Industrial Management Case Studies Value Stream Management for Lean Healthcare Tapping, Kowolski, Archbold, & Sperl Lecture 1 IDM 404 Industrial Management Case Studies

The Healthcare Crisis – Costs 1 US healthcare costs are extremely high Medical tourism is a threat to U.S. system Bone – marrow transplant $2.5 million in US $26,000 in India Healthcare costs are increasing at double-digit rates each year Healthcare costs are being transferred to the consumer (patient) New mothers are sent home within 24 hours of giving birth Spring 2018 IDM 404 Dr. Burtner

The Healthcare Crisis – Costs 2 Insurances (Private and Government) Facility overhead Majority of hospitals 20-30 years old Malpractice premiums Competitive healthcare Hospitals compete for staff Hospitals compete for patients Infrastructure changes (supporting information required by insurance/government) Decreased funding Rapidly changing technology requirements Spring 2018 IDM 404 Dr. Burtner

The Healthcare Crisis – Staffing Nurses are responsible for direct patient care Nurses must provide more and more documentation Nurses asked to provide more with less Nurses leaving traditional healthcare for related positions (home health, sales, teaching) New qualified nurses must be found Spring 2018 IDM 404 Dr. Burtner

The Healthcare Crisis – Boomers Baby-boomers will require an increase in services throughout the healthcare continuum Benefits per retiree will accelerate more quickly than the taxpaying workforce that supports retiree benefits Inadequate savings may result in less money for healthcare Spring 2018 IDM 404 Dr. Burtner

Contemporary Quality Movements Six Sigma Customer-focused statistically-based methodology for reducing defects <Tapping, et al> Voice of the Customer, designed experimentation to minimize variation and root-cause analysis Lean Philosophical approach that works to eliminate waste or non-value added activities while improving process flow <Tapping, et al> 5 S, visual controls, mistake proofing, kanbans Lean Six Sigma – combination of both methodologies with an emphasis on identifying waste and reducing defects Spring 2018 IDM 404 Dr. Burtner

Why Lean Healthcare? Pressure on Healthcare System to Become Leaner Consumers’ increasing awareness of the inefficiencies in healthcare Changing practices of payers (federal gov’t, private insurance, individuals) HHS (hospital compare) CMS policy toward never events Healthcare Customers The ultimate customer in healthcare is the patient The healthcare system is comprised of multiple internal customers and suppliers Customers are also stakeholders Implementation in Healthcare Applied throughout a complex system (Broad application) Adopted quickly by various departments with minimal training Results seen “immediately” by internal and external customers The Right Methods at the Right Time??? Spring 2018 IDM 404 Dr. Burtner

Potential Obstacles to Lean Healthcare – Part 1 Culture of organization or department “It’s not my job” attitude Lack of vision or purpose from upper management Lack of capable processes and standards Fear of change Inadequate training Spring 2018 IDM 404 Dr. Burtner

Potential Obstacles to Lean Healthcare – Part 2 Financial constraints Departmental silos Lack of departmental communication and co-ordination of care or information Governmental regulations Legal constraints Safety concerns Certification/licensing requirements Spring 2018 IDM 404 Dr. Burtner

Benefits of Value Stream Management as described by Tapping et al Focus improvement efforts toward a single customer or patient process Prevent scope creep Allow for departmental areas to be improved with minimal resource allocation Allow resource coordination/allocation across the organization Allow for a means of moving from the current state to the future state Provide a structure for the process owner with the necessary skills to initiate projects more frequently Allow Lean to be understood in everyday terminology Spring 2018 IDM 404 Dr. Burtner

The Healthcare Crisis - Funding Emergency Medical Treatment and Active Labor Act (EMTALA) Requires hospitals and ambulances to provide care to anyone needing emergency treatment regardless of citizenship, legal status, or ability to pay Does not provide for reimbursement Decreasing funding from federal, state, and local agencies Spring 2018 IDM 404 Dr. Burtner

Response to the Healthcare Crisis The healthcare industry is becoming more motivated to Improve patient satisfaction Improve patient care Improve job satisfaction for healthcare workers Reduce costs There is an increasing recognition of the value of creating more efficient patient and non-patient care processes by reducing waste. Spring 2018 IDM 404 Dr. Burtner