Value Stream Management for Lean Healthcare IDM 404 Spring 2010 Dr. Joan Burtner Industrial Management Case Studies

Spring 2010IDM 404 Dr. Burtner Lecture 1 Slide 2 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 2010IDM 404 Dr. Burtner Lecture 1 Slide 3 The Healthcare Crisis – Costs 2 Insurances (Private and Government) Facility overhead  Majority of hospitals 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 2010IDM 404 Dr. Burtner Lecture 1 Slide 4 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 2010IDM 404 Dr. Burtner Lecture 1 Slide 5 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

Contemporary Quality Movements Six Sigma  Customer-focused statistically-based methodology for reducing defects  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  5 S, visual controls, mistake proofing, kanbans Lean Six Sigma – combination of both methodologies with an emphasis on identifying waste and reducing defects Spring 2010 Lecture 1 Slide 6 IDM 404 Dr. Burtner

Lean Healthcare Pressure on the Healthcare System to Become Leaner  Consumers’ increasing awareness of the inefficiencies in healthcare  Changing practices of payers (federal government, 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 2010 Lecture 1 Slide 7 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 2010 Lecture 1 Slide 8 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 2010 Lecture 1 Slide 9 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 2010 Lecture 1 Slide 10 IDM 404 Dr. Burtner

Spring 2010IDM 404 Dr. Burtner Lecture 1 Slide 11 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 2010IDM 404 Dr. Burtner Lecture 1 Slide 12 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 2010IDM 404 Dr. Burtner Lecture 1 Slide 13 Quiz on Lecture 1 Use 3-6 sentences to describe medical tourism and why it is a threat to the US healthcare industry List 2 of the 3 baby-boomers influences on the healthcare industry In response to the healthcare crisis, the healthcare industry is motivated to reduce costs and improve ________________, _____________, and ______________.