1. Lean in Healthcare Michael Waterman
Division Director, Performance Excellence
March 17, 2016
Welcome
Why we are hear
Goal of today

2. Fundamentals of Improvement
“Seeing and Eliminating Waste”

3. Improvement Using Scientific Method
Improving processes is not new…..it has been around for centuries
Scientific Method
Ford Production System
Frederick Taylor
Toyota Production System
Deming – TQM
And a host of spin-offs - lean, six sigma, lean-sigma, business process re-engineering…..
There are many different names for process improvement over the years
Each on has a set method and package of tools that are used to improve a process.
All are based on the scientific method
Ask question-Can we make this better
Do research on current state-study the system, measure performance
Construct Hypothesis-why do problems exist, how to elminate
Test your solution-do a pilot study
Analyze the results….what did we learn from experiment
If it worked, change it…if not start again.

4. So what has changed?
Toyota determined that improvement need not just be set of disparate tools, but could be used as entire business system to create operational excellence
House of Toyota
The method of lean we are using is based on the Toyota Production System
The idea is that you don’t just give people tools but you have to create an entire business system around the tools. This is a cultural change that is needed.
The change will impact how our managers and leaders do their job everyday.
The base of this system is understanding the various value systems and establishing methods of standard work. This will help to create operational stability. Work standards lead to reduced variability and therefore more predictability in outcomes.
The next level involves creating a culture of continuous improvement.
We infuse the Lean design concepts in our processes. That is the idea of pull systems, flow, visual management, etc. We will explain more about that later today
By example we show our employees that continuous improvement is everyone’s job.
We utilize daily management methodologies to teach and reinforce this.
The result of all this is an organization based on providing the highest quality, shortest lead time by eliminating wasteful activities in our work.
Prior to the merger we used these methods to address process improvement

5. What is “Lean” Short for “Lean Thinking”
Management System for Continuous Improvement based on the Toyota Production System
Set of principles that guide organizational thinking based on two themes:
Elimination of waste or non-value added activity (continuous Improvement)
Respect for all people
So Toyota doesn’t really call this Lean
If you go to Toyota they might not know what you are talking about
The term Lean came about as a result of two MIT professors who were studying automotive companies and how each one worked.
Lean Manufacturing as it was first called was their conceptualization of what they saw at Toyota.
Two primary themes in lean
Eliminate waste, or non-value added activity
We are going to talk more about this in a minute
Respect for all people in the organization
This ties in perfectly with our cultural unfreezing and concepts such as Assume Positive Intent, Be Here Now, Mood Elevator, and so on.
Taichi Ohno

6. Value Added versus Non-Value Added
Any activity that takes time, space, or resources, but does not contribute directly to satisfying the needs of a Customer
Any activity that contributes directly to satisfying the needs of a Customer
So what is the difference between value added and non-value added work.
This is the key thing we need to understand to successfully create the culture we want. We need to rethink how we measure and define value
We are going to define a value added activity as any thing we do that contributed DIRECTLY to satisfying a customer need
What does that mean?
Example, ED patient with ear ache
What is their need?
What steps to do we take that add value if filling that need
Triage?
Registration?
ID band?
Prescription
We are going to call anything we do that takes resources but does not contribute to satisfying a customer need non-value added.
Does not mean it is not necessary or not valuable…but by doing this we are going to change how we approach process design and improvement
So based on this, what % of the time do you think a typical process adds value?
Activity
Over Time
Customer Need Presented
Customer Need Met
Time

7. How is “Lean” Different?
“Lean” is the only improvement methodology that focuses on reducing the non-value added activity
Value Added
Non-Value Added
A Typical Process is 95% Non-Value Added to 5% Value Added
Activity
Over Time
Customer Need Presented
Customer Need Met
A typical process is 95% non-value added activity
Give examples of the Value streams we have done already
Give filter example.
What we want to do is to isolate the NVA activity and focus on that. We don’t want to focus on changing the 5%...that is not where the big opportunity is.
By eliminating things we do that don’t provide value, we improve throughput and quality without significant cost. We are eliminating work
Give example of 1700 nurses and 50% of nurses time is wasted walking around
Give example that 2000 steps is a mile and that take 20 minutes
Give example of cleaning IV pumps
We create resource capacity by taking away thing that waste time.
Focusing on NVA creates two simultaneous phenomenon:
The improvement potential is much LARGER
The cost of the improvement is much LESS

8. Waste = Non-Value Added Activity
Three Forms of Waste
Operational Waste
Waste of Unevenness
Waste of Overburden
Waste = Non-Value Added Activity

9. Are your Eyes Open?
Can you see Waste ?

10. Eliminate the Waste Basic Concepts of Improvement
Current State
Design the system/ process with these attributes:
Flow
Pull
Defect Free
Visual Management
Continuous Improvement
Apply Improvement Concepts and Eliminate Wastes
Better State

11. Anytime work stops, waste is present
Flow
Principle – Allow value to flow continuously to customer demand, in a standardized way
Anytime work stops, waste is present

12. Utilize Pull Systems when work cannot flow continuously
Principle – Perform work only when you have a true need from the customer
Pull don’t Push
Utilize Pull Systems when work cannot flow continuously

13. We always have time to do work the second time
Defect Free
Principle – Build quality into the process to exactly meet customer specified value the first time
We always have time to do work the second time

14. Manage Visually
Principle – See normal conditions from abnormal conditions at a glance so corrective action can be taken in real-time
Issues tracked to support continuous improvement not as a punitive tool
Process and Results
Visual Management gives employees the
knowledge and motivation to succeed!

15. Kaizen - Continuously Improve
What is happening?
Gaps? Trends?
Why?
Root causes?
What needs to
be done?
Correct the problem
Prevent the problem
Who is going to do it?
Who does what?
Any support needed?
When is it going
to be done?
Prioritization?
Deadline?
Milestones?
Be fact based – Data and facts to drive the dialog
Set right tone – Proactive language and send consistent messages

16. Applications in Finance
Applying Lean in Non-Operational Areas

17. Lean Design in Financial Areas Example: Closing the Books
Defining the Customer Need
SIPOC
Reducing Batch Size
Concurrent Processing
Based on an article by Jean Cunningham from Plant Lean
Examples on the internet shows one company reducing the time to close books by 38%.
Another reduced the time from 9 days to 5 days.

18. One Soft Hard Ti m e Financial Impact Productivity Level Loading LWBS
Overall Impact
Soft
Productivity
Level Loading
Cost Avoidance
Hard
LWBS
LOS/Growth
One
Ti m e
Invent ory
Safety Issues
Measuring operational vs financial metrics
Picking leading vs lagging measures
Getting financial signoff on measures
Standard calculations and measures (TAT in OR, Arrival Time in ED, etc)
Availability of data

19. Measure Both Increases and Decreases
Example Calculations
Impact from changes in LWBS
((Baseline LWBS % - Current LWBS%) x (Actual Monthly ED Volume x Baseline LWBS Admit Rate % X IP Contribution Margin + Actual Monthly ED Volume x (1-Baseline LWBS Admit Rate %) x Outpatient Contribution Margin )x 12/1000))
Measure Both Increases and Decreases

20. Questions?