1. LEAN IN HEALTH CARE AND ITS APPLCATION AT
SUTTER GOULD MEDICAL FOUNDATION
A final project Presented to the Faculty
of
California State University, Stanislaus
In Partial Fulfillment
Of the Requirements for the Degree
Of Master of Business Administration
By
Syed S. Ali M.D.
October 2012
2. CERTIFICATION OF APPROVAL
LEAN IN HEALTH CARE AND ITS APLICATION AT
SUTTER GOULD MEDICAL FOUNDATION
by
Syed S. Ali MD
Dr. Nael Aly
Project Advisor
Dr. Tzu-Man Huang
Project Coordinator
_________________________________________
Dr. Paul Harris
EBMA Director
Linda Nowak, Ph.D. Dean, College of
Business Administration
Date
Date
_______________________
Date
Date
4. iv
DEDICATION
LEAN IN HEALTH CARE AND ITS APLICATION AT
SUTTER GOULD MEDICAL FOUNDATION
This project is dedicated to my patients who deserve the best that health care has to
offer, in a compassionate and affordable way.
5. v
ACKNOWLEDGEMENTS
LEAN IN HEALTH CARE AND ITS APLICATION AT
SUTTER GOULD MEDICAL FOUNDATION
I thank my parents for teaching me to never stop learning. I am grateful to my wife
who is always understanding and supportive in in all my endeavors’ to continue to
grow professionally and personally and my kids Umair, Sitara and Amber for their
Love and understanding.
I would like to thank my professor Dr. Nael Aly for his enthusiastic support of this
project. I would like to acknowledge my fellow students Dee, Elizabeth and Sam.
I would also like to thank Steve Mitnick the Medical Director of Gould medical
Group for his insight on Lean in Health Care and his contribution to some of the
appendices.
6. vi
TABLE OF CONTENTS
PAGE
Dedication................................................................................................................ iv
Acknowledgements.................................................................................................. v
List of Figures.......................................................................................................... viii
List of Figures.......................................................................................................... ix
Abstract.................................................................................................................... x
CHAPTER
I. Background............................................................................................ 1
II. Why Lean in Healthcare ........................................................................ 3
III. Overview of Lean.................................................................................. 6
History of Lean in Healthcare.................................................... 7
IV. Sutter Gould Lean Implementation........................................................ 13
The Culture ................................................................................ 14
Identifying Waste..................................................................... 15
Identifying problems................................................................. 17
Implementing Lean Practices………………………………… 19
Lean in Action…………………………………………………. 22
Results and Benefits…………………………………………… 33
Affordability Focus at Sutter Gould…………………………… 35
Accessibility and Long term Benefits…………………………. 36
V. Recommendations……………………………………………………….38
VI. New projects in its infancy applying lean principles…………………….41
VII. Conclusion……………………………………………………………… 43
8. viii
LIST OF FIGURES
FIGURE PAGE
1. Theda care ideal state information flow ............................................................ 6
2. Seven week cycle of rapid improvement event................................................. 7
3. Results of implementing lean in ICU Theda Care ........................................... 8
4. Lean implementation at Virginia Mason...........................................................10
5. Values adopted by Sutter Gould Medical Foundation.......................................14
6. Time physicians spend on various tasks for a typical day…………………….17
7. A3 chart used for Kaizen events at Sutter Gould………………………………21
8. Conference room used for Kaizen events at utter gould Modesto ...................... 23
9. Another wall of conference room used for Kaizen event.................................... 24
10. Closer look at the wall of Lean Metrics............................................................. 25
11. Flow chart of questions to ask to determine areas of improvements ................. 26
12. Drawers and counters in an exam room………………………………………. 26
13. Cabinet in an exam room……………………………………………………… 27
14. Garbage bag and its position marked…………………………………………. 28
15. Weighing machine and its place marked on the floor………………………… 28
16.Kanban posted outside every exam room……………………………………... 30
17. Picture of arrows for patients to follow on the floor ........................................ 31
18. Official Exit sign................................................................................................ 32
9. ix
19. Kanban informing waiting time for patients, e-mails and scripts……………… 32
20. Patient wait times………………………………………………………………. 33
10. x
ABSTRACT
LEAN IN HEALTH CARE AND ITS APLICATION AT
SUTTER GOULD MEDICAL FOUNDATION
From the comprehensive review and data presented, this paper shows that applying
lean management principles in health care delivery will translate into the highest level
of quality, affordability and accessibility for patients. In addition, efficiencies are
realized for doctors, physicians’ assistants, medical assistants, and other staff
providing them more time with patients, enables them to go home earlier, and
mitigates burn-out. From a financial standpoint return on investment is also realized
as more patients can be scheduled with the time savings achieved by implementing
lean in health care.
Keywords: Sutter Gould, health care, lean management, muda, kaizen
11. BACKGROUND
The Sutter Gould Medical Foundation (SGMF), a Sutter Health Affiliate, is a not-for-
profit multispecialty health care organization that serves the San Joaquin and
Stanislaus Counties of Northern California. There are 48,000 physicians, employees,
and volunteers within the Sutter Health family who care for patients in more than 100
Northern California communities. Its mission is to enhance the well being of people
in the communities it serves through a commitment for compassion and excellence.
SGMF’s vision is to lead the transformation of health care through achieving the
highest level of quality, accessibility and affordability by using lean management and
applying the fourteen principles of the Toyota Production System (TPS).
The problem with health care in the last decade is that costs have been rising
astronomically. Americans underestimate the magnitude of the problem; 68 percent
of the population does not even believe there is an issue. The level of health spending,
in non-institutionalized U.S. population, increased from $313.5 billion in 1997 to
$627.9 billion in 2000. This increase was attributed to the rise in prevalence of
treated chronic diseases. During 2005, the U.S. spent almost $2 trillion on health care
while ranking fourteenth in providing quality health care in the industrialized nations
around the world. This ranking was based on universal standards such as infant
mortality, maternal morbidity and mortality (CDC Overview 2012). There has been
a steep rise in U.S. health care spending as a percentage of the Gross
Domestic Product (GDP). (See appendix A). Further complicating issues is
that 5% of the population consumes 75% of health care dollars. To simplify
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this, for every dollar we spent on health care $0.75 went towards treating
patients with chronic diseases. In public programs, treatment of patients with
chronic diseases constitutes an even higher portion of spending; more than
$0.96 in Medicare and $0.83 in Medicaid (Chronic Conditions: Making the
Case for Ongoing Care, 2004).
According to the Institute for Healthcare Improvement, lean principles applied
in healthcare can have a positive impact on productivity, cost, quality, and timely
delivery of services. In order to create success, it is critical that the primary customer
define value that is the patient. To achieve this goal, organizations need to create a
culture emphasizing individual learning. Individual learning does not guarantee
organizational learning, but without it no organizational learning occurs. As noted in
Peter Senge’s renowned management book, The Fifth Discipline, personal mastery is
a requirement for any learning organization and, consequently, for the development
of any high performance team which leads to the ultimate success of any organization
(Senge, 2006).
WHY LEAN IN HEALTH CARE?
In the United States nearly half (45 percent) of the population suffers
from at least one chronic disease. Chronic diseases are the single greatest
threat to our nation's health and to our health care system. More than two-
thirds of all deaths are caused by one or more of the five chronic diseases
namely heart disease, cancer, chronic obstructive pulmonary disease, and
diabetes.
13. 13
Chronic disease is also a major driver of health care costs and threatens
health care affordability. According to the Centers for Disease Control and
Prevention (CDC), chronic disease accounts for about 75 percent of the
nation's aggregate health care spending - or about $5,300 per person in the
U.S. each year (Chronic Disease Prevention and Health Promotion). In
taxpayer-funded programs, treatment of chronic disease constitutes an even
larger proportion of spending - $0.96 for Medicare and $0.83 for Medicaid.
Much of the persistent increase in spending over the past two decades is
attributable to rising disease prevalence, lower clinical thresholds for
treatment, and new medical innovations that have emerged to treat chronic
and other diseases and the rise in obesity to an epidemic proportion. By
applying lean to the healthcare environment and creating standardized
guidelines can lead to the highest level of quality, affordability, and
accessibility to any health care organization. It not only improves the quality of
life of the patient but also reduce the number of visits to the emergency room
as well as admission, thereby reducing the overall health care cost and hence
improving affordability
OVERVIEW OF LEAN
The concept called “lean management” or “lean thinking” is most
commonly associated with Japanese manufacturing, particularly the Toyota
Production System (TPS) or (Thinking Production System). Much of the TPS
way of thinking is based on the work of quality guru W. Edwards Deming.
14. 14
Managers should stop depending on mass inspection to achieve quality.
Focus on improving the production/managing process and building quality
into the product in the first place. A perfect process not only creates value, but
it is also satisfying for people to perform, managers to manage, and
customers to experience. When applied rigorously and throughout an entire
organization, lean principles can have a positive impact on productivity, cost,
quality, and timely delivery of services. Compared to other industries, health
care has been slow to identify who the customer really is. Because of the
complexity of the health care system, internal customers — physicians,
hospitals, insurers, government payers — have often driven processes. It is
critically important that the primary customer define value i.e. the patient.
CONCLUSION
The United States of America cannot wait for the government to provide
solutions to reduce this unsustainable rise in health care. Many multispecialty
groups such as Gould Medical Group of Modesto, California and Group Health
Physicians of Seattle, Washington developed goals to serve as catalysts for large
multispecialty group practices to achieve performance excellence by shared
learning and their objective for member groups to be leaders in quality of care,
patient experience and cost effectiveness; through the application of lean
principles they have proven to make great strides in reducing cost and
improving overall quality of care.
15. 15
In developing a Lean organization, Sutter Gould Medical Foundation went
through internal and external environment scanning, strategy formulation,
strategy implementation, and mechanisms of evaluation and control. SGMF has
established standards and determined areas of opportunity through their extensive
data collectionand kaizen events utilizing the A3 methodology to solve problems.
The organization has developed a culture with each individual personally invested in
aligning their value streams with their core pillars and mission. By introducing lean
into the health care system and creating a lean environment, waste can be reduced and
ultimately eliminated fromthe system. In so doing, health care becomes more
affordable, more accessible leading to higher quality of care ultimately reducing the
problem of chronic disease.
RECOMMENDATIONS
From the Literature review and after analyzing the present processes in
place, it was noted that only thirty-five percent of the staff have participated in
lean Kaizen events. Our recommendations would be to focus on how to get to
the fifty percent mark within the next year and a four-year goal of seventy-five
percent of staff being actively engaged and on board with lean improvements to
create that lean culture. Here are some recommendations on how to achieve
this:
16. 16
1) After the kaizen event each participant goes through intensive 4 weeks
course on lean and TPS as implemented by Virginia Mason. These
participants then become champions of lean and are assigned four of
their colleagues to impart their knowledge of lean and recruit them to the
Kaizen event.
2) Through the Physician Service Agreement (PSA) a bonus of $2 million
dollars is given to the group for achieving a seventy-five percent or
greater bench mark on lean and reducing the dollars based on where the
organization is between thirty-five percent and seventy-five percent.
While the doctors are involved in the Kaizen events, the doctor part of
internal medicine may not be on the event for their topic; the benefits of having a
linkup between the department being discussed at the event and the leading
management/head physician actively involved will help to create that “culture”.
Here are some ways of collecting and disseminating information pertaining
to providers (doctors, PAs, MAs and Clinical Nurse practitioners):
1) All Kaizen events per quarter are discussed in a huddle for twenty
minutes to reinforce the lean culture that directly affects providers.
2) Every quarterly general staff meeting a synopsis of all Kaizen events
shared with all providers.
Patient satisfaction is one of the cardinal objectives of implementing lean
in health care. Here are some specific ideas on increasing patient satisfaction
scores:
17. 17
1) Having at least fifty percent of the patient population enrolled as
internet users with HIPPA compliant secure e-mail charts working
towards a goal of seventy-five percent.
2) E-mail messaging system perfected so that e-mails from patients are
responded within twenty-four hours.
3) Provide an incentive with a two percent of bonus for achieving one
hundred percent compliance of providers answering e-mails within
twenty-four hours.
4) After visit summaries (AVS) given to each patient with a reconciled
latest medication list, next appointment date, labs ordered, and
information on particular diseases if required. (A study done by
Kaiser suggests patient satisfaction increased by fifty percent when
AVS is given to the patient.)
Basing your management decisions on long term philosophy, even at the
expense of short-term financial goals, was clearly evident when the SGMF picked
the value stream: They started with the doctor and patient value vs. saving
money and increasing ROI. The result: They invested money upfront in getting
lean consultants and setting up R.I. events, which lead to savings the second
year. Focus on long-term goals of the organization and possibly look at different
value stream with a focus on increasing ROI. Here are some value streams to
focus on to increase in ROI.
18. 18
1) Having standardized management protocols for common diseases in
the outpatient setting to improve standard, quality and uniformity of
care. These standards are formulated on latest evidenced based
medicine.
2) Reducing variation in prescription – ninety percent of all medications
used should be generic, hence reducing costs.
3) Teaching lean principles and practices to every supplier from medical
equipment, to surgical gloves, including housekeeping supplies, to
realize more savings and increase in ROI.
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"Going Lean in Healthcare." Institute for Healthcare for Improvement. N.p., n.d.
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<www.entnet.org/Practice/upload/GoingLeaninHealthCareWhitePaper.p
d
"Innovations in Healthcare - Virginia Mason Institute, Seattle, WA." Lean
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19. 19
<http://www.virginiamasoninstitute.org/innovations-in-
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Lichtig, W. (2005, April 1). (Lichtig, W. A. (n.d.). Lean Construction Journal.
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http://www.cms.hhs.gov/NationalHealthExpendData/02_NationalHealth
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20. 20
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