What is Lean and what results can you produce with it?

Properly executed as a core of a complete business strategy, “Lean” or “Deep Lean” can produce a trifecta for a healthcare organization – dramatically improving quality, financial results and satisfaction among both patients and staff. However, most hospital “Lean” implementations fall far short of what is possible, and some work labeled “Lean” ignores key principles needed for success.

What is “Lean” and What Results Can We Produce With It?

“Lean” is the too-simple label applied to the ideas, principles, and operations tools developed first in post-war Japan by Toyota and then competitors that have spread across the globe and from industry to industry. When well executed, “Deep Lean” engages everyone in the organization around a set of principles that allow them to design and improve all processes to have the stability and structure to meet customer need without error, without waste, and with the least possible lead time (leading to greater throughput).

Is Lean a Quality Improvement Methodology or a Business Strategy?

Most early hospital efforts failed for predictable reasons – chiefly that leaders thought Lean was something to be implemented solely in operations, below leadership levels, as a series of quality improvement projects – all of which lead to limited and decaying impact. Lean inexorably reveals problems and waste and tensions the organization to work differently as a complete system to eliminate those conditions – if leaders aren’t keenly focused, managers are forced to “dumb down” and weaken Lean as a matter of self-preservation. Even worse, many leaders “deploy Lean” solely to achieve cost savings, without providing the staff involved with professional safety. This poisons the well for far-larger ongoing gains in quality and cost. Happily, in recent years, a few health systems have undertaken much more significant performance transformations, centered on Lean principles, with leaders “leading the learning” and anchoring it to their business case in all dimensions. Not surprisingly, they are achieving more significant and durable results.

Results

Between 2003 and 2009, Thedacare in Appleton, Wisconsin improved its quality measures while moving its operating margins from 2.5% to 6%, increasing its bond rating from A2 to A1, and increasing cash on hand by $105 million. At Thedacare, Deep Lean is not a project, it is the way work is done. Denver Health, a public hospital system, reports improved quality, improved morale and $45 million in documented savings that have allowed it to avoid a single layoff during the current recession. At the Hospital of the University of Pennsylvania, work supported by Value Capture but driven by the nurses and physicians of the oncology units saved 28 lives and $2.2 million and was documented by CNN as a model for what “true health care reform” should be.

Where Should Lean Fit As Part of a Comprehensive Hospital Strategy?

Deep Lean is most powerful when it is deployed as part of a comprehensive plan to sharply increase the performance of a hospital or health system. Chances for success are increased dramatically when leaders build a foundation for Lean first, with such building blocks as values-centered goals to anchor the process for staff, transparency to create the right culture for problem solving and rapid knowledge transfer, and giving everyone “eyes to see” waste and problems in process design. (This leadership framework is the focus of a seminar for CEOs and those who wish to become CEOs offered by leaders from Thedacare, Value Capture and other proven peers and thought leaders.)

What Are a CEO’s Keys to Success With “Lean”?

1. Frame it in your mind as a whole-organization leadership system, not a set of quality-improvement projects and tools.

2. Be eager to “lead the learning.” Thedacare’s President Kathryn Correia says “How can I lead what I don’t know?” Being in front of the learning lets you be more confident about what to do next, and also models the core behavior you need from everyone.

3. Define the measures of success (quality/safety, cost and lead time/throughput) and maintain the focus on customers and business value on all those dimensions. Lean correctly focuses on radically improving the processes that produce the results, but the leader has to make sure people are paying attention to the results, through regular checks, reviews and consultations.

4. Go to “Gemba” say the Japanese – where the work is actually done. Lean will help you focus the whole institution on where the value is actually produced in the organization, the front line, but only if you consistently model getting there and seeing, asking, listening, learning and coaching.

5. Focus on maintaining a safe environment – emotional, professional and physical. Lean forces a lot of problems into the open that normally just “flow on by.” Each layer of management below you will be very threatened if you are not actively generating positive energy around the problems “surfacing” and modeling the energetic engagement with Lean principles-based problem solving.

6. Be deeply involved. Obviously, there is a lot of “doing” that others will lead, but no staff person should have cause to think you have “delegated” Lean. This is a critical mistake most hospital CEOs make. Paul O’Neill, our chairman, says “show me a company that brags about its equal opportunity office, and I will show you a company without equal opportunity.” The same is true for Lean – it needs to be “the way we are learning to run our business, starting with me.”

7. Coach, encourage and support – especially your direct reports (all of them need to be deeply involved). The feel in the executive suite should be of you putting your arm around each member of your team, saying “this is the way we are going. It’s not going to be easy, but we’re going to get there together. Now let’s have at it.”

8. Establish an incentive system – recognition first (and always maintained); and shared financial incentives once you can confidently base them on true value creation vs. gaming and sub-optimization.

9. Regular communication, usually with a concrete teaching and support focus.

10. Always work to draw more people and areas into the doing. And nurture the ideas of the doers!