United States spent roughly $2.6 trillion dollars on healthcare expenses, representing nearly 18% of GDP.  Astoundingly, money attributed to healthcare waste actually exceeded the entire budget for the Department of Defense by nearly $100 billion.  Unfortunately, health outcomes in the United States are poor despite the amount of spending.  Rising costs, wasteful spending and inefficient patient care are factors that continue to contribute to a general dissatisfaction with the healthcare industry in the United States.   Rising costs have very real ramifications for those Americans that cannot afford to receive basic care. The Institute of Medicine has reported that nearly 98,000 Americans die each year from preventable medical errors.[1] In addition, nearly that many succumb to hospital acquired infections each year.  All of this has lead to healthcare expenses becoming the leading cause of personal bankruptcy in the United States.   Demands on the U.S. healthcare industry are only growing, placing more stress on an already fragile system.  These demands come in many forms. Health reform efforts such as the Affordable Care Act (ACA) are requiring health insurance coverage for 30 million new patients, while instances of chronic conditions like diabetes, asthma and obesity are on the rise; and advanced technologies are increasing the rates of diagnoses and treatment options.   This healthcare system is extremely complex and poor health care outcomes across the country are not merely a result of poorly trained workers or a lack of technology.  The industry as a whole suffers from inefficient business processes.  Nurses often spend much of their time tracking down missing equipment and correcting medication errors rather than on patient care.   There is, however, a light at the end of the tunnel.  An intriguing solution that is attracting attention from healthcare executives is called lean process improvement. Lean methodologies of process improvement are best in class management techniques that exist in a wide variety of industries and are now being implemented in healthcare.  So, what is ‘Lean’?   Lean is a management style, which focuses on process improvement.  Lean methodologies aim to eliminate wasteful practices such as unneeded tests, fragmented care and missed prevention opportunities, perfect business processes and provide high value and effective medical services for patients.   Two examples of lean methodologies are Six Sigma and Toyota Production Systems (TPS).  These techniques were developed within the manufacturing sectors.  Today, these best practices have been adopted across a wide variety of industries, including aerospace, financial services and aluminum refining. Within healthcare, lean process improvement techniques have been used quite successfully to address operational issues like patient flow, medication safety, patient scheduling, hospital acquired infections, emergency room wait times and patient identification errors.   Lean methods of process improvement are extremely important to hospital systems.  In today’s environment, policy reform efforts reduce reimbursement rates, bundle payments for a number of services and emphasize patient outcomes or ‘value’ over the number of services performed.  This is in response to the fee for service model, which rewarded hospitals for providing a high quantity of services rather than quality services.  The bottom line is that hospital systems are receiving less payment for their services.  In order to enhance their revenue stream, hospital systems must look to eliminating costs and making processes more efficient.  Lean methodologies address these solutions.  In essence, lean methodologies of process improvement provide a method for hospitals to ‘do more with less.’  By eliminating wasteful practices, reducing readmission rates and lessening the rates of preventable medical errors, hospitals can add to their bottom line and ensure their survival.   There are challenges to going lean.  Hospitals are traditionally very resistant to change.  Strong leadership is necessary to create a vision for all hospital staff that includes eliminating ‘work around’ solutions and ‘spot repairs’.  Hospital leaders must prioritize lean techniques in order to reflect a movement towards large-scale change management and continuous quality improvement.   Another challenge to ‘going lean’ is that hospital staff often assume ‘lean’ is a code word for layoffs.  Again, it is imperative that hospital leaders emphasize that these efforts are aimed at enhancing the efficiency of workers and creating an atmosphere in which workers can perform at higher levels.  In hospitals today, physicians and nurses are overworked and pulled in too many directions.  Much of the work is non-value added tasks such as tracking down missing equipment, deciphering ineligible drug prescription and medical test orders and providing unnecessary procedures, that result from to administrative and operational inefficiencies.  By focusing on lean techniques and improving business processes, much of this non-value added work can be transformed into value-driven tasks.  The ultimate goal is to create an environment in which healthcare providers can focus more on patient care rather than administrative tasks.   Many critics bemoan the corporatization of medicine and the movement of medicine towards a business-minded approach.  However, healthcare must adopt best in class business techniques in order to handle the increasing complex nature and growing patient demand within medicine.  Adopting lean methodologies for improving healthcare is one such business practice that has been proven in other industries and should be seriously considered to modernize healthcare into a sustainable industry equipped to satisfy future demands.


[1] Institute of Medicine (IOM).   2000.  “To Err is Human: Building a Safer Health System.”  Washington, DC: The National Academies Press
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Heinz Journal

Heinz Journal

The Heinz Journal is a student-run publication of the Heinz College of Information Systems and Public Policy at Carnegie Mellon University, dedicated to publishing works that link critical and theoretical analysis with policy implementation.

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