While some NHS Trusts have been “encouraging” employees to take unpaid leave as a way to reduce salary bills, there is a small fraction of the healthcare sector that has begun to discover more effective ways of reducing costs and finding efficiencies. By tapping into methods once considered an exclusive tool for the private sector, healthcare organisations under increasing pressure can quickly identify and deal with waste, and bring in new efficient processes and cost savings. Both hospitals and businesses have similar objectives. Both need to keep employees to run the organisation and both wish to prize themselves on great customer care. But as the past year has shown, when money becomes tight both seem to depend on reducing waste via employee redundancy or by cutting wages and bonuses. However, by implementing a set of “lean” principles, redundancy and wage cuts can be minimised or even become a thing of the past. By using lean processes as a way to reduce costs and eliminate waste, without affecting the job safety of the employees, businesses have found a new solution to an age old problem. Lean is a term increasingly talked about in almost every sector of industry throughout the world. Although it is held up by some as the most effective method to ensure a company is running at its most efficient, identifying huge cost savings as a result, many people within the healthcare sector still have very little idea about what is involved, where it originates from and best practice methods. It is considered something that is only suited for the private sector, and this idea has limited progression within the public sector. This article will highlight how lean approaches can help the healthcare sector inject much needed cash and increase efficiency in the areas that matter, by creating a more streamlined approach to the way the sector works.
The lean concept
It is crucial to look back at the history of the lean concept and where it has come from in order for the healthcare sector to take advantage of the benefits it can offer. Lean can be traced back to the integrated socio-technical system developed by Toyota between 1948 and 1975. The “Toyota Production System” (TPS), as the term was coined for the technique, was designed to organise the manufacturing and logistics parts of the business for the Japanese automobile giant. Although recent events have somewhat soured Toyota’s reputation, the effectiveness of this system could not be denied and soon spread throughout the automobile manufacturing world with the likes of Ferrari, Porsche and Ford soon reaping the benefits of increased efficiencies and cost savings. Such success was not going to be ignored by other manufacturing industries for long and soon various forms of the original TPS were making their way around the globe. As a result, lean can be found at the heart of every manufacturing process and the idea has seeped into the business world.
Using lean in healthcare
With the hundreds of processes used within healthcare from drug discovery to drug prescription, money and time is grossly spent ensuring that all those involved have remained compliant and have completed tasks correctly. However, as funding becomes more limited in such areas, Trusts often face significant challenges – as well as public criticism due to media amplification of stories of poor service. Knee-jerk reactions often protect the frontline but re-evaluate everything else – seeking out what can be cut. Lean management offers ways in which to improve rather than cut. By developing the employee, retraining them if necessary, or redeploying them into a better suited department, processes within the workspace can be vastly improved. One such case is that of Alder Hey Children’s NHS Foundation Trust.
Alder Hey Children’s NHS Foundation Trust
Based in Liverpool, the Trust has 2,700 members of staff, 200,000 outpatient attendances and 60,000 A&E attendances. In 2005/2006, the Trust faced financial and service pressures following the implementation of a payment-by-results funding and realised that they needed to change radically in order to improve and address these pressures. “Almost overnight we found ourselves faced, for the first time in our long history, with a potential financial deficit, a sizable one – about £30 million over three years. We knew we needed to act quickly,” reflected Paul Hetherington, director of performance and service improvement, at Alder Hey Children’s NHS Foundation Trust. The Trust had attempted in the past to introduce and use an internal cost reduction programme. However, with further improvement still needed in cost and quality performance, a more radical approach was required. Alder Hey Children’s NHS Foundation Trust turned to a lean approach which involved using the “Simpler Business System” that evolved into the “Rapid Improvement Service Transformation” programme (RIST). Over a three year plan, more than 400 staff members have actively engaged in transforming services and the Trust hopes to further develop basic capabilities, transfer knowledge, develop the RIST team, and its “Releasing Time to Care” programme. This is a lean approach to eliminate the time taken looking for equipment and supplies, for nurses in the wards, which was developed by the RIST team. The use of lean has also helped the Trust to identify the potential to significantly reduce floor space in its new children’s health park. Productivity across the whole Trust has increased by 5% and all first appointment patients have been seen within five weeks. Some 98% of A&E patients are seen within four hours and it has the lowest MRSA infection rate in the North West. The cost of providing care in hospitals within England for each patient is judged by a created index, known as reference costs. This has been reduced from 131 to 109 by Alder Hey Children’s NHS Foundation Trust – a number much closer to the national average, when considering the higher costs occurred by providing care for over 20 specialties. The length of patients stay for the whole hospital has also been reduced by more than 10%. The adoption of lean into healthcare has brought about a cultural change in the way employees at Alder Hey Children’s NHS Foundation Trust now work and, as a result, customer care has increased and become more effective. Complaints have been reduced by more than one third and the Trust has consequently increased its income and reduced costs by over £10 m in the past two years.
The process
During a hospital-wide analysis of care pathways and services (also known as enterprise-wide value stream analysis or “EVSA”) in July 2007, the Alder Hey leadership team of executives, clinical leaders and managers identified six value stream families. Focusing improvement within these families was forecasted to lead to the elimination of 50% of the identified waste with a target savings of approximately £12.5 m. The Trust then ran a series of “Pathway and Service Value Stream Analysis” events to design new pathways and services including day case surgery (no overnight stay), emergency access (A&E observation), diagnostics (X-ray, scans and blood tests), outreach services (clinics run closer to home in hospitals, health centres and GP surgeries) and corporate services (finance, HR, supplies and estates). The new pathway designs (known as “future states”) were then implemented over an 18 month period using the rapid improvement methodology (where real change is seen in just a week), supported by the external lean coaches. The Trust also developed the use of strategy deployment to ensure that all improvement activity was specifically focused on the strategic objectives of the Trust in quality, patient satisfaction, cost effectiveness and staff morale. The “EVSA future state” was refreshed in the summer of 2009 following a visit to Thedacare in Wisconsin which has been practising lean healthcare for over eight years. The visit team, consisting of executives and clinicians, were enthused by the approach and the results that they observed, and incorporated many of the ideas in their “future state” (a blue print for pathways with 50% less waste). This included a “collaborative care model” and capacity management. Rapid improvement events are now scheduled to implement the changes. Lean is not a “management fad” at Alder Hey – both executives and clinicians have developed a lean transformation programme, for the next three years, that is designed to address significant cost constraints – while improving quality, safety and access to care.
What healthcare can learn from the private sector
Communication is key. In order for real change to take place, goals must be defined and shared with staff. Explanations need to be given on how these goals will be achieved, while it is crucial to continuously motivate staff. Clearly the old ways of working have inherent inefficiencies, but it is crucial to remember that staff are not part of the “fat” that needs to be “trimmed”. People should not be associated with waste. With resources strained on a regular basis, staff should be viewed as the enablers who will improve processes and deliver targets. Management has no more important role than to motivate and engage large numbers of people to work together toward achieving goals. To win their heads, hands and hearts, the healthcare industry must create a culture of continuous learning and an environment that not only accepts, but actually embraces, change. Consider doing the following:
• Positive leadership modelling (values, habits, and behaviour define culture).
• Implement human development programmes and cross train key people.
• Hire “top” talent.
• Renegotiate union contracts for more flexibility.
• Aggressively enforce safety, attendance and drug policies.
• Deliver on meaningful challenges – energising the team will be the source of motivation to achieve breakthrough results.
Even though there are plenty of challenges and uncertainties, the healthcare sector must make a commitment to continuously invest in its people and promote a culture of continuous learning and improvement. The rewards and results will far outweigh the effort required.
• Chris Lloyd is the vice president of healthcare at Simpler Consultancy.