Caldwell Memorial Hospital’s supply chain was struggling, as many hospital operations do, with multiple stock locations, excess and often incorrect inventory, and low accountability for what was on the shelves.
So the hospital’s leaders took action, and their successful initiative provides several steps that other providers may want to consider, too.
#1 Use Lean thinking
Caldwell leaders looked to their prior experience with Lean management tools to guide their efforts in the supply chain. A value stream assessment helped them pinpoint specific challenges, while data collection and analysis helped them develop a strategic plan for tackling them. This critical prep work revealed several key areas of focus: inventory visibility, demand flow optimization and management of physician preference items.
#2 Get visual
First up: inventory visibility and demand flow optimization. By introducing a new, Lean-based visual replenishment system, Caldwell gained the transparency needed to consolidate supplies, eliminate excess inventory and lower distribution costs. Plus, clinicians no longer had to spend valuable time managing supplies when they should be with patients. The combined annual savings from these initial activities totaled more than $3 million.
#3 Reign in requests
Next on the list: physician preference items. From supplies to lab resources to room and board, no two Caldwell physicians seemed to utilize assets in quite the same way. And these variations were adding up.
Digging into and analyzing resource usage data allowed Caldwell to break down the costs by clinician, case and location. This revealed just how much the inconsistency was costing the hospital — more than $4 million — and what Caldwell needed to do to convert those costs into cost-saving opportunities.
If you’d like more information on how this hospital achieved its remarkable result, please reach out to us.You can also read the full case study here.
An efficient revenue cycle has always been an important factor in the success of a healthcare organization. But in today’s complex and dynamic industry, where value-based reimbursement models are becoming the norm, streamlining the flow of money from payers to providers may be more important than ever.
That streamlining is just what Mountain States Health Alliance (MSHA) accomplished. Faced with looming financial challenges, leaders at this Tennessee health system sought a way to reduce expenses, and withstand financial pitfalls for the long term.
By implementing a Lean revenue cycle management (RCM) process, MSHA:
How did do they do it?
MHSA leaders did it through improved communication, transparency and consistency among departments, and the adoption of Lean tools for continuous process improvement.
Since RCM affects every patient in every department, MSHA had to tear down the walls separating the front end (scheduling, registration, financial counseling), the middle (medical records, coding, billing) and the back end (claim drop, liability, accounts receivable).
Daily huddles brought staff members together to discuss key metrics and share information. Progress was tracked on daily improvement boards that were visible to anyone. And Rapid Improvement Events helped staff members get a handle on the interconnectedness of their work, which in turn helped them identify redundancies, reduce variation and waste, and create standards of work.
And the results speak for themselves.
If you’d like more information on how the health system achieved this remarkable result, please reach out to us via our value-based care resource page.
Patty Gabow, MD, had first-hand experience implementing Lean at a hospital as the CEO of Denver Health. In an HFMA article, she says one of her biggest take-aways is that you have to set an audacious, inspiring goal for Lean transformation – at Denver Health, it was to become a model for the nation. Mortality rate was a key metric for Denver Health, and while doing Lean their observed mortality rate was below the expected mortality rate for the kinds of patients they saw.
According to Dr. Gabow, "the core philosophy of Lean is that transformation is built on two pillars: respect for people and continuous improvement." Lean works to remove waste as viewed from the customer perspective, and does this with respect for the customer and for employees. "Many people who work in health care today feel unempowered, and Lean is both empowering and democratizing: It relies on the people who actually do the work to solve the problem." The importance of Lean's respect for people came home to Dr. Gabow when she realized that "Lean returns joy to the work, which is something a lot of people in health care don't feel anymore."
See more of Dr. Gabow's comments at http://www.hfma.org/Leadership/Archives/2015/Fall/What_Lean_Can_Mean_to_Your_Organization%E2%80%94If_It_s_Done_Right/#sthash.PXIxFd2i.G19u79jB.dpuf
Though my inbox is usually flooded, a headline from the Modern Healthcare newsletter I receive caught my eye this week. A special report titled, “Learning to Be Lean,” showcased Presence Health’s Lean transformation. Not only did the article highlight tangible savings - sepsis mortality rate decreased from 24 percent to 9 percent for instance - but it also called attention to soft improvements achieved when engaged stakeholders commit to Lean quality improvements. Staff at all levels felt more comfortable approaching management with challenges and taking accountability for driving change. Engagement levels and morale of staff involved in improvement processes increased. Management was better able to pinpoint problem areas in order to determine the best course of action.
Presence Health has been a Simpler client for years and it is both rewarding and encouraging to see the organization’s improvements recognized. We’re proud to have had the management at Presence Health refer to Simpler as “the guys who got us started’ in Lean. And it’s encouraging that each year more healthcare organizations understand that in order to deliver the best care in today’s dynamic and challenging healthcare environment, productivity and efficiency must be at the center. These are among the goals of Lean.
I’d like to acknowledge some other Simpler clients included in the article as leaders in “adopting Lean methods to redesign clinical and business processes.”
- Simpler worked with Denver Health on its Lean journey to become the first health organization to be awarded the Bronze Medallion Shingo Prize for Operational Excellence. Patricia Gabow, M.D., former Denver Health CEO, is now one of our senior advisors.
- ThedaCare, a nonproﬁt community health system, turned to Simpler to work with their architects and builders when planning a new clinic. As ThedaCare’s Lean coaches and advisors from the inception of their improvement system in 2003, we were proud to help them rethink the building’s design to better meet patient needs, while completing it ahead of schedule and under budget.
- Our colleagues at Joan Wellman & Associates (JWA Consulting), who brought additional specialized expertise in Advanced Lean operating systems in healthcare when they joined Simpler and Truven last year, work closely with Seattle Children's Hospital.
As the Modern Healthcare article points out, only in the past decade or so have health systems adopted Lean. When I reflect back on the return and improvements our clients have seen in that time, I’m optimistic of the positive change Lean can deliver for years to come.
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