We have all heard of miracles. Someone’s cancer miraculously regresses, a child is found alive in a collapsed building after 3 days with no food or water, or someone blind hits their head and can suddenly see. Merriam Webster dictionary defines a miracle as: An unusual or wonderful event that is believed to be caused by the power of God. A very amazing or unusual event, thing, or achievement.
A majority of Americans think miracles happen and according to several polls on the topic, a majority of physicians who are overall a skeptical and science oriented group, believe that miracles happen. Given this wide-spread belief I think us “believers” would agree that the following are true about miracles: They are fairly rare, they almost always involves one person, they cannot be explained by science, and most are related to a person’s health or well-being.
Over the last 10 years the amount of Hospitals that say they utilize process improvement and/or have a process improvement staff have expanded rapidly, estimates vary but it’s likely that at least 45% - 60% of our 5,000 Hospitals are utilizing some process improvement methodology. In terms of my experience I see a majority of Hospitals practicing LEAN methodology or some similar variation. There is huge difference in the results of such programs, many Hospitals are practicing LEAN but only a small minority are truly embracing LEAN and in effect being LEAN.
This is where the miracle connection comes in. From my many interactions with Healthcare executives I suspect a good portion of them consciously or subconsciously believe in process improvement miracles. Why do I say this? Because many believe that without much intervention and time from themselves, without sacrifice and hard work from staff, without generating any internal conflict, and without much program funding Process Improvement miracles will occur. They believe that if they talk about LEAN, understand some of the lingo, hire or train some black belts or a Lean Sensei they will have created a LEAN acting and LEAN thinking operation. That is not how it works. If the proper planning and attention is not applied to the Process Improvement program it will not be successful. Hoping, praying, and wishing that the organization will become LEAN does not work.
I have been practicing Lean methodology for 25 years and I have never seen a LEAN organization transformation miracle. I have seen LEAN organizational transformations but they came about gradually over many years of focused dedication to the concepts and principals. You can’t dip your toe into the LEAN process, you can’t do it sometimes, only in some areas, or only when it is focused on some financial or safety crises. It involves significant behavior changes that eventually lead you to the cultural change you need.
For a LEAN program to be successful it needs to be well structured and thought out. This requires both significant strategic planning as well as a financial and emotional investment. If JACO or some other certifying body came into a Hospital and found significant and reportable problems the Hospital administration and the Board would not hesitate to spend whatever money and time it took to fix the problem(s); we all know this happens practically every day. The reason for the focus is obvious: The problem is real, it is very tangible and it has the potential to harm the hospital’s reputation and in turn, its viability.
The difficulty of investing properly in a LEAN or Process Improvement program is that the problems are usually not so tangible and often not “top on the radar screen”. Instead of one or two big problems LEAN is focused on all daily problems, separately these problems do not usually account for much in terms of patient safety or financial cost but together, they are significant, enough to take away at least 2-4% of margin and likely to eventually lead to patient safety issues or staffing issues that will be extremely costly. Many of the problems in daily work are hidden, they don’t show up as an item on the P&L, they don’t make headlines but like a small snowball travelling down a mountain, more and more snow will be added and eventually it can become a very large object or an avalanche that cannot be stopped and it will cause much destruction. It’s always the problems you don’t see or perceive that eventually cause the most damage.
Most CEO’s feel that developing a great work culture is very important. There is no better vehicle to do this than by implementing a complete and fully supported LEAN program but it needs to be done correctly and that takes hard work, professional help, some up front financial cost, and super-intense executive focus. When done correctly the results are truly “miraculous” but don’t expect those results to occur via a miracle, it just will not happen.
I have completed a lot of projects in the surgical area in the last 18 months and I am continually amazed regarding how much potential profit is being wasted in this area – I’m talking real money, well into six or seven figures. Given that fact, you would think that there would be much more of a profitability focus in the OR. Maybe the focus is lacking because most of this margin loss is hidden because in spite of considerable inefficiencies most OR’s still show a profit but they could be so much more profitable! There is a reason why surgeons often become partners/owners in independent, for-profit ambulatory centers, they are incredibly efficient and make lots of money. Yes, I know, a Hospital OR is not the same as an ambulatory center, they don’ have the super sick patients, the complex cases, the trauma cases, etc……but does that mean there is no room for more efficiency in a Hospital OR?
Why doesn’t the OR get the same attention regarding efficiency projects that other Hospital departments have received? Now don’t get me wrong, every department is “beat up” when they have excess OT or appear non-profitable but on the whole, surgery departments get a lot of efficiency lip service regarding the need to improve performance but little pressure to execute. Maybe it’s because the Hospital executives see that area as profitable so why rock the boat. Maybe it’s because surgical services is complex with lots of moving parts and let’s face it, most Hospitals have poor analytical abilities - If you can’t measure it you can’t fix it. I’m not sure of the reason but I suspect the issue will soon get a lot more attention.
My experience is that the average utilization (when properly computed) of most OR’s is around 55%-65%. When you are dealing with such a high fixed cost area you have to ask why such a low utilization is acceptable. Let’s use a restaurant analogy:
I have a 100 seat restaurant, in order to cover my fixed cost and keep my core staff from leaving I have a weekly expense of $10,000 and I usually make gross revenue of $300 per table each week that those tables are occupied. If they were occupied 100% of the time I would have gross revenue of $30,000 and thus a margin of $20,000. Of course 100% is not possible but 80% is possible so at 80% I would make margin of $14,000 a week versus $9,500 a week at 65%, over the course of a year that means I lost $234,000 in margin! If I was running that restaurant I would do one of two things: Make sure I filled as many tables as possible or move to a 60-70 seat facility and cut my costs. Most community Hospitals are generating at least $1M (many make much more) in margin so using my restaurant example they would make an extra $420K or 42% more margin each year !!!
I tend to see the following inefficiencies:
>Underutilized OR suites. On the surface they don’t look underutilized because there is so much surgical shuffling and staff re-allocation that the under-utilization is pretty well hidden – the place looks busy.
>High staffing and operational costs to accommodate the whims of surgeons who cannot or will not treat their elective cases like electives (pre-planned well in advance) and instead treat them like emergencies. Too many add-on cases, not efficient or necessary. On average I see about 40% of elective cases being scheduled 1-3 days ahead, it should be 20% or less.
>Poor case sequencing: Cases are scheduled helter-skelter with little thought to setup and breakdown efficiencies or creating consistent staffing patterns.
>Poor Timeouts: This creates greater liability and chance of Medical error or delays caused by poor staff awareness. The 2 minutes utilized for an average TIMEOUT actually ends up savings time although many surgeons and staff perceive it as a waste of time.
>Late starts: My number one pet peeve. Mostly due to surgeons, anesthesia, or staff being late, there is no excuse and it is very correctable.
>Inefficient setups and turnovers: Besides the obvious time for setup, breakdown, and cleaning, there are incomplete case carts, incorrect preference cards, and poor equipment readiness. All correctable yet most OR’s do not do a good job in this area, causing six to seven figure waste.
Do OR’s ignore the above inefficiencies? Of course not, almost every OR has many improvement initiatives going on but few are successful and even when gains are made they quickly fall apart and are not sustained. OR Directors are in high demand because most get burned out after 3-4 years, they are caught between a rock and a hard place - Surgeons who want everything their way no matter what the cost or efficiency and Administrators who are after them to cut costs (without angering the surgeons). My hypothesis about the problem: Most OR Directors are hard-core nurses who are highly accomplished clinicians, they never asked for help doing their clinical duties and they sure as heck don’t need help to fix the business issues of an OR. The problem is that they are clinical experts and not process experts (even if they have taken some lean courses) and focusing on too many things dilutes the efforts in both areas. The truth is that bringing in process expert help is expensive and “technically” the initiatives can be done internally, but in reality these efficiency initiatives are not done well, often do not sustain, and the process takes too long (the OR staff does have a “day job”). Payback on this kind of project is often 3X or better but beyond the financial payback the change in practice and the building of team-work is worth much more than the hard financial gains. As bundled payments take hold, as in-patient length-of-stays shorten, and as more surgeries move to non-hospital surgery centers profits will be extremely squeezed. We know that all change takes time so Hospitals have to act now if they want to change behaviors and preserve one of the few profitable areas of Hospital operations.
I hear a lot of chatter in the Hospital’s about pushing innovation. Many Hospitals have started “innovation” initiatives and/or brought in innovation consultants. However while many make the talk few will make the walk. The reason? Innovation require disruption and Hospitals dislike disruption. Except for the education sector there is no other organization that so tightly clings to convention. Healthcare has changed how they deliver service but the changes have been forced by both government regulation and increasing patient demands. Most Hospitals are dragged into change versus leading change and in turn developing innovative delivery systems. Only a handful of healthcare organizations have voluntarily created and embraced disruption. One disruptor is definitely Geisinger Health who has guaranteed satisfaction about their services with their “warranty” program – If patients are not happy they can make a claim to get some or all of their money back. Radical? Disruptive? Yes and Yes and absolutely innovative (and highly successful), yet ......no one has the courage to follow.
All organizations and people resist change but the reason that true innovators succeed is because the leadership at these organizations make their staff and organizations uncomfortable, not in a bad way but in a good way. They are willing to put up with a fairly high level of discomfort and risk and because of that their organizations have no choice but to innovate. There are literally hundreds of small healthcare startups trying to assist in the innovative process yet they struggle to penetrate the current Hospital mindset. Hospitals dabble in these new ventures, cautiously dipping their toes and slowly, ever so slowly, testing new concepts as the world and aggressive competitors pass them by.
If there was ever a time for boldness in Healthcare we are there now. Regulations change daily, reimbursements are unstable, and patient populations are less healthy and you can’t control that but what you can do is design a flexible and responsive delivery system that can react to whatever challenges arise. So if you are serious about creating an innovative organization spend a little time reflecting on what that means. Start the mindset change with staff, set attainable but hard to reach goals with firm timelines and clear metrics and stop dabbling, start committing to some serious disruption. It’s unpleasant for the short term but the long term results are nothing less than uplifting and impactful for both your patients and your employees.