Applying "Lean" Thinking to Healthcare Solutions

The second Innovation Lecture Series: Engineering Systems Solutions to Real World Challenges took place on December 14 at MIT.  The series is co-sponsored by MIT's Engineering Systems Division and IBM's University Relations as part of its Skills for the 21st Century initiative.  The first lecture in the series was held in October and featured IBM's Senior Vice President Linda Sanford, discussing the IBM transformation initiatives that she leads.    

The Innovation Lecture Series are delivered by business and technical leaders, who discuss their concrete experiences in leveraging technology and engineering capabilities to address complex problems in their organizations.  This past lecture focused on healthcare and featured three top executives of the Vassar Brothers Medical Center, a regional medical center and hospital in New York State's mid-Hudson Valley: Dr. Daniel Aronzon, President and CEO; Nicholas Christiano, Vice-President and CIO; and Dr. Stephen Katz, Chief Medical Officer and Senior Vice-President of Medical Affairs.  A webcast of the lecture as well as additional materials are posted in the Innovation Lecture Series web site.

Dr. Aronzon gave an excellent overview of the key challenges facing healthcare today: accountability, transparency, safety, capacity, cost and efficiency.  In an environment of accountability, hospitals and physicians must be responsible for their performance and for outcomes.  The big challenge is how to measure them so that patients and payers can look at report cards and choose those providers with the best records.  As has been the case in other businesses that have successfully instituted Six Sigma programs, accountability is critical to enable continuous improvements in healthcare measures, such as clinical outcomes and patient safety. 

He said that the key to transparency is to replace the wall of secrecy that hospitals have usually imposed to cover up the mistakes that physicians and other personnel make with a policy of full disclosure.  This results in a significant increase in trust on the part of patients and their families.  It also lowers the costs of lawsuits.  You significantly reduce the expenses associated with discovery and eliminate the anger that often turns a malpractice lawsuit into a costly vendetta against the hospital and physicians.

Dr. Aronzon next talked about safety.  He referenced a 1999 study To Err is Human conducted by the Institute of Medicine of the National Academies.  According to this study, close to 100,000 people die in US hospitals every year because of medical mistakes - the sixth largest cause of deaths in hospitals.  He said that in order to reduce mistakes it is critical to create a culture where people report honest errors without fear of punishment.  This makes it possible to analyze the root causes of the error and institute processes to mitigate similar errors in the future. 

Dr. Aronzon then discussed the Medication Bar Coding Administration project, which is designed to significantly reduce the number of errors in administering medications to patients in the hospital.  He said that the industry-wide error rate for an experienced nurse administering medications is 20% overall.  The vast majority of these mistakes are not serious - the rate for serious errors is 1.4%.  But Vassar administers around 2 million doses per year, so a 1.4% error rate means 28,000 serious errors per year.  Not only is this dangerous to the patients, but it is also very expensive, as it is estimated that the cost to the hospital associated with treating the consequences of each such error is nearly $10,000

The wireless-based Medication Bar Coding Administration solution requires that a nurse perform three scans before giving medications to a patient.  First they scan themselves, then the patient, then the vial containing the medications.  Only if all three scans are correct and the computer flashes a green sign will the nurse administer the medications.   Using this simple scanning technique - similar to techniques widely used in manufacturing plant floors, transportation logistics, supply chains and other engineering systems - Vassar Brothers Medical Center has eliminated 87% of the serious errors incurred in administering medications.

Next he talked about capacity, and in particular the tidal wave of aging "baby boomers" that will significantly tax the resources of the healthcare system for years to come.  Not only are the boomers hitting the system with larger numbers and increased longevity, but their healthcare expectations are also significantly higher than those of previous generations, such as getting multiple opinions for medical procedures.  This means that hospitals have to become more consumer-oriented to satisfy the growing demands made on them by their patients.

Finally, Dr. Aronzon talked about managing costs and attaining higher efficiencies.  The US spends around 16% of GDP in medical care - close to $2 trillion per year.  Roughly one third of that expense is wasted.  For example, the lack of good medical records means that the same patient may be given expensive procedures like CAT scans and MRIs multiple times because different physicians and different parts of the same hospital cannot access the records of earlier procedures.  Another example of waste is the inability to track expensive, mobile, widely used medical equipment, such as computerized IV pumps, which cost around $5,000.  The pumps are often hoarded by departments within the hospital to make sure that they have them available when needed.  Tracking such expensive medical assets with RFID and wireless technologies is a very good way of managing their efficient allocation across the hospital.

There is no question that significant innovations are possible in healthcare and similar people-oriented, market-facing, complex industries, by applying the kinds of Lean Production methodologies that have been successfully applied in "classic" engineering industries involving manufacturing and supply chains.  There is also no question that if there ever is a discipline that can badly use the proper application of information technologies, engineering principles, and lean thinking – it is the healthcare system, which we urgently need to turn into A Healthy System.  I urge you to view our Innovation lecture on the challenges and opportunities in healthcare for an illuminating discussion on the subject.    

Comments

[Ricky]

My Uncle is a Health care Professional in Stockton, CA. He would be particularly interested in reading this post. Although, with my limited knowledge in this field, what you wrote makes sense.

[Joe Samagond]

A very interesting read.

Joe S

[Ricardo]

This industry has always been trying new ways of managing the vast amounts of -important- information they produce. Legislation, litigation and efficiency (cost reduction related to the two first issues also) have been great drivers for the changes. Great lecture and really high level speakers.

[Michael Zak]

Thank you for an especially good item in your blog, which we highlighted in the NAM’s weekly Business Blog Roundup.

Cheers,

Michael Zak
Corporate Communications Specialist
National Association of Manufacturers

[nurse line]

I have always gone to Call a Nurse for all of my health concerns. Whenever I have a question I call Call a Nurse and they are always very polite and knowledgeable. It saves me allot of stress by calling them at anytime 24/7 with my problems.

[health advocate]

the baby boomer are really causing a problem for the health care insustry. babay boomers are all now at that age where they retire. Many of them cannot even do that. we need more nursing homes and hospitals to help the baby boomers.

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