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CFOs: Collaborate with the Competition to Save Millions

Karen Minich-Pourshadi, for HealthLeaders Media, December 5, 2011

It may be hard for healthcare CFOs to envision sitting around a table with nearby competitors, having a detailed discussion about what doesn't work at your organization. Yet collaboration can result in shared ideas and even shared costs for programs that save money and improve services.

It's happening in North Carolina, where a Lean initiative shared among several community hospitals is boosting their quality of care, slashing millions in costs, and laying the foundation to unify that state's healthcare community. The result for one hospital was an ROI of nearly 5-to-1 in the first year alone.

Three years ago, Jeff Spade, FACHE, senior vice president of the North Carolina Hospital Association and executive director for the North Carolina Center for Rural Health Innovation and Performance, set out to get as many healthcare providers as possible to adopt Lean management methods, as part of his goal to create high-performing hospitals and health systems in the state.

Lean techniques for cutting costs and boosting productivity by eliminating waste and improving processes are widespread in hospitals. In a recently released HealthLeaders Media survey on cost containment, 50% of healthcare organizations say they use lean as an efficiency technique.

Yet many Lean programs are limited to departments within hospitals and health systems rather than being implemented on an organization-wide level. Major cultural and leadership shifts are required to implement Lean, along with a significant upfront cost for training staff.

Lean methods make great sense for rural hospitals, Spade says. "Rural hospitals are disadvantaged financially. They tend to serve a large number of uninsured, Medicare and Medicaid, and that can make it more difficult for these organizations to survive over time. So I was looking for an idea that could bring the group improvement in their finances as well as improve their capacity for the population they serve," he says. "Plus, we wanted a model that could be shared collaboratively, so it didn't have to be customized by each hospital. Lean gave us that."

But getting the first five pilot hospitals in place would require equal parts inspiration, perspiration, and non-hospital funding. To build interest, Spade invited experienced Lean representatives from other hospitals to share their lessons and success stories. Then he held informal workshops and learning sessions with hospital executives from his association.

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