Some Hospital Leaders Making Big Strides in Value

I told you last week that my opinion was that hospital leaders were the only folks showing leadership on healthcare reform. Sometimes one exaggerates to make a point. As several readers pointed out, many of the quality initiatives that have forced hospital leaders to focus on quality were implemented either by Medicare or other payers or have been legislated in some instances. Fair point. However, many of these forced quality initiatives have either been piecemeal, as in Medicare's multiple demonstration projects, or of dubious financial feasibility.

Nevertheless, some forward-thinking hospital leaders are reading the tea leaves and working in advance to demonstrate value for the payer in anticipation of further restrictions on payment based on quality measures. That's a marked change for an industry that has often rightly been accused of dragging its collective feet on quality for years.

Of course, nothing much is achieved in business of any kind without some outside force pushing for it. Do you think Detroit automakers would have ever made the quality strides they have in recent years without the market telling them their cars were crappy compared to the competition? Better late than never, I guess. What about any other consumer product or retail experience? No, players in those lines of business know they must improve and cut costs in order to survive—otherwise people won't buy their product or service. That's hardly ever been the case in healthcare. But maybe we're getting there, based on conversations I've had with two hospital leaders lately on their performance improvement projects, based on so-called Lean manufacturing principles, which were first developed, oddly enough, in the auto industry.

As one system implemented Lean over the past several years, it experienced a 25 % reduction in total cost of care, hasn't had a medication error in the last 15 months, achieved a patient satisfaction ranking of 100%, and slashed documentation time in half, enabling nurses to increase the time they spend with patients by 70%.

"The tools put the decision-making in the hands of those who do the work with the patient," says Tim Olson, chief financial officer at ThedaCare in Appleton, WI, who credits his organization's work with Simpler Healthcare, a Lean-addled consulting firm, for the strides the system has made. "As CFO, I shouldn't be telling people what capital decisions to make," he adds.

What a strange statement.

"Isn't that why you worked so hard to get that "C" in your title?" I said.

"In the old world, if you had VP or C in your name, you got to make that decision, but that's not necessarily the best way to do it," he responded.

Therein lies the beauty in Lean. Frontline workers are the ones who do process redesign. They know best where the waste is, after all. Leaders just empower them to do it.