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Systemwide Process Improvement

Karen Minich-Pourshadi, for HealthLeaders Media, April 14, 2011
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It’s been estimated in multiple government studies that 30 to 40 cents of every dollar spent on healthcare—more than a half-trillion dollars per year—is used for costs associated with unnecessary, inefficient, and even unsafe care. It’s a statistic that has prompted more than a few healthcare leaders to embrace the Six Sigma or Toyota Lean Process Improvement principles to find the fat in specific processes.

Through the use of small-scale Lean or Six Sigma initiatives, some in healthcare have seen their revenue cycle improve; yet nationwide, few hospitals or healthcare systems have taken the leap to turn these precision strikes into a full-scale, permanent management transformation. Those that have done so have saved millions of dollars and improved quality and patient satisfaction. For these leaders in process improvement, Lean and Six Sigma offered a starting point to correct the flaws in their own systems, and those who have embraced the tenets of these philosophies systemwide have used them as a launching pad to grow their own hybrid process improvement initiatives. They save millions annually and believe that process improvement is even more relevant for healthcare leaders to put in place than it was decades ago when it began.

Two healthcare systems—Virginia Mason Medical Center and St. Vincent Mercy Medical Center—exemplify the value of the systemwide approach. Both have full management support for their process improvement programs and they are staying ahead of the cost curve.

Virginia Mason Medical Center, Seattle

Virginia Mason Medical Center has literally written a book—Transforming Health Care—on how to apply process improvement plans. The medical center operates a system of integrated health services including a large, multispecialty group practice of more than 480 providers (440 physicians plus advanced registered nurse practitioners), a network of neighborhood clinics, an acute care hospital, and a research institute. Having started its transformational journey in 2002, the organization pursued Toyota’s Lean Process improvement and then eventually created its own specialized model, dubbed the Virginia Mason Production System.

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1 comments on "Systemwide Process Improvement"


james mcniff (4/15/2011 at 8:56 AM)
This same opportunity exists in non-clinical applications like the revenue cycle..Per AHA, hospital expenditures for 2009 was 724 billion dollars..If we assume a 5% margin the net revenue would be about 760 billion..The average hospital's cost to collect is about 4%..This equates to 30 billion spent on the revenue cycle..Through the application of the HIPAA business transactions,intelligent software and process redesign there is the potential of reducing these costs from 30 to 50%..A savings of 10 to 15 billion dollars a year for the industry..