Finance
e-Newsletter
Intelligence Unit Special Reports Special Events Subscribe Sponsored Departments Follow Us

Twitter Facebook LinkedIn RSS

Go Lean (Part 2): Don't be Scared, It's Only Change

Karen Minich-Pourshadi, for HealthLeaders Media, January 11, 2010

What you may find, however, is that there is a great deal of fear surrounding Lean and staff layoffs. Certainly it has happened that once Lean was implemented, less staff was needed, but that is only the case when productivity could be maintained or improved while decreasing the staff. It's important that everyone is clear about the goal for your Lean efforts. Better quality and improved patient satisfaction are the ultimate goals. However, the by-product of efficiency is often financial savings—and that's nothing to be ashamed of.

"A lot of non-profits are very cautious about making the focus of the transformation solely financial, so many of them concentrate on improving quality and patient satisfaction—choosing to become the 'provider of choice' and hoping the financials will wash out," says Hagood.

However, CFOs shouldn't shy away from stressing the importance of the financials with the team, because it goes hand-in-glove with better quality and patient satisfaction. "It's the folks on the front line who need to believe in this [Lean]. They can't see it solely as a new cost cutting approach or it won't work," Hagood adds.

Financials, quality and patient satisfaction are intertwined and nowhere is that perhaps more evident than in length of stay. LOS has long been a pain-point for physicians and administrators. The faster you turn over beds, the more quickly patients can be treated without expanding (investing capital) for more space. Doctors want more beds to be able to treat more patients, but these days many facilities cannot invest the nearly $1 million per bed to build. Since more money isn't readily available to change the bed situation, a new approach—a Lean approach—helps everyone achieve the goal.

According to data gathered by Knowledge@Wharton and Boston Consulting Group, if a hospital with 800-beds reduces the average length of stay by just 10%, 80 beds will be freed up annually. That means the staff can help more patients, ultimately increasing procedures (by an estimated 4,000) thereby boosting operating profit by almost $30 million annually.

Applying Lean correctly and allowing your team to understand the practical ways in which it can not only help the bottom line but also the patient is the key to the successful implementation of this program. The fact is Lean efficiency and similar programs work. Hospitals can ill afford to allow their staff to kick and scream so loudly that they fail to take action. Doing so could cause incredible financial woes in the coming years—no hospital can afford those consequences. You're all on the same team, only now the team is "Go Lean."


Note: You can sign up to receive HealthLeaders Media Finance, a free weekly e-newsletter that reports on the top finance issues facing healthcare leaders.
Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
Twitter

Comments are moderated. Please be patient.