Admitting there's a problem is the first step toward finding a solution. When was the last time your facility looked at your patient flow in each department? If it's been a while you are likely missing a serious opportunity not only to improve patient satisfaction but also to save serious bucks that can go directly to your bottom line.
Looking at your patient flow could potentially save you hundreds of thousands of dollars. In the case of St. Joseph, Missouri-based Heartland Health improving the surgery department patient flow garnered them over $300,000 in savings the first year ($283,000 in FY09, and $217,000 in the first six months of FY10), plus an 80-90% patient satisfaction ratings a 60% improvement in on-time a.m. start times (from the 71% range to over 81% each month), and greater employee satisfaction.
What did they do to achieve such lofty results? Well, according to Carolyn Paden, the service leader for surgical services and patient care at Heartland Health, it took the empowerment of the oversight committee to make and enforce decisions and a little help from another hospital. For years the oversight committee met and discussed utilization of the surgery department, but when it came to taking action, the group felt powerless to make changes. Consequently the surgeons were doing their own scheduling, and booking rooms for non-urgent operations well into the wee hours of the night.
"Having an operation at midnight or two a.m. is a big dissatisfier for patients, physicians and the rest of the staff. All the staff together agreed that we had to change," says Paden. "So when we starting focusing on patient experience at Heartland Health we knew that we wanted to move our scores up and improve our on-time starts."
Paden and her team reached out to St. John's Regional Hospital in Springfield, MO, for help. Its Level I trauma center handled about 25,000 patients annually when Christina Dempsey, BSN, registered nurse, and vice president of perioperative services was working there and making great strides in smoothing and improving their patient flow. Heartland Health invited Dempsey to come and speak with its lead physicians and surgeons.
"The only piece we have any control over is the elective schedule in the operating room, so we start in the operating room and finish in the ER. What we often find is that by spending the time, energy, and money focusing on the ER as the cause for all bottlenecks, you can fix [patient flow] the rest of the hospital," says Dempsey.
As Heartland Health began this process, Dempsey joined the Press Ganey Consulting Group as senior vice president for clinical operations, and she continued to work with the hospital in that capacity to help address their patient flow problem. Dempsey explains that when analyzing patient flow they look at three areas:
Queuing theory (the science of waiting) and simulations with operations, experience, and expertise.
Scheduled and unscheduled volume and ways to smooth the flow of electives patients through the hospitals.
Right-size simulations to ensure you have the right staff at the right time.
Dempsey and Paden determined that their first action was to separate scheduled and unscheduled demand. To do this they needed to review queuing theory data, which looks at random arrivals, known service rates, number of services (i.e., operating rooms) and capacity to accommodate urgent need.
Their queuing analysis showed that they needed to have one room for urgent cases, and allowed all the others to be scheduled for elective surgeries so there would be no gaps, bumping or delays. "So it reduced the overtime Heartland Health had, so they achieved more than their goal and they exceeded their targeted saving," Dempsey adds.
Next, the oversight committee created a set of scheduling rules and designed a block-room schedule. And, Paden says, to ensure the committee could effectively enforce the rules and the schedules they worked with the hospital administration so that any staff complaints or requests for exceptions with the new program were re-directed to the committee.
"Once we started blocking the rooms, we could see more cases, but it caused many of our surgeons to have to rearrange their office schedules," Paden explains. In doing so, however, the facility could schedule more surgeries during the day increasing revenue (note, revenue increase figures were not available), driving up patient satisfaction and reducing staff overtime costs by over half.
"We learned to staff to the blocks, which we didn't do at first. When we started doing this there was a huge change," she adds. "But by far, the biggest win has been getting the engagement of the physicians in the process."
Dempsey notes Heartland was able to save the equivalent of six FTEs and "make life much more predictable for the staff and physicians."
Equally important, the act of correcting the patient flow helped the facility save money and with more available time to schedule operations they will likely increase revenue along with patient and employee satisfaction. So, before you let your patient flow problems fester, it's time to step back and begin to analyze the flow—doing so may just be the best cost cutting effort you'll pursue all year.
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More than $6.5 billion—that's how much healthcare organizations spend on energy each year, and that amount is rising to meet patients' needs, according to EnergyStar, a government-backed program helping businesses and individuals protect the environment through energy efficiency. As CFOs look for innovative ways to trim expenses from the budget, they should look no further than the HVAC and lighting systems.
Oodles of energy is wasted at most hospitals and that means potentially thousands or possibly even millions could be saved. And for a change, energy usage is one budget line item that facilities have well within their control. Why is it important to be more "green"? Aside from the importance to our planet, consider that for every $1 a non-profit healthcare organization saves on energy, it's equivalent to generating $20 in new revenues for the hospital with a 5% margin $10 for medical offices, according to the Portland, Oregon-based BetterBricks, the commercial building initiative of the non-profit Northwest Energy Efficiency Alliance ; that's the kind of savings that should ignite the figurative light bulb above any financial leader's head.
Such was the case with the Portland, Oregon-based Legacy Health System, which after examining a few energy and financial numbers, decided to make the six hospitals on five campuses—totaling 3.9 million square feet—more energy efficient. Pat Lydon, the strategic resource coordinator in the system office, started out in a purchasing and managing role and found that one of the areas on which he was focusing heavily for savings after discovering that they weren't getting optimal energy and pricing through their utilities.
"I looked at what we were doing with the utilities and I quickly realized that the way the energy market is . . . there's the potential to save quite a bit of money," he says. "Using less of the resource is something we have direct control over versus the cost for energy which is always changing. So I made the case [to the CFO] that this is something we should work on internally."
Knowing where to start
As with any journey, the first steps are the most important ones, so Lydon looked to Jennifer Stout, healthcare market manager for BetterBricks, for guidance.
"Your first step is to get the buy-in from executive management by showing that cutting energy waste makes more dollars available to patient care," says Stout. "Once executives see that connection, they'll support energy efficiency as a long-term, mission-critical priority."
For Legacy Health that included working with the utilities and BetterBricks to create and implement a strategic energy management plan tailored to the hospital's mission of quality patient care, environmental stewardship and progressive action. This plan allows Legacy Health to implement some of the solutions right away into their operations and maintenance practices. But would they be spending more than they were saving? Not under this plan; many of the adjustments are low-cost or no-cost tactics that could be managed by the facility management team.
Lydon and the facility management team set out with two objectives for Legacy Health's expansive campuses: (1) to optimize the HVAC system across the board, and (2) to reduce unnecessary lighting. When applied, these two objectives cut energy usage, and therefore costs, quickly. The system-wide aggregate electricity usage year over year had been growing at 6%, however, through better resource management, Legacy Health was been able to slow that rate of growth to 2.6% (2006-2007) and 0.25% (2007-2008). Legacy's strategic energy plan also included resource management and best business practices; which put Legacy on track to reduce energy use intensity by 10% per square foot—a significant savings for most hospitals.
Multiply those percentages with the scores of square footage Legacy Health owns and that translates into an estimated $1.4 million to $2 million in savings annually. The project has proven so successful that Lydon has now moved on to the next phase of the project which is tracking energy used in a variety of other areas to determine where the hospital should go to find more energy savings. This work includes:
Creating an energy use index for each building (energy consumed per square foot)
Determining energy cost per square foot
Calculating the energy cost as a percent of total expense
Factoring in the energy expense per adjusted patient day
Where Energy Is Lost
Stout says a lot of low cost and no cost opportunities exist for hospitals to start with if they are looking to make cost cutting progress and save energy.
"One of the big areas is understanding when systems are needed and when they are not needed in the facility, and then making sure that your HVAC systems are scheduled according to when there is demand," she says. This work extends to lighting and other hospital equipment. Moreover it includes knowing when to purchase new equipment versus when it's worth your money to tune up or retrofit your existing equipment.
"With energy savings CFOs need to recognize that this is money that comes off the top and it all goes to the bottom line. It's savings that just occur by these low-cost and no-cost efforts," notes Stout. "This is one of the few controllable costs a hospital has."
Being more resource savvy is the natural progression of any cost-cutting efforts your facility is undertaking. These days in particular, hospitals need to become more energy efficient not only because it's the correct thing to do for the environment, but because it's a stellar way to save potentially hundreds of thousands of dollars annually.
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There are always interesting stories in the media about families being denied coverage for unusual reasons. Like the parents of 4-month-old Alex Lange, whose healthcare provider decided that a 17-pound baby was too big for his age and did not justify coverage. After backlash, the provider agreed to cover Alex and change its company policy so that weight would no longer be considered a pre-existing condition.
As insured individuals, we can all sympathize with the frustration a person feels when they are unjustifiably denied their medical coverage. From a CFO's perspective, claims denials are a daily occurrence, but they are no less frustrating when it means your hospital is bleeding hundreds of thousands of dollars annually. Claims denials and underpayments are one area that few CFOs would dispute could always use improvement. The challenge is with all the other "quick-fix" cost-cutting measures financial leaders are trying to implement, reviewing your claims denials for problems is often low on the list. That's a grievous error, especially when you consider that many healthcare experts believe as many as 90% of claims denials may be preventable through improved execution of verification, authorization, and clinical documentation.
As hospitals face declining marginal efficiencies from their facilities' cost centers, financial leaders must review, and in many cases revamp, their denials management best practices in order capture a higher proportion of claims and increase collections.
Financial leaders need to work with their teams to identify, clarify, and quantify denials and underpayments in order to actually improve claims management. So to find out how to make improved claims management a directive that actually improves your revenue stream, I asked Judith B. Suska, MBA, FHFMA, director at IMA Consulting, a national independent healthcare management consulting firm which has worked with more than 200 hospitals and health systems, about some of the key components to getting your denials in order.
1. Build a denial recovery unit.
Some organizations look at volume and ask, "Why are we seeing 1,000 denials?" only to discover these individuals are not eligible for insurance. Other facilities look at their dollars and ask basically the same question. The best approach depends on your hospital's charter for denial management created to help guide your task force, says Suska.
Members of the task force should include a representative from any function that deals with revenue cycle such as patient access, health information management, case management, finance and there also needs to be clinical representation.
The key initial goals of your task force, which Suska recommends initially meet weekly or bi-weekly, should include determining
what's a denial vs. a write-off
how will denials and underpayments be tracked (manually vs. automated)
how should this facility approach the issue
2. Collect information from the denial database.
If you don't collect the right information or you gather too little, you won't have any true understanding of the gobs of money your hospital could be losing every day to denials and underpayments.
"Regularly tracking and trending denial data is necessary," Suska says. "Denials can change from month to month, perhaps when you have a change in a payer contract or if you add an employee to a clinical group or there is a credentialing issue or a coding change. You have to pay attention closely in terms of volume of denials and also the types."
Who is denying your claims and why, should be the first place you look. The American Medical Association released the 2008 National Health Insurer Report Card which showed that greatest claim denials came not from a third-party payer, but from Medicare. With a count of records for Medicare at 6,938,431 the government adeptly denied 475,566 claims. The Medicare denial rate found in the study was on a weighted average basis, so roughly 1.7 times that of all of the private carriers combined. The third-party payer with the highest percentage of claim lines denies was Aetna, with a count of records at 637,239 they denied 43,317 claims, or 6.8%.
With neither the government nor other third-party payers about to change their processes, it behooves CFO to do more than encourage the team to simply refile rejected claims—actually that's a waste of time, effort and in the end dollars. Suska suggests that financial leaders "begin at the end" and look at the back office. Your business office should analyze the denials reports generated which can then be categorized by code, cause, or department—your task force will determine what data is most useful.
"Vigilance is key; you're looking for preventative measures to put into place and you also need to constantly be aware of any industry issues that may affect your claims, such as RAC. It's really never-ending," says Suska.
3. Consider automation.
Because claims denial is so unrelenting, it's worth investing in automation to track it. Think you can't afford it? If your facility is bleeding hundreds of thousands annually due to denials you have no choice or the facility could land in the red when reimbursement changes occur.
"It is very labor intensive to track and report on denials manually," Suska notes. "Consider investing in an automated tool."
Keep in mind, whether you use manual or automated processes for denials and underpayments, this process should always be the responsibility of numerous people at the hospital.
4. Know when to hold 'em and when to fold 'em.
Even organizations that have sophisticated denials management programs get denied, so knowing when to appeal a denial is equally important. Suska recommends culling a sub-committee from the task force and establishing monetary guidelines for determining which denials to focus on. The appeals process may also help you uncover whether any documentation issues need to be addressed.
Legislation and third-party payers are frequently changing and either of them can have a profound affect on your hospital's bottom line. While you cannot ignore these two critical elements, it is vital that your organization make every effort to get all the dollars you are owed while working within their defined perimeters. Reducing your claim denials and underpayments is a long-term approach to keeping your hospital financially sound.
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It will likely come as no surprise to most of you that in the last two years HealthLeaders Media conducted its annual CFO survey, cost reductions ranked high on the priority list for financial leaders. And, as things continue to simmer in Washington over the merger of the house and senate healthcare reform bills, it seems highly likely that cost cutting will remain a focal point for this year and beyond.
However, when it comes to decreasing cost every facility takes a different tack. For instance, at New York University Langone Medical Center, the focus is on maximizing revenues from recruitment, and retention while they remodeled their revenue cycle processes (charge capture, coding, and documentation) to find longer-term savings. Meanwhile, last week I spoke to a CEO at a 185-bed North Carolina Medical Center and they recently merged with a larger health system to create economies of scale.
Most CFOs are finished with the quick fixes, and now they are thinking long-term. But where do you begin? I touched based with William Hejna, fellow at Noblis Health Innovation, a nonprofit science, technology, and strategy organization headquartered in Falls Church, VA, to get a few more ideas on where to look when you're sleuthing for savings.
Tip 1: Consider the scope of your services. Hejna recommends taking an inventory of the services offered internally and externally. Once you have the list, review the cost of each and ponder ways to trim cost before cutting a service. Next assess the list for possible services to cut with a weather-eye on how this offering impacts your organization's mission, not just the bottom line. "You have to look at the list and then take a step back and be objective about it," he says.
Tip 2: Look back to move forward. If your list of services looks more like a wine list at a five-star restaurant, it may be time to really assess what services are being used versus those that are in demand for your market. "The reality is we are good at deciding what the next service we need to add, but we aren't good at looking in the rear view mirror and saying what don't we need any longer," says Hejna.
He suggests looking at what the hospital's top five priorities are, and based on that, assess which services no longer fit into the plan. This exercise takes a great deal of objectivity by the facility leadership, he notes, and in some instances it may be wise to bring in an objective third party to do this assessment. In some instances you may be able to restructure a service to benefit the organization. You want to optimize the services you have, when possible, but you have to be willing to let them go when necessary.
"Hospitals need to take a hard look at the revenue cycle processes," says Hejna. "If you can redesign the revenue cycle and find a way to improve the revenue stream to add to the hospital's bottom line, that's a lot easier than cost reductions."
Tip 3: Supersize profits by rightsizing. Since the 1980s, the healthcare industry, not unlike the fast-food industry, has supersized. It started with healthcare facilities in which ORs ballooned in size by 53% and acute-care patient rooms grew by 77%. But beyond large rooms, some reporting organizations estimate that as many as 14 states have more inpatient beds than population data suggest they'll need for the next two decades. This is "wrongsizing" on a huge scale, especially when coupled with the anticipated dearth of physicians to work at these facilities.
Hejna suggests that financial leaders ensure the services a facility offers are "right-sized" to meet the demand of the area. For instance, that could include revisiting physician services arrangements, decreasing or increasing employed physicians, or scaling back on physician alignment. Rightsizing isn't about layoffs, it's about ensuring you have exactly what you need to make your facility operate perfectly—no more and no less.
Tip 4: Eliminate process waste. Everyone from your maintenance workers to your CEO needs to be operating at optimum efficiency. Toyota's Lean Efficiency offers one methodology to try; there's also Six Sigma. Both of these credos are long-term fixes to solving the wasteful mindset that pervades many facility staff. "You have to take the whole care delivery process and be sure it is as efficient as possible—from a cost standpoint, that's where you'll squeeze out the most value."
Tip 5: Know when to stop cutting. Not unlike someone who finds success in weight loss, knowing when to stop trimming the fat is important. If your facility becomes too emaciated you could damage some greatly needed services. Hejna says to always be mindful of your mission when approaching cutting.
"Cost reduction is all about anticipating need, and that flows from the analysis of demand and being able to predict, at least annually—quarterly is better—what your volume is going to be," he says.
Actualizing sustainable savings for your hospital over the long-term requires financial leaders to become comfortable with being uncomfortable. You must challenge the existing way your hospital does business and you must encourage your staff to embrace these changes too. Thankfully, the more often you do challenge the existing budget and then measure the process and progress of your changes, ultimately you will see there is intrinsic value—translation: money—in doing so.
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In Part 1 of our look at "Lean" healthcare we looked at how Seattle Children's hospital applied the tenets of this methodology toward creating a more efficient outpatient facility. In our second part, we look at how to approach "going Lean" with your team.
If you've ever watched a child get ready for school in the morning, you've witnessed the ultimate in inefficiency. First they can't find their homework—it's never in their backpack. Then they can't locate their shoes or their coats or just about anything else that they bring with them every day. To get them out of the house on time means that Mom and Dad must move with lightening speed and optimum efficiency from one room to the next acting as a super-human GPS for socks, shoes and the like. Then they must pull together a lunch and get them out to the bus. All this activity barely leaves time for breakfast, much less a relaxed start to the day.
Let's add Lean to this picture. Mom and Dad impose a new way of approaching the morning routine; prepare things the night before. The kids don't like this; they don't want to do it (why would they, you do all the work for them in the morning). There's grumbling and resistance but after a lot of prodding the plan goes into action. Step one: The night before, all clothes and shoes are laid out in one location in the bedroom where the child wakes up. Step two: The book bag is pulled together (including homework and books) and placed next to the front door. Step three: Lunches are packed the night before and are ready to take from the refrigerator. Step four: Breakfast bowls, spoons and a box of cereal are left on the counter waiting to be used.
All that advance prep work will likely take you and your child 10 minutes the evening before. But now there is no fuss. Everything is where it should be; you spend no time searching for items and believe it or not, you and your child can even enjoy breakfast (or a few extra minutes of rest). Everyone starts the day happier and the program is a success.
We know everyone likes things to run smoothly but not unlike the average child, the average adult dislikes change in their routine. Change brings fear, but it often brings progress. You see, there is a misconception by some in healthcare—in particular with clinical staff—that Lean is about efficiency without regard to caring. Getting Lean to work at your facility requires you as CFO to help breakdown these preconceived notions and show the staff why this is beneficial to them and their patients.
1. Hit 'em with the financials.
"There are lots of efforts that can be done for short-term fixes to shore up financials and ROI, Lean isn't the best method for the quick hit," explains Charles Hagood, president and founder of Healthcare Performance Partners, a division of Broadlane. "You don't embark on a Lean transition unless you are more focused on long-term, quality patient care because it takes three to five years to really take effect."
Gallatin, TN-based HPP has spent more than a decade implementing and partnering with companies in the application and utilization of the Lean and Lean Six Sigma concepts and tools.
In July, as part of an agreement with the Obama administration to pay for reform, hospitals agreed to forgo $155 billion in government reimbursement over the next 10 years—that's an average of $2.7 million per year per hospital. Moreover, the revised Medicare rates are likely to be determined by efficiency on a regional or city-wide basis—not a hospital-to-hospital basis. In other words, some low-performing hospitals could be lumped in with efficient hospitals (and vice versa), so every hospital would be best served to become more efficient in order to obtain the best reimbursements as a group.
These will be long-term cuts to your budgets, and you need a long-term approach to correcting them. It's just common sense that every hospital has to make up that money—ideally in growth—but improving outgoing expenses is another approach. Lay it on the line with folks: Help us be more efficient, so we don't have to look for other ways to compensate for the losses (e.g., layoffs or compensation freezes).
That's not to say there aren't quick fixes to be found by applying Lean principles. For instance, I spoke to a CFO on the east coast last week who was discussing cost reductions, but what she really was discussing was efficiency. During a meeting with some hospital directors it came out that they had a time clock issue with the staff. Through no fault of the staff, there was only one time clock to check in and out. So, once the staff punched in—on the main floor—they still had to make their way to their department. Sometimes along the way they'd stop for a coffee or to say "hello" to someone. Those personal minutes on the hospital's dime added up. What was the simple, efficient solution? Put a time clock on each floor. Now when the staff clocks in, they are ready to work and the hospital isn't paying for down time. Was this a million dollar efficiency measure? No, but it saved the hospital an estimated $10,000 for the year—and every dollar counts.
2. Discuss what efficiency means in terms of quality.
A doctor can tell a diabetic to cut out sugar, but the patient needs to do the work. The same holds true for you and the rest of the hospital staff and administration. To help get everyone on board ask them to help define what efficiency means at your hospital. Also look for input through brainstorming sessions on areas where processes could be improved. As with the time clock scenario, CFOs aren't in the trenches everyday, so you need the staff to participate if you want success.
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."
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Getting lean is the quintessential New Year's resolution. But when you think lean in 2010, don't think diet—think hospital management and savings in time and money. To help get your year off on the right note, I'm taking a two-part look at using Toyota's Lean Process Improvement and how your facility could benefit from it. This week, we'll look at how one Seattle-based hospital used "Lean" tenets when constructing a new facility.
Lean management isn't a new premise, it's been around for decades, but in these challenging economic times, implementing such an approach can be the answer to some tough financial questions. Seattle Children's Hospital has embraced the canon of Toyota's Lean Process Improvement and this July they will open a newly constructed outpatient facility built by applying those principles to the design and construction process.
Most CFOs have heard of Lean Management, still it's not yet in application at most facilities. Simply, Lean is a strategy for cutting costs and boosting productivity with an emphasis on eliminating waste from the hospital and improving processes while providing more value to customers. The American Society for Quality conducted a study of 77 hospitals and found that 53% of hospitals have some type of Lean initiative and 42% are using a similar management program called Six Sigma (which looks at reducing variations in processes, products, and services).
Perhaps you've been trying to enact one of these programs at your facility, and still more likely you haven't completed the process. The same American Society for Quality study reported that only 4% of hospitals have full deployment of Lean. The issue is that in order for Lean management to truly be effective it has to be driven by a unified team mindset—everyone has to believe and act Lean. Unfortunately the study found that 30% of hospitals are still lacking leadership buy-in, while 59% are lacking resources. But in this economy, creating an environment that embraces the reduction of waste can really help a hospital's bottom line.
For Seattle Children's Hospital, leadership buy-in wasn't a problem. Children's has been using a modified version of the Toyota Lean Process Improvement, which is called Continuous Performance Improvement, to evaluate and improve healthcare from the patient and family point of view. So it only made sense that when they approached new construction, they would try to implement the same methodology.
With an estimated 12,785 admissions annually, the Washington-based, 250-bed Seattle Children's Hospital serves as the pediatric referral center for Washington, Alaska, Montana, and Idaho. Evans says the main campus had already reached 80% capacity in their exam rooms when they decided to build, and regardless of the economy they still needed to do so.
"We had to get creative to get ahead of the curve or we would be unprepared for when the recession ends. We are interested in serving the needs of the region, so this project always had the green light," says Cindy Evans, vice president of ambulatory and regional services and medical specialties at Seattle Children's Hospital.
However, while they had the green light to proceed, the economy was causing a change in scope. In late 2007 when they begin to look at constructing the new outpatient facility, Seattle Children's Hospital was approaching the process in a traditional way. They estimated that they would need approximately 110,000 square feet to accomplish their goal of improving access to pediatrician sub-specialties and to increase their presence on the east side of King County.
Just months later, in March 2008, the reality of the economic crisis took hold and that meant taking another look at their plans for the facility. It was then that they decided they should be approaching their construction in a different way—a Lean way. They gathered the major stakeholders in the project, including medical and management staff, the architectural firm, the contractors, and the construction manager, and discussed how they could not only take the project Lean and fast-track it.
"When we were in the planning phase, we were in the recession so we knew we had scale back. We started by reducing the square footage by 30% to 75,000 square feet, but by using Lean in our design process we were able to keep the facility the same programmatically; we ended up exactly where we started just by getting rid of the waste," explains Evans.
How did they find the "fat"? By challenging all the stakeholders in the $75 million project to come up with ideas to reduce delays and cost, Evans says. That translated into an unusual and creative approach to their design plans.
Rather than have the team continually review and alter the architects' paper design plans, which often takes facilities months, they decided to take the design to scale and finish the process in two weeks. The architect and contractors measured out and built a version of a patient room and sections of the floor to scale. The medical and administrative teams then toured the mock-up and tried out the design. Design flaws could be swiftly spotted and modified on the fly allowing the hospital's team to test out suggestions and changes.
Being able to see and touch the space helped everyone see where the inefficiencies in the layout were from the location of the patient bed to where the equipment should be positioned. They went so far as to analyze storage space, determining the exact size of the supply closet based on the historical supply data—thereby eliminating the need for large supply closets with unused space that was badly needed for exam rooms. The team mapped the flow of patients, supplies, and providers and even counted the actual number of physical steps it would take for different processes to be completed, such as a nurse gathering needed supplies.
"Usually when you construct a facility you do it generically, you reduce variations. But some areas are serving different needs and those may need more or less space. By using Lean thinking, and having the mock-ups we got a true picture of what we needed," says Evans. "We ended up with five of these macro mock-ups before we finalized the plan, and the team really found them beneficial. There's just no way we could have gotten all that by looking at a paper plan."
Toyota's Lean Model has been used for nearly every type of business, so it's not unusual that it made its way into construction. What is unique to Seattle Children's Hospital is the extensive application of the tenets.
By taking one extra step of creating a life-size mock up to test out the inefficiencies in their design, they were actually able to trim time from the architectural design process as well as prevent delays during construction by addressing new ideas in the mock-up phase and not the building one. The Lean process has proven successful for Seattle Children's Hospital, the project is on budget, and is expected to open on schedule this July.
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