New Hanover Regional Medical Center (NHRMC) faced a challenge familiar to most healthcare organizations: to deliver greater value, efficiency and quality in care delivery at the lowest acceptable cost to their patients. Consumer, payer and regulatory pressures keep growing, accelerated by the Affordable Care Act.
“We were going to be facing a $150 to 200 million deficit and things had to be done differently," said Jack Barto, former president and CEO from 2004-2016.
Costs were just one side of the equation, however. Cutting the organization’s overall spend would need to go hand-in-hand with improving performance and NHRMC would need to activate all its employees, overcome inertia, and change the culture of the organization itself.
7,000 problem solvers
NHRMC partnered with Vizient to engage its staff of 7,000 in an organization wide Lean transformation. The mission? To instill a culture of continuous improvement, where employees themselves felt empowered to change the way things work. Success would require the commitment of everyone, from the C-suite to frontline staff.
“Our Lean transformation, our partnership with Vizient, and implementing this over the last six years has made us the successful organization we have been.” John Gizdic, current president and CEO.
This transformation would touch every aspect of the organization’s daily practice: re-thinking processes, removing inefficiencies, raising quality measures, while improving the patient experience. It’s been a several years-long journey, guided by the expertise of the Vizient Advisory Solutions team. To earn their employees’ trust and investment, the NHRMC executives made a bold pledge: to achieve their goals without reducing staff.
10,000 steps, one great leap
Early wins in NHRMC’s pharmacy set the tone. A Lean-based improvement event brought pharmacy techs into the process. The result? A redesigned workflow that shaved 10,000 steps each day from drug retrieval. Practically overnight, the pharmacy was transformed.
“Rearranging pharmacy logistics and trimming techs’ daily travel time from four miles to a half mile was a huge win in efficiency,” says Gizdic. “And getting meds to the floor faster was also a huge win for nurses, physicians and ultimately the patient.”
More importantly, Gizdic notes, the results demonstrated to employees that Lean transformation was more about improving operations and making better use of existing resources—not just a cost-cutting exercise. The changes allowed for redeployment of two full-time positions. Instead of cutting the positions, they were redeployed to perform direct value-added patient care duties.
“From that success, we had many departments lining up to do the next initiative.”
From fixes to non-stop improvement
The first projects generated excitement. However, the organization’s challenge became sustainment and accountability.
In response, NHRMC worked with the Vizient team to shift from a focus on discrete improvement events to a broader view, emphasizing the education of senior management about their changing roles and responsibilities towards sustainability and accountability.
Leaders were asked to assume more of a coaching role, where information and solutions are harvested within the work units.
Stronger finances, brighter future
The financial benefits of the Lean journey continue to build. In an era where reimbursements and payments have decreased, the only way you can improve your margin is by decreasing your costs at a greater rate.
Ed Ollie, chief financial officer estimates that in a little more than a decade NHRMC has compiled $165 million in total savings, including $110 million over just the past five years—without staff reductions. It now boasts one of the lowest cost structures per discharge in North Carolina and an operating margin that increased from 3 percent to 6 percent.
The savings have emerged from not just improvements to clinical practices and procedures, but also by applying Lean principles to the business side of operations.
“We’ve driven down our accounts receivable, reduced our denials, increased our point-of service collections and lowered our supply costs,” says Ollie. “The interesting thing about the journey is that the longer you work at it, the better you get, and the more you know can be done.”
To read the full story, visit www.vizientinc.com/culture.
Greg Firestone is the director of Lean strategies at New Hanover Regional Medical Center in Wilmington, North Carolina where he is responsible for creating a culture that is relational and responsive, to drive change throughout the organization.
Steve Taninecz is a senior consulting director at Vizient where he leads Lean health care transformations at hospitals through the country.