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How One Woman Saved IU Health $54 Million

By Philip Betbeze  
   January 19, 2017

With a little help from about 10,000 of her friends and colleagues, the head of Indiana University Health's office of transformation leaned in to cut waste and encourage value, one project at a time.

By 2012, Indiana University Health's board could see the writing on the wall: Its healthcare costs were too much.

In fact, the board sensed a day coming soon where the high cost of care would have a negative effect on the health system's competitiveness.

It felt an urgency to prepare the Indianapolis, IN-based health system for a future in which the buyers of healthcare, whether they be health plans, the government, or individuals, would be price-conscious.

IU Health had already tried some performance improvement projects, but they were scattershot and not based on a unified philosophy. In order to improve results and scale the improvement process, the board challenged then-CEO Dan Evans to deploy a system-wide value-improvement tool that could enlist all employees.

Lean, Not Six Sigma
Evans commissioned a study group that ultimately chose Lean because of its ability to engage large swaths of employees and because it "transforms culture," says Alicia Schulhof, the former HCA chief operating officer whom Evans hired to direct the effort, and whom he eventually put in charge of IU Health's Office of Transformation.

"Six Sigma can be intimidating," she says, referencing another popular process improvement technique. "[Lean] allows every one of our 35,000 team members to be a problem-solver."

That may be a slight exaggeration. Slightly fewer than 10,000 employees have participated in the project so far, but the transformation effort has reached wide—it's been installed at all 12 regions and 15 hospitals—and deep, as Lean performance improvement projects can be extremely specialized.

Schulhof does not prescribe efficiency projects. Her office and the consulting company IU Health hired to help with the process rollout train local offices in the statewide health system to find promising projects.

It's working. Over the past three years, efficiency efforts that Schulhof has overseen have yielded more than $50 million in savings.

Philip Betbeze is the senior leadership editor at HealthLeaders.

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