Disruptive Innovators: Shifting to lean

In an effort to offset some of the expected impact of the Affordable Care Act, the executives at Mountain States Health Alliance (MSHA) – one of the largest healthcare systems in northwest Tennessee and southwest Virginia – knew they had to make a bold move. They chose to implement lean.

Made famous by Toyota as an efficiency process, lean has been increasingly used in healthcare to eliminate waste and reduce costs.

[See also: 6 tips for lean revenue cycle management]

“We quickly realized that lean was not just a cost-cutting improvement tool; that it was more of a cultural transformation on how you run your organization and lead your organization,” said Andrew Wampler, MSHA’s assistant vice president.

MSHA began its lean journey by making it part of its 10-year strategic plan and hiring Simpler, a global management consulting firm, in 2011 as a lean coach. MSHA selected four sites – three of its 13 hospitals, and Mountain States Medical Group – to get things started.

Administrators began tracking and benchmarking financial, clinical and patient satisfaction outcomes from the start, Wampler said. And even though MSHA is just at the beginning of its lean experience, the health system is seeing encouraging results. Overall, the health system has saved, so far, about $5 million, with an estimated return on investment of $56.7 million.

Some specific results:

• At Johnson City Medical Center, the emergency department consolidated medical supply space from five separate closets to one central closet, saving the staff time and increasing productivity and workflow. By standardizing the supplies location, staff members could more easily monitor stock, reducing inventory costs by about $89,000 a year and supply expenses by about $150,000.
• At Johnston Memorial Hospital, a communications plan resulted in more admitted patients being placed in beds on the inpatient services floor, resulting in more space in the ED, which raised the average daily volume from 109 patients to 120 over a one-year period. Additionally, wait time to see a physician decreased by 17.24 percent and the decision time for admitting patients to inpatient services decreased by 43 percent, from an average 133 minutes to 73.

MSHA is encouraged by the results it has had so far and the healthcare system plans to continue to roll it out throughout the organization, said Wampler. “This is going to get us to our goals,” he said. “It’s exceeded our expectations of what we thought it could do, I think, but once we really figured out what it could do, I think our expectations now are even higher because we know this could really get us to a level that could put us out there – way out front of – a lot of other healthcare organizations.”

By using lean, Mountain States is figuring out how to make its existing business better as it positions itself for the future, said Michael Chamberlain, president of Simpler North America.

“They’ve taken a very serious approach to eliminating waste in their healthcare system,” said Chamberlain.

“The industry as a whole – while they believe they’ve made massive change, there’s so much more to do,” Chamberlain said. “Mountain States is on the precipice of something really special because they’ve bought in to all the elements that it takes for them to be successful.”