Lean: Background and History Steve Johnson, 45 minutes

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1 Lean: Background and History Steve Johnson, 45 minutes Slide 1. Opening: a. I m Steven Johnson. The dermatologists among you might recognize the name. I share the name with a horrible skin condition caused by drug reactions. b. Thanks for having me. It s quite an honor. c. I m here to talk about the origins of process improvement methodologies and what they mean to us today in healthcare. d. Let s get started. Slide 2. Handouts: In case any of need something to read during my presentation a. Examples of Seven Wastes in Healthcare b. Some lessons from my bit c. Booklist i. I wish I could point you to a definitive, concise book that gives you the clearest picture of what is happening with Process Improvement in Healthcare today. I can t. And there s at least two reasons for that: ii. Are in the publishing business, not the business of delivering healthcare. As such they have to differentiate themselves from the competition, and they do this by making new acronyms and new systems and claims that begin with terms like, the only way or you can t accomplish big changes without They want to convince us that they hold the secret, but, there is no secret. iii. In our business today, by the time the book is on the shelves, the situation has changed, politically, scientifically, information technology has changed, our local organization has changed. I haven t seen the book yet titled What the University of Utah Healthcare Needs to Do. We have to create our own recipe that suits our situation and our culture, both of which are in flux. Slide 3. The automotive experience a. Ford: He had a crisis of opportunity i. Opening Stats 1. <ANIMATE> December 1896 Henry Ford sold his first car, the Quadracycle, for $ <ANIMATE> 1901, 425 Oldsmobiles sold. 3. <ANIMATE> 1904, 5000 Oldsmobile s sold. 4. In 1904, American manufacturers had: 5. Limitless cheap labor from farms and Europe. 6. Standardization took hold 7. Millions of acres of cheap land 8. Low taxes (0% on corporations) 9. No meddlesome OSHA, EPA, child-labor laws, etc. Lean Leadership, Sept. 17,

2 10. Why bother improving? 11. Here s why 12. Model T was a disruptive technology. Ford needed a new system to meet demand. 13. <ANIMATE> 1914, Ford sells 1/4 million cars , Ford sells over a million cars , Ford s 15,000,000th sold. 16. How did this happen? Slide 4. Ford created a culture of continuous improvement. Two major things he did: implement standard work and flow. a. He implemented Standard Work on a level never seen before; to a point that he eliminated the need for fluent English. b. Created Flow in his process. Slide 5. In healthcare, when you hear about Standard Work, I hope it doesn t conjure the notion of treating every patient the same. a. It s not just a bad idea to treat every patient the same, it against the rules. i. Joint Commission requires individualized care plans for every patient. b. Example from Hardwiring Flow: i. Oral contrast helps radiologists see images better. ii. Subject ED: 20,500 abdominal CT scans annually. iii. Policy required oral contrast on 100% of CT scans. iv. Contrast added 155 minutes to ED LOS. v. Study of their ED showed contrast wasn t always necessary. vi. Revised protocol: Contrast usage down to 2700/yr. vii. Benefits: viii. 2.5 hours in the ED saved per patient ix. Freed 46K hrs (~10K patients) of ED capacity annually x. Cost c. Back to Ford: Results: No matter how elegant the plan, occasionally one should check the results. i. Other guys needed 5X the labor input to keep up with Ford. ii. Reduced assembly from 12.5 hours to 93 minutes iii. Flipped the cash cycle on its head. 1. Michael Dell did it again 2. The next head flip will be the company that convinces customers to pay them, and they re happiest when there s no interaction come to think of it, insurance companies already do that. iv. Employees 1. In 1914, Ford s minimum wage was $0.62/hr. (~$14.06 in 2012) 2. Also in 1914, he instituted the 8 hour work day. 3. He was accused of socialism 4. From 1914 to 1916, profits doubled. Slide 6. Flash Forward Lean Leadership, Sept. 17,

3 Slide s : American auto industry faces a slow motion crisis Slide 8. Lean: The Toyota Production System Decoded for American Industry a. Lean is a methodology based on principles. These principles are adaptable and proven in almost every industry, including healthcare. Slide 9. The first principle of Lean is Identify Value. a. People come to us for two primary reasons. These can be blended in some cases, and surely we could split these out into 4, 6, 10 value streams if we wanted to. b. But not every activity we engage in to provide these is valuable to our customer. i. In traditional manufacturing, an activity is only deemed value-added if it changes the form, fit or function of the product as designed. c. <ANIMATE> In healthcare, we adapt that to be An activity that builds on a patient's information or is directly involved in care provision. Everything else is non-value added (NVA). Slide 10. The Seven Wastes: a. Mr. Ohno noted Eliminating waste is easy. Finding waste is hard. i. These goggles represent Lean training, to help us spot waste in our systems ii. In healthcare, we don t notice waste for the same reason fish don t notice water. It s everywhere. It s always been there. And it s all we ve ever known. b. Recognizing this, he provides a taxonomy to help us find it. i. The seven wastes. ii. Even with the 7 wastes, the VA vs. NVA distinction is not always easy. c. <ANIMATE> NVA doesn t mean unnecessary i. Some NVA enables VA; some NVA is required by the current system. Slide 11. Big Lessons from Lean a. Principles for promoting patient and information flow through our system i. Specify Value and identify your value streams: which consists of value added and non-value added activities ii. Eliminate Waste, using the 7 wastes to identify it. 1. Pick Three a. It absolutely does NOT say, to save on costs, quality must suffer, or patient access must suffer iii. Designing a Simple process can be Hard iv. Standard work: A principle which is readily applicable to any work, even creative work v. Error proofing: Process design rules for preventing errors; put more positively, to make it easy to do things the right way, without blame and train vi. Use Visual Workplace Mgmt: These are visual elements that fit in the flow of work to make process problems immediately visible vii. Create flow Lean Leadership, Sept. 17,

4 viii. <ANIMATE> 1. Just as the nature will reclaim the neat rows of even the best planned garden; complexity creeps into our systems. 2. We have to be vigilant in tending our garden. 3. Before this discussion devolves into an even more trite platitudes let me give you just one example from the not yet published book: Best Care At Lower Cost Slide 12. Complexity is a natural result of progress a. This book is available for free download. I highly recommend it. b. It contains contributions from many of the usual healthcare process improvement leaders: i. Virginia Mason s current CEO, ii. Brent James, iii. ThedaCare, iv. Kaiser, v. Denver Health. c. They conclude that Care delivery has become increasingly fragmented, leading to coordination and communication challenges for patients and clinicians. d. They reference a study Pham and another from Arora both 2009: i. One study found that in a single year, a typical primary care physician coordinated with an average of 229 other physicians in 117 different practices just for Medicare patients (Pham et al., 2009). The involvement of multiple providers tends to blur accountability. One survey found that 75 percent of hospital patients were unable to identify the clinician in charge of their care e. Another example from the book but originally from Boyd, et al. in 2005: i. Various existing clinical practice guidelines would suggest that a hypothetical 79-year-old woman with osteoporosis, osteoarthritis, type 2 diabetes, hypertension, and chronic obstructive pulmonary disease should take as many as 19 doses of medication per day. Adherence to five separate sets of clinical practice guidelines for the woman s five diseases could result in adverse interactions between her medications, or a medication for one disease could exacerbate the symptoms of another. Such guidelines might also make conflicting recommendations for the woman s care. If she had peripheral neuropathy, guidelines for osteoporosis would recommend that she perform weight-bearing exercise, while guidelines for diabetes would recommend that she avoid such exercise (Boyd et al., 2005). Slide 13. Remove the Complexity you can: a. Following the Lean methodology helps us remove the complexity we can and manage the remaining complexity. b. <ANIMATE> ACAPP c. KC seat factory story: Lean Leadership, Sept. 17,

5 i. If we had a bus and enough time, I could take you to a plant in KC that makes car seats for GM s D class sedans. ii. If you walked in, you might assume the plant was about to close because: 1. There s no inventory. 2. No raw stock on shelves. 3. No finished goods on shelves. 4. On one end of the plant there s a semi, on the other end of the plant, another semi. 5. There s a constant stream of electronic orders coming in from the assembly plant which is less than ten miles down the road. 6. The orders come in for one car at a time in the exact order they are being built back at the mother-ship. iii. I actually interviewed at this plant and they offered me a job, but I don t know what I could have brought to the table that they didn t already have. Slide 14. MRO experience a. Instead I went to consult where our customer was the US Air Force. Let me tell you about the Air Force: i. It s a huge entity. In Ogden UT it employees over 20,000 people. ii. Succeeding at its mission is vital to a prosperous nation iii. The nature of its mission is high risk and thus its leadership often adopts a risk-averse posture. iv. It is steeped in traditions, many of which act as paralyzing forces when it comes to change. v. It attracts the best and the brightest personalities, many of them competitive a-types vi. let me know when this begins to sound familiar vii. It has access to some of the coolest new technology viii. It is monstrously inefficient, less so today than it was even 10 years ago, but still has a long way to go. ix. Not subjected to the forces of supply and demand of a normal marketplace. x. The biggest similarity: Both of these workplaces, bring value to their customers by managing the incoming variation and they have to make a profit. b. When I started working with them, they were adjusting to a new operating environment; one that involved competition. Competition not born of supply and demand, but competition nonetheless, from private companies that could do the same work better for lower cost. c. As you might have guessed, these companies had already embraced Lean and Six Sigma. d. There are two reasons I want to tell you about MRO. Lean Leadership, Sept. 17,

6 Slide 15. The first is the uncanny similarity to healthcare. An MRO shop is a hospital for aircraft components. a. I recently finished an online mind reading course, and I m picking up that many of you find the story of Lean in automotive unsatisfying. b. Walk through the MRO flowchart c. Sometimes comes in for specific ailments, specific repairs. but more often comes in for a checkup, called an overhaul. i. Like a DRG, the MRO providers have to bid on the work they are going to do before they see the patient. ii. Do we replace it for $500? Do we repair for $100? Or is it good enough as it is? $0. This is a risk/profit question. You can t replace every component every time that s a whole new airplane. But if you make the wrong call people could die and the wrath of the US government will come down on the company. Slide 16. Doesn t that look similar? a. Many in this industry were wary of another flavor of the month program coming in i. They had waited out many before it; it s a great strategy ii. They said, bully for Toyota. We re different. We support he warfighter. Lives depend on us Slide 17. Which brings me to the second point: Kelly AFB a. In 1995, congress voted to privatize Kelly s MRO operations and allow private enterprise to bid on the work. b. As a condition of the take-over, the companies used the same equipment. i. Labels on every piece of equipment, property of US gov t. c. Used the same employees. i. At the time of BRAC, you had three choices, move, retire/quit, join the new company. d. Lastly, they had the same patient population, no cherry-picking. e. There were two things that changed: i. The first was leadership. They were sent packing. ii. Second, the system of running the business was changed to a Lean Six Sigma blend. iii. Including a massive reliance on what we today call business intelligence from data regarding the health of the engines f. It took about two years to get the changes completed, all the while they had to continue to run the plant and repair the Air Force s components. g. After two years, the components were completed faster, less expensively, and time on the wing increased to times that were better than new. h. From the perspective of the leadership they knew this was going to happen for years. Because for years, the companies that came in and took over their shops were taking Kelly s spill over work, the components they couldn t get done, and it was no secret whose work was better. Lean Leadership, Sept. 17,

7 i. They knew the crisis was coming, yet it happened anyway. Slide 18. Six Sigma a. While automotive was learning Lean, Motorola was developing Six Sigma: reliant on data and analysis. b. Six sigma gets its name from a target reliability level. If you have Six Sigma levels of product or service reliability, you are only making an error 3.4 times for every million opportunities. c. The tools in Six Sigma were collected from giants of process improvement such as Deming, Juran, Taguchi, Shewhart it s a long list. d. Six sigma at its essence says, discover the variability you can control and remove it. Then tune the process to get the outputs you are targeting. e. Six Sigma follows a methodology called DMAIC. At different points in the methodology, Six Sigma Black Belts make use of various analytical tools, many of them rooted in statistics, to guide them to the next step. f. If you re asking yourself, did he say black belt? the answer is yes. g. We are black belts. We only use our skills defensively; but if cornered, our analytical skills are such that we can kill you twice before you hit the ground. h. Actually the term was coined right here in Salt Lake City, at the Unisys Printed Circuit Facility by a guy named Mikel Harry in i. He was a Motorola employee on loan to Unisys and apparently process characterization experts didn t have the panache they needed to recruit Unisys engineers into the training. j. Motorola was the birthplace of Six Sigma. k. Back to automotive for a moment: Car companies use Six Sigma every bit as much as they use Lean. l. Today, you have to use Lean and you have to have Six Sigma on your side: 100,000 mile reliability is a result of Six Sigma s influence Slide 19. Big Lessons From Six Sigma a. Variation is the Enemy b. The answers are in your data i. This is perfectly aligned with the virtuous goal of evidence based medicine ii. It also extols evidence based business mgmt. iii. And evidence based customer satisfaction c. Listen to the Voice of the Process i. Regarding these last two, Investing in technologies and people today these investments promise to make the explosion of data more manageable and more accessible to you, the clinicians, for real-time clinical decision support. d. For consistent output, control your inputs e. Keep your processes in control f. Listen to the Voice of the Customer g. Your problems are in your processes, NOT your people Lean Leadership, Sept. 17,

8 i. Processes, not people, are responsible for errors, waste, and low quality ii. Six Sigma assumes smart, caring professionals are at work in our processes, doing the best for their patients and their co-workers. iii. Unfortunately, it s hard to curse at a process. iv. Instead, too often we rely on the blame and train culture. Slide 20. PDSA: PDSA is a third popular methodology. a. In the popular press, it s the least prescriptive and easiest to teach. That may be why there fewer books about it. b. PDSA has a foothold in medicine, probably because it s been called the scientific method applied to process improvement. By none other than Edwards Deming. c. PDSA was popularized by Deming. He originally called it the Shewhart cycle although Shewhart called it PDCA. d. If you want to go way back, you might say it was popularized by Francis Bacon when he codified the scientific method as hypothesize, experiment, evaluate. That is, in fact, where Shewhart started. Slide 21. PDSA promotes experimentation with your processes. a. PDSA is not research, i. Orderly ii. Controlled iii. Time-consuming iv. Expensive b. Nor is it the shotgun approach where we just throw stuff against the wall and see what sticks. Slide 22. PDSA promotes rapid prototype multiple iteration, as does Lean and Six Sigma. In fact all of PI methodologies encourage revisiting the same process multiple times. a. Some of you are thinking, Why repeat? Why don t you just get it right the first time? b. The answer is that s not how innovation works. i. You may as well ask why the Wright brothers didn t invent the 747? ii. Or why didn t Watson and Crick decode the entire human genome? iii. If this graphic looks tiring to you, I agree. Slide 23. We promote a plan more akin to this a. Here we see a project cycle, a setting in period, and then a smaller revisit if that s where the enterprise priorities point. Slide 24. Our Performance Improvement Framework: a blended methodology a. There s a huge amount of overlap in these methodologies. b. Some folks maintained an allegiance to orthodoxy, the rest of us got down to business and to rise above all that chatter, the world seemed to come to agreement on the term Operational Excellence but we thought that d be confusing so we called it Performance Excellence and we re not the only ones. c. All the tools are available and we apply them as needed. Lean Leadership, Sept. 17,

9 d. These methods aren t designed to fit just one industry. Though every industry, every organization, every department is different, when thoughtfully applied, they will benefit most al. In fact they already have benefitted our organization. Slide 25. By now, we all know American Healthcare is also facing a slow motion crisis. a. This is just one example among many terrifying examples. b. On average, Americans take out roughly 3x what they put into Medicare. Slide 26. But there s good news: a. It s not intuitive, but when we improve quality, costs come down. b. Not intuitive, but shown to be accurate over and over and over. Slide 27. More good news: The new Best Care at Lower Cost report rightly states that we don t live up to our potential. A very fair assessment. a. Here are three examples of opportunities to spend less. i. Unnecessary Services: $210B ii. Inefficiently Delivered Services: $130B iii. Administrative Inefficiencies: $190B b. Trying to leave the stage on a high note. i. Clearly, we are not lacking for opportunities Slide 28. Even more: Endeavors with these levels of effort and coordination aren t new to us a. Bring it back to our hospital, and we re leaders on all three of our strategic goals b. What this means to me, we are in a great position to deal with our slow motion crisis. i. The change is coming, and we can either be in charge of it, directing it, or at its mercy. ii. We can t take our time. At the same time, we have to be deliberate in our response. iii. It been done at other places, as we re about to hear. iv. We can surely do this at the University of Utah. c. There s only one potential barrier, and it s a big one. Slide 29. Culture of Continuous Improvement a. I always associate organizational culture with an iceberg because two thirds of it lies beneath the water line, out of sight, but you better be good enough to navigate around it. b. Culture is a messy thing. It s hard to transform a culture. It s been done. Plenty of good examples. c. Culture is also ravenous: My favorite quotable of 2012 has to be Culture eats strategy for lunch, but I think we re in a good position. i. We have some good signs: My little group gets project requests every week some are even from physicians d. Still, the jury is out i. Something about the culture of GM caused it to fail despite all the warnings Lean Leadership, Sept. 17,

10 ii. Something about the culture of Kelly Air Force Base caused it to fail despite all the warnings iii. Thankfully, there are examples to follow of successful healthcare organizations. e. We are in a great position to deal with the oncoming crisis, and University Healthcare has an excellent record of transformative leaps in performance, i. Quality, EPE, financial strength ii. While they had physician involvement, none of those depended so heavily, so directly, on you as this one will. iii. And I very much look forward to working with you in the coming months and years. f. Thanks for listening. Lean Leadership, Sept. 17,