Thursday, October 8, 2009

9 Points (conclusion)

J. Michael Rona
Principal, Rona Consulting Group
Mercer Island, Washington

This is the fourth and final post in a series about 9 Points that define the lean heatlh care enterprise:

1. A Compelling Vision
2. Enlightened and Fearless Leadership
3. Values Driven
4. Respect for the Customer and Customer Driven
5. Quality Driven
6. Obsessed with Safety
7. Respect for Staff
8. Continuous Improvement
9. Generate Higher Margins or Create Greater Capability

These nine points help characterize a lean health care organization. When implemented and fully engrained, the organization is transformed. Then it lives the principles of the Toyota Management System and produces perfect products, one at a time, in flow synchronized to the demand of the customer. This is what a lean health care organization looks like and how it behaves.

In this post I cover Point 7, 8, and 9.

7. Respect for Staff

A lean healthcare enterprise recognizes and behaves as if its staff were its most precious and irreplaceable resource. It respects its staff and demonstrates a profound commitment to enabling the best performance of its people. It sees as its second most important challenge to its leadership, the creation of a supportive environment in which it engages its people in creating excellence. Lean health care organizations enable perfectly competent and capable people to perform at extraordinary levels. Such organizations develop processes that allow their people to soar every day.

Lean health care organizations, in their actions, recognize and believe that releasing the creativity and brilliance of their workers is the key to breakthrough innovation and the success of the company.

8. Continuous Improvement

Lean health care organizations are constantly improving their processes and reducing their lead times (delivery times) through the vigorous elimination of waste. At every level, one can see the organizational learning cycle of PDCA (Plan, Do, Check, Act) at work. They are never satisfied with the current state and while they are not routinely looking for quantum changes in their processes, their steady, tortoise like constancy on waste reduction, they far outpace their competition in perfecting their processes

9. Generate Higher Margins or Create Greater Capability

Lean health care organizations generate margins that far exceed those of organization which do not use lean management approaches. This is because their source of value creation starts with a focus on customers, respect for staff and the elimination of waste to improve unit costs, reduce lead times, dramatically improve throughput and increase capacity with no added costs. These organizations do not rely on layoffs and other short-term strategies to generate margins, they rely on their people to find better ways and see their investment in their people as their most important strategic advantage. In organizations that are on fixed budgets, the elimination of waste enables greater capacity to serve customers using the same or less resources.

The effectiveness of these nine principles are clearly demonstrated in the results of the implementation of lean healthcare at the Virginia Mason Medical Center in Seattle, where we achieved productivity increases between 45 to 75%, cost reductions between 25 to 55%, improvements in throughput between 60 to 90%, quality improvements between 50 to 90%, inventory reductions between 35 to 50%, and lead time reductions between 50 to 90%.

The effectiveness of these same principles has been demonstrated more recently by our clients, who report similar achievements and confirm that the return on their investment in lean healthcare ranges from a low of 100% to over 1000%.

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