Boston Hospital Saves Jobs, But Isn’t Improving

Paul Levy, the chief executive of Beth Israel Deaconess Medical Center in Boston is winning praise – from employees and some people outside the hospital – for finding ways to lay off only 150 people, rather than 600 as was originally planned. An article in The Boston Globe explains how.

The steps he is proposing, which would save $16 million, include suspending the employer match for retirement plans, withholding some raises and rolling back executive increases, and eliminating cash payments for surplus earned time.

Job openings will not be filled and less-busy areas will have to reduce their headcount, Levy's plan also suggested. The employee barbecue will go, saving $50,000, as will reimbursement for cellphones and BlackBerrys, for an estimated $100,000, and an early retirement offer is being explored.

The article (by Elizabeth Cooney) quotes some employees as supporting the actions. They’re not really happy, but relieved more jobs weren’t eliminated.

If you have some understanding of lean operations, you may already realize that I am writing about this because of what is missing from the list of Levy’s actions. There is no mention of finding ways to save money by operating more efficiently and eliminating waste through improvement of the hospital’s processes.

Would someone like to ring Mr. Levy with a wake-up call?


Book Talk: Two Productivity Press Books Win Shingo Research Prize

Word is starting to leak out about this year's Shingo Prizes, and we are delighted with what we have learned so far: that two of the books we publish have won the Shingo Research Prize, which recognizes and promotes research and writing regarding new knowledge and understanding of manufacturing.
One of the books isn't about manufacturing, but healthcare. Lean Hospitals: Improving Quality, Patient Safety and Employee Satisfaction by Mark Graban is a best-selling book explaining the application of lean principles to hospital operations.

Also winning is Understanding A3 Thinking: A Critical Component of Toyota's PDCA Management System by Durward K. Sobek II and Art Smalley. This book provides strong insights into not only use of the A3 report, but the thoughts and concepts that are the basis for it.

Many other Productivity Press books have won the Shingo Research Prize over the years. This year’s recipients will be recognized at the annual Shingo Prize conference May 5-8 in Nashville.

Congratulations to our authors for their fine work!


A Flawed Process Makes Med School Graduates Scramble

Optimizing a supply chain is always challenging. And when what you’re doing is not working on an existing supply chain, but trying to bring suppliers and customers together, it can be even tougher.

I was thinking about this after reading a recent posting on The Wall Street Journal Health Blog describing the event known as Match Day. That is when thousands of graduating medical students find out where they will do their residences, which is accomplished by use of what the blog refers to as “a great big computer.”

The matches are announced on a Thursday. But lately the supply of graduates exceeds the number of residencies, so three days earlier, on Monday, many students are informed that they weren’t matched with a program.

That leads to a stressful and chaotic event known as the “Scramble.” That means these graduates spend Tuesday rapidly contacting hospitals that still have open slots, sending out applications, making calls and conducting phone interviews. A graduate in the Scramble will usually grab the first offer that results (assuming he or she gets one), even if it is not in their chosen specialty.

What made this item of particular interest to me is that those involved in the process are actually trying to improve it. And they seem to understand at least one lean concept: that the order of steps in a process can be just as important as the steps themselves.

Mona Signer, executive director of the National Resident Matching Program, describes their proposal like this: Instead of the students finding out Monday that they haven’t matched, and the remaining open slots being publicized at noon on Tuesday, both of those steps would take place on Monday. Then, the students would be able to send their applications for open slots on Monday (though that timing is still a bit unclear). They’d have to use an electronic system run by the Association of American Medical Colleges, rather than the multitude of communication means, such as email and faxes, that are used now and that can jam up programs’ systems.

Rather than the very fast mating dance on Tuesday, the programs wouldn’t be able to make offers until Wednesday — which believe it or not, would be significantly more time for them to make decisions. Applicants could receive multiple offers, which would be sent through NRMP’s system. Match Day would be moved from Thursday to Friday…

Signer says the proposal is still under consideration and could change significantly before it’s finalized. The changes wouldn’t happen until 2011.

How would you approach this problem? Value stream mapping? Post your thoughts below.


Saving Time When Buying Groceries

I encountered an interesting use of technology at my local supermarket recently. What I liked about it, from a lean perspective, is that it eliminated some waste from the process of shopping.

The introduction of bar codes and scanners (which I believe was 30 or 40 years ago) speeded up shopping tremendously. In the past few years, many supermarkets (and other stores) have added self-service checkout lanes, where you scan the items yourself rather than hand them to a cashier. I find that convenient when I have just a few items, though I doubt it makes much difference in how long the process takes.

But at our local Stop & Shop in New Jersey, my wife and I encountered something that was new to us (though I understand this has been in place for a while in other parts of the world).

Upon entering the supermarket, we were offered an easy-to-use handheld scanner. (You have to have one of the store’s bar-coded frequent shopper tags to get one. Your tag is scanned, and you receive the scanner.) As we walked through the aisles of the store, we scanned each item we selected, then placed it directly into a bag in our shopping cart. (You can bring your own reusable bags, as we do, or obtain plastic bags from the store.)

If you change your mind about buying something, the handheld unit has a “remove” button to take it off your list.

For fruits and vegetables, we went to a special station in the produce section. We placed each bag of produce on a scale, and typed in either its name or number code. The scale printed a bar-coded label for the amount we were buying, which we then scanned with the handheld unit.

At checkout, with our groceries already in bags, we handed the scanner to the cashier, who then scanned our frequent-shopper tag again, along with any coupons we had. The total was displayed, we paid, and the register printed out a receipt listing every item we had purchased. Checkout took little more than a minute.

The biggest time savings occurs because you place your groceries directly into bags, rather than having to place them in the wagon, unload them at checkout and then put them in bags. A little additional time is required to scan each item, but I believe the time saved more than makes up for this.

It’s a win-win situation. The customer completes shopping in less time, and the store can process more customers through checkout.

Has anyone else had experience with this? What do you think?


Book Talk: Using Hoshin Kanri to Improve the Value Stream

Sometimes one plus one is more than two. That can be the case when you link two separate lean tools. And that is the focus of Using Hoshin Kanri to Improve the Value Stream, a new book by Elizabeth Cudney.

The title makes it pretty clear which tools the books discusses. Cudney points out that organizations often fail at improvement because they go after symptomatic problems rather than the faulty system-wide processes at the root of those problems. She shows how to avoid this common misstep by using value stream mapping to create a current-state map.

But then comes the challenge of creating a future-state map – and, more importantly, achieving the goals of that future state. And that is where hoshin kanri – policy deployment – comes in.

Cudney - an assistant professor at Missouri University of Science and Technology who also has manufacturing experience – contends that hoshin kanri is not only a methodology, but an approach that will catch people’s attention, encourage their involvement and increase the momentum of improvement.

The book includes both a “Leancyclopedia” and a lean glossary.

Do you have a question or comment about a book(s) that you would like addressed in Book Talk? Email me directly at Ralph.bernstein@taylorandfrancis.com.


Author Note: Donald Dinero conducts TWI Webinar

We always like to promote our authors, so let me mention that Donald Dinero, author of Training Within Industry: The Foundation of Lean is conducting a free webinar on TWI next week. Be sure to check it out.


AIG Forgot About Customer Value

The furor over the bonuses paid to AIG executives reveals a fundamental problem, not only with AIG but with most Wall Street companies and probably many other corporations as well.

Before I get to that, let me mention a pet peeve that stems from my background as a journalist. I believe words should be used properly. If the bonuses on Wall Street are a major – and expected – part of an employee’s compensation, then don’t call them bonuses. Wall Street may have its own reasons for calling them bonuses, but if so, I take a different position.

However, that is a minor point. The major one is that huge bonuses distort what a business should be all about.

People work so they can make money to live and prosper. And the owners or shareholders of a business have making money (i.e., maximizing shareholder value) as their mission.

But that is different from the mission of the business itself – which should be, as lean advocates understand, to serve customers by providing them with value.

People are human, and they respond to incentives. When the incentives are huge – hundreds of thousands, or even millions, of dollars – that overrides everything else. Serving customers then takes second place to getting that big bonus.

The result is that everything becomes focused on making money, even to the detriment of customers. Wall Street firms eagerly throw money at mortgage lenders and brokers to buy the mortgages they’ve created because securitizing those mortgages produces huge profits. Never mind that the underlying sub-prime mortgages are junk that will eventually blow up in their faces. They justify their actions by deluding themselves into believing the value of real estate will always go up.

In the case of AIG, the company essentially assumed the risk of those assets on behalf of many other companies, eager to take the profits that came from doing so, foolishly assuming they would never have pay claims on the insurance they provided.

Ratings companies facilitated these deals, giving high ratings to products that never came close to deserving them – because it was so profitable.

Everyone involved probably claimed they were providing value for their customers. Everyone should have known better.

The best example I’ve heard recently of people who truly were concerned about serving customers was in a column written for The New York Times by Thomas Friedman.

I live in Montgomery Country, Md. The schoolteachers here, who make on average $67,000 a year, recently voted to voluntarily give up their 5 percent pay raise that was contractually agreed to for next year, saving our school system $89 million — so programs and teachers would not have to be terminated. If public schoolteachers can take one for schoolchildren and fellow teachers, A.I.G. brokers can take one for the country.

Executive compensation is a thorny issue, and I don’t have any easy answers on how it should be structured. I have no problem with people making lots of money, or even getting bonuses. I’m inclined to think bonuses should be tied to the rising and falling of the company’s performance, with stock options preferable to cash.

But whatever the structure, compensation should not get in the way of executives being dedicated primarily to providing value for customers.

AIG – and the rest of Wall Street – lost sight of that.


Lean Jobs: Current Salary Trends

Salaries for people in dedicated lean positions in manufacturing haven’t changed much in the last couple of years, and salaries in manufacturing generally are down since last year, according to the annual salary survey by Industry Week.
The magazine’s survey, based on nearly 1,700 responses, found that the average salary for a lean or continuous improvement manager is $83,387. Six percent of the survey respondents, or more than 100 people, fell into that category.
For comparison purposes, the same number two years ago was $81,846. The new number is up less than 2 percent over that amount.
Any the magazine found that the average salary for all people in manufacturing, $95,248, was down 9.7 percent from last year.
Lean skills can be valuable in a variety of manufacturing positions, and many people who are lean leaders work at companies that don’t have dedicated lean posts. For example, the average salary for a VP of Operations is $135,869. That is the second-highest salary for any position, after corporate management (CEO, COO, president). The average for someone in operations management not at the VP level is $79,043.
The lean manager job mentioned earlier pays less than any director or VP position, but more than a position in manufacturing/production management, plant or facilities management, supply chain management, or purchasing/procurement management.
The vast majority of survey respondents were white men. In fact, Industry Week used the survey results to describe the “average manufacturing manager”:

A white male, between 50-59 years old, has worked in the manufacturing industry for more than 26 years, lives in the North Central region of the United States (i.e., the Midwest), has been with his current company for 3-5 years, has a bachelor's degree, works for a manufacturing of industrial products or machinery, and earns $95,248.

Does your experience match the survey results (in terms of salary level, or salaries going down in the past year)? Post your comments below.


Book Talk: Lean Hospitals

Since its publication last summer, Lean Hospitals by Mark Graban has been one of our best-sellers. The book explains why and how lean can be used to improve safety, quality, and efficiency in a healthcare setting.

Many of you may know Mark as the author of the Lean Blog.

For this week’s book talk, I chatted with Mark about reaction to the book, as well as lean in healthcare. He said he has been getting a lot of feedback on the book, the most encouraging regarding senior executives (the target market) who said the book helped them understand lean is not just a set of tools (one of the book’s key points).

He commented, “I do get a lot of feedback in particular about Chapter 10, which talks about engaging and leading employees. People are really interested in engaging staff in continuous improvement. How do you motivate people to want to participate in lean efforts? The whole discussion of standardized work as a management system is helpful. It is not just a matter of writing documentation, but how do you manage, how do you engage people?”

A pleasant surprise is the amount of contact I’m getting from people around the world about the book,” he added. “In the last couple of weeks, I was contacted by somebody in Sweden who bought 100 copies to do training. There was a person in a hospital in Netherlands. It’s real exciting to see, and a gauge of how much lean thinking in healthcare is spreading throughout the world.”

Mark says he is very busy with his consulting work, even in the current economy. “In a way, (the economy) makes the case for using lean more compelling. While there has always been a focus on both operational and service improvements, and return on improvements, there is a little bit more focus now on hard-dollar-return on improvements.”

In addition, “One other situation hospitals are somewhat being forced into: If you look at capital expansion, one solution to problems in healthcare is ‘we just need more space.’ In the last five to 10 years, hospitals have learned they can actually use lean methods to make better use of the space they have. Now some hospitals are being forced into that. Lean is an alternative to improve productivity and service without that expansion.”

What progress are we making in seeing lean applied to healthcare? “In terms of the adoption curve, I think we’re still in the upward part of the curve. We’re beyond the area where people can credibly say this won’t work in healthcare. We’ve got the wave of hospitals, the early adopters, and now there is the wave of hospitals seeing what others have done, saying ‘OK, this does work.’ It’s hard to say what percentage of hospitals are using lean. There is not good data out there…

“It is certainly not the conventional wisdom in the industry yet. There are certain departments. We are right on the verge of it becoming the accepted notion in the laboratory profession. Lean laboratories significantly outperform traditional hospital laboratories. For hospitals as a whole, we are still educating people, still selling the notion of lean.”


Link Update: Leadership & Business

I’ve added Leadership & Business to the list of Other Interesting Sites below.

It’s a new blog written by David Silverstein, the CEO of consulting firm Breakthrough Management Group International (BMGI).

I don’t necessarily agree with everything David says. For example, he defends companies making deep layoffs in our severe economic times, a practice of which I am not particularly fond. But he also promotes the ideas that idle time is a great time to train people, and that the entire workforce should be engaged in improvement efforts. So I give him credit for that.

Be sure to check out his blog.


Hospitals Do a Poor Job of Reporting Problems

Complete and accurate data about performance are essential to any improvement effort. You cannot measure whether performance has improved unless you know what it was when you began, and what it is after improvements are made. That is true in every industry, including healthcare.

So I find it disturbing that some major healthcare institutions have questionable data about their performance.

According to The New York Times, the office of the New York City comptroller developed a report saying the city’s hospitals are the least reliable in the state at reporting preventable mistakes and adverse incidents for patients like heart attacks, blood clots, hospital infections and medication errors.

Though city hospitals accounted for almost half the patients statewide in 2006, they reported about 39 adverse incidents per 10,000 patient discharges, compared with nearly 70 per 10,000 in the northern suburbs and upstate and nearly 64 per 10,000 on Long Island…

Particularly since similar institutions are being compared, the report said, a higher number of incidents does not mean that a hospital provides worse treatment, only that it is more diligent about reporting problems. The lack of accurate reporting makes it virtually impossible for consumers to judge accurately the quality of a hospital or for the hospital to compare itself with its peers and make improvements, the comptroller’s office argues, saying the consequences include longer hospital stays and higher health-care costs.

“Without the fullest possible reporting, hospitals cannot identify areas where systematic improvement may be needed,” reads the report. “Weak enforcement and flagging commitment to a broad-based effort has compromised the whole program.”

A variety of hospital officials have questioned the validity of the report. But even if they have some legitimate points, the Times article, written by Anemona Hartocollis, notes that “a hospital’s size and the type of procedures it performs do not seem to explain the differences in reporting rates.”

This is an aspect of lean initiatives that doesn’t get talked about very often – the fact that improvements in data gathering and reporting may be required before actual process improvement takes place.

What is the worst data problem you’ve encountered related to improvement efforts?


Chicago Hospital Reorganizes – Poorly

Cross-functional teams are essential in lean, both in planning and in implementing improvement efforts. You need different perspectives to see all the possibilities. And you absolutely have to include the process users on the team.

Apparently the University of Chicago Medical Center doesn’t understand that.

The center is planning to reorganize its emergency room. According to the Chicago Tribune, the American Academy of Emergency Medicine, which represents 5,000 emergency-room doctors and residents, says the planning process is flawed because it does not include the center’s own ER physicians.

"Not including emergency-room physicians and nurses ... would be analogous to changing the way surgery is performed in an operating room without involving any surgeons or changing the way a cardiac catheterization lab works without cardiologists," said Dr. Larry Weiss, president of the American Academy of Emergency Medicine and a professor of emergency medicine at the University of Maryland...

Since the restructuring, the U. of C. said it has been meeting regularly with physicians and staff, including emergency-room personnel.

"Like nearly every hospital in the country, the University of Chicago Medical Center is trying to make the best use of limited emergency-care resources," the medical center said in a statement Tuesday night to the Tribune. "We are searching for effective ways to provide the right level of care for patients with widely varying needs. This process, still under way, involves the active participation of physicians and nurses."

There are also issues regarding the fact that the reorganization is aimed at clearing the ER of patients with non-urgent injuries and illnesses by redirecting them to community hospitals and clinics.

The American College of Emergency Physicians called for a Congressional investigation into the U. of C. initiative and whether it violates federal "patient dumping" laws…

The U. of C. maintains that its Urban Health Initiative and related emergency-room reorganization announced last week is about getting patients the right treatment at the appropriate location in a tough economic climate and that it does not violate the law. That announcement also included moves to terminate 450 employees in a major restructuring…

As a specialized teaching facility, U. of C. costs are much higher than those of other hospitals, its official say, so it makes more sense to refer patients elsewhere when possible.

The academic medical center in Hyde Park has said 40 percent of the 80,000 patients who come to its emergency room each year do not need to be there. These visits cost the hospital tens of millions of dollars a year in time spent by staff and specialists treating cuts, bruises and other less critical conditions that can be handled at community hospitals or health centers.

Beyond what may be a flawed planning process, I see other problems here. First, the Center could be focusing on having two different ways patients flow through the ER (i.e., value streams), one for true emergency cases, one for all others.

Second, I have to be skeptical of the claim that a specialized teaching facility has inherently higher costs than any other hospital. A lean strategy could undoubtedly find ways to bring those costs down.

The associations attacking the U. of C. could bolster their case by presenting examples of hospitals that have used a lean approach to improve planning and reduce costs.


Book Talk: Resources for Understanding Visual Controls

Visual controls are an essential foundation of lean. Proper use of visual controls eliminates a lot of wasted time by making it easier for workers to find what they need. Today I thought I would discuss some books that focus on this principle.

This is prompted by an email from Paul Harbath of the Utah Manufacturing Extension Partnership (MEP), who recommends Visual Workplace, Visual Thinking by Dr. Gwendolyn Galsworth. Paul, who is licensed to use Galsworth’s material, describes the book as using “the creation of a visual workplace to engage the shop floor people in the company’s continual improvement journey.” He says it has helped him achieve significant results in getting shop floor associates involved.

Along the same lines, we publish The Visual Factory: Building Participation Through Shared Information by Michael Greif. This book has been around for a long time, and that’s because it provides good information. It spells out how you can make the factory a place where workers and supervisors freely communicate so that every employee can take improvement action. And it discusses not only shop floor controls, but even meeting and communication areas. Like the Galsworth book, it features many color photographs.

Visual controls are directly related to 5S. We publish a lot of 5S books. I won’t mention them all here, but you might want to check out the classic 5 Pillars of the Visual Workplace by Hiroyuki Hirano, the easy-to-read 5S for Operators in our Shopfloor series, the handy 5S Pocket Guide, and 5S for the Office by Thomas Fabrizio and Don Tapping.

Finally, let me mention one of our more recent books: Understanding A3 Thinking: A Critical Component of Toyota's PDCA Management System by Durward Sobek and Art Smalley. I mention it because the A3 report – a single sheet of paper summarizing an improvement effort – is also a visual tool. But the key to using visual tools is understanding WHY they provide value. This book does an excellent job of explaining the thinking behind using an A3 report, and its role in a PDCA (plan-do-check-act) management system.

Do you have a question or comment about a book(s) that you would like addressed in Book Talk? Email me directly at Ralph.bernstein@taylorandfrancis.com.


Link Update: Green Enterprise Movement

Under the list of Other Interesting Sites on this blog, I’ve added a link to GEM – the Green Enterprise Movement.

GEM is a Toronto-based consulting firm whose goal is to help small and medium size businesses achieve environmental sustainability. That’s a laudable goal, and a good bandwagon on which to be jumping.

Brett Wills is one of the key people at GEM. He is also the author of a new book we are publishing, Green Intentions: Creating a Green Value Stream to Compete and Win, which will be available this summer. Several of us in the blogosphere have written about the natural fit between lean and sustainability, which is what this book is all about.

Be sure to check out GEM’s website.


Hospitals Cut Back When They Should be Streamlining

We’ve all read about some of the realities driving the push for change in healthcare: It costs too much, there is a lot of waste, hospitals need more capacity, there are too many errors, too many unnecessary deaths, and so on.

As if those weren’t enough, here’s another: Half of the nation’s hospitals are losing money, according to an article in the Los Angeles Times quoting an analysis by Thomson Reuters.

Hospitals typically get a big chunk of their income from investments, and that income has shrunk dramatically due to the stock market collapse. But that’s not all.

Paying admissions declined as people put off elective procedures and insurers tightened their grip on the length of hospital stays they covered. And the number of patients without insurance or the means to pay their part of the bill began to rise.

Hospitals are responding with cutbacks.

As a result, 47% of the hospitals surveyed expect to make staff cuts, and 69% plan to cancel or delay equipment purchases, according to the survey by Novation, a company that manages supplier contracts for hospitals.

That is not surprising, but it is disappointing. It might be possible to avoid, or at least minimize, cutbacks if hospitals were applying lean approaches to eliminate waste and increase capacity.

If only more of them realized that.


Lean Can Improve Fire Safety in Operating Rooms

I suspect most people don’t normally think of fire as something you should worry about when you go in the hospital. But apparently it is – and I believe it is also a problem that could be a prime opportunity for applying lean principles.

According to an article in The Wall Street Journal, the risk of fire occurs primarily – though not exclusively – in the operating room “because high-tech electrosurgical tools and an oxygen-rich atmosphere can create a combustible mix.” But there have also been reports of fires related to everything from the coils in MRI machines to bassinet warmers. Some patients have suffered severe burns.

While there is no national database of hospital fires and burn incidents, data from studies conducted in Pennsylvania indicate there are 650 surgical fires in hospitals annually in the U.S. -- and there may be three to four times as many "near miss" incidents, such as a surgical drape that begins smoldering and was extinguished quickly, says John Clarke, a trauma surgeon and clinical director of the Pennsylvania Patient Safety Reporting System. While a surgical fire is a relatively minor risk compared to infection, the fact that fire is "preventable and can have such serious repercussions for patients elevates its priority", Dr. Clarke says…

One analysis of closed malpractice claims by the American Society of Anesthesiologists shows that of 145 claims for burn injuries, more than half were from devices intended to warm the patient, while 31% were from electrical tools used for cauterization.

Many hospital workers are unaware of their hospital’s fire-safety guidelines, don’t know about many burn hazards and haven’t been trained in fire prevention.

Training in proper use of equipment and prevention methods is important, of course. But there is more to it than that.

Hospitals are also stressing the importance of teamwork in the operating room, where surgeons wield the heat sources, nurses and technicians dispense the disinfectants and ointments that can act as fuel, and anesthesiologists administer oxygen and nitrous oxide. Because each member of the team may be focusing on his own role in a procedure, "the No. 1 cause of fires is lousy communication" says Patricia Seifert, editor-in-chief of AORN Journal, the monthly publication of the Association of periOperative Registered Nurses. AORN developed a fire-safety tool kit that it sent to 13,000 operating-room directors and managers around the country, and it is now offering the kit free to its 42,000 members.

Remember those recent news reports about how the use of surgical checklists can reduce complications? Something similar is probably applicable here. Call it standard work, or use of a cross-functional team, or mapping of a process – pick your own lean tool. But my point is that a lean strategy and use of lean tools are clearly one of the best approaches for addressing this problem.