Lean and Mean

June 24, 2011
Gary Kaplan, M.D. Improving care while effectively managing costs is one of the central challenges faced by the modern healthcare industry. Over
Gary Kaplan, M.D.
Improving care while effectively managing costs is one of the central challenges faced by the modern healthcare industry. Over the past few decades, hospitals have slowly begun to adopt business and management practices from other industries, which has led to a re-evaluation of the patient-provider relationship.

In 2000, executives at Virginia Mason Medical Center, a non-profit regional healthcare system in Seattle, were tasked with finding a more patient-centric (as opposed to facility- or physician-centric) way of operating.

“Our board challenged us to take a closer look at our practices and processes to make sure everything we did was for the benefit of the patient,” says Gary Kaplan, M.D., Virginia Mason's chairman and CEO. “That's when we realized we needed a new management method that would work in our industry to improve care, reduce waste and allow us to spend more time with patients.”

Kaplan and his team turned to an unlikely source for inspiration: Toyota. The Japanese auto manufacturer has become an industry leader, in part because of the success of the Toyota Production System, a precursor of the Lean production methodology that is focused on eliminating waste and inconsistency.

With Toyota as its model, the hospital developed what it calls the Virginia Mason Production System, applying the methodology to everything from reducing patient wait times to better managing its surgical instruments. In the process, the hospital has saved millions of dollars and greatly improved the efficiency of its staff.

More and more hospitals are turning to quality and operational management techniques with origins in the manufacturing world like Lean, Six Sigma, and Total Quality Management (TQM). The Joint Commission on Accreditation of Healthcare Organizations has embraced many of these approaches as well.

Still, according to Chip Caldwell, president of St. Augustine, Fla.-based consultancy Chip Caldwell & Associates, only about a third of hospitals are actually using these approaches. “Most industries have much higher adoption levels,” Caldwell says. “There are competitive pressures in other industries that we just don't have in the healthcare space.”

It's important to note that Lean and Six Sigma, although they share some similarities, are not exactly the same. Six Sigma is a problem-solving methodology focused primarily on reducing process variation (or defects), while Lean focuses more on improving process flow (and efficiency). Some companies and consultants have combined the two into “Lean Six Sigma.”

Both approaches have been successfully deployed in hospitals, but typically with some minor modifications (at least in teminology) to fit the healthcare environment.

“On the Lean side, we have to do some translating,” says Caldwell, who is also a former president of the HCA Atlanta health system. “Six Sigma is suitable to almost any way of thinking. It's really a marriage of statistics and engineering. When you take all the mumbo jumbo out of Six Sigma, it's a model for experimentation.”

Patient satisfaction

Ronald Whiteside
Since 2000, Virginia Mason has conducted more than 550 Rapid Process Improvement workshops involving nearly 4,000 staff members, and the results are impressive. The hospital has saved $11 million in planned capital investments, freed 25,000 square feet of space, reduced inventory costs by more than $1 million, reduced the time it takes to report lab tests results to the patient by more than 85 percent, and reduced staff walking time by 60 miles per day.

“The big picture is that we're seeing improved patient satisfaction, better access to physicians, greater safety and quality, increased staff satisfaction and more efficiency and productivity throughout the organization,” Kaplan says.

Tomas Gonzalez, M.D.
Mount Carmel Health System, which operates four hospitals in the Columbus, Ohio area, has been using Six Sigma methods since 2000, and has generated a combined $79 million in cost reductions and new net revenue through efficiency improvements and by reducing insurance denials and bad debt.

“At the time, we were struggling financially and were trying to find a way to get out of this perpetual cycle of struggle and recovery,” says Mount Carmel Executive Vice President and COO Ronald Whiteside. With the help of Longmont, Colo.-based consulting firm Breakthrough Management Group (BMG), Mount Carmel deployed Six Sigma to help reduce its operating costs, increase patient throughput, and increase revenue.

As is often the case with Six Sigma and Lean projects, Mount Carmel frequently uncovered surprises. For example, the hospital had a high ambulance diversion rate because of back-ups in its emergency department. The project team thought these delays originated in the ER, but discovered that bed management practices were actually to blame. “There are a lot of ‘a-ha!’ moments when you starting digging into the details,” Whiteside says.

Improving care

Improving throughput and wait times can help the hospital service more patients while reducing costs. But the financial benefits are only part of the story. Patient care can also be improved, sometimes dramatically, using these techniques.

Nowhere is this more apparent than in Virginia Mason's Floyd & Delores Jones Cancer Institute, which was designed from the ground up with Lean principles in mind. All services, including infusion rooms, labs, a pharmacy and even social workers and support groups, are organized to flow to the patient.

The result: Wait times have been drastically reduced or eliminated, and patients are able to receive the majority of their treatments in a single room. Oncologists, nurses and customer service staff are centrally located, and computers on wheels (COWs) provide real-time chart access.

This centralized approach can be a godsend for patients already weakened from their chemotherapy treatments. “For one patient, this reduced his visits from 10 hours down to two, and we saved him about 500 feet of walking,” Kaplan says.

Valley Baptist Health System, which operates medical centers in Harlingen and Brownsville, Texas, has applied Six Sigma across multiple processes, improving patient outcomes and saving millions of dollars in cost avoidance. The hospital began using Six Sigma at the behest of new CEO James Springfield in 2002.

“The goal was simply to make things better,” says Tomas Gonzalez, M.D., senior vice president and chief quality officer at Valley Baptist. “There were no target figures in mind other than improving our processes to help patients, and maybe help our bottom line.”

Valley Baptist has not only applied Six Sigma to operational projects like reducing wait times and length of stay, but has also initiated a number of projects focused directly on patient outcomes. One of the hospital's biggest successes was reducing the incidence of ventilator-associated pneumonia by adhering to basic safety guidelines (like washing a patient's mouth out twice per shift). Gonzalez says the team was able to decrease the pneumonia rate by 86 percent, decrease length of stay by 19 percent, and decrease the mortality rate by 10 percent — and achieve a total cost avoidance (including the reductions in length of stay) estimated at $3.1 million.

Gonzalez emphasizes that Valley Baptist has focused primarily on the clinical return on investment of Six Sigma, rather than the financial returns, decreasing mortality rates associated with acute myocardial infarction, congestive heart failure, community-acquired pneumonia and other conditions by significant amounts.

“What is important for other providers to understand is that Six Sigma is a tool that can be used to implement evidence-based medicine,” Gonzalez says.


Deploying new management techniques does not necessarily mean they will always be successful. Even in the manufacturing world, both Lean and Six Sigma have had mixed results. In healthcare, these initiatives can stumble if executives fail to take the broad view of how information and patients move throughout the entire facility. An improvement in one department can create a backlog in another.

“We started in the OR, and we didn't see any savings,” says Mount Carmel's Whiteside. “There are so many moving parts in the OR that doing one project just wasn't going to create any savings on the other end. We had to create a bunch of projects around scheduling, pre-admission work, discharge, and other operations to see any improvement.”

Says Gonzalez at Valley Baptist: “We stumbled for about two years before we really got our feet on the ground. I'd say about 60 percent to 70 percent of projects have been successful. Not everything you touch will work, and not everything you fix stays fixed.”

A bigger issue in the hospital environment is resistance from staff, particularly physicians and nurses, who either don't believe these manufacturing-based methodologies have any place in healthcare, or who are unwilling to accept that new processes are needed. In a few cases, executives and even physicians have resigned rather than participate.

“The downside of being in such a highly professional industry is that we have a lot of very strong personalities,” Caldwell says. “Consequently, almost every new idea that gets to the bedside of the floor goes through a lot of scrutiny.”

It's important to engage the staff early, and to make the goals of the projects as accessible as possible. Having some physicians lead these initiatives (as was the case with Gonzalez at Valley Baptist) can also be helpful.

Having top-level executive support is another critical early step. “Introducing a new management method in an industry as entrenched as healthcare requires change management approaches, and that starts with changing the minds of leaders,” Kaplan says. “This is not a top-down methodology, but unless the leaders' minds have changed, it can't be implemented.”

Getting started

Initially, many healthcare facilities turn to outside consultants to get them started. However, the goal in both Lean and Six Sigma environments is to train staff so that continual improvements can be made over time. Valley Baptist, for instance, worked with GE Healthcare Performance Solutions (Waukesha, Wis.) during its Six Sigma implementation, but now handles its training internally.

Kaplan says it's important to have a clear understanding of how your existing processes really work. Measurement is a key part of that understanding, and hospitals that have been successful in these initiatives rigorously record everything from how long patients wait on the telephone to how far nurses walk during the course of a shift.

“We think we know the work we're doing, but until you apply a systematic, rigorous method of observation, do you truly understand the work?” Kaplan asks. “You cannot take waste out of the process until you understand the process.”

Improvement projects also have to be designed with the entire organization in mind. Otherwise, bottlenecks are just moved from one department to another.

“The organizations really making the most use of Six Sigma and Lean are those that apply the techniques for large, core processes instead of departmental-specific processes,” Caldwell says. “If you put functions together, like the emergency department and bed management, it's very complicated, but those are where the big gains are.”

Hospitals also have to invest in resources and training, and maintain their certifications in whatever techniques they deploy. Staff members that lead the initiatives may have to devote significant portions of their time to project work. While not every hospital will go as far as Virginia Mason (the hospital has sent more than 190 staffers abroad for training and to tour Toyota facilities), this investment is critical to maintaining any gains or improvements.

Above all, it's important to keep in mind the overarching goal of the hospital: to optimize patient care.

Web Sites

Six Sigma


The Lean Enterprise Institute


“My patients tell me that something is different now,” says Kaplan, who is also a practicing internal medicine physician. “You don't have to wait as long on the phone. The doctor doesn't have to leave the room as often. When you press the call button, you don't have to wait on the nurse; they're right there.

“Previously, our nurses were spending 60 percent of their time doing things other than direct, hands-on care,” Kaplan continues. “That's one reason we have a nursing shortage in this industry. By using these methods, we're trying to make the work more meaningful for our staff, and that directly translates into better patient care.”

Brian Albright is a contributing writer based in Columbus, Ohio.

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