Management

Driving Hospital Performance to the Next Level

Applying lean principles in healthcare brings significant changes in the way hospitals operate

"Hospitals are experiencing severe capacity constraints which affect service quality and physician and patient satisfaction" - Tajinder Vohra Senior Vice President Healthcare, Procurement & Supply Chain Services Genpact

Technology and pharmaceutical development led the first three waves of healthcare industry innovation and have advanced enormously over the last several decades. However, there has been little change in the processes deployed by healthcare providers as they remain relatively untouched by the tools and techniques, successfully used in other industries to drive efficiency and effectiveness.

Lean and six sigma are methodologies, which until recently, were practiced primarily in the manufacturing industry but are now being implemented in the service industry as well. While healthcare has many unique operational nuances, there are significant functional processes that overlap across other industries. However, application of lean six sigma tools in healthcare is not as straightforward as it is in manufacturing.

Healthcare has different levels of complexities and non-deterministic flows which makes process optimisation tougher. Lean and other such frameworks when adapted to healthcare, have the potential to fully unleash the power of the processes within hospitals.

Challenges Faced by Hospitals

The Indian healthcare system faces some significant challenges:

• Insufficient capacity: Hospitals are experiencing severe capacity constraints which affect service quality and physician and patient satisfaction. The problems range from a lack of available beds, to Emergency Room (ER) overcrowding, to an increasing nursing shortage and delays in patient care. These problems constrain a hospitals' ability to develop new patient services and enhance revenue streams.
• Sub-optimal operational performance: Hospitals focus on improving departmental level efficiencies in delivering quality patient care. This siloed approach leads to multiple hand offs, inefficient use of infrastructure and can have potential patient safety issues.
• In-effective cost and material management: Issues such as overstocking and high stock of expiring and unused medicines, multiple points of storage and inability to track actual consumption add to a hospital's challenges.
• Sustaining performance: The lack of standard measurement systems to track performance of hospitals also impacts efficiency levels. Even in the best run hospitals, data and metrics are used only to diagnose past issues and not to predict and proactively tackle potential issues related to patient experience and safety.

Varied Solutions

• Building new hospitals and expanding existing infrastructure.
• Deploying more resources - physicians, nursing staff, equipment and technology.
• Increasing inventory levels of medical and non-medical supplies.
• Providing relevant medical training and financial incentives.

These solutions are all capital intensive, possibly one time solutions and not always easily implemented. The industry is in need of an alternative business model which can positively impact financial and operational issues.

Lean in Hospitals

Demanding customers and increasing cost pressures are forcing healthcare providers to realise the importance of improving quality and safety and eliminating waste as strategies for responding to these challenges mentioned earlier.

In most hospitals, clinical processes encompass only 10-30 per cent of total processes. Non-clinical or back office processes make up the balance. Within this area lies an opportunity to dramatically decrease costs and increase efficiency through the adoption of alternative business models. Hospitals are unable to leverage their full potential and true value which can be unlocked by applying the correct tools and methods to their individual processes.

Applying lean principles in healthcare brings significant changes in the way hospitals operate. However, lean should be applied across all departments and functions inside a hospital to fully leverage its potential. This end-to-end approach enables continuous improvements in hospital processes and makes the improvement process very deterministic instead of a discovery exercise.

Lean applied end-to-end cuts across departments, hierarchies and the operational complexities of hospitals. This covers the entire cycle of patients visiting for a treatment and hospitals getting the payment-called Visit-to-Cash (V2C), processes include:

• Primary Care Physician to Pre-Registration.
• Door to Diagnosi.
• Lab - Order to results,
• Radiology - Order to results
• Diagnosis to Dispositio.
• ICU transfer to completion of care.
• Medical prescription to Administration.
• Intent to admit to patient roomed.
• Intent to discharge to room readiness.
• Pre-operation to Transfer Out (OR).
• Warehouse/ Pharmacy to Point of Use (Medication/Medical Supplies).
• Patient access and on-boarding.
• Utilisation review.
• Administrative processes (billing, AR, AP)

Some examples of how process can be improved by deploying lean across the V2C cycle include:

Patient Experience

• Stitch-to-cut cycle times impacting surgical suite availability can be improved by 4-6 per cent in 90 days by improving the patient flow process.
• Patient walk times can be reduced by 20 per cent by optimising process flow and ergonomics.

Supply Management

• Pharmaceutical and non-pharmaceutical stock levels can be reduced within the first 90 days to prevent overstocking without impacting care-giving processes.
• Overall supply costs can be further optimised by 8-12 per cent by moving from physician preference items to standardised supplies.
• Expiration of medication and obsolescence of supplies contribute 1-3 per cent of total operating costs of wards and can be reduced by 30 per cent within 90 days.

Payments/Cash Management

• Potential exists to improve first time right in billing by up-to 5-30 per cent each by fixing avoidable and manageable root causes.
• Payer denials can be significantly reduced by fixing upstream processes like patient referral systems.

Key Benefits of Applying Lean in Hospitals:

• Delivers P&L identifiable impact using a tested and non-intrusive diagnostic and delivery mechanism - Increased revenue and margins and improved working capital.
• Identifies and builds a roadmap to best-in-class organisation by linking granular level process to critical business outcomes.
• Provides measureable improvements in a short time span by simple yet scientific tools and method.
• Standardises processes and procedures leading to significant improvements in the areas of care quality, cost-effectiveness and patient satisfaction.

The Road Ahead

As the healthcare sector reinvents itself, it is clear that survival will now depend on not doing more of the same but viewing challenges differently and applying newer paradigms to how hospitals are structured to deliver care. Hospitals will have to move from departmental 'silos' to 'value flows' and process thinking is going to be the most important lever for hospital CEO's.

Lean has proven to be an effective tool in developing and implementing a continuous improvement blueprint of hospitals' key processes. This allows hospitals to focus on clinical excellence while being able to get maximum efficiency from support functions. It shifts the focus from managing in silos to managing processes that can be resilient and delivering sustained results.

tajinder.vohra@genpact.com