Daily Kaizen

So how should one think about inventory in a service organization? I am often in meetings where I hear leaders say “well I can see why reducing inventory is manufacturing is important, but we see patients and it just not the same.” Is this really true?

A couple of years ago I had a chance to spend a week with Japanese sensei during a kazien blitz at a large office products manufacturing company. All day he hammered the local managers to try and double their inventory turns even when they said it was not possible. One of the managers produced some reports that showed that reducing inventory one one of the lines was only going to save the company a couple of thousand dollars a year. Before he could share this with the Sensei (which would have been a big mistake) the local Lean champion told the leader the financial gains from reducing inventory where not nearly as important as the improvements associated with quality. This comment stuck with me.

Later that evening at dinner the Sensei talked a lot about the evils of inventory and how it led to sloppy practice. Inventory allows teams to smooth over problems and creates a buffer from variation in demand and production. By reducing or eliminating inventory it forces managers to deal with problems when they happen and even more importantly it forces the business to become proactive. Without inventory a team can no longer run their business by looking in the rear view mirror, the must instead anticipate the needs of the customer and plan.

From a healthcare perspective there are many examples of where if we had less or no inventory we would be far more effective. If we reduced our pharmacy and medical supplies down to 1-2 days on hand it would no doubt free up some capital. Yet, far more importantly it would force our managers to come together in order to anticipate our patients demands in ways far more proactive then we do today. We would need to know what patients are coming into our medical centers and what they need. It would call out how our schedules and hour of operation create huge amounts of waste due to variation.

For our medical practices building patient backlogs could be looked at as an inventory to buffer our supply of appointments and services from the changes in demand. If we move away from having backlogs and reduced the inventory of appointments not only would be have a better experience the chances are the quality of clinical outcomes would improve. We know patients with unmet care needs (inventory) have expensive outcomes and a lower quality of life. Additionally creating a system that responds in real time to patient demands would also help us understand how our own internal practices are driving huge amounts of waste.

For all of the reasons listed above I believe inventory reduction has a place in a healthcare organization.

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As I talked about in my last post we are getting ready to kick off the conceptual design work for our future Ambulatory Care system. Our aspirations are very bold in this work and we will be using breakthrough improvement techniques including 3P (Production, Preparation, Process). In many ways as an organization we have spent many years preparing for this next level of improvement. We have the discipline and stability of a Daily Management system; we have run many kaizen improvement and leaders and staff now talk a common language for improvement.

On Friday a group of folks from Group Health that are preparing for this change had a chance to do some deep learning and reflection. We convened a group of experts with experience from leading Lean healthcare (VM, Mayo, Everett Clinic, etc.) and industry (Toyota, Hill-Rom, etc.) organizations to share best practices and learn from each other. We asked the group to challenge our process and plan and the learning was very rich.

While there are many topics I could discuss about what we learned during the time together I am going to narrow in on metrics since this is a subject I have not brought up in a while. More specifically, how does an organization set appropriate and effective measures when it comes to breakthrough change? Over the last couple of years we have learned a lot about how to drive behavior and improvement by setting good measures. We have moved away from ROI’s, budget based measures and index measures which is all good news. Yet, from a cultural perspective we struggle with setting stretch targets. I have been in countless conversations over the last couple of years where leaders and team members have argued that setting targets that are more than incremental risk humiliating the team when they are not achieved. They further argue that physicians are perfectionists by their very nature and setting targets overly aggressive leads to burnout and frustration.

As an organization we will need to figure out ways to work through this since having incremental targets for breakthrough work will never equal success. It will lead us away from challenging the system in ways that are substantive. Teams can simply work harder to achieve a 10% improvement, while a 50% improvement takes a completely different system and level of improvement. Discussing this topic with our colleagues from outside Group Health they provided us with some good advice. Here are some of the takeaways I took from the conversations:

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  • First, setting stretch goals can be inspirational and motivating to staff if done correctly. As an organization we need to ask WHY people currently are resistant to these goals. Most likely we will find many example of how leadership behaved in the past when these goals were not met. Did people get disciplined, not receive compensation, etc? People have learned through management behavior that stretch goals are not good for them. We need to change that behavior. If a team is charged with 50% improvement and achieves 40% we should celebrate!

   

   

  • Second, focus on stretch goals that will drive new behaviors. They should be process focused and tangible. Reducing cycle time by 50% or 0% customer complaints will drive the right conversations. Having targets that are financial in nature will just confuse folks since they won’t know what to do differently. Leadership has to have the belief that by improving quality and delivery in the right ways will lead to the financial results.

   

   

  • Finally, they suggested that we simplify our scorecard and all targets should either by 50% improvement or Zero. For patient safety and critical quality measures we should always strive for zero errors. For improvements in throughput, cycle time and administrative rework we should strive for 50% improvement from baseline. I found this suggestion to be very helpful.

   

Over the next couple of weeks we will finalize our metrics and I will share them on the blog for your feedback. It will be fun to see how far we can go!

Popularity: 100% [?]

While I often whine to others about the frustrations of what is happening in my job the truth is that I am a very lucky guy. Over the last six years I have had the chance to work in a really generous organization that has made a significant investment in my development. Year after year I have been assigned new and challenging work that has been diverse in focus and content. Once again I get the chance to do something very cool and innovative.

Over the last year we have made tremendous progress in improving our clinical and business processes. Strategies like implementing the Medical Home model and putting in a Daily Management system have helped rapidly fuel growth and given a stable platform to build from. Yet, most of this work has been largely functionally based and constrained by our current structures and physical environments. Mostly we have focused on putting in place standard work and improving department flow. We have not yet focused on truly breakthrough improvement.

Back to my luckiness, in a couple weeks we are going to be beginning the conceptual design process for the ambulatory value stream that will shape Group Health’s future. This is my new assignment. Our senior leadership team has asked that we create what in Lean terms is called a “Model Line” where we will take two new “Greenfield” clinics and design for breakthrough improvement. We are being asked to step aside from the current constraints in policy, structure and flow and to think through “what will it take” to create a perfect patient and staff experience.

In order to fulfill these goals we will be using tools like 3P (Production, Preparation, Process) and IFD (Integrated Facility Design). As I stated above we will be starting with defining the conceptual design, but will move quickly into moonshine act ivies including having full scale mock-ups of the clinic in a warehouse. We will be concurrently designing the clinical and business process as well as the clinic/facility that will enable these processes to come to life. Just as exciting is our opportunity due to our business model to integrate our health plan capabilities into our clinical process. If successful we will be able to create truly Lean Solutions that will solve people’s problems, completely, when they want them to be solved.

My only wonder is what will I get to do next?

Popularity: 61% [?]