Health Care Realized

Measurable Progress in Health Care

Month: December 2016

5 Ways to Create a Toxic Culture in Your Hospital

l am often enticed to click on advertisements in articles that I am reading with titles similar to the title of this post.  Since the Holidays and end of the year responsibilities find me short on time, I’d like to tease my next post with the following list of things that many organizations do to undermine their culture and condemn their efforts to drive improvement to failure.  One of the most important(and least considered!) steps in implementing strategies to improve performance is getting buy in from staff.  Take a look at the list below and reflect on whether you or your organization has committed the following sins this Christmas Season:

  • Ignore Staff Satisfaction
  •  Experience Frequent Executive Turnover
  •  Fail to Articulate a Clear Vision
  •  Fail to Prioritize Patient Satisfaction
  •  Accept Mediocrity, Institute a Non-merit Based System for Advancement, Nepotism

What’s not Waste?


As a follow up on my last post  identifying waste as described by Lean methodology, I’d like to emphasize what is not waste.


As anyone with experience in Lean workouts knows, there can be quite a feeling of exuberance in identifying areas for improvement and seeing cost savings materialize as a result. The challenge is to ensure that we don’t get carried away.

Waste in Real Life

I work with a hospital who had spent millions of dollars to have a team of Lean consultants identify cost out opportunities.  As part of a Kaizen workout, they identified supply closets as poorly organized, with some supplies overflowing from a shelf and empty bins labeled with supplies that were MIA.

In what seemed like a logical exercise, they polled the staff about the frequency with which they used each of these items and correlated their responses to the ordering and par levels that had been established in purchasing.

After this exercise was complete, they found an old Arctic Sun device, buried under half opened packages and covered in dust.  Since no one could remember using it, and Biomed had never performed annual maintenance on it, the consultants recommended throwing it out to make space for items that would be more “valuable”.

Unfortunately, when a few months later a patient with a spinal injury was admitted to the ICU and required core cooling for the therapy prescribed by the medical team, there was no equipment available to support this protocol. Fortunately for the patient, they had this system in the ED, but this situation resulted in the hospital purchasing a new fleet of warming/cooling systems at a tremendous cost because the cost of stocking multiple types of blankets was prohibitive.


Is this optimization?

Just because an airplane can fly faster and more efficiently when 10% of its fuel is discarded in response to certain flying conditions, it doesn’t follow that eliminating the other 90% will yield proportional gains in efficiency.

The danger in utilizing Lean and other programs in the hospital setting is that the observations that support making the changes are snapshots in time.  It is nearly impossible to know whether the baseline for operations over the last year will be at all representative of the conditions in the next 12 months.  The inclination to create a totally “Lean” efficient system is very compelling, but without leaving slack to accommodate an ever changing environment, you can hyper-engineer your processes.  This can create competing incentives within your processes, and leave the hospital unable to be flexible.

Where are the trade-offs?

Operational leverage—by which I mean leveraging the efficiency of the organization against the risk of perturbations to the system.  An example of this in everyday life is road construction.

When planning for a road is done, the plan is to make it completely efficient based on the number of cars that will use it. Once the road is completed, the initial conditions may change dramatically.  For instance, because the road provides access to previously unoccupied land, businesses may come in and line the road causing backups at exits, and increased traffic between exits.  In a very short period of time the road that was sufficient to support this route as it was at the time of planning is woefully inadequate.

Bottom Line

The point here is that there are likely a great number of things that are done well at your hospital.  Moreover, it is human nature to hedge—by putting a few extra dressings in a special drawer for emergencies for instance.  Make sure that by streamlining your processes, you are not eliminating the human element.  With a holistic understanding of your hospital, you can marry process to expertise to culture and create a truly optimized organization.

Labor Costs in Healthcare and Lean Methodology

lean-labor-pictureIs Labor Waste?

Over the last 10 years it has become increasingly fashionable to incorporate Lean principles into hospital operations.  As many readers are likely aware, Lean Methodology is derived from the manufacturing processes developed by Toyota to improve quality and reduce cost that continues to be used effectively.

As part of operational excellence initiatives by companies such as Motorola, GE, and others, Lean, 6Sigma, as well as iterations of Total Quality Management developed by W. Edwards Deming were instituted through the 80’s and 90’s and have become mainstays from business school to the boardroom.  In recent years, hospitals have joined the fray.

Ultimately, the question that needs to be answered as we consider using these tools in our hospitals is: what outcome can we reasonably expect from implementation?

There are two areas that are targeted as part of any workout and subsequent project.  Lean focuses at the most basic level on maximizing “Value Added” activities, and minimizing waste.  Hospitals, by their very nature provide a great deal of value which is underpinned by research and EBM initiatives.  Though we can always train better, and adopt best practices faster, the medical community has always been effective at developing new cures and procedures to improve outcomes.

In today’s post, I would like to focus on waste.

Where is the waste?

  • Waste associated with reimbursements
  • Uncompensated care
  • Waste associated with data that is acquired, but not used
  • Waste in the form of expertise that goes unused because collaboration is hindered by incompatibility in technology, poor process management, lack of vision.

How do we manage waste?

One of the principles that is integral to the success of the Toyota Production System is that everyone has  a stake in the process. Everyone is considered a respected member of the team, and their work is valued. If there are defects in their work, it is considered a problem with the process rather than with the individual.

The story that often is told to illustrate this is of the janitor who is cleaning around the production line. When he notices that the lighting is inadequate to ensure that the floor is clean, he stops the line knowing that if he can’t see well, other workers on the line may miss something and pass an error along through the manufacturing process.

To ensure the buy in of all employees, few if any employees are ever fired, and budget cuts result in executives reducing their pay. Some say this is more applicable in Japan, but similar productivity has been seen in Toyota factories in the US.

So how does this relate to hospitals?


Frequently, I see hospitals institute layoffs, then several months later hire staff to fill the same positions. This creates resentment in the folks who stay, and cynicism in those who are forced to look for work. While a snapshot of the balance sheet for the few weeks following the layoffs shows reductions in labor costs, the added expense of cross training and rework can cancel out these gains.  More importantly, productivity can be dramatically reduced.

According to work done by Tom Muha, PHD referenced in his article Medical Errors Why don’t nurses speak up? hospital productivity in the US is in a lot of trouble:

“Surveys show that over 50% of the staff in a typical hospital are disengaged, only performing their jobs and doing the minimum required to collect their paycheck.

Even more startling is that up to 20% of hospital workers are “actively disengaged.”

What proportion of the staff at your hospital falls into these categories?

The bottom line

As Medicare continues to emphasize bundled care reimbursement, it is critical that expenses are reduced to achieve margin targets.  Labor is traditionally one of the largest costs on a balance sheet and may appear to be an easy target for cuts.  The impact on operations is such that any short term gain is vastly outweighed by significant losses.  Driving more efficient operations will likely require more rather than fewer personnel, though they should be better tailored to their roles.  The greatest source of waste  is likely found in preventable complications which can result in huge costs and for which there is no reimbursement.

Ultimately the greatest form of waste is poor patient outcomes.  Better managing this type of waste will drastically reduce costs and support revenue generating opportunities.