There is no question that miraculous things happen in medicine in the US every day. For all of the wonders of medicine, the number one domestic issue for Americans—now being resurrected, as the election is past—is healthcare. The concerns range widely, but center on cost, access and quality. There is much discussion regarding the need to redesign the system, with a primary focus on the mechanism for entry into healthcare: health plans (or what so many used to call insurance companies). There are those who will castigate the insurance companies as miserable and expensive arbiters of access to necessary medical care and there are certainly enough anecdotal stories regarding seemingly irrational insurance company behavior to warrant at least a closer look at these mechanisms. Michael Moore’s movie ‘Sicko’ fanned the flames of this constantly smoldering issue. There are many who vilify the government for its neglect of those most in need, the poor and the elderly. And there are many who reveal the periodic episodes of immorality and ethical failures of doctors and hospitals, both for profit and not—for—profit.

But for all of the criticisms of healthcare in the US, there is nowhere near enough focus on the industry itself and its woefully poor effectiveness at solving the problem. The reasons given are usually lack of resources or money, but this is simply due to today’s healthcare management paradigm.

There is plenty of money in the healthcare system to do all that one might reasonably want to do. Unquestionably there is money available in more efficient methods of managing healthcare benefits; easily 10 per cent of total healthcare costs currently administered by the private insurance industry could well be liberated through a single payer system. Beyond this, the private purchasers of healthcare (employers and health plans) could simply buy more prudently, as does Medicare. But more important is recent data on small scale applications of new management methods for operating healthcare delivery systems. Extrapolated nationwide, this data shows unequivocally that there are millions, more likely billions, more in dollars available through the elimination of defects and waste in actual healthcare delivery.

In 2003, the senior executives of the Virginia Mason Medical Center in Seattle, Washington, reported on its early findings of its full scale commitment to applying the Toyota Production System (what is called Lean Manufacturing by the industry) to its healthcare processes. It reported an average of 50 per cent improvement in access, cost reduction, throughput, and waits and delays. It showed dramatic improvements in defect reduction, safety and clinical outcomes. Their presentation to the CEO Forum of the Institute for Healthcare Improvement (IHI) National Symposium was well received by healthcare CEOs and considered “interesting but not sustainable.” Four years later, the results continue to be validated and expanded within Virginia Mason and in several large healthcare systems in the US. Today, there are few reputable organisations in healthcare which are not testing or, at least considering, what Lean would do for them.

This work has shown that quality can be dramatically improved and costs significantly reduced. It has shown that customers and staff can be much happier. It has shown that the elimination of waste can free vast resources.

The implications of this work on a broad scale are enormous. In the pursuit of perfect (zero defect) healthcare, one can improve the quality and safety of the product, improve access, improve customer and staff satisfaction, reduce costs and improve margins; all without adding resources—without adding additional costs. It is not true that there is a scarcity of dollars for healthcare—the truth is that there is an abundance.

On an international scale, healthcare in the US simply underperforms most industrialised countries on many critical dimensions: cost, access to healthcare and health and well being (infant mortality and life expectancy). The US has “by far the most expensive healthcare system in the world, based on healthcare expenditures per capita (per person), and on total expenditures as a per centage of gross domestic product (GDP)…the US spent $4,178 per capita on healthcare in 1998, more than twice the…median of $1,783 and far more than its closest competitor, Switzerland.”¹ The reasons for such high cost are multiple: the high cost of medical technology and prescription drugs, wide variation in practice patterns of the clinical healthcare system, the cost of the uninsured, the aging of the population, relatively small investments in preventive care, and the high cost of the very complex multiple payer system in this country. Administrative costs abound, as “it has been estimated that between 19.3 and 24.1 per cent of total dollars spent on healthcare in the US is spent simply on administrative costs.”²

The US is the only country in the developed world, except for South Africa, that does not provide healthcare for all of its citizens.³ According to a survey by the Centers for Disease Control and Prevention, released in June of 2007, “about 43.6 million people in the US, or 14.8 per cent of the population, had no health insurance in 2006…About 54.5 million people in the country, or 18.6 per cent of the population, had no insurance for at least part of 2006…about 9.3 per cent of the children under 18 did not have health insurance.” ⁴ These figures indicate the gaps in our current system, gaps that can be filled through a reduction of waste and emphasis on quality.

There are many indicators of health and well being, but some of the most popular are infant mortality and life expectancy. The US lags in these categories as well: “In 1996, the US ranked 26th among industrialised countries for infant mortality rates,”⁵ and “very low (24th) on disability—adjusted life expectancy.”⁶

On the national scale, there are several factors that underlie the poor performance of the industry and are within the accountability and responsibility of the industry: lack of uniform adoption of scientifically validated best clinical practices, lack of commitment to the safety of patients, lack of understanding of the relationship of quality and cost, lack of commitment to patients as customers, lack of a management paradigm to deliver best products and lack of common vision by healthcare leadership as to what is possible.

It has been known for almost 30 years from the work of Dr. John Wennberg of Dartmouth that there has been wide variation in practice patterns and costs of healthcare with little correlation to better results. His data has shown that more is not better. “What is so profound—and so scary—is that the data is so powerful, and it doesn’t change,” observes Dr. Christine Cassell, president of the American Board of Internal Medicine, “There is a stark correlation between reduced utilisation and better outcomes.”⁷ There is ample data to show that the wide variation in practice patterns makes little sense, is not better for patients and is more expensive.

In addition, the studies and data abound with respect to best medical practices for the treatment of a wide range of clinical problems, which result in better outcomes and far less cost than many prevailing practices. Variation in the application of these standards results in worse outcomes (sometimes death) and higher costs. This is in large part the basis of the original “100,000 Lives Campaign” of Dr Don Berwick, CEO of the IHI. He challenged hospitals across the country to adopt best standard medical practices to save the lives of patients who should not die in hospitals because of lack of adherence to known best practices. This followed on the heels of the 1999 report from the Institute of Medicine report “To Err is Human”, which reported that 55,000 to 98,000 patients died in hospitals due to medical error. Wennberg and many others, including Berwick, have challenged the healthcare industry to uniformly implement what is known as best. But it has been challenging as it assaults the independence of the industry and the professional autonomy which is so insidious in healthcare.

What is missing in healthcare was discussed in the author’s article “97.1 Per cent Perfect: Healthcare Leadership’s Pinto” in the Journal of Health Administration in the Spring of 2005. It is a vision of zero defect healthcare that is affordable to all. Moreover, what is missing is a management paradigm to enable that vision. This is why the healthcare system is failing. The current belief that the system is not manageable and that healthcare is too much of an art is simply not true.

In 2000, the chance meeting with an expert in the Toyota Production System from Boeing, Mr John Black, showed the wonders of what can happen when processes are perfectly designed to meet the needs of the customer. A philosophy pioneered over the last 50 years ago by the Toyoda family and the Toyota Corporation, its aim is to produce perfect products for its customers. In the process, it also produces at the lowest cost and produces the best products. Toyota’s principles, commonly called “The Toyota Way,” are based upon two pillars: continuous improvement and respect for people.

Toyota’s respect starts with the customer. It is obsessed with the needs and wants of the customer and cannot imagine giving the customer a product that is untested and unsafe. Beyond this, however, Toyota tries to get into the mind of the customer to anticipate what they will need and want. Its respect then continues to the worker at Toyota. Toyota is committed to making sure that its workers are well-appreciated and that they have the training, skills, equipment and environment in which to excel. They rely on their people to constantly improve their work and methods.

Toyota’s commitment to improvement is legendary. They are constantly striving for improvement, starting with a vision that is truly beyond what anyone would consider reasonable, and then working daily at improving and achieving their goals.

The implementation of the Toyota Production System has shown at Toyota (and in every industry where it has been implemented) reductions of waste by at least 50 per cent. In what James Womack and Daniel T Jones called “Lean Thinking,” the Toyota Production System yielded at least:

• • Half the human effort in the factory
• • Half the manufacturing space
• • Half the investment in tools
• • Half the time to produce the product
• • At least half the inventory on hand
• • Dramatic reductions in defect
• • Greater flexibility to produce a greater variety of products and
• • Significantly lower costs

In addition, Toyota’s key principle of “zero” pushes the organisation towards perfection in production. John Black, who introduced the Toyota Production System to Virginia Mason leaders, observes in A World Class Production System, “zero means zero defects, zero changeovers, zero inventory and even zero quality control.” It means, zero waste, zero breakdowns, zero customer dissatisfaction, zero non—value added work and zero lost opportunity.

How does this apply to healthcare, the customer of which is people? Exactly in the same way. Everything that healthcare does is a process, albeit generally not in a standard way. This is the essence of the criticisms of Berwick and Wennberg. There are no standards in healthcare. There are best practices, but standards mean best practices always followed in exactly same way. For practitioners of the Toyota Production System, this is called standard work. It is the basis for all work and the basis for all improvement.

At Virginia Mason, Thedacare in Wisconsin and the Park Nicollet Healthcare System in Minneapolis, Minnesota, this concept of standard work was initially resisted until it became obvious that it was precisely the lack of standard work that led to errors, defects, waste, poor performance, poor morale, high cost and customer dissatisfaction. As Virginia Mason adopted the Toyota Production System as its management method and systematically trained its leaders and staff, it began to see the dramatic elimination of waste and remarkable improvements in processes. It saw changes that it had never deemed possible and began its journey to zero defects in all of its processes. Through its implementation of best practices in critical care, standard work for Ventilator Associated Pneumonia (VAP) called the Ventilator Bundle; it reduced VAP by 92 per cent .⁸ This meant 37 less patients who contracted this illness, a cost reduction of $ 1.5 million and no one dying of complications related to this illness. Through its implementation of continuous improvement, it increased procedure room throughput in Gastroenterology by 50 per cent as well as its margins, all without adding additional capacity.⁹ It reduced its surgery billing cycle time by over 60 per cent.¹⁰ It improved nurse time at the bedside of the patient from 35 per cent to nearly 90 per cent.¹¹ Time and time again, Virginia Mason and now, many others across the country, have experienced these magnitudes of improvements in all of the processes it has attacked.

The core issue in healthcare delivery is not the absence of resources to care for customers. It isn’t even the lack of knowledge of what practices would be best. If all the best practices that are known in American healthcare were uniformly implemented, quality and safety would soar and costs would drop dramatically. But it takes the commitment of leadership. And that commitment starts with a vision. A lofty vision: perfect healthcare for one’s customers. Such a vision is “customer first.” The vision is a fanatical obsession with customer needs and wants matched by an equal investment in the people doing the work. It follows with a deep understanding of what the people in healthcare are doing, largely hampered by the incredibly complex and inept processes that have evolved over time. And it requires the relentless courage and passion of leaders to shake free of the chains of the current healthcare management paradigm and embrace a new concept of leadership: customer driven, employee validated, morally astute and constantly pushing forward.

In the July—August 2007 Harvard Business Review, Mr Katsuaki Watanabe, President of Toyota is interviewed and asked about his vision for Toyota. He replies, “I want Toyota to come up with the dream car – a vehicle that can make the air cleaner than it is, a vehicle that cannot injure people, a vehicle that prevents accidents from happening, a vehicle that can make people healthier the longer they drive it, a vehicle that can excite, entertain and evoke the emotions of its occupants, a vehicle that can drive around the world on just one tank of gas. In my vision for the future, the most important themes are the environment, energy, safety and evoking emotions and comfort.”¹²

What a remarkable vision…from a man who makes cars. What would that vision look like from a healthcare leader? Perhaps, “I want to create a healthcare system that knows so much about its customers that we are more concerned with their health than they are. Not only do we provide perfect healthcare for them when they are ill, but we do all that we can to make sure that they become more healthy, even when they do not need us. From birth, we would “adopt” them; we will provide them a roadmap for a long and healthy life. I want to provide healthcare that is affordable to anyone who wishes to come to us. I want to make a system in which my workers can excel every day, not worried about making errors nor being exhausted when they go home. I want people coming to us from all over the world to learn how we do things and I want long waiting lists of people who cannot wait to come and work with us.

Now, perhaps this sort of vision will lead to the adoption of a management system to make it happen: a system which happens to exist and work very successfully in a wide variety of industries. When Toyota started making cars, they were really not very good. In fact, they would produce cars and sell them and soon the customers would come back and ask them if they were the testing grounds for Toyota’s poor products. By the end of 20078, Toyota will overtake General Motors as the largest vehicle manufacturing company in the world. How have they done it? “We just do whatever we believe is right, trying every day to improve every little bit and piece. But when 70 years of very small improvements accumulate, they become a revolution.”¹³

Healthcare sometimes seems like it is testing its products on its customers. Its product is of poor quality and too expensive. Now, it is time for its revolution.

References

1 “The U.S. Healthcare System: Best in the World, or Just the Most Expensive?” Bureau of Labor Education, University of Maine, Summer 2001
2 ibid
3 ibid
4 “Survey Finds 43.6 Million Uninsured in U.S.”, New York Times, June, 26 2007
5 “The U.S. Healthcare System…”
6 ibid
7 “The State of the Nation’s Health”, Maggie Mahar, Dartmouth Medicine, Spring 2007
8 http://av.conferencearchives.com/pdfs/070506/700.pdf
9 http://av.conferencearchives.com/pdfs/070506/700.pdf
10 The Toyota Way to Healthcare Excellence, 2008, John Black
11 http://av.conferencearchives.com/pdfs/070506/700.pdf
12 “Lessons from Toyota’s Long Drive”, Geoffrey A. Moore, p.84, Harvard Business Review July-August 2007
13 ibid