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Lean management can work to risk manager's favor
Lean management is a big trend in the business world these days, including the health care arena, but risk managers may assume that the "lean" is all about budget cutting and belt tightening. Not at all, say the experts in this strategy and the health care providers who are using it.
Lean is not a "budget-cutting" or "cost-cutting" program, explains Mark Graban, a senior fellow with the Lean Enterprise Institute in Cambridge, MA.
"Lean is really a quality improvement methodology that also leads to lower costs. From a risk management standpoint, it's important to note that patient safety can be dramatically improved with lean methods preventing patient falls, infections, and other adverse events," Graban says. "That's the real power of lean."
Rather than being something to dread, lean management actually can be an asset to a risk management program, says Marc Hafer, CEO of Simpler, a consulting firm based in Ottumwa, IA, that teaches business strategies to health providers. Hospitals can see powerful transformations if they teach their managers and employees how to see and eliminate waste in everything they do, he says.
Hafer explains that lean is a management approach that enables the true performance potential of a business, like a hospital, or a process, like admitting patients, to be realized. The concept of lean management was developed by the auto manufacturer Toyota in its Toyota Product System that used lean principles throughout the enterprise to produce products at lower volumes with fewer defects. In practice, lean management achieves this through the fundamental applications of various tools that help employees see and eliminate waste.
So, how is delivering health care like manufacturing Toyotas? Hafer explains that any process, whether it is treating patients or building cars, is susceptible to eight common forms of waste that are often roadblocks to optimizing a process:
1. Overproducing: Making or spending too much time on something that doesn't add value to the customer.
2. Waiting: Idle time when no value is being added to a process.
3. Transportation: Delays in moving materials or unnecessary handling of patients, staff, or materials.
4. Inventory: Capital investments, stock, or corresponding control systems that do not yield profits.
5. Unnecessary Motions: Movement of people or equipment that do not add value to a process.
6. Processing Waste: Work carried out on the wrong machines or work that was the wrong procedure.
7. Defects: Wasted effort on inspection or work that was already done.
8. Unused Human Potential: Using problem-solving skills that do not add value to the patient or staff.
Hafer points out that a lean management approach can dovetail nicely with risk management efforts, because improving the flow of work processes inevitably helps improve patient safety and reduce errors.
"If you look at the work processes of nurses, for instance, we find that in most cases, they spend 30% of their time at the bedside with the patients and 70% of their time with inefficient processes that take up more of their time than necessary. If we can use lean management to change that ratio, you have nurses at the bedside providing better quality care to the patient," Hafer says. "We find that more than 90% of the time for some health care workers is spent not in adding value to the patient, but in dealing with problems in flow and the work process, and devising workarounds to compensate for those issues. All of that entails risk."
Cost savings possible
Although lean is much more than just budget cutting, the approach does make it possible in many situations to reduce costs. Einar Seadler, a senior executive in the management consulting practice of Accenture, a consulting firm based in New York City, explains that lean strategies make it possible for risk managers to save money which always is a goal for any administrator while simultaneously improving patient safety.
"When lean is applied, it is focused on eliminating waste from the customer's point of view, and when you look at waste that way, you start to see the business differently," Seadler says. "The doctors, nurses, the CEO, the staff will be able to see the waste in what they do. When you start addressing prescription errors and secondary infections, lean will help you find the root causes of those problems, and you end up saving money while you also improve patient care and reduce risk."
Vicki Smith-Daniels, PhD, has been studying lean management since the 1980s and teaches in the supply chain management department at the W.P. Carey School of Business at Arizona State University in Tempe. She says lean is about removing everything from a system that does not add value, a concept which she says risk managers should welcome.
"As a risk manager, you should view lean from a positive perspective, because it is getting rid of everything that does not promote patient care and patient safety, or caregiver safety," she says. "The downside to these initiatives can be that they sometimes do not include a risk manager on the team, and so they don't get that valuable perspective. They may miss some of the ramifications of the changes they want to make, and they could actually increase the risk."
That is why it is essential for risk managers to be directly involved in lean at the highest levels, Smith-Daniels. Embrace the concept and all it can offer, but have a direct say in the decision-making process by being on the lean process teams.
"There are too many cost initiatives in hospitals that are being labeled as lean," Smith-Daniels says. "In too many cases, the people involved think they are leaning out their processes and achieving improvements to the system, but they're seeing it only from their perspectives and they don't see how some of the changes can have other effects. Lean has plenty of good to offer, but risk managers have to be in there to make sure their knowledge is factored in."
For more information on lean management, contact:
Mark Graban, Senior Fellow, Lean Enterprise Institute, Cambridge, MA. Telephone: (617) 871-2943. E-mail: firstname.lastname@example.org.
Marc Hafer, CEO, Simpler, Ottumwa, IA. Tele- phone: (888) 532-6888. E-mail: email@example.com.
Einar Seadler, Senior Executive, Accenture, New York City. Telephone: (877) 889-9009. E-mail: firstname.lastname@example.org.
Vicki Smith-Daniels, Professor, Supply Chain Management Department, W.P. Carey School of Business, Arizona State University, Tempe. Telephone: (480) 965-6473. E-mail: email@example.com.