Lean Design in Healthcare

A Journey to Improve Quality and Process of Care

Adam Ward

• Publisher: Productivity Press
• Year: 2018
• ISBN:
  9781351015530
• Edition: 1
• Topic: Médecine
• Subtopic: Santé publique, administration et soins

This book gives the reader an inside look at creating a new healthcare service using practical examples and scenarios one would face if doing it themselves. This book chronicles the journey of a fictitious healthcare delivery organization using the Simpler Design System principles based on Lean methodologies. While the characters and actual story is fictitious, it is based on the journey many healthcare systems and clients have taken, the issues they have faced, and the successes and failures they've had.

Tools and approaches used are based on the actual work of Simpler. The story format engages readers and is intended to motivate and inspire executive teams to use the tenets of the book as a guide to launch their own successful implementation of an idea-to-launch methodology. Tools include those gleaned from actual application of Lean Product Development, Agile, Design for Six Sigma, and Design Thinking Principles.

Through engaging storytelling and practical theory, this book is written from the perspective of a physician leader that agrees to be the executive sponsor for a service redesign. As the story progresses, the sponsor becomes fascinated with the process and becomes the first VP of Innovation within his organization.

1The Players

Marc removed his glasses and set them on the table. There were nearly twenty people in the room, but you could have heard a pin drop. A team of five was anxiously awaiting his feedback as their CEO, the CEO of Angstrom Health.

It had been a tough eighteen months for them. Although it was technically an experiment, Georgina considered it her life. Regardless of what the boss at the end of the table would say, she knew her team had done everything in its power to be successful. It was indeed a risk. As part of a large, physician-run healthcare system, this would stand as a critical moment in its history. She believed the data. She also knew it was intuitively correct.

It was clearly better for the patient. Their satisfaction scores were the highest they’d ever been in recent years. There was no arguing the health count outcomes either. They were simply better than even their best physician had previously achieved. While reimbursements were slightly less, the cost to deliver care was also down.

The problem was decades of tradition. Their team had just presented a completely new service line requiring virtually no doctors, and patients would not be seen in their traditional clinics, buildings with remaining, multi-year leases. On top of that, operating hours were radically different, aligning with peak patient times, not classic banking hours. It was dissimilar to anything they had done before. None of their competitors were doing anything even remotely similar.

She was also conscious about the amount of money that she had spent. It was a fairly significant amount and if the executive leadership team was displeased, this would probably be the end of her employment.

Marc was a great leader. A specialist, he had a storied, thirty-five-year career. He still practiced, albeit just a day a week. The entire Executive Leadership Team (ELT) respected him. Success had followed him his whole life. He had played college football at a Division I school and had run marathons for years, ultimately setting a personal record of 2:30. His network was massive, a result of years of cordially engaging with others. With a near photographic memory, he could recall facts about everything: medicine, history, sports, philosophy and more.

There would possibly be some debate on issues, but the ELT would follow whatever he ultimately decided.

“When you first brought me the initial proposal,” Marc said, “I made a statement. I told you that I had never seen the data presented as your team had done. It was the story you told from that data that sold me on funding this experiment.” Marc folded his hands in front of him and chose his next words carefully. Georgina’s team members were struggling not to smile, but one young man was showing all of his teeth in a giant, goofy grin. The leader remained stoic, not wanting to celebrate early.

“But a lot has changed in the past year and a half. Regulatory uncertainty, physician burnout and declining reimbursements have put extreme pressure on our organization.”

The executives around the table nodded in agreement. She looked at each of them. Right next to Marc was Richard Mann, the CFO.

Financial

Richard Mann was one of the few executives who didn’t have a background in medicine. He was all about the numbers. A former consultant, he had been brought on board years ago to help Marc lead the turnaround from near bankruptcy. Richard knew what he was doing. He had trained the entire organization in how Angstrom Health made money. He was amazed how few executives and even fewer physicians knew how money flowed in healthcare. Admittedly, it was complex, far more so here than in virtually every other nation on earth, but it was a product of the American culture it was birthed in. There were three powerful parties. The most powerful was the government, which set reimbursement rates for half of all Americans, those on Medicare and Medicaid, the military and VA and a handful of others. Next powerful were payers, the insurance companies who were clearly making more profit than health systems, under pressure to do so as publicly traded companies. They had money and they lobbied hard with it. They controlled the insurance premium dollar. They collected the money and disbursed it. Everyone with private insurance, all working America, was a captive in their prison of rules. It seemed they loved to deny claims. The entire billing process had become so convoluted that health systems paid third-party firms millions of dollars to manage their revenue cycle, hoping to get back a slightly higher fraction of what they deserved for the care they provided.

Georgina remembered her conversation with the coach about the revenue cycle. That term was made up for healthcare. Other industries didn’t have it. Somehow, the triangle of policy, payer and provider made it extremely difficult to get paid for the care delivered. Meanwhile pharmaceuticals and medical device companies were getting exactly what they were charging, at the expense of the health systems. It was capitalism on the insurance premium dollar. Everyone agreed with Richard on this point: Payers were the necessary evil that healthcare systems were forced to work alongside. The third group, providers, could seem at times, overly altruistic.

“Providers” included all healthcare systems, hospitals, clinics and ancillary locations. It included anyone who delivered healthcare to a patient. They were powerful because they were the only ones who could deliver care. Without them, there was no healthcare. Ultimately, outside of the fifty percent of spend, the government made policy and payers were the bank. Healthcare could exist without them. Historically, it had. But these were difficult days. In other countries, the government ran everything, with exceptions where providers were independent. Healthcare had become politically contentious. Richard didn’t have a position on whether the Affordable Care Act (ACA) should be replaced or not. He just wanted to know how Angstrom Health would get paid for the work they delivered. The uncertainty of the market was annoying, particularly given the colossal momentum of the industry. Turning like a battleship would be an improvement. This was one of the slowest industries to make and adopt changes, no doubt due to the tension between the three players. Financial changes had an instant ripple effect. They had large investments in buildings and equipment. Then there was the highly specialized and expensive payroll. Decisions regarding those took years to plan and deliver. As a non-profit, they managed a razor-thin margin of just a couple percent. Small fluctuations made a big impact. They had survived state healthcare overhaul and were figuring out how to deal with the ACA. He hadn’t quite figured that out. The country was spending 18% of its gross domestic product (GDP), about $10,000 per person per year, on healthcare, yet providers were financially struggling.

Somewhere in the mix was the patient, who directed the dollars by choosing where to get care. A few years ago, there was a significant number of patients who didn’t have insurance. That hurt financially. It required large write-offs each year. Worse, it filled precious moneymaking appointments with patients who couldn’t pay. Fortunately, that wasn’t the case anymore. His state had required its citizens to have insurance years before the nation followed with the ACA and then the individual mandate repeal. To Georgina, all Richard ever cared about was the number of relative value units (RVU) and average length of stay (LOS) in the hospital. The more RVUs, the better. Margin and cash on hand were more important than anything else. With a higher number of RVUs, the organization earned more revenue. As for LOS, the lower the better. Get people treated and get them out with no complications, was Richard’s opinion. Reimbursement was fixed for most people being treated as inpatient, a typical result for their stage in life. Heaven forbid we have a readmit. “But at what expense?” Georgina often thought. “That is easier said than done.” They were penalized on reimbursements based on their patients’ readmission rate and timing. “We can’t just kick them out early and hope they’re OK,” Georgina told herself constantly.

A focus on RVUs and LOS as the primary success metrics drove an entire set of behaviors that Georgina had grown to loathe. It was bad for everybody, from physicians to patients. It was a game that finance played with insurance. It may have helped regarding insurance contracts but it provided no indication of how good the delivered care was. It forced physicians to rush. Rushing led to less time with patients and less focus on their overall health, as opposed to merely the chief complaint presented at their most recent appointment.

Richard was the most difficult ELT member to deal with. “He’s just so nearsighted,” Georgina thought. This man hated to invest in anything without an immediate payback. It appeared that he had no vision whatsoever. To Richard, Georgina and her team of innovators were a thorn in his side. He couldn’t manage the morass of the current system, let alone plan for an uncertain future. He certainly didn’t need to deal with her crazy ideas of disruption. The organization wasn’t flexible enough for that. Marc knew they were both right. That’s why he forced the two to cooperate on solutions. The pace of change had to be right. Too fast, and the savings wouldn’t cover the current investments on top of the new ones. Too slow, and they risked facing financial failure for being obsolete, getting disrupted from outside of the industry. Retail clinics were a prime example of this. They had a cost and convenience advantage Angstrom Health couldn’t match. They were doing stuffy noses now, but how long before they were treating chronic diseases? Richard was focused on their traditional competitors, other giant health systems, but disruptors were what kept Marc up at night. Georgina knew that. In fact, she was partially responsible for it. The early data her team had provided, which Marc had just referenced, was a State of the Union of sorts for Angstrom Health. It was a complete analysis of their system and market. The alarming conclusions had helped get her team fully funded. She just hoped what they had done since would keep them going. Richard was a wild card.

Operations

Next to Richard was Jill, the Chief Operating Officer. “She is one tough woman,” Georgina reflected. “My kind of woman, actually.”

Initially a vocal opponent of the work, Jill had become an ally, one of Georgina’s biggest supporters. The two had had some difficult conversations, some heated arguments and some impasses that felt congressional, neither side budging, each passionately representing their stakeholders. There was a lot of irony in that. Representing their stakeholders. They were on the same team. They both wanted to deliver excellent care and keep Angstrom Health independent.

Despite not being a physician, Jill probably had the most initials behind her name. She started as an Orthopedic Nurse Practitioner with a PhD, serving as an officer in the U.S. Army. It was intense work, taking care of soldiers with war injuries. Her Masters of Public Health was earned during her time in the military and her MBA immediately afterward. Jill had specialty certifications in what seemed like a dozen areas. She was well versed in all things healthcare and was invited regularly to speak at conferences. Nothing seemed to faze her, except stupidity.

There was no tolerance for incompetence. Georgina recalled one meeting where Jill said, “You know that saying, ‘There are no stupid questions, just stupid answers?’ Well, that’s not true. That question you just asked,” she continued, addressing another colleague in the meeting, “was the dumbest thing I’ve ever heard. Do your research before you say stuff like that. You’re embarrassing yourself.”

Jill wasn’t wrong. The executive who was the target of that tirade no longer worked there. To Georgina’s recollection, Marc had fired him just a few weeks later.

“Or did he resign?” Georgina wondered. It didn’t matter. His termination had been a long time coming. That type of public humiliation wasn’t typical in healthcare, with most people opting for the far less obvious passive-aggressive route. Nothing could be proven that way. Jill didn’t have time for that. She had to get stuff done. Everyone on her team liked that. Issues were discussed and resolved in the open, much like what Georgina did with her team. There were few things that destroyed a team as fast as a mutiny. Fortunately, Georgina was extremely intelligent and Jill respected that. It didn’t keep those two from taking vastly different sides on issues.

Pride was often the thing that kept people from considering another solution, especially after making a public statement. Public here meant a statement to the ELT. The issue was no longer about what was best, it was about saving face. Both Jill and Georgina had to kowtow to the greater good, what was best for the system and what was best for the patient. As the COO, Jill held the highest day-to-day responsibility for delivering business results. Indeed, some felt Jill would take over when Marc eventually decided to retire. She may not have the relationship with Marc that Richard did, but she held far more responsibility. There were thousands of people under her organization chart, nearly 80% of the entire workforce. That didn’t matter. Whatever metrics Richard was pushing, she had to provide. For the past few years, it had been increasing RVUs and reducing LOS. This had often put her at odds with Georgina’s ideas. However, Jill knew they would have to move the ship in the direction Georgina was pushing. She just didn’t know how fast they could move that way.

Medical

Dr. Steve Bertram, the Chief Medical Officer, was another story. Georgina wasn’t sure what his position was. Two years into his role, he was still establishing his own feel toward his area of responsibility. There were hundreds of providers under him. He obsessed over what his physicians thought. Sometimes, his ideas for what should be done were just crazy. He was a pediatric oncologist and constantly fought for whatever would help the patient. Adults and less-funded areas of medicine were new to him in this role. Money and treatment plans were rarely an issue for him. He had been in long enough to know what his direct reports and medical team thought. He was an avid learner, and Georgina thought that maybe he read too much. He had shown both extreme pleasure and displeasure at her team’s work. If it made his physicians happy, he was all for it. However, if even a couple of his prominent physicians didn’t like it, he let Georgina know. He often floated technological solutions for his staff to Georgina, hoping she would help him get some of them implemented. They had worked on a couple together. Implementing a technology was one of the easier things her team did. However, it required a little bit of investigation.

One of the things that kept Dr. Bertram up at night was the idea of shifting to risk-based care. All he and his staff had ever kno...