Supply Chain

By John DiConsiglio

When it comes to central processing, Derek Wallis has a pragmatic philosophy: If it ain't broke, don't fix it.

And Wallis' department wasn't "broke." Wallis is the supervisor for central processing at Kingston General Hospital in Kingston, Ontario. His team had always exceeded benchmarks for area hospitals. They operated on budget, their turnaround times were good and a planned expansion would add over half a million square feet to the department.

"We didn't have a problem," Wallis recalls. "I wanted more people and more space to squeeze in every OR plate and screw. But overall, we were running as well as anyone."

That was before Wallis ever heard the word "lean"at least in a business management context. But once he was introduced to the lean philosophy, Wallis would never look at his department the same way again.

"I am the textbook lean convert," Wallis says today. "I'm the first to admit: I didn't know how much I didn't know."

Just before the planned expansion, Kingston senior leadership came to Wallis with a new idea. They had recently experimented with lean management in the lab. The results were good. Turnaround times were reduced. Perhaps, they suggested, their lean consultants might take a quick look at central processing. Who knows what they might find?

Wallis was skeptical. Lean, he was told, was a business philosophy designed to promote continuous process improvement and greater efficiency. It had been tried everywhere from the auto industry to health care inventory. But Wallis had seen similar fads come and go without impacting supply chain management.

"I doubted they could tell us anything we didn't already know about central processing," he recalls.

True, during the lean assessment, consultants noted that his department was cluttered; but Wallis insisted he could tidy it up in a weekend. And, yes, pie graphs and videos revealed that surgical tray items sat around for hours before anyone attended to them. But when Wallis saw a spaghetti diagram outlining the circuitous walking patterns staff took to retrieve a cart, his eyes began to open.

"The more I watched, the more I saw all the unnecessary steps we'd built into the system," Wallis says. "I thought we were an efficient machine. But there was all this wasted motion."

Within 18 weeks, Wallis had signed on to the lean army. Once he put the concepts into practice, Kingston's central processing reduced instrument tray turnaround time by over 50 percent. Lean management worked so well that the department's planned expansion was cut by about 1,500 feet. And since the expansion, Kingston's central processing department has claimed another 1,000 feet of extra space.

Welcome to the world of lean, where fervent supporters claim simple steps can lead to unprecedented effectiveness, remarkable cost cutting, renewed employee satisfaction and nothing less than the end of inefficiency as we know it.

Based on long-held principles championed by Toyota, lean emphasizes removing inefficient processes while focusing on delivering more value to customers. Similar to the Six Sigma management strategy, lean has taken a foothold in businesses from the insurance industry to the financial worlds.

Now, spurred by the recession, a dearth of qualified personnel and uncertainties surrounding government reform, lean has hit health care. According to a recent American Society for Quality (ASQ) study more than 50 percent of hospitals report some level of lean adoption. The ASQ survey isn't comprehensiveand even it notes that as many as 44 percent of lean users only employ "minor" tactics. But after successes in health care facilities like Kingston, many see lean gaining steam.

"This train is leaving the station," says Sheon P. Lynch, administrative director of transition planning and formerly administrative director of operations and quality improvement at LeBonheur Children's Medical Center in Memphis, Tenn. "Either you jump on board, or you are going to be left behind."

The strategy behind lean

Lean management is, in its simplest form, a business strategy that takes a careful look at each step in a process to identify and eliminate inefficient motion. "With lean, you continually self-evaluate to find inefficiencies," says Michael DeLuca, director of supply chain systems and consulting services at UPMC, a health care network that serves 4 million patients across Pennsylvania, Ohio and West Virginia.

Lean experts closely examine the movement of itemsfrom surgical trays and bariatric wheelchairs to inventory requisitions and even patients. In the OR, for example, a lean watcher might examine the flow of instruments between doctors and the central service department. In the supply chain, he may look at how accounts payable clerks enter invoices.

"Lean ensures that the itemor personis always moving from value-added step to value-added step," says Lewis Lefteroff, senior consultant at ValuMetrix Services, a branch of Ortho-Clinical Diagnostics Inc., a Johnson and Johnson Company. "They're not rushing, not taking short cuts, not compromising quality. They are moving from step to step and eliminating the inefficiencies in between."

That sounds easy enough, but even the staunchest lean advocates recognize that the philosophy is simple to supportand hard to implement. About 70 percent of lean management attempts fail, Lefteroff concedes, mainly because they don't receive backing from "C-suite" executives.

"Hospitals should not bother doing [lean] unless your CEO or president is passionate about it as a management philosophy," says Lynch who, as administrative director for operations and quality improvement, oversaw LeBonheur's lean management implementation.

Like Kingston, Lynch's LeBonheur wasn't experiencing a significant services problem when it decided to go lean. Compared with other area children's hospitals, the 225-bed facility was middle-of-the-pack. Its lab had mediocre numbers for billable tests and labor consumption. But Lynch returned from touring a Tennessee facility convinced that lean was the answer to its problemsso convinced that she built reduced supply costs, full-time equivalents and other lean savings into her budget.

Going lean

Before long, Lynch, with the help of ValuMetrix consultants, applied lean concepts to the hospital's lab and OR. "We looked at how people spend their time and how products move through the flow of the hospital," she says.

In one case, the staff videotaped a vial of blood and followed it from the patient's room to the lab to the test's completion. Her staff observed each step in the vial's "life"‚ 250 in all, many of which were repeated or unnecessary. Most of the time, the vial simply waited.

"Whether you follow a consumable or a patient, you'll find that it spends 90 percent of its time waiting," Lefteroff says. "It waits to be used, to be moved or to be talked to."

In the OR, Lynch's lean team watched staff walking‚ from surgery to the stockroom and back again. Stockroom aisles were too narrow to transport whole carts, and surgeons complained about nurses' frequent supply runs. By viewing case-picking videos, Lynch found that her staff, as in many hospitals, spent too much time retracing their steps as they filled trays or searched for poorly stocked supplies. In a hospital with 10 ORs that perform 9,000 procedures a year, LeBonheur saw a significant opportunity to cut costs and increase surgical efficiency.

"Nurses are running up and down hallways, searching through cabinets because they can't find some 50-cent consumable item that no one thinks about until it's not there," Lefteroff says. "It sounds silly. But if it's what you need, then everything else goes on hold until you find it."

The lean assessments led to streamlined processes as stockrooms and labs were reorganized. In the lab, for example, Lynch's team gutted the cabinets and drawers. Items are now placed in open benches, where supply levels can be closely monitored.

The results, Lynch says, have been eye-opening. In three years, LeBonheur saved $450,000 in excess on-hand inventory, including more than $100,000 on expired items. Lynch's staff reduced its walking patterns by 50 percent, leading to a 54 percent reduction in case-picking time. In the lab, turnaround was cut in half in just 12 weeks. "In the past, if you told me we could cut turnaround by 10 percent, I'd be thrilled," Lynch says.

Investing in lean

The changes haven't come cheap. Lean requires an intensive up-front investmentin both money and labor. Lean consultants charged LeBonheur upward of $300,000 for the 12-week assessment and implementation, not to mention the costs of training staffers in lean techniques. Likewise, restructuring the LeBonheur lab along lean protocols cost the hospital about $60,000‚ and another $15,000 to make minor changes in its OR suites.

At UPMC, DeLuca used lean concepts to automate procurementno simple task for an inventory that costs $1.8 billion a year. From online requisitioning to e-check requests, UPMC has "eliminated paper from our supply chain," DeLuca says.

Like LeBonheur, UPMC examined each step in its process to find "front-end human touches" that DeLuca estimates add $30 to every transaction. Using lean tactics, UPMC attempted to replace these "touches" with e-alternatives. Requisitions were created electronically, converted automatically to purchase orders and paperlessly routed to vendors. The electronic invoice arrives in UPMC's system and generates an e-check to the vendor's bank. "The orders need to be perfect with no match exceptions," DeLuca says. Today, 40 percent of UPMC's transactions are what DeLuca calls "lights-out orders," with no front-end buyer touch. Prior to going lean three years ago, DeLuca says, "we had a buyer touching every single order."

But even successful health care facilities have little time to savor the benefits of going lean. "If my client tells me that he's completely lean, I tell him that I've failedbecause you never actually get there," Lefteroff says. "This isn't a project that starts and ends. It's about a culture of continuous improvement. The struggle is to get repeatable and sustainable performancesand you can always improve."

At LeBonheur, for example, Lynch continually audits the OR to keep it on the lean track. "We have to make sure everyone is maintaining their new habits," she says.

And while leadership change can derail lean efforts, the greatest impediments to going lean are the same people who make the strategy workthe staff itself. As lean consultants videotape and critique staff movements, nurses, materials managers and other employees can reject it as perceived criticism.

"You are doing your job when suddenly somebody comes along and says, 'This is wrong. You need to do this better.' Many people are going to resist that," says Steve Mayfield, senior vice president for quality and performance improvement at the American Hospital Association and director of the AHA Quality Center.

The key to employee buy-in is to show them that lean changes process, not people. "When people see that you are changing the environment to make it easier for them to do their work," Mayfield maintains, "they blossom."

Just ask Wallis. The former skeptic says he now spends half his time on the central processing floor helping his staffers improve their performance. "You can see that [staff] feels better about their work and the way they are doing it," he says. "They feel like they are making a difference. And, when you come to work every day, that's really all people want."

John DiConsiglio is a freelance health care writer based in Arlington, VA.

This article first appeared in the October 2009 issue of Materials Management in Health Care.

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