Adding Value to Healthcare by Eliminating Waste: Q&A With Virginia Mason Medical Center CEO Dr. Gary Kaplan

Gary Kaplan, MD, has been chairman and CEO of Virginia Mason Medical Center in Seattle since 2000. Dr. Kaplan is also a practicing internal medicine specialist at Virginia Mason's clinic in Kirkland, a Seattle suburb. During Dr. Kaplan's tenure as chairman and CEO, Virginia Mason has received significant national and international recognition for its efforts to transform healthcare. Awards and distinctions include Top Hospital of the Decade by The Leapfrog Group, 2012 Top Hospital — for the sixth consecutive year — a grade "A" patient safety rating by The Leapfrog Group, a 2012 Distinguished Hospital for Clinical Excellence and Patient Safety Excellence Award from HealthGrades and a 2012 America's 100 Best Specialty Excellence Award for Overall Cardiac and Gastrointestinal Care from HealthGrades.

Virginia Mason Medical Center CEO Gary KaplanIn 2002, Virginia Mason embarked on an ambitious program to adopt the principles of the Toyota Production System as its management system. The Virginia Mason Production System, or VMPS, is a system-wide management system that improves patient safety and quality and reduces cost and the burden of work for the health care workforce.

Here, Dr. Kaplan discusses how VMPS helps Virginia Mason eliminate waste — one of the biggest challenges he feels the healthcare industry faces today — to focus on the patient, his perspective on partnerships and how leadership means going against the grain to make the tough calls.  

Question: Hospitals pursue partnerships or mergers for a variety of reasons. In February, Virginia Mason and Kirkland, Wash.-based EvergreenHealth approved a strategic partnership. How did you approach that partnership?

Dr. Gary Kaplan:
While it is not our first partnership, the EvergreenHealth partnership is important because it was developed and executed at a time when many others, including some in the market, were consolidating or merging to get bigger, grow market share and enhance pricing power.

Our partnership with Evergreen is predicated on a shared vision and shared goals as well as a belief that a thriving respectful partnership between like-minded organizations makes more sense than a medical arms race.

Q: What would be your advice for other CEOs to ensure a beneficial partnership?

GK: I would advise other hospital CEOs to remember that culture and shared values are just as important as other considerations, such as size and market power, for a potential partner.

We are supportive of a collaborative approach that doesn't need governance or a balance sheet merger to succeed. I am not saying those things are inherently bad, but I am saying that the recent rapid market consolidation is not necessarily in the best interest of patients and communities. Partnerships need to be complementary to be successful, and our partnerships are great examples of that.

Q: What challenges currently face Virginia Mason Medical Center? How do those compare to current national challenges?

GK: Our greatest challenge is the same challenge that everyone faces, although they may not all agree it is the greatest challenge. For us it is: How do we create even greater value in our marketplace? We do that here by eliminating waste. We think that [waste] is an enormous problem. That which adds no value is how we define waste. Donald Berwick, the former administrator of CMS and founder, former president and CEO of the Institute for Healthcare Improvement, called waste the "quality dimension of our time." He is a quality guru, and over the past 20 years, he has come to see how [healthcare] can focus on eliminating waste and how it will add tremendous quality and safety to our healthcare processes and outcomes.  

Even though the challenge of waste continues, we feel we are in a good position. Our staff is trained to focus on eliminating waste every day; it is a mindset that exists among our staff. Some estimates say that 30 to 40 percent of what we spend on healthcare today adds no value. When you think about that estimate, it is as much as a trillion dollars of waste, which includes all categories of healthcare: administrative, clinical decision making, overuse of diagnostic and therapeutic interventions, inventory, facilities and more. The areas that may be adding no value are huge opportunities for us to improve.

Q: You mentioned that the Virginia Mason staff is trained to think about eliminating waste every day. How have you made a "waste elimination" mindset a fundamental part of the hospital?

GK: It goes back to the strategic plan we developed around 2001, which helped to clarify the question: Who is our customer? Everyone says the customer is the patient, but in reality that is not always the behavior of those of us in healthcare. We have designed our systems and processes around us — the physicians and nurses. Instead, at Virginia Mason we have focused on developing systems and processes around the patients. That led us to our core vision and core strategy. Basically, we bet the farm on a quality strategy more than 10 years ago. We wanted our core business strategy to be quality rather than size and market power, and in doing so, to create value for our patients and our communities.

The way we chose to do that was by adopting Toyota Production System principles. We have been applying it consistently longer than anyone in healthcare. Every one of our employees is trained in its methods. Several thousand members of our staff have participated in improvement events over the past decade. It is a way of life — it is our philosophy and management system. We focus on the belief that we can mistake-proof our processes and get closer to zero defects in the healthcare we deliver to our patients by eliminating waste. It has been a remarkable 10 years centering on this quality strategy and applying the specific methods that we borrowed from manufacturing.

Q: You mentioned that a quality focus and the Toyota Production System influenced Virginia Mason's philosophy. How do those elements of your philosophy inform your goals for Virginia Mason or where you'd like to see the medical center progress?

GK: Our vision is to be a quality leader not just in Seattle but everywhere. That is what we aspire to be. We also want to help transform healthcare. The way we have chosen to do that is by striving to create a perfect patient experience at Virginia Mason — every patient, every time. We strive to show a great patient experience is possible without building unnecessary facilities and having dominant market share. The patient should not have to wait in the emergency room or on the phone. We strive to give the patient everything they need and only what they need. We want to show that a hospital can succeed in patient experience and thrive economically. Our aspirations are about our patients and about our community.

Q: Can you share one piece of advice or one lesson you've learned throughout your career?

GK: I would start by saying that it is important for leaders to have passion. Leaders need to care and to feel emotionally connected with their work and their vision. They need to share that passion and inspire others by appealing both to the head and the heart.

Healthcare today is hard work and it is complex. As senior leaders, we have a responsibility to inspire our people and lead our people, but we need to appeal both to the intellect as well as to the emotions or heart of our people. We need to never lose sight of why we went into medicine.

For me that is part of who I am; I am passionate about Virginia Mason's vision and what we are working on. I have come to see over time that the combination of intellect and passion will best inspire others to  achieve what is necessary for large scale change at an organization.

A lot of individuals make rigorous intellectual arguments but can't move organizations forward. Just appealing to the heart without a rational and intellectual foundation is also not the ultimate or best leadership approach. You need both.

Q: Who has most inspired your personal leadership style? What did he/she teach you?

GK: There are many individuals I have been very fortunate to have as mentors. I have also tried to be a student of leadership, constantly watching others and learning every step of the way.

However, my father heavily inspired my personal style. He was a businessman and still is at age 87. I grew up working in his hardware store. I learned about customers and how listening carefully, maintaining a sense of humor and having optimism are really important tenets in leading either a small business or a healthcare enterprise.

Q: Do you have any personal routines or guideposts when you come to difficult decisions? How do you handle that pressure and come out with a no-regrets answer?

GK: I think it starts by listening carefully rather than having my mind made up and shutting down. I think that may be a pitfall that many leaders fall into. Another would be doing my homework [before a decision]. Leadership is hard work, and you need to take it seriously, which means doing research, talking to many stakeholders and listening to diverse viewpoints. I want to surround myself with people who present varied points of view and not those that just agree with me.

If a discussion is going in a certain direction and even if I agree with it, I will ask for someone to present an opposite point of view so we can hear it and make sure we present all alternatives. After we review and make sure there is fair process for all stakeholders, someone has to make the call. I try not to shy away from making those decisions. You have to make sure that a decision is fairly communicated and you can execute the strategy or tactic.

I also reserve the right to be smarter today than I was yesterday. That may mean we change our minds. When all is said and done leaders today need to have what I think many call managerial courage. We need to be able to sometimes go against the grain, go against the flow and make tough calls.

More Articles on Virginia Mason Medical Center:

10 Things to Know About Virginia Mason Medical Center
How to Get Hospitals to Think 'Lean': 5 Key Principles
Evergreen Healthcare, Virginia Mason Approve Strategic Partnership

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