Lean management for cutting costs and a happier hospital

When many people think about lean management, one thing comes to mind: cutting costs. However, by looking at lean management from a broader perspective, healthcare organizations can achieve much more than cost savings.

Johnson City, Tenn.-based Mountain States Health Alliance, a 14-hospital health system with facilities in northeast Tennessee and southwest Virginia, used lean management to not only cut costs, but also improve patient and employee satisfaction.

In October 2011, Mountain States enlisted Simpler Consulting as a lean management coach. It was Simpler's job to help everyone at Mountain States, including executives and clinicians, understand the organization's lean management goals.

Before beginning its transformation, Mountain States identified three goals to be achieved: improve patient outcomes and satisfaction, increase team member satisfaction and reduce turnover, and provide better value for patients.

With its overarching goals in place, Mountain States decided to begin its lean transformation at four of its facilities: Johnson City (Tenn.) Medical Center; Johnston Memorial Hospital in Abingdon, Va.; Norton (Va.) Community Hospital; and Mountain States Medical Group.

At Johnson City Medical Center, executives and others came together and identified the organization of medical supplies as a problem in the hospital's emergency department. There was no way of knowing how much of each supply was available, as JCMC had no organization system in place, and supplies were stored in five closets located across the ED.

Through the lean transformation, an unused conference room was turned into a centrally located medical supply closet. Executives and staff also worked with the materials management department to ensure supplies were restocked on a more regular basis, and all supplies had a designated location in each patient room.

The changes resulted in JCMC reducing inventory by $89,000 per year through regular restocking of supplies, and the hospital saved approximately $150,000 per year in supply expense.

"From a team member standpoint, less time and fewer steps are being wasted when we perform our daily work," said Travis Simmons, emergency services manager at JCMC, in a news release. "The supply room is much more organized, and elements of the regular processes that didn't make sense or were frustrating have been streamlined or removed."

In the operating room, JCMC's initial cost per case started at $2,327. Using lean management, the hospital has lowered that number to $2,014 over the past three months. This reduction leads to significant cost savings, as JCMC sees roughly 11,604 cases in its operating room each year. 

"We have used the supply savings to update equipment and bring in new technology that allows us to provide better services to our patients and communities," says Andrew Wampler, vice president at Mountain States.

In 2011, the average patient visit at JCMC's ED lasted almost 6 hours on average. That time has been reduced to 3.5 hours, and "our goal is to drive that down even further using lean techniques for the benefit of our patients," says Mr. Wampler.

JCMC has continued to make changes since it first began its lean transformation, which has led to patient satisfaction scores in its ED rising from 80.8 percent to 83 percent. This is due to patients being seen in a more timely manner. In some cases, "there are patients receiving care that weren't before because they were walking out the door due to wait times," says Mr. Wampler. 

Mountain States has even had patients participate in some of its lean transformation events, which allows patients the opportunity to have their voices heard. "It is also an invaluable opportunity for us to see the patient perspective first-hand — a fundamental principle of lean in healthcare," says Mr. Wampler.

Due to the success Mountain States has had with lean management, the health system is using lean management as part of its role as an accountable care organization, with a goal of improving patient outcome and satisfaction while cutting healthcare costs.

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