Rooting Out the Waste: Virginia Mason's Suzanne Anderson on What Makes an Efficient Hospital

Suzanne Anderson, CFO and CIO of Virginia Mason, explains how her organization has embraced lean methodologies to become successful.

Nestled in the heart of Seattle, practically in the shadow of the Space Needle, rests Virginia Mason Hospital and Seattle Medical Center. At the heart of the system, physically, is a 336-bed hospital, renowned for its green, sustainable practices.

At the heart of the system, philosophically, is the Virginia Mason Production System. A mirror image of the Toyota Production System, the VMPS aims to improve patient safety and quality by rooting out wasteful processes. This approach, guided by lean principles, is nothing new to healthcare. But Virginia Mason was one of the first U.S. healthcare organizations to adopt the TPS as its management methodology, and it has tailored lean principles into the fabric of its organization during the past 12 years.

"A lot of people in healthcare today that use lean use it as a quality improvement tool. We think about it much differently than that," says Suzanne Anderson, executive vice president, CFO and CIO of Virginia Mason. "For us, the Virginia Mason Production System is our management system. It's not something done on the side. It's the way we conduct all our business. It's the language we use."

The background of Ms. Anderson — and how VMPS entered the fray

SuzanneAndersonMs. Anderson's life has spanned the continental U.S. She grew up in rural New Hampshire, where her mother was a nurse at Hitchcock Clinic, now known as Dartmouth-Hitchcock in Lebanon. When Ms. Anderson went away to the University of Notre Dame in South Bend, Ind., she decided to study English — not the usual path for a CFO or CIO. "I really didn't know what I wanted to do, so I wanted to study something I liked," Ms. Anderson says.

She then attended Vanderbilt University in Nashville, Tenn., earning her MBA. Combining her English and business background, Ms. Anderson knew she wanted to go into consulting "because I wanted to be in a position where I could learn as much as possible about a broad range of topics."

Ms. Anderson remembers her first day on the job as a consultant with her Seattle-based firm — March 31, 1986. Ironically, it was at the Virginia Mason Clinic billing office. She worked on and off with Virginia Mason for the next 21 years before finally joining the system in her current roles in 2007.

At the time, Virginia Mason was working hard to improve its operations under the leadership of Gary Kaplan, MD, a board-certified internal medicine physician who still serves as Virginia Mason's chairman and CEO. For example, with VMPS, the system developed a patient safety alert program to curtail patient problems before they begin, reorganized staffing levels for the emergency department, implemented measures to make the revenue cycle simpler and changed the nurse workflow, which reduced the amount nurses had to walk by 750 cumulative miles every day. All of these projects involved employee input and simple reorganization, Ms. Anderson says.

The VMPS has made Virginia Mason more efficient, directly leading to improved finances. The economic collapse of 2008 negatively impacted Virginia Mason, as it did to many healthcare organizations, but the system has still managed to maintain an operating margin between 2 and 4 percent during the past several years. Net revenue is approaching $1 billion — and all of this comes in an area of fierce competition, as Swedish Medical Center and University of Washington's Harborview Medical Center are mere blocks away.

"Beginning in 2008, and in every year since then, we've exceeded our budget," Ms. Anderson says. "That's not just because we sandbagged the budget — we have a very active governance board and aggressive targets."

Sequestration's effect on Medicare, general declining payment from payers and rising expenses are viewed as some of the biggest financial challenges this year for Virginia Mason, Ms. Anderson says. But she sees those challenges as opportunities to continue using lean-based decision-making.

"Our costs of inputs are rising like everyone else's are," Ms. Anderson says. "We have staff, and we want to give them raises. We buy supplies, which are increasing with the rate of inflation. The only way to be financially successful is to take waste out of the system. Take out the unneeded things, which thereby reduce our costs so we can continue to remain competitive in this challenging reimbursement environment."

Virginia Mason's "lean" sustainability program

Perhaps most emblematic of the Virginia Mason Production System, aside from the system's quality and safety efforts, is EnviroMason. Virginia Mason created EnviroMason — an environmental stewardship program that converts green ideas from across the organization into actionable projects — because it places a high priority on protecting the environment. For Ms. Anderson, the program has been a no-brainer.

"If you think about where we're located and our workforce, it makes sense," Ms. Anderson says. "We're located in the Pacific Northwest and a part of country that culturally is much more environmentally aware."

Under EnviroMason, Virginia Mason became the first hospital in its region to recycle in the operating room. It also was the first hospital in the Pacific Northwest to eliminate garbage cans and Styrofoam. Virginia Mason has commuter-friendly initiatives for patients and employees, a sustainable food and nutrition program that emphasizes local food sourcing and other innovations that have led to awards from Practice Greenhealth, Seattle Business Magazine and others, making it one of the greenest hospitals in the country.

Ms. Anderson says the program is entirely the product of employee collaboration, and it exemplifies the positive results — both environmental and financial — of a lean-driven culture.

"Why I love working at Virginia Mason —we always do the right thing, and to me, this is just the right thing," Ms. Anderson says of the organization's sustainability culture. "There are just a lot of positive things that come from that: engagement with staff, environmental [improvements]. If we don't do this, I just dread the thought of what the impact could be financially and in other ways."

VirginiaMasonHospitalWhere technology fits in

As CFO, Ms. Anderson says the VMPS creates an immediate, positive effect to keep the organization financially sound. As CIO, the VMPS has also proved beneficial.

Virginia Mason has used a Cerner electronic health record system since 2003, which allowed the hospital to meet stage 1 of meaningful use easily. The organization is now in the process of attesting for stage 2. Ms. Anderson says Dr. Kaplan and the entire executive team know technologies like EHRs and computerized physician order entry are going to be the foundation for healthcare going forward, but they must be implemented without reintroducing new forms of waste.

"We talk internally about technology being part of the 80/20 rule. Twenty percent of the work is technology, and 80 percent of our work is change management so we set up our use of the system in the best way possible," Ms. Anderson says. "One of the things [Gary] says: If you automate bad processes, all you do is move garbage at the speed of light."

Leadership concepts that stem from VMPS

Lean principles preach the value of employee engagement and proactive problem-solving. In essence, lean guidelines ward off the "Nut Island effect," which is a phenomenon where value-driven employees feel isolated from an organization's central administration. Ms. Anderson says she approaches her own leadership with lean and the VMPS in mind.

"I think I pride myself with how accessible I am to my team. I learned that as a consultant," Ms. Anderson says. "When you're working on a consulting project, you have to be able to work with entry-level staff who give you all the information you need to talk to executives and the board. If you can't interact with those people in a meaningful or productive way, you can't do your work."

When asked about mistakes she's made in the past that have helped her become a better leader, Ms. Anderson says she's learned, above all, to take responsibility for all actions. For example, early on in her consulting career, she made an error in a hospital analysis report.

"I went into the office explaining the mistake and the impact it would have," Ms. Anderson says. "[The hospital CFO] looked at me and said, 'I can't believe you're in here telling me this. Nobody would've come in here and told me. You could've hidden this.'

"Here I was dreading this conversation, telling someone how you completely failed," Ms. Anderson adds. "But that has been a reinforcing principle for me. I always tell people: I don't care what mistake you've made. Just tell me so we can figure out a solution."

For other healthcare executives who are attempting to refine their leadership skills and improve the efficiency of their organization, Ms. Anderson believes a philosophy like the VMPS could be a great starting point. Virginia Mason teaches VMPS methods to others. Since 2008, more than 5,000 leaders in healthcare and other professions from 19 countries have attended VMPS seminars.

"I feel very lucky to work at Virginia Mason," Ms. Anderson says. "The reason I feel that is because I worked with so many different clients. I can count on one hand the clients that I considered truly great to work for. Virginia Mason was at the top of the list. Part of it is…VMPS, which we use as basis for [everything]."

More Articles on Hospital and Health System Leadership:
CIOs Share 7 Best Practices for Reaching HIMSS Stage 7
Translating and Collaborating: Q&A With Greg Johnston, CFO and Senior Vice President of Baptist Health System
Women at the Wheel: Q&A With the Female Leadership Team of Grand View Hospital

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