Lean Process Improvement in Health Care


US hospitals are in for a transformative awakening. They are facing the most sweeping change to health care since Medicare was enacted in the 1960s. The Patient Protection Act recently signed into law, fundamentally alters the healthcare landscape for all hospitals and medical care facilities. Demand for services will increase astronomically, as 30 to 40 million individuals become insured, this demand will spike in 2013 and 2014.

Improving throughput in hospitals and medical care facilities will become a challenge, calling for improving process efficiency and labor productivity, at a time when most hospitals are already at their capacity limits. Experts predict that the Emergency Rooms will be the hardest hit, where non-critical wait times may be as long as four hours. Improving productivity will have even more meaning with the predicted shortfalls in nurses and doctors.

Pricing pressures from insurance providers, plus new rules from Medicare and Medicaid are threatening the financial viability of for profit and non-profit healthcare institutions. The cost of poor quality will now have to be absorbed by the hospitals.

Although the Patient Protection Act does not become fully effective until 2013 now is the time for hospitals and other healthcare providers to start implementing changes in the way they do business. Hospitals must transform the care delivery system and create a new model free of non-value-added steps, and provide high quality care to the patient.

The Need for Change

The need for change in healthcare has never been more apparent than it is today. Healthcare is by far the largest industry in the United States. It is on the edge of astronomical growth as baby boomers reach their sixties and the impact of the recently enacted Patient Protection Act. The demand for new physicians will continue to grow even more rapidly than the supply of practicing physicians. The Council on Graduate Education predicts that the nation is likely to experience a shortage of 85,000 to 96,000 doctors by 2020. The health Resources and Services Administration predicts that the national nursing shortage will exceed 800,000 by 2020. Hospitals must take action and learn to do more with less. Lean process Improvement has the very real potential to update the care delivery process to one that flows, mistake free, and delivers value from the standpoint of the patient / customer. There is, however no time to waste. The time for action is now.

Can lean techniques help hospitals increase efficiency, streamline processes, and improve patient outcomes and patient satisfaction? In a special report on how lean processes can transform businesses beyond the shop floor, experts from Wharton and The Boston Consulting Group (BCG) explain how it is possible to accomplish these goals.

Length of patient stay is a critical measure of effectiveness and efficiency. A shorter stay means that beds turn over more quickly and hospitals can treat more patients without investing additional capital. According to Jon Scholl, a partner and managing director at BCG, a hospital with 800 beds that cuts average length of stay by just 10 percent can free up nearly 80 beds per year, enabling the delivery of more than 4,000 additional procedures and boosting operating profit by almost $ 30 million. This approach effectively "builds" new beds for the hospital. With new construction costs averaging $ 1 million per bed today, "another $ 80 million in averted capital can be realized," says Scholl. "If you can lower length of stay by 10 percent, just look at the incredible leverage a hospital has."

Lean Hospitals do more than implement just tools and technical methods. Lean is also a cultural change and a management system, a transformation that takes time, effort, and persistence. Hospitals should not expect results overnight because Lean is a journey not a destination. Lean hospital value leaders are implementing infrastructures that all too familiar to a Lean manufacturer – Lean practices training, internal consultants / experts, or Kaizen Promotion or Center of Excellence Offices. Lean Hospitals are making significant training and development investments to help teach their managers how to become true leaders by empowering their employees and driving continuous process improvement.

Some Lean Hospitals use a primarily Kaizen Event driven event methodology, although the method is sometimes called "Rapid Improvement Events" or by another name in healthcare. Other hospitals have taken an approach that focuses less on short events and more on creating the infrastructure to drive improved process performance. As the leading Lean Hospitals are about five years into their journey, time will prove which model (or models) will be the most sustainable. As in manufacturing and other service organizations, Lean Hospitals will have to guard against regressing to old practices or behaviors.


Lean process improvement is not a new concept, but it is relatively new to health care. There are many skeptics who believe Lean is a manufacturing strategy and is not suited for medical care. Like the manufacturing industry, hospitals are in fact, extraordinarily complex organizations, with multiple interacting processes. Many of the principles of the Toyota Production System and other lean tools can and do apply to medical care delivery processes.

Courageous, out-of-the-box thinking health care organizations such as the Mayo Clinic, ThedaCare, and Virginia Mason along with others, are leading the way by demonstrating that lean process improvement can reduce waste in health care and are achieving similar results as other industries.

Lean principles hold the promise of reducing or eliminating wasteful activities, costs, and inefficiencies in health care, creating a system that provides value to patients.