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Lean for hospitals: the quality perspective

Brendan Buescher, Bob Kocher, Russell Richmond, and Saumya Sutaria

To achieve a performance transformation in hospitals, administrators need to combine an economic strategy with a clinical strategy. The lean manufacturing system addresses both needs. To be successful, however, this approach requires not just technical know-how but also a fundamental alteration in mindsets and behaviors of the hospitals clinicians. In the two essays that follow we explore these two sides of the lean equation, with the goal of raising the bar for medical quality across the board.

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Many people argue that the aggressive efforts by European hospitals to improve efficiency and financial performance have come at the expense of patient care and quality. This does not have to be the case. Our experience in dozens of U.S. hospitals shows that it depends how hospitals approach improving efficiency. In fact, initiatives to lift efficiency can be powerful tools for raising the quality of care at the same time. The highest priority for every hospital is to ensure that patients receive the quality of care defined as the right treatments at the right time with the right outcome. For too long a laissez-faire attitude toward quality has persisted. The pressure today from patients and policy makers will no longer permit hospital administrators to neglect attending to the clinical quality gap. To grapple with this complex issue, forward-thinking hospital leaders have discovered the portfolio of lean management tools developed by Toyota Motors and now used in numerous other industries. When these tools are combined with new attitudes on the part of managers and clinicians, outcomes and operational efficiency improve at the same time that costs go down. These lean techniques offer hospitals a simple and powerful way to eliminate complexity, waste, and variability in caredelivery processes. The current delays, high costs, and suboptimal outcomes that are plaguing European hospitals, it could be argued, are consequences of the absence of such a comprehensive performance transformation approach. In this edition of Health Europe, we present the two parts of this paradigm in separate essays. First, in Lean approaches for better care and lower costs, we explain in detail some of the techniques in the lean toolkit and how they can be adapted to hospitals. In the second essay, Changing mind-sets to achieve superior clinical quality, we discuss the necessary changes in mind-sets and behaviors that will allow stubborn physicians and frustrated hospital managers to reach dtente and work together to improve quality. In most hospitals administrators and clinicians spend too little time arriving at a shared understanding of the problem and agreeing on a performance goal. In fact, almost every hospital has a long list of improvement efforts that have fallen short because administrators and clinicians are not cooperating. A renewed focus on quality helps align the vital stakeholders around the hospitals most critical challenges. Bear in mind, however, that it is not enough to apply the one without the other. Organizations that think they can adapt the lean management tools without reaching inside the heads of their physicians and clinical managers will miss the boat. Mind-sets and behaviors must be altered for the fundamental changes to take root.

Lean approaches for better care and lower costs

The lean manufacturing concepts developed in the Japanese automobile industry include many tools that are applicable to hospitals. They reduce costs, align incentives, and improve overall outcomes and quality of care.

uropean hospitals are under pressure. Cost, quality, operations, and competition are very much in play for patients, policy makers, and governments. Rising costs and frustrated patients are resulting in a variety of reforms ranging from experiments with privatization in the United Kingdom to DRG-based reimbursement in Germany. While it is unclear whether a common model of reimbursement will emerge, what is clear is that hospitals will need to clearly demonstrate to patients, policy makers, and governments the value that they create, and in many cases they must reduce costs. Often, hospitals have been reluctant to reduce costs for fear of compromising the quality of care. Partly because of their reluctance to manage costs, European hospitals have developed some of the most complex, variable, and inefficient care processes in the world. Length of stay is long, compared to international peers, and outcomes are no better. Today, there is a big opportunity for virtually every European hospital to streamline care delivery. By applying lean principles, hospitals have been able to achieve dramatic improvement in care quality, costs, and operational efficiency. We believe that hospitals that excel across these dimensions will be the winners in Europe. Many efficiency gains benefit patient care. Emergency departments (ED) that improve processes to reduce the time required to initiate treatment for cardiac patients or the time it takes to give medications can directly improve patient outcomes. In the intensive care unit (ICU), earlier extubation results in fewer pneumonia cases, while reducing length of stay throughout the hos-

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pital reduces hospital-acquired infections. In the operating room (OR), synchronizing processes so that cases start on time has the potential to reduce patient anesthesia time (and the risks associated with anesthesia). It can also cut down on delays and cancellations for subsequent patients. This article describes how hospitals have successfully coupled improvements in quality and efficiency using techniques adapted from lean manufacturing. The lean toolkit Toyota Motors realized 30 years ago that teamwork, managing to performance metrics, and reducing variance in key processes produces higher-quality cars and more efficient manufacturing. During that time, Toyotas principles, which became collectively known as lean production, have been copied by car makers, other manufacturing industries, and service industries, all of which have gone on to achieve impressive improvements in performance (Exhibit 1). Seven principles make up the lean toolkit: 3 Identifying customer-focused outcome metrics 3 Coupling and collocating linked processes 3 Reducing variability by standardizing procedures 3 Eliminating loop-backs and circular processes
Exhibit 1

3 Aligning staffing and capacity with demand 3 Designing processes for the norm rather than the exception (and handling complexity separately) 3 Measuring and posting performance These principles are as simple as they sound. Each is time-tested and has been shown to apply in hospitals. In fact, our experience is that the major challenge in applying lean techniques is removal of complexity Many hospitals can easily measure from existing processes. Usually, inputs, such as nursing utilization or processes have evolved organically number of procedures, but few hospitals over time to encompass myriad can measure the outputs that matter to patients, such as readmission rates. procedures, controls, and steps so that it is difficult to answer the 2 questions that drive lean thinking: How does the customer (usually patients) view this process? and What happens next (and what needs to be accomplished prior to the next step)? How hospitals use the tools Applying lean principles in hospitals doesnt have to be a struggle. Many hospital administrators and managers have been stymied by their assumption that health care complexity and variability makes lean techniques impossible. Rather, this is the precise reason why hospitals should be tenacious in their adherence to lean principles. Since patient care is a complicated task where delivering consistent quality can be the difference between life and death, it is critical to apply techniques that are proven to improve quality. We think the entire lean toolkit applies to hospitals and leads to substantial quality improvements. But it is not always an easy sell within the hospital. In practice, hospitals have the greatest challenge persuading physicians and nurses to buy in to the process. We find they have special difficulty applying lean to the following issues: 3 Developing a set of patient-oriented quality outcome metrics 3 Reducing unnecessary care variability 3 Aligning staffing and capacity with demand 3 Designing processes for the typical patient rather than the exception (and handling complexity separately) 3 Measuring and posting performance It is most critical and difficult to develop a set of patient-oriented quality metrics, determine how to measure the metrics in real time, and gain the courage to post performance. All of the others are simpler to overcome. Clinical pathways reduce variability, cross-training workers matches resources with demand, and clinical criteria can be used to identify typical versus complex patients for care processes (for instance, through fast tracks in the ED).

The lean hospital Typical hospital

Identifying metrics Coupling and collocating processes Reducing variability Eliminating loop-backs Measures inputs u Focus on high-profile diseases u

Lean hospital
Measure outputs u Focus on common diseases u and outcomes Tests done at the bedside u Services brought to the u patients Diagnoses treated similarly u by all physicians procedures Quality control of tests and u Fewer patient hand-offs u Flexible staffing to adjust to u changes in demand criteria for use Simple processes and clear u High compliance with processes u Data shared widely u Broad accountability for u performance

rather than common diagnoses

Tests done in central locations u Patients moved frequently u Diagnoses treated differently u by different physicians Frequent need to repeat tests u or procedures Unplanned returns to OR or u higher levels of care Long delays due to staffing u mismatched with demand Complex processes designed u

Adjusting to demand Designing processes for the norm Measuring and posting performance

for all patients Poor adherence to processes u Data rarely shared beyond u leadership Little accountability for u performance

Source: McKinsey analysis

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Choosing the right metrics makes all the difference Many hospitals are expert at measuring input-oriented metrics (e.g., number of procedures performed, nursing utilization) but few focus on output-oriented metrics (e.g., patient readmission rates for related problems, performance compared to evidenced-based clinical end-points). It is rare to find hospitals that measure the outcomes that matter most to patients, such as time from discharge to being able to resume normal activities (e.g., driving or returning to work). Moreover, hospitals normally spend far more time and effort tracking outcomes for relatively rare diagnoses and procedures (e.g., transplants morbidity and mortality compared to pneumonia or hernia surgery outcomes). Our approach to identifying the right set of metrics is simple. Metrics should be balanced across quality, operations, and financial performance. Quality metrics should be oriented around the most frequent diagnoses, with the objective to represent outcomes that matter to patients. These quality metrics should be proven in the medical literature to improve outcomes. Importantly, they also must be able to be measured in close proximity to the care delivered. Finally, more metrics is not better. They should be limited to less than 5 metrics per diagnosis. Not more than 20 to 30 operational and financial metrics should be put in place for any area or individual (Exhibit 2).
Exhibit 2

Lean performance metrics Sample lean report card Quality Operations

uG eneral standards of care - 30-day readmission rate - Medication errors per 1,000 patient days - Falls per 100 patient days - Skin ulcers per 100 patient days

Metrics for most common diagnoses

start delay u Percent OR cancellations C oronary Artery Bypass Grafting u u ED visits - Prophylactic antibiotics prior to surgery u ED average length of stay - Percent of surgeries performed off-pump - Percent of surgeries using IMA Financial - Hours from surgery to extubation u Revenues u Coronary Artery Disease - Patients on 4 drug therapy at discharge u Costs - Labor - Percent of patients with EF<0.3 - Overtime receiving spironolactone - Supplies - Medical devices/ u Diabetes Mellitus surgical implants - Percent blood sugar readings between - Pharmacy 100-120mg/dL - Percent patients with creatinine < t2.0mg/dL receiving ACE inhibitor therapy Report cards should be shared by administrators, physicians, and frontline staff

u Average daily census u Average length of stay u Average discharge time u Average OR utilization uA verage first case

Creating transparency by measuring and posting performance is essential Measuring metrics impacts performance. However, driving continuous improvement requires sharing performance information and empowering people to improve the process. Hospitals often have difficulty measuring performance and are reluctant to share results. Much of the data hospitals want to measure is on paper, not collected, or not accessible. Hierarchy, animosity, fears of offending physicians, and fear of legal liability are often cited as Hospitals dont like to share perforreasons for not sharing perfor- mance data for a number of reasons, mance data. including a fear they will alienate their physicians or upset the hierarchy. Technical difficulty measuring data is overcome by resorting to simpler means. Using paper or Excel data collection templates and simple databases, instead of complex hospital management systems, usually enables any hospital to track any metric daily. Many hospitals have developed simple and inexpensive middleware software solutions to automate metric measurement. It is best practice to measure performance daily, so that success can be celebrated and gaps addressed while they are still fresh. Time and time again, we have observed that the concerns related to performance data evaporate once they are posted. In fact, most physicians and nurses are curious about the quality of care they deliver, how they can improve, and how they compare to their peers. Therefore, we believe that all data (risk adjusted as necessary) should be un-blinded (always protecting confidential patient data). Performance transparency allows hospitals, physicians, nurses, and service lines to identify and share best practices while encouraging health competition to improve performance. Current efforts to control costs and improve quality, like DRG adoption in Germany and NHS reforms in the U.K., are having the effect of making hospitals and physicians more interested in performance data. Lean tools transform care quality Lean principles improve performance throughout the hospital. Best practice is to create a daily management dashboard summarizing overall performance. Each service line or area should have a set of complementary metrics that they measure and respond to daily. With such metrics in place, hospitals are able to implement and realize improvements very rapidly typically in a few months (Exhibit 3, next page). Improving care in the ED Most EDs are very good at rapidly triaging patients and less effective at starting treatments. Unfortunately, quality outcomes are dependent on how rapidly the right treatment is started instead of how fast the patients are

Source: McKinsey analysis

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Exhibit 3

Example of a daily performance management tool

Hospitals should track and widely share their 20 or 30 most critical metrics for operations, quality, and service performance. Example metrics Inpatient throughput u Length of stay (days) Discharge time 5.5 2:20 pm 12 0 7 166 2 63 14 82 5.2 2:15 pm 15 2 6.5 149 1 66 13.7 66 5.1 2:28 pm 11 2.5 6.1 155 2 70 14.5 67 4.8 12:30 pm 5 2 7 150 2 30 12 60 Today Yesterday Monthly average Illustrative targets

are ordered according to symptoms (ideally at time of triage) and blood cultures are drawn with the initial labs often save hours. Also important is reducing variability in care by ensuring that patients get the correct medication, based upon evidence. In most hospitals this translates to a first-line medication for all patients, with exceptions for allergies and complex patients. EDs should post their treatment times for cardiac patients and pneumonia patients. Improving care in the ICU Mechanical ventilation is one of the most stressful experiences for patients and families. Managing respiratory physiology is one of the most complex tasks performed by physicians and respiratory therapists. Clinical studies have shown that frequent weaning trials and earlier extubation improves outcomes. The priority for extubation is heightened because patients who cannot be extubated within 3 days have a much greater risk of becoming ventilator dependent, which leads to prolonged hospitalization and death. Unfortunately, few hospitals have robust processes to ensure that ventilated patients are extubated efficiently. Lean principles yield several lessons for the ICU: the quality metric of total intubation time should be measured in hours rather than days, and simple criteria to evaluate weaning trials (e.g., rapid shallow breathing index) should be evaluated frequently. All of this should be done in parallel with other physician activities by respiratory therapy or by nurses rather than primarily by physicians. With appropriate oversight, delegating care to skilled non-physicians actually leads to more attentive and specialized care. Enabling less expensive staff to perform previously unimaginable tasks has been successful time and time again in other industries like airlines, shipping, banking, and publishing. Physicians should be mobilized when patients meet extubation criteria, regardless of time of day or day of the week, so that
Exhibit 4

uO perating theaters
Start delays (mins) Cancellations (%) Utilization (hours/day) Accident and emergency u Length of stay (mins) Leave without being seen (%)

u Quality outcomes
Time to antibiotics (mins) Extubation time after surgery (hours) Time to cardiac treatment (mins)
Note: Data are fictitious for this example. Source: McKinsey analysis

Sharing data daily is powerful. It keeps the organization focused on improvement and outcomes.

moved into a treatment area. For heart attacks, the metric that matters most is the time from arrival to restoring blood flow to the heart, with the benchmark being less than 90 minutes. Typical EDs have protocols for treating heart attacks, but fall short of the goal of restoring blood flow within 90 minutes. Most often, bottlenecks occur at the step of mobilizing cardiac teams or releasing medications from the pharmacy. Usually, this is because of excessive complexity and diagnostic criteria. Applying lean principles eliminates this bottleneck through a combination of parallel processing and simplifying complex processes. Additionally, designs where the cath lab and pharmacy are collocated with the ED can augment performance. Lean cardiac care reduces the time to restoring blood flow by simplifying the criteria needed to mobilize cardiac teams or medications to allow the call to be made earlier in the process and more efficiently by the primary caregiver (who is not necessarily the most senior physician). Criteria should be redesigned so that they are based on high positive predictive value rather then a complete set of tests. A single pager number or phone number should be assigned, and ready sets of supplies and medications should stocked in the ED. Using this approach, we have seen EDs improve efficiency by 20 percent to 40 percent (Exhibit 4). Similarly, by applying the same principles, EDs can decrease the time it takes to start antibiotics for pneumonia patients. Again, parallel processes and simplifying the process prove to be critical levers. Ensuring that X-rays

Lean emergency departments Impact of lean operations

Emergency department length of stay for admitted patients
Hours: minutes

Emergency department length of stay for discharged patients

Hours: minutes

uR esults were

40% decrease 7:36 4:28 Baseline Lean 2:54 Baseline

25% decrease

2:13 Lean

achieved after only 3 months, with improvement ongoing uH ospitals attract more patients with faster service uH igher patient and staff satisfaction scores; lower nurse turnover

Source: McKinsey analysis

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patients can be liberated from ventilators at the right hour. From a quality perspective, performing timely extubations in the ICU is no different from delivering timely treatment for heart attacks in the ED. ICUs that adopt these principles have seen dramatic reductions in ventilator-associated pneumonias, ventilator dependence, and mortality. ICUs should post their intubation times, re-intubation rates, and ventilator-associated pneumonia rates. Improving care in the OR Because of the financial implications of sub-optimal OR performance and the outspoken styles of many surgeons, hospital administrators expend disproportionate amounts of energy trying to improve ORs. Most often, these efforts result in little sustained improvement and frustration for everyone. Worldwide, ORs have the tendency to start cases late, manage pre-op processes erratically, and inconsistently deliver the right supplies at the right time. Applying lean principles greatly simplifies OR improvement and creates an atmosphere of cooperation rather than animosity. The first step is to redefine scheduled time as cut time and to track actual cut time versus scheduled time. The revelation for most ORs is that the real problem is the pre-op process. Hospitals should redesign the pre-op process from the perspective of the patient who desires to have his or her surgery experience from arrival to completion performed safely and without delay. Again, the principles of simplicity and standardization in terms of pre-op evaluation and testing result in large improvements. Additionally, evaluating the next days cases in parallel to identify potential delays (for example, missing history and physical, consents, and blood requests) pays large dividends and eliminates most canExhibit 5

cellations. Using these principles, ORs are typically able to reduce start delays and cancellations by more than 50 percent over a few weeks. ORs should post their average start delays and cancellation rate (Exhibit 5). Lean aligns all parties around quality Many people in health care share the misconception that quality is someone elses responsibility. Hospital administrators say it depends on physicians, physicians says it depends on nurses, nurses say it depends on the system and management holding physicians accountable. The advantage of using lean techniques for managing performance is that it makes everyones role and responsibility clear. In a lean hospital everyone is responsible for improving metric performance. Performance is measured at the individual level (physician) and service line or unit level (nurses and management). By posting unblinded performance everyone can work together to address shortcomings and achieve targets. Ideally, incentives and accountability are linked to performance (Exhibit 6). Defining roles and aligning physicians, nurses, and administrators using lean techniques is accomplished as follows: 3 Physicians are responsible for initiating the right care and designing and following clinical pathways. Physicians are aligned by improved patient outcomes, better cost profiles, reduced likelihood of malpractice suits, and simpler care-delivery processes. 3 Nurses are responsible for ensuring that pathways are executed and for helping to measure metrics. Nurses are aligned because it is simpler to care for patients according to treatment pathways and they are more confident that patients are receiving the appropriate care. Additionally, efforts should
Exhibit 6

Lean operating rooms Impact of lean operations for a hospital system

Average improvement across over 30 hospitals

Lean management roles: simple, clear, and more effective

Same day cancellations
Percent of cases

OR utilization
Average hours per room per day

First case start delays

Average minutes

Ensure correct pathu Make the u right diagnoses Initiate u clinical pathways Be accountu able for metric performance

55% increase 5:30 3:30 Baseline Lean 31 Baseline

Physicians
Lean hospital High-quality, operationally efficient, and low-cost clinical care

40% decrease

40% decrease

ways are implemented consistently Assist with measuring u metrics Be accountable for u metric performance Provide resources and u tools for physicians and nurses Set targets and hold u others accountable Be ultimately responu sible for quality and overall performance

18 Lean

10 Baseline

6 Lean

Administrators

Lean management allows systems to u make step-change in operations

Lean gives individual hospitals autonou

my to manage processes and accountability for performance

Source: McKinsey

Source: McKinsey

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be made to streamline documentation for patients cared for according to pathways. 3 Hospital administrators are responsible for ensuring that performance metrics are measured and managed. They also must provide physicians and nurses the resources and tools that they need to deliver care. Administrators are aligned because lean metrics makes quality performance comprehensible and transparent. Moreover, improving metrics results in both efficiency gains and financial improvements. Cheaper and better Hospitals wishing to pursue a lean transformation for the sake of raising their clinical quality should enjoy a comparable improvement in financial results, whether measured in Hospitals that can move more patients terms of more patients served for the same amount of resources through their existing systems faster consumed, or possibly even higher can save on capital investments that would otherwise be needed to expand revenues. Eliminating errors, their physical plant. waste, delays, and variability reduces costs and eliminates many of the most frustrating and frightening aspects of care for patients and caregivers. Expediting treatment in the ED reduces labor costs and generates capacity for incremental patients. Moreover, better outcomes for heart attack patients results in fewer ICU stays and fewer expensive implantable defibrillators. Extubating patients earlier in the ICU prevents length-of-stay outliers, which are extremely expensive, and the challenge of finding suitable discharge settings for these patients. Starting OR cases on time creates capacity for additional cases and reduces overtime costs. Importantly, incremental patients in the ED, OR, and inpatient units can normally be treated without additional fixed costs.

Changing mind-sets to achieve superior clinical quality

To implement lean methods, hospital managers must persuade physicians and nurses of the merits of this system. But its not so easy. First, establish clinical quality as the goal toward which all hospital processes are oriented.

The take-away: 1. The time is right for European hospitals to focus attention on quality-ofcare metrics.
2. A judicious application of lean principles, derived from other industries,

can help hospital administrators identify key drivers of clinical quality. These are often different from the resource inputs that have traditionally been measured.
3. Lean principles let administrators, physicians, nurses, and other clinical staff

align their priorities around patient-care quality in a transparent way that encourages accountability and a natural desire for process improvement. o

s patient choice comes to play a larger role in European health care, hospitals will have to learn to compete both economically and clinically in ways that were previously unknown. Quality of care plays a role in both realms. European hospitals are facing rising labor and supply costs at the same time as patients are demanding higher service levels and clinical quality. Moreover, the nursing shortage and medical technology innovations are longlasting trends that hospitals cannot ignore. Traditional responses, such as budget increases to offset costs, are unpalatable. It is time for Europes hospitals to re-think the way they deliver care to arrive at a sustainable, leaner, and higher-quality model. Why have hospitals failed to focus on quality and lean operations? We believe that costs are overshadowing the quality debate. Health care managers have forgotten that it is possible to optimize both cost and quality. Confusing the issue further is the fact that most hospitals are more focused on what metrics to measure, and less on how to influence the metrics in the desired direction. In fact, our recent survey of 70 U.S. hospitals and their directors of clinical quality supports this. We found a tremendous attentiveness to measurement, which

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Exhibit 1

It is not so easy to improve hospital mortality US hospital inpatient mortality

Percent, 1993 -2002

10.0 9.0 8.0 7.0 6.0 5.0 Stents* 4.0 3.0 2.0 1.0 0.0 1993
*

2002 Average = 2.2 % 10-year improvement CAGR = - 2 %

Implantable debrillators**

prevented many hospitals from acquiring the skillset required to achieve sustained clinical quality metric improvement. Said another way, using current approaches, many hospitals are unable to actually influence the clinical quality results that they have worked so hard to measure. Our survey of directors of clinical quality corroborates this. Hospitals lack a systematic approach to improving quality results, making inpatient health care one of the last industries to realize the value of programmatic quality improvement. This must change, and quickly. The pieces to the puzzle Each hospital is different. However, every hospital has the potential to address in its own way the 3 core elements of performance improvement: process redesign, clinician behavior, and management capability. Time and time again, we have witnessed rapid step-change in hospital performance when these 3 elements are approached together (Exhibit 2). Making change stick: redesigning processes at the front line Changing clinical processes works best when those at the front line design the change nurses, physicians, housekeepers, phlebotomists, and so forth. As obvious as this seems, it is the exception rather than the rule for most hospitals. Most hospitals design new processes and push them down from the administrative suite to the front line. Usually these are implemented only for a short time before managements attention wanders and staff revert to their former ways.
Exhibit 2

1995

1997

1999

2001

FDA approval of Gianturco - Roubin Coronary Flex stent. **FDA approval of Guardian defibrillator.

D u espite many advances in medical care as well as tremendous effort and investment by hospitals, mortality has barely changed over the last decade u Mortality reduction is the ultimate goal of quality improvement efforts

Source: HCUP Nationwide Inpatient Sample (NIS); Agency for Healthcare Research and Quality (AHRQ); McKinsey analysis

seemed to distract from the more proper goal of improving the outcomes of those metrics. In the United States, hospitals expend considerable efforts attempting to measure everything. This has proved misguided and myopic. Europeans have the possibility to skip this unproductive evolutionary phase in quality improvement if they pay attention and set their priorities correctly. This is corroborated by the fact that there has been relatively little improvement in clinical quality results in the United States over the last 10 years, despite a concerted focus by many governments, health systems, advocacy groups, and hospitals. Clearly, it is time for hospitals to focus on execution rather than measurement. After all, it is the clinical quality results that matter (Exhibit 1). In addition, we believe that achieving superior results in clinical quality will lead to a sustainable competitive advantage. Demonstrably higher quality will increase the barriers to entry for competition on lucrative service lines, and it will make it more difficult for consumers to commoditize their care, easily substituting one provider for another. In addition, superior results in clinical quality will make the hospital a more attractive place to work, which will influence physician and nurse recruitment in tight labor markets. Improving performance on clinical quality metrics in hospitals is difficult. There are multiple stakeholders to consider and influence physicians, nurses, administrators and success requires both redesigning processes and changing behaviors. Unfortunately, the overemphasis on measurement has

The pieces of the puzzle

Process redesign Inuencing clinician behavior Performance management leadership

uE ngage clinical staff by

forming working teams uM ap existing quality process uR edesign using lean manufacturing principles mplement and rene uI

uE mpower physicians to
improve performance Make performance and targets transparent uF ix operations rst! S u upport and reinforce the changes required

uT rack and share

quality data Daily metrics Monthly management reviews Quarterly physician reports uH old everyone accountable for quality

Assembled, these pieces result in a step-change in quality

Source: McKinsey

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It is critical, therefore, to engage a variety of front-line employees and physicians in jointly evaluating, designing, and recommending approaches for improving clinical-care delivery processes. This can occur in a small group setting, such as a weekly 45-minute team meeting with a defined agenda and clear objectives. These teams should have regular access to hospital leadership to help overcome barriers and communicate progress. Participation on working teams should be considered a privilege and should be based upon a record of leadership and high performance. A bias for action must be infused into the process. Many hospitals suffer from analysis paralysis a desire to study the problem and design a perfect solution rather than make continuous improvements. As a result, too often the outcome of hospital meetings is identifying issues for Hospitals should avoid the temptation further study rather than manto study the problem until they come up with the perfect solution, instead dates for action. As a first step, of making continuous incremental senior management can build improvements. momentum and set expectations by invoking a do it, test it, fix it mentality, within the context, obviously, of safeguarding the patient. Further, single-point accountability should be established one employee should be responsible for the success of each initiative. We have found that hospital employees find it empowering to be charged with positively influencing their own environment. We know from other industries that the real change comes when front-line employees are allowed to determine how best to do their jobs and achieve quality targets. This idea is at the core of Toyotas lean management approach that has revolutionized manufacturing. Once responsibilities are clear, the other principles of process redesign come quite naturally. There are many frameworks for process redesign. One that we have used successfully uses the core principles of six sigma, known as the DMAIC approach define, measure, analyze, improve, and control. When coupled with the toolbox of other lean techniques visual management, standardized operations, error proofing, and pull scheduling this approach can be amazingly powerful. Results can be further turbo-charged when incentives are used to reward superior performance. Incentives can be small a prioritized parking place, a free cup of coffee, a pizza party contest between nursing units yet are a powerful technique to influence front-line behavior (Exhibit 3). Three tools for influencing clinician behavior If hospital administrators around the world met one day in conference, they would most likely reach unanimous agreement around the following statement: My hospital would function so much more smoothly if only the phy-

Exhibit 3

Incentives to reinforce behavior change

Top 10 Academic Medical Center* Behavior change Type of incentive Tertiary-care hospital Community hospital mprove speed of uI

uA dopt treatment uR ecognition for

guidelines for common diseases

uR educe LOS for uR ecognition for

surgical patients

executing physician orders

physicians achieving 90% compliance Closer parking spots Star physician lapel pins Public recognition

physicians who achieve LOS targets Preferential OR times uF or nursing units that achieve goals Monthly recognition Celebration lunch with leadership

uR ewards for nurses

who exceed targets monthly Gift certicates for coffee, lunch, or movies uF or nursing units that surpass goals Monthly pizza party

Results

uM ore than 80% of

physicians using treatment guidelines after only 2 months

uO ver a 40% reduction

in surgical LOS Several physicians achieving goals Healthy competition among nursing units

uS ignicant improvement in order execution times Fewer missed orders uA ppreciation from physicians

*According to USNews, 2003.

Source: McKinsey analysis

sicians would change their behavior. Far too often, hospital leaders and physicians are at loggerheads over issues both large and small. It doesnt have to be this way. Delivering high-quality care for patients is one area where everyones interests are aligned. In fact, we have found clinical quality an ideal platform on which to change many hospital processes, including those related to patient service and throughput. Here are three time-tested techniques that help align clinicians around quality improvement and process redesign: 1. empower physicians to improve their performance; 2. fix operations first; 3. support and reinforce the changes.
1. Empower physicians to improve their performance

Empowering physicians to improve their performance requires sharing the hospitals clinical performance data publicly, using the existing clinical leadership to lead process redesign, and clearly communicating goals. Physicians understand and respond to data. In fact, most physicians and nurses are curious about the quality of care they deliver, how they can improve, and how they compare to their peers. Hospitals have traditionally been reluctant to share or post this information, but hospitals with successful quality improvement programs have found that performance transparency allows factbased discussions with clinicians. Physicians are naturally competitive and they are used to achieving goals. Communicating personal performance compared to a blinded comparison to peers can engender healthy competition to improve performance (Exhibit 4, next page).

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Exhibit 4

Sample physician performance data

ICU length of stay for CABG-related DRGs* Days Dr. A Dr. B Dr. C Dr. D Dr. E Dr. F Dr. G Dr. H Dr. I Dr. K All others
*DRG

Best in class: 1.5* 1.5 1.8 1.8 2.0 2.2

Average: 2.3**

ICU admits 205 53 37 294 38 138 93 25

Best practices for sharing physician performance data Performance compared to u peer group (by specialty group) and best practices

age physician compliance. An environment that enhances physician productivity while simultaneously improving quality can also serve as an important driver of business development.
3. Support and reinforce the changes

Full portfolio of quality u

measures including: ALOS Severity CMI Mortality Disease-specic metrics how to improve performance and sharing of hospital best practices data

2.3 2.6 2.7 3.2 4.2 2.6

Specic suggestions for u

Peer review and nancial u Frequent reporting u

26 136 32

Like patients undergoing treatment, physicians need reinforcement that the changes required are necessary and beneficial. When they doubt the need to change, physicians are slow to respond in fact, many take a wait-and-see attitude toward most hospital initiatives to determine if leadership is truly committed to the change. To overcome this inertia, administrative leadership need to be very firm about their expectations and provide the right incentives to encourage participation. We have found that public recognition and posting competitive results work quite well. Once physicians understand expectations and recognize incentives, they are quick to respond. In addition, quality expectations need to be written into job descriptions, the credentialing process, and hospital bylaws. Driving results with performance management Posting data daily is not enough. Management must make nurses and physicians pay attention to performance. Ideally, performance across quality, operations, and financial metrics is linked to annual evaluations and compensation decisions. Some hospitals have had success using balanced scorecards. While integrating lean-management metrics into the annual evaluation process is important, it is critical that performance management occur daily.
Exhibit 5

(e.g., daily metrics and quarterly reports)

106, 107, 109. ** For all surgeons, 1,077 total admits to FICU.

Source: McKinsey analysis

Enlisting the support of local physician champions to participate in publicly recognizing their colleagues for successful change can be a powerful incentive. Visual management techniques can help the hospital avoid the most common form of resistance to change lack of clarity about the purpose of change and feedback about progress.
2. Fix operations first

Performance management approach

Timing Purpose Monthly Steering committee meetings Weekly Working teams responding to metrics and implementing initiatives Daily Daily monitoring of metrics

Few things drive an angry physician to an administrators office faster than operational errors preventing physician performance improvement. It is essential that hospitals iron the operational kinks out of redesigned processes before mandating physician compliance. There should be zero tolerance for front-line operational errors. All staff should be empowered and expected to do whatever it takes to eliminate errors. Lexus stops the assembly line every time an operational error is discovered and does not restart operations until the team is sure that the error can never happen again. Initially, this leads to several line stoppages while issues are resolved. However, soon the process is perfect and the line is far more reliable in terms of both quality and productivity. A similar approach is necessary to refine clinical processes and eliminate the bottlenecks that prevent physician improvements. Getting hospital operations in line first (making sure the system functions nearly perfectly with lab, radiology, nursing, pharmacy) is the necessary quid pro quo to encour-

uR eview of performance

relative to best practice

dentify opportunities for uI

improvement and elimination of barriers

uR ene current initiatives,

identify issues and barriers to overcome uC onsider additional areas for improvement uL aunch next wave of initiatives

uC reate transparency across

the hospital for performance in the key opportunity areas uR espond rapidly to key throughput metrics and proxies u Shape working team meetings

Source: McKinsey

56

McKINSEY HEALTH EUROPE NUMBER 4

THE QUALITY PERSPECTIVE

57

We recommend a sequential approach for driving continuous improvement consisting of daily data reviews, weekly team meetings to manage metrics, and monthly steering committees to discuss results (Exhibit 5, previous page). Steering committees should be composed of administrators, physicians, nurses, and front-line staff, with the primary objective of demonstrating the importance of performance and helping teams overcome barriers. An additional benefit of creating a steering committee is that it keeps clinicians and senior leadership connected with front-line staff and the day-to-day challenges of delivering high-quality and lean care. Ultimately, this group should set targets, allocate resources, and be responsible for overall performance. Lean techniques and these established change techniques process redesign, influencing clinician behavior, and management leadership offer hospitals a simple and powerful set of quality-improvement tools. This approach resonates with physicians, nurses, and front-line staff because it focuses on patients delivering the right treatments at the right time with the right outcomes. We hope that the urgency of the forces at work will help European hospitals learn from the mistakes the United States has made. The goal should be to spend less time on quality measurement and more on delivering results. Like other industries, hospitals can undergo transformative improvement using these approaches. Moreover, we believe that European hospitals have the potential to improve quality and performance by an order of magnitude similar to other industries that have adopted lean techniques. After all, there is no intrinsic reason why the delivery of health care should be riskier than air travel or of lower quality than the ambulance that delivers patients to the hospital. It is both necessary and inevitable that a Toyota-style hospital emerge in Europe that will redefine health care in terms of quality and cost. We believe that faced with this challenge, hospitals will be forced to either catch up or close. Fortunately, hospitals can make this choice.

The take-away: 1. Hospitals should spend less effort determining what metrics to measure and more time driving whatever they measure to best-practice performance levels.
2. Rapid and substantial improvement can be achieved by focusing on 3 ele-

ments: lean process redesign, influencing and aligning clinicians, and implementing management tools and accountability.
3. Clinicians will follow, and change, once management demonstrates

their commitment by fixing operations, sharing performance data, and empowering clinicians to shape solutions. o

Do you have any questions, suggestions, or comments? E-mail us at: health-service@mckinsey.com The authors of this article:

Brendan Buescher is a Principal in McKinseys Cleveland office. He specializes in health care, hospitals, and operational studies.

Bob Kocher, M.D., is an Engagement Manager in McKinseys Washington, DC, office, who works often on hospital studies.

Russell Richmond, M.D., is an Associate Principal in McKinseys Boston office. He has served clients in the health care, high-tech, automotive, and finance industries.

Saumya Sutaria, M.D., is an Associate Principal in McKinseys Silicon Valley office. His interests are provider systems, biopharmaceuticals, and medical devices and diagnostics.