Closing the Healthcare Performance Gap

Around the world healthcare organisations are being challenged to do more with less resources. In the UK the NHS is trying to find £20 billion in efficiency savings. Can this be done without reducing services to patients? After carrying out experiments in numerous hospitals in several different countries we can now see how lean can help to close this performance gap in healthcare, as lean has done in many other sectors. 

There are two approaches to lean - the bottom-up involvement of front line staff in continuous improvement activity and the top-down use of lean to close critical performance gaps. The weakness of the bottom-up approach is that the many islands of improvement are never joined up to deliver hospital-wide gains. The weakness of the top-down approach is that it fails to address the end-to-end patient journey or to reach down to the front line. 

Combining the two approaches is a winning combination for all parties - less hassle and unnecessary waiting for patients, more time for staff to spend caring for patients and freed-up resources for management to use to meet the challenges facing the organisation - to for instance reduce waiting times, to take on additional elective work or to close excess capacity safely. One of the best examples can be found at the HSJ’s Best Acute Trust of 2010, Calderdale and Huddersfield NHS Foundation Trust, which has reduced medical length of stay by 30% to one of the shortest in the NHS, while also closing two wards last winter. Other hospital pioneers around the world are now following their example.

The first step is to recognise that patient demand (both for admission and discharge) is in fact very predictable, even for emergency patients. Our research shows that much of the apparent variability, including the so-called "winter pressures", is caused by the way internal and external resources are scheduled and compounded by the close proximity to the financial year end, not by patients or the seasons. The second step is to follow the elective and emergency patient journeys all the way to discharge. Typically over 25% of medical patients are medically fit for discharge but continue to block beds for several days. Unlocking this entails re-thinking the way that the work on the wards is planned, the timely delivery of the support services patients need to be able to leave and working with outside agencies to prepare nursing home beds, care in the community or financial support ahead of time. 

The essential building block to manage these patient journeys is a Visual Hospital board where the status of every bed in the hospital is updated every two hours. This makes the "demand to get out" visible, triggers the necessary discharge actions and signals the need to match capacity with changes in demand. The second building block is for the core medical staff to develop and make visible a plan for every patient, detailing what is expected to happen and when during their stay all the way to discharge and that is updated daily. Synchronising these plans makes the work to be done and whether it has been completed clear and visible to all staff. Finally someone has to be given the responsibility for managing the patient journeys across many departments from admission to discharge. Their job is to see that today's work is being done as planned, to unblock disruptions and to gain agreement from all concerned on what needs to be done to improve these patient journeys. Without these foundations, hospital performance is unlikely to improve.   

Putting these building blocks in place, focusing improvement activities and turning freed-up capacity into bottom-line savings is the responsibility of top management. But in our experience NHS managers are locked in a viscous circle that distracts them from doing so. They are continually responding to new policy initiatives from central government, which can translate into over 500 live projects chasing 350 or more targets in a typical organisation The endless rounds of meetings to prepare these project plans, review them and then explain why, on top of an already overloaded day job, they were not completed eats up all their time. We call this the "Bermuda Triangle" of management in the NHS. This makes it impossible to support managers improving patient journeys or to focus efforts on the vital few actions that will make the biggest difference to the performance of the organisation. As long as this viscous circle continues, managers will struggle to realise any efficiency savings. 

This viscous circle also explains why so many well intentioned initiatives to reform the NHS from the centre have run into the sand and failed to deliver performance improvements. Although these initiatives are often hijacked by vested interests, the core problem is that there is no effective mechanism for translating them into action. This is often made worse by periodic structural reorganisations that further distract managers and their staff to worry about their job security rather than improve hospital performance. 

A period of stability in which hospitals and commissioning bodies can work together to align demand and capacity with the available resources and remove sources of unnecessary variability in the healthcare system is the key to escaping this viscous circle. Foundation Trust status is improving hospitals' ability to manage their own finances, but the next step is to create the operational management to improve patient journeys and reduce unnecessary length of stay. Once hospital management begins to see that this is delivering results they will have the confidence to deselect the many other projects that consume valuable resources but do not contribute to improving healthcare
performance. 

Join us to hear this story first hand at our Lean Summit 2011

Yours sincerely
Professor Daniel T Jones

Lean and Operational Excellence

It is a mistake to think of lean as just one of the many tools in the Operational Excellence portfolio. Operational Excellence is really a catch all label for many different "best practices". Lean on the other hand is a very specific set of interlocking practices, tools and behaviours derived from a very clear reference model. Lean grew out of years of practice and experimentation at Toyota and at companies in other sectors that have followed their example. It did not come from applying theoretical insights to business practice.

Correctly understood, lean is a much more fundamental and comprehensive approach to solving business problems and creating value for customers. It is also a great deal more than engaging employees in continuous improvement and eliminating waste.

One of the key things that distinguishes lean is its scope – which encompasses the whole value creation process – such as a global supply chain or an end-to- end patient journey. Instead of developing new support systems - such as better forecasting or decision support systems - lean focuses on the actual work that creates the value customers pay for, which lean thinkers call value streams.

Lean brings many different tools to bear so each value creating step can be performed right first time on time, then links the steps together in a physical flow or through pull signals and then levels the workload to align capacity with demand. As the primary value creating work begins to flow lean applies these tools to synchronise all the supporting activities that enable the primary value stream to flow and all the elements a customer needs to solve their problem – such as the test results, medications and therapies for a hospital patient. This in turn requires the right lean management to ensure the work can flow according to plan, to escalate issues and unblock obstacles to flow and to support root cause problem solving.

The net result is a value creation system designed back from the customers’ definition of value and around the activities that create this value, more accurately and with far less wasted effort and cost. While most organizations cut their teeth leaning their existing activities the true potential of lean comes from the opportunity to redesign the next generation products or services and the value streams that deliver them without the drag of existing assets. Manufacturers are for instance now looking to local rather than distant “low wage” suppliers and polyclinics are now offering services previously only available in big district hospitals.

The other thing that distinguishes lean is its depth. The more activities are linked together and synchronized and the physical or time buffers between them are removed the more the operation of the whole systems depends on the skills, behaviours and direction of every employee.

On the one hand such an integrated system multiplies the probability of interruptions that must be responded to quickly. On the other hand it provides extremely valuable feedback on the causes of these interruptions and other changes, which may otherwise be hidden or lost. It is precisely to leverage this feedback that the core lean skills are not just the tools and techniques, but the use of the scientific method to define and diagnose a problem, understand the facts, try several countermeasures and check which of them solved the problem. Because solving problems can only be done by combining a detailed knowledge of the work with the context of the problem these skills need to be learnt by every employee, not just the experts. Developing these skills and using this experimental approach to constantly improve the performance of each value stream is learnt by doing rather than in a classroom.

In order to enable value streams to flow across facilities, departments and organisations someone has to take responsibility for creating the conditions for collaboration between all the actors involved. Lean chief engineers, project managers and value stream managers carry the responsibility for the performance of their product, project or value stream while the authority over the resources needed to accomplish this remains with vertical department of function heads. The keys to making this work are agreeing the right metrics for tracking the operation and performance of the system as a whole and creating the right visual management context in which to gain agreement from all parties on the facts of the current situation and to commit to a jointly agreed plan going forward. The team then reviews deviations from the plan very frequently, unblocks any obstacles and captures any learning for the future. Lean thinkers use visual management everywhere precisely because it reinforces collaborative behaviours.

Highly transparent and interdependent systems throw up literally thousands of possible things that could be improved across an organisation. The skill of a lean leader is to be able to set the direction and to focus everyone’s efforts on the vital few things that will make the biggest difference to the organization, its customers, employees and shareholders. This means being able to translate organizational goals into measurable gaps that need to be closed and using strategy deployment to create a dialogue down the organization to agree the actions that will contribute to closing these gaps, so these can be adequately resourced while others are deselected. It also means diagnosing and addressing the underlying causes of instability - such as the amplification of orders passed upstream or discharge delays causing queues for admission to a hospital. Finally leaders must act to use the freed up  capacity or cash to reduce costs and grow sales without requiring additional capital.

Yours sincerely
Professor Daniel T Jones

PS. I look forward to debating this and other issues with you at our Lean Summit on 9-11 November in Kenilworth.

How to Judge the Sucess of Lean?

Lean is a journey and to my mind the best way of judging success is by how much people have learnt so far and how ready they are to take the next leg of the journey.

I often meet people who tell me that “Lean has changed their lives”. While this certainly makes writing books worthwhile it also presents an opportunity to ask some probing questions. Can they show me how lean has changed the way they work with their colleagues and the things they are working on? Are they for instance really working together in teams, defining their own standard work, visualising progress against the plan and solving problems that prevent them doing the right things for customers and their organisation? This tells me a lot more than how many training courses or Kaizen weeks they have done.  

I then ask them to show me whether lean has enabled them to change the way the work flow or value stream that they are part of is run. Has lean helped them to create stability where there was chaos, to level the work and to allow it to flow in line with customer demand? Indeed are they clear who their immediate and final customers are and can they distinguish real from created demand? From their answers and looking at their value stream maps it soon becomes clear how much of their end-to-end value stream they can see, particularly beyond their own area, facility, department or organisation. It is also easy to see whether the underlying logic has fundamentally changed – from batch to flow and from push to pull etc. 

The next step is to ask whether they have managed to join up all the lean improvements along their value stream and deliver significant results for customers in terms of quality, delivery and cost and for the business in terms of freed up cash, greater productivity and growing sales, while saving or forestalling capital expenditure. Moreover have these results been recognised by senior management, because being able to demonstrate that a good process is the best way to get good results is essential to sustain support for lean from the top. 

As we learn to practice the scientific method embodied in A3s I increasingly hear managers say that “Lean has changed the way I think”. I now start by asking what the problem is that I am trying to solve and how important it is that this, rather than many other problems, get solved.” Taking a look at their A3s shows you a lot about the thought process behind the stories their A3s are telling. The less polished – in pencil and rubber rather than PowerPoint – and  the more visual – more pictures and less words – the deeper this thinking has taken root. Their portfolio of A3s also tells you the scope and level of the problems they have been able to tackle to date.

Then I ask managers to take me on a Gemba Walk of the areas they are responsible for to understand how deeply this thinking has spread and influenced decision making. Are the key targets, the progress of the work against plan and current problems visible and regularly reviewed on the Gemba, or are decisions still based on data reviewed in an office? Are escalation processes to respond quickly to problems clear and is everyone engaged in reviewing the progress of project A3s on a daily or weekly basis? Is management using A3s to translate higher level goals into actions and to create a dialogue between teams along the value stream and are they using these projects to mentor staff in using the scientific method?

I then ask whether this scientific approach to thinking has improved the productivity and effectiveness of management, particularly in the way they use their time. Can they really focus on the vital few actions that will make the biggest difference in meeting their goals while having the confidence to deselect the rest? Do they spend far less time in endless meetings and more time reviewing progress and projects on the Gemba? Has the greater stability in their processes freed up time spent fire-fighting that can now be used to lead and mentor improvement activities?

I am now beginning to hear managers say “Lean means we need to change the way we manage” . Yes it does! This is an important threshold when top management recognises that they have to lead their lean transformations and focus these new ways of working together and new ways of thinking on closing the key performance gaps that will make the biggest difference to the business and to their customers. Has the debate over the vital few gaps been visualised in an Oobeya room and turned into key projects and actions using strategy deployment? Have these key projects been resourced and the many other projects deselected? 

This leads to the next important step which is giving someone the responsibility for leading these end-to-end projects to turn previously separately managed activities into an integrated work flow or value stream, including synchronising all the key support processes. Managing the relationship between this horizontal responsibility and the vertical authority over the resources necessary to accomplish this redesign is a new challenge. Is the organisation ready to embark on experiments to learn how to make this work?

The final challenge is to recognise that in the end lean is a line and not a staff responsibility and that lean knowledge is developed through involvement in successive controlled experiments – learning by doing – rather than through a standard training programme rolled out by experts from the centre or by outside consultants. A lean transformation is built through running clusters of controlled experiments, building knowledge through communities of practice and shared through recognition ceremonies and an intranet of project A3s. In my experience this “get to action quickly” approach not only generates faster results but also “turns on the lights” in peoples’ heads to own it and run with it over time, rather than survive another initiative from head quarters.  

As we have seen the lean journey is about learning new ways of working together , learning new, scientific ways of thinking and learning new ways of managing organisations. The more you learn the more you discover there is to learn!

Yours sincerely
Professor Daniel T Jones

Managing Visually

Learning to See is the starting point for Learning to Act. By making the facts of any situation clearly visible it is much easier to build agreement on what needs to be done, to create the commitment to doing it and to maintain the focus on sustaining it over time.

However what makes visualisation really powerful is that it changes behaviour and significantly improves the effectiveness of working together to make things happen. It changes the perspective from silo thinking and blaming others to focusing on the problem or process and it generates a much higher level of engagement and team-working. This can be seen at many levels on the lean journey. Here is my list, but I am sure you can think of many more.

Standardized work defined by the team as the best way of performing a task makes the work visible, makes the need for training to achieve it visible and establishes a baseline for improvement. Likewise standardized management makes regular visits to the shop floor visible to audit procedures, to review progress and to take away issues to be resolved at a higher level.

Process Control Boards recording the planned actions and what is actually being achieved on a frequent cadence make deviations from the plan visible, so teams can respond quickly to get back on plan and record what problems are occurring and why for later analysis.

Value Stream Maps make the end-to-end process visible so everyone understands the implications of what they do for the rest of the value creation process and so improvement efforts can be focused on making the value stream flow in a levelled fashion in line with demand.

Control Rooms or Hubs bringing together information from dispersed Progress Control Boards makes the synchronisation of activities visible along the value stream, defines the rate of demand for supporting value streams, triggers the need to escalate issues and to analyse the root causes of persistent problems.

A3 Reports make the thought process visible from the dialogue between senior managers and the author or team, whether they are solving problems, making a proposal or developing and reviewing a plan of action.

Strategy Deployment makes the choices visible in prioritising activities, deselecting others and conducting the catch-ball dialogue to turn high level goals into actions further down the organisation.

Finally the Oobeya Room (Japanese for “big room”) makes working together visible in a project environment. So far it has been used for managing new product development and engineering projects. However organisations like Boeing are realising how powerful it can be in managing projects in the Executive Office (see the presentation and the podcast by Sharon Tanner).

The Oobeya Room is in my view the key to making all this visualisation effective. It brings together all of the above to define the objectives, to choose the vital few metrics, to plan and frequently review the progress and delays of concurrent work-streams, to decide which issues need escalating to the next level up and to capture the learning for the next project (see the Discussion Paper, presentation and podcast by Takashi Tanaka).

But more importantly it creates the context in which decisions are based on the facts and recorded on the wall, avoiding fudged decisions and prevarication. It also ensures that resource constraints and win-lose situations that can arise between Departments are addressed and resolved so they do not slow the project down.

Reviewing progress and delays on a daily or weekly basis rather than waiting for less frequent gate review meetings leads to much quicker problem solving. Because these stand-up meetings only need to address the deviations from the plan and what to do about them they also make much better use of management time.

In short the Oobeya Room brings all the elements of lean management together. Taken to an extreme visual management can of course itself become a curse. I have seen whole walls wallpapered with often out-of-date information that is not actively being used in day-to-day decision making.

Learning how to focus attention on just the right information to make the right decisions in the right way is the way to unlock the real power of visualisation and team-working in the Oobeya Room.

Yours sincerely
Professor Daniel T Jones

The Financial Consequences of Lean

Why is it so hard to see the financial consequences of lean? Failure to answer this dilemma has derailed many lean initiatives. This is not such a problem if top management really understands the significance of focusing on getting everything to flow right-first-time-on-time to customers. Like top management at Toyota and Tesco, they know that good processes lead to good results. Alternatively if you have an experienced Sensei who knows where the gold lies buried and who has worked on similar situations before, there is a good chance that they can help you to deliver the kind of results you expect from lean.

But in my experience help is needed if you are pioneering lean in your organisation while at the same time trying to convince top management that it can deliver lasting financial results. This is particularly true when you are dealing with a complex shared pipeline with multiple steps and routings through which many different products or services flow. It becomes much harder to see where to act to deliver the greatest gains for the organisation and for its customers. And as my colleague John Darlington has shown traditional accounting systems and even sophisticated product costing systems end up rewarding the wrong kinds of actions.

As John puts it, they encourage overproduction by valuing what has been made not what has been sold, they do not recognise the importance of bottlenecks and constraints, they encourage point optimisation rather than flow, they have nothing to say about lead times, they promote the idea that bigger batches lower the unit cost and they encourage cost reductions that often prove to be mirages. In other words they fail to show the power of focusing on compressing lead times, which lies at the heart of lean. Struggling against this kind of headwind is almost impossible for any length of time.

Unlike Financial Accounting for reporting results to the outside world, we are free to choose how to construct our internal costing systems to drive the right kinds of actions. For instance lean organisations use Target Costing systems to focus improvement efforts in new product development. Why do we not do something similar to design and improve how well we run our end-to-end processes or value streams, particularly where they involve shared resources and cross several departments?

John shows how adding operating expenses to value stream maps for all the products going through these shared resources and turning inventories into time gives us the basis for Flow Costing, which relates the time products take to flow through the value stream (rather than to the cycle time through each operation) to the operating expenses of running it. Inventories (and delays in services) are the richest source of insight into how well we are using our capacity to generate money through sales.Shorter throughput times increase the ability to respond to quality problems and to introduce engineering changes, they may make it possible to raise margins and postpone the need for new investment, and meet due dates with lower finished goods stocks.

The real value of Flow Costing is to help set the priorities for lean improvement actions by being able to see the financial consequences in terms of increased sales, less cash tied up in inventories, reductions in operating expenses and postponed investments. These priorities can then be built into the policy deployment goals for each department, and the resources in their budgets to accomplish them. Flow Costing is a powerful way to help to bring throughput times much closer to value creating times, by which time the differences between Flow and Product costing systems almost disappear.

Yours sincerely
Professor Daniel Tiones