Friday, May 18, 2012

Focus and Leverage Part 113

Continuing with my series on healthcare and my push for everyone to get a copy of Performance Improvement for Healthcare, let’s begin with another quote from this wonderful book.  Whenever you see an entry in quotation marks, it is a direct quote from this book.  “The problems with and the solutions to the healthcare crisis are not about people nor technology nor science. They are about transforming the system. Fifty percent of $2.3 trillion spent per year on healthcare in the United States is wasted because of inefficient processes. Therefore, the answer is to fix the system of inefficient processes, to prevent mistakes, and to manage the bottlenecks better by focusing on the right problem with the right tool at the right time—in other words, to use an integrated approach to performance improvement.  Is it possible for a hospital to improve outcomes while improving its performance as a business at the same time?”  The answer to this question is yes, absolutely!

I’ve written many times about the power of integrating Lean and Six Sigma with the Theory of Constraints (TOC) and while most of my examples have come from manufacturing and Maintenance, Repair and Overhaul (MRO), everything that I’ve ever written applies quite nicely to the healthcare field.  TOC provides the focus that is missing from so many improvement initiatives being worked today.  That is, by identifying the system constraint and focusing waste and variation reduction efforts on the constraint, you set the stage for significant improvement in throughput.  Imagine a hospital surgical unit and being able to operate on 30-40% more patients without adding any additional expense.  Would that add to your bottom line?
“Until the late 1990s, Lean, Six Sigma, and Constraints Management methodologies were like three different religions—coexisting but independent of each other. As late business process management pioneer and father of the swim-lane diagram, Dr. Geary Rummler, said, there are “turf wars between competing process-improvement philosophies, methodologies and technologies.” Then Lean and Six Sigma were integrated and became the leading approach in the early 2000s, whereas integration of Lean and Constraints Management also were applied in manufacturing and defense. Constraints Management is arguably the least known among these three methodologies, especially in the U.S. healthcare industry. An informal survey conducted by NOVACES shows that very few U.S. hospital executives have even heard of Constraints Management.”

“On the other hand, Constraints Management applications have been resulting in major improvements in the hospitals of the United Kingdom, New Zealand, South Africa, Singapore, and Israel and is remarkably popular in Dutch healthcare. If a hospital in the Netherlands has a process improvement methodology applied, then one-third chooses Constraints Management. Constraints Management is significantly more popular in Dutch hospitals than in Dutch manufacturing. Breakthrough potential is even greater when Constraints Management is carefully integrated with Lean and Six Sigma.”
“Three methodologies—Six Sigma, Lean, and Constraints Management—have risen to the forefront and bridged the gap between manufacturing and service/transactional industries—especially the ever-expanding healthcare environment. These three approaches are very complementary. Lean and Six Sigma are primarily process-improvement approaches. On the other hand, Constraints Management takes a system perspective at a higher level by looking at the interdependencies among processes and their dynamics for system improvement.”
“When separated, Lean tools cannot bring a process under statistical control, and Six Sigma cannot improve cycle time dramatically, as Michael George states in his book, Lean Six Sigma. Lean promotes elimination of waste everywhere without necessarily a focus on the overall system, and Six Sigma has an inherent risk of local optimization. Constraints Management highlights where to focus improvement efforts for system level

impact by offering a dynamic holistic view where bottlenecks and the weakest links of healthcare organizations become not only visible but also manageable for maximum value. Lean and Six Sigma tools allow teams to produce solutions to better manage constraints. Constraints Management is excellent in providing a step-by-step approach to direct improvement efforts, but it does not tell you how to get the most mileage out of the bottleneck. Once the direction is set, Lean and Six Sigma tools help an organization reach its destination.”

“The integrated approach is analogous to looking through three windows into a system: Lean, Six Sigma, and Constraints Management windows. The Constraints Management window is like looking at the forest from a hot air balloon and selecting the best tree from which to pick fruit.  The Lean window shows the simplest way to pick the low-hanging fruits as well as the fruit on the floor with very little effort. And the Six Sigma window shows how to consistently pick the bulk of the sweeter fruits, without bruising them, at higher, difficult-to-reach branches of the tree.”

In my next posting we’ll continue our discussion of how this integrated approach dramatically improves results when applied correctly.

Bob Sproull

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