How experts from manufacturing are helping to redefine healthcare delivery. Ted Stiles, Partner at Stiles Associates delivered this presentation at the 2012 NE Shingo Prize for Operational Excellence Conference on September 25, 2012

1. SHARING
EXCELLENCE
What Healthcare is Learning
from Manufacturing

2. INTRODUCTION
• Retained Executive Search
Firm Specializing in TPS and
Transformational Operating
Systems
• Exclusive focus since 1991

3. SPENDING MORE FOR LESS
• USA richest country in the world yet lagging in healthcare.
• WHO ranks US 37th vs. all other nations.
(blended ranking combines health of citizens, cost of care, responsiveness of health
system)

4. SPENDING MORE FOR LESS
Source: OECD

5. SPENDING MORE FOR LESS

6. VIEW FROM THE HOSPITAL LEVEL

7. OPERATING REVENUE IN DECLINE
• Patient volumes in decline
– Higher deductible rates
– unemployment/uninsured
$ – Elective procedures down
• Revenue (reimbursement
rates) in decline
– Medicare
– Medicaid
– Private insurance

8. QUALITY ISSUES
• Medical errors kill enough people each week to fill
four jumbo jets
• 25% of patients are harmed through medical errors
• Standard methods used to detect errors fail as much
as 90% of the time
• Reimbursement increasingly tied to quality metrics
Sources: WSJ 9/21/12; US News and World Report 8/28/12;

9. WASTE ABOUNDS
2009
• $210 Billion: Unneeded services
• $190 billion: Excess administrative
costs
• $130 billion: Mistakes and delivery
inefficiencies (preventable
complications, fragmented care).
• $105 billion: Artificially high prices.
Source: Institute of Medicine report 9/12

10. SUMMARY
• Topline Revenue in decline
• Quality issues alarmingly high
• Unsustainable levels of waste
• Increased levels of accountability
LEAN/TPS

11. LEAN AND THE HEALTHCARE INDUSTRY

12. GROWING DEMAND FOR LEAN
• 10 years ago less than 3% of
hospitals were investigating Lean.
• Today that number is closer to 30%
and growing.
• Stiles Associates Healthcare practice
has grown 10x in 5 Years.

13. HOSPITAL SOURCES FOR LEAN
• Consultants
• Internal Lean Teams
• Cross Industry Collaboration:
– ThedaCare - Ariens
– Virginia Mason – Toyota
– WellSpan and GM build simulation training center
– Autoliv tours
– Many more

14. APPLICATION ACROSS SYSTEM
• Emergency Departments
• Operating Rooms
(scheduling/set up/turnover)
• Inpatient units
• Materials/Supply Chain
• Labs
• Discharge process
• Facility Design

15. MOST COMMON TOOLS
• Value Stream Mapping
• Kaizen
• 5S
• Standard Work
• Poke-Yoke
• Kanban
• Spaghetti Diagrams
• Paretos
• Level Loading

16. EXAMPLE – OR LAYOUT REDESIGN
Results: BEFORE
• Step Reduction 15%
• Total Process Time
Reduction: 44%
• Total Distance
Reduction: 46%
Source: Joan Wellman Associates

17. PROJECT EXAMPLE – SUPPLY AREA
Results:
• Supply Search Time
Reduction 82%
• Total Space Savings: 14%
• Sustainable Visual
System implemented to
aid timely reordering.
Source: Joan Wellman Associates

18. MANAGEMENT SYSTEM
• Strategic Planning
• KPI Development
• Visual Control Boards
• PDCA Culture Initiatives
• A3
• Daily Huddles
• Leadership at the Gemba

19. OTHER SYSTEM RESULTS
• Akron Children’s Hospital: Reduced costs more than $8 million from 2009
to 2011.
• Henry Ford Health System: Reduced inpatient harm rates nearly 25% and
achieved cost-savings of $85 per patient.
• Inova: Decreased ER waiting time by 31% and improved operating margin
by $10 million.
• Mercy Hospital in Mason City Iowa: Achieved a 53% faster turnaround
time for patient blood test results, $470,954 in annual cost savings and
$70,000 in construction avoidance.
(Source: Healthcare Value Leaders Network)

20. OTHER SYSTEM RESULTS
• Seattle Children’s Hospital: Reduced overall patient costs by 3.7% and
supply expenses by $2.5 million.
• ThedaCare: Achieved zero medication reconciliation errors for 4 years in a
row and reduced readmission rates to less than 12%.
• The Cleveland Clinic has realized over $100 million in savings in the last 5
years.
(Sources: Healthcare Value Leaders Network; the Cleveland Clinic)

21. LEAN HEALTHCARE MIGRATION

22. MIGRATION DEMAND
• Lack of native transformational experience
• Need for strong operational leadership experience
• Establishing Metrics and Alignment skills deeply
needed
• “Fresh eyes” can see more waste

23. MIGRATION INTEREST

24. MIGRATION INTEREST

25. MIGRATION INTEREST
Candidates are Seeking a Deeper Connection to their
day-to-day work

26. SKILLS REQUIRED
• Ability to Slow Down
• Ability to deal with Complexity and Ambiguity
• Relationship Building/Interpersonal Skills
• Excellent Communication Skills
• Previous Experience in Business Process Areas
• Transformational experience in different industries
• Optimism and the Ability to Create Pull

27. QUESTIONS
Ted Stiles
Partner
Stiles Associates
800-322-5185
tstiles@leanexecs.com