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Lean Leadership and Health

John S. Toussaint M.D.
The Rate of Spending on Healthcare is Fiscally
Unsustainable** McKinsey-RE: Japan

Almost half of all Americans, (133 million) live

with at least one chronic condition:
 81% of hospital admissions; 91% of all
prescriptions; and 76% of all physician visits
 Accounts for more than 75% of the nation’s $2
trillion medical care costs.
 Diabetes : $174 billion/yr
 Smoking: $193 billion/yr
 Heart disease and stroke: $448 billion/yr
 Obesity: $117 billion/yr
 Cancer: $89 billion/yr
Enacted Legislation
Patient Protection and Affordable Health Care and Education
Care Act (“PPACA”) Affordability Reconciliation Act
 Became law March 23, 2010, Pub.  Became law March 30, 2010, Pub.
L. No. 111-148 L. No. 111-152
 Contains “bulk” of health  Modifies/adds to PPACA
reform law

Health Reform

Impact of Coverage Expansion (excluding Medicare-
eligible population)+

Current coverage
Coverage Medicaid/CHIP Exchanges Uninsured
150 million covered through their 40 million covered by Currently 50 million are
employer Medicaid & CHIP uninsured

By 2020
Coverage Medicaid/CHIP Exchanges Uninsured
159 million will have coverage 51 million will be enrolled in 24 million will purchase 22 million nonelderly
through their employer Medicaid & CHIP coverage through residents will remain
Exchanges uninsured (about 1/3 of
whom are unauthorized
Financing Reform through Program Cuts, Higher
Over 10 years, despite $938 billion in additional spending, Health Reform actually reduces the
deficit by cutting other programs and increasing revenues

Cuts to Medicare/Medicaid Revenue provisions

 Market basket adjustments (including  Industry fees (pharmaceutical industry fee,
productivity adjustments) for certain medical device fee, insurance industry
hospitals and other providers - $196 billion fee) - $107 billion
 Restructuring of payments to Medicare  Higher Medicare tax on high-income
Advantage (MA) plans - $136 billion taxpayers - $210 billion

 Reducing Medicare and Medicaid  “Cadillac tax” - $32 billion

Disproportionate Share Hospital (DSH)
payments to hospitals - $36 billion
 Other cuts (e.g., home health payment  Penalty payments by employers and
rates) - $87 billion uninsured individuals - $65 billion

Total = $455 billion  Other revenue (e.g., indoor tanning tax) -

$111 billion

Total = $525 billion

Key Delivery Reform Provisions
• Center for Medicare and Medicaid Innovation
• Independent Payment Advisory Board (IPAB)
• Accountable Care Organizations (ACOs)
• Medical Homes
• Hospital Value-Based Purchasing Program
• Value-Based Payment Methods
• Pilot Program on Payment Bundling
• Reforms for Hospital Acquired Conditions and Hospital

Implementation Timeline for Delivery Reforms
• Prohibition on federal • Hospital value-based purchasing
Medicaid payments for program begins (FY 2013)
conditions (FY 2011) • Financial penalties imposed for
hospital readmissions (FY 2013)
•Deadline for Center for
Medicare and Medicaid • Deadline for establishing pilot
Innovation (January 1, program on payment bundling
2011) (January 1, 2013)

2010 2011 2012 2013 2014 2015 2017 2020

• Deadline for
• Independent • Reductions in Medicare hospital
establishing ACOs
Payment Advisory payments for hospital-acquired
(January 1, 2012)
Board to submit first conditions (FY 2015)
recommendations to
• Deadline for
reform Medicare • Physician value-based payment
establishing Medicare
payments (January 15, modifier applied to specific
medical homes (January
2014) physicians (January 1, 2015)
1, 2012)
• “You can count on Americans to do the right
thing … after they have tried everything else”
(Winston Churchill)
Lessons from the Massachusetts Health Plan
 Cost is twice the original estimate and growing faster than the US
…Looming $5.4 billion State deficit – 1/3 of the State budget is dedicated to Medicaid
 35% of the FPs are not taking new patients, average wait for IM appointment is 50 days
…..Overuse of ED by newly insured
 61% of physicians rate their income level as “uncompetitive;”
 Hospital operating margins have trended down since 2006!
…. The Boston Med. Center forecasts first loss in five years
… median operating margin for community hospitals in 2008 was .04%
 “The current fee-for-service system is a primary contributor the problem of escalating
costs and pervasive problems of uneven quality”.
 Special Commission formed to recommend fundamental reform of the payment system.

Source: Massachusetts Commission Report, July 16, 2009

Core components of the public policy
• Payment systems that do not reward healthcare
providers to deliver better value
• Lack of transparency of performance
• Providers lack of a consistent methodology to
improve care
Current Payment Systems Reward Bad Outcomes,
Not Better Health
Healthy Continued
Consumer Health

Preventable No
Condition Hospitalization
Efficient Successful
Acute Care

Comprehensive Care Payments
To Avoid Episodes
Healthy Continued
Consumer Health
Preventable No
Condition Hospitalization
Acute Care Efficient Successful
Episode Outcome

Care Successful
Payment Outcome
or Complications,
“Global” Infections,
A Single Readmissions
For All Care
Needed For
A Condition
Transparency of Healthcare
WCHQ is a 501-C3 voluntary
reporting entity

The purpose
Develop performance measures for assessing the healthcare
quality outcomes
Guide the collection, validation, and analysis of measurement
Publicly report measurement results for healthcare
providers,purchasers and consumers
Share best practices with the WCHQ community
Wisconsin Health Information
• The WHIO Health Analytics Exchange At-a-
-- The Exchange contains claims data that spans multiple care systems and
services provided statewide
-- The Exchange holds a rolling 27 months of claims data on the majority of
people in Wisconsin
-- The Exchange contains 7.3 million “episodes of care” which capture the patient
quality and cost experience over time with conditions such as pneumonia,
diabetes, congestive heart failure and 750 others.
Provider Detail – Diabetes Cost Index List
Provider Overview – Cost Ranking
WHIO Cost vs WCHQ Clinical Quality
We must revolutionize
healthcare delivery but how?
Results using Lean
• Group Health of Puget Sound reduced E.R. visits by 29% using
their medical home redesign resulting in a $10/pm premium
reduction to customers
• Bolton U.K., reduced Stroke mortality by 23% over 18 months
• ThedaCare’s redesigned inpatient Collaborative Care unit has
achieved 0 medication reconciliation errors for 3 years running
and the cost of inpatient care dropped by 30%
• St. Boniface Winnipeg, Canada has the best cost/weighted
case(Canadian measure for inpatient cost efficiency) for an
academic medical center in Manitoba, and is second in all of

Source: Health Affairs 2009, Volume28, No: 5:1343-1350 , America Journal of Managed Care, September 2009
The Methodology of Lean
TRUE NORTH METRICS 12/15/09 Draft. 6

- Preventable Mortality
- Medication Errors

- Access
- Turnaround Time
- Quality of Time

People Financial Stewardship

- OSHA Recordable Injuries - Operating Margin
- HAT Scores - Productivity
- Employee Engagement Index
Hoshin Kanri
• Hoshin
– ho – method or form
– shin – shiny needle or compass
“method for strategic direction setting”
• Kanri
– control or management
• Strategy Deployment = Hoshin Kanri
– process to embed strategy
– Target and Means
• As a standard process, it becomes easier for
– To describe key ideas to others, and
– to understand others
• It fosters dialogue within the whole
• It develops problem-solvers
• It encourages front-line initiative
• Teaches scientific method
A3 or PDSA: What Are Talking About?

Why are you talking about it ?
What is your proposed countermeasure(s)?
Current Situation
Where do we stand ?
What’s the problem? Plan
What activities will be required for
Goal Where we need to be? implementation and who will be responsible
for what and when?
What is the specific change you
want to accomplish now? Follow-up
Analysis How we will know if the actions have the
impact needed? What remaining issues can
- What is the root cause(s) of the problem? be anticipated ?
- What requirements, constraints and
alternatives need to be considered?
Sponsor: Leader: Greg Long, MD, CMO Revision #4, Date:
Title: System Safety A3 (Hospitals, TCP, Senior Svs. Support Areas) Facilitator: Sensei:
1. Background 2. Current Conditions 5. Proposed Countermeasures

• Our paradigm tolerates risk & errors. Cause Countermeasure Description Responsible
Culture of Safety Report Card! Patient 1) Involve patient & family in creating safe environment 1) Create standard work that actively involves the patient & 1)
• Healthcare nationally harms 5 million pts/yr and 1) Realize anyone can make a mistake! D OSHA RECORDABLES
their family in creating a safe environment
kills nearly 100,000 pts/yr-minimal change since 2) Create safe environment to report errors. C-
People 1) Staff competency & training 1) Develop competency of staff related to risk assessment & 1)
original IOM report (To Err is Human) released anticipation
3) Create collegiate interactive healthcare teams.C+ 2) Culture of Safety within ThedaCare 2) Educate & train, modify behavior toward culture of safety of 2) Roger G.
in 1999. 10
4) Barrierless communications. C- all staff & physicians; anticipate safety/error issues JMichael G.
• Our employees are at risk in the workplace. 5) Teams with mutual human caring & support. B- 9 3) Problem solving daily by all 3) Train all manager level and above employees in TIS problem 3) Roger G
8 solving (eg., A3 & A4 use) Katie B
• Sub-optimal safety = avoidable cost ($$$) to
UNSAFE INR 7 4) Embrace standard work 4) Performance to standard work is assured as it becomes a 4)
ThedaCare and the national healthcare system. 6 way of life for all staff (purposeful variation is acceptable)

• Our expectations r/t safety are unclear. 5 Process 1) Standard work creation & compliance 1) Develop, imbed, sustain standard work, including evidence- 1) Division
7% MEDICATION ERRORS based medicine pertaining to safety leaders
• We lack a true culture of safety limiting our 6%
PREVENTABLE MORTALITY 3 2) Failure Mode Effect Analysis (FMEA) 2) Apply FMEA to key processes 2)
awareness of the problem and effective 5% 3) Standard work for assessing safety issues 3) Align assessment results with appropriate intervention. 3)
interventions…..”not my problem”. 3%
4% 4) User-friendly reporting 4) Devise user-friendly reporting tool & process that insures
2% 1 maximum, non-judgemental reporting by all employees
3% Per
• Safety resource needs unclear. 1% 2% 1,000
Policy 1) Safety assessments 1) Operational staff assess safety each shift with celebration of 1)
1% defect-free performance
2007 - 2008
• ThedaCare leadership’s behaviors and actions 2008 2) Amend bylaws & TC policies 2) Amend and enforce hospital bylaws & TC policies outlining 2) Humana
do not always align with safety as a top priority. 2007 2008 Actual 2008 expected behaviors r/t safety Resources
ACTUAL Robin Wilson
4 Known Deaths in 2008 Target 2009
Target = 0 2008 2009 2010 2011 2012
2009 Target = 3.8% 3) Align gainshare with safety 3) 3)
4) Add safety to target state in TIS events

3. Goals and Targets Plant 1) Safety in new building 1) Continue to build/design safety into the environments 1)
2) Reduce sprains & strains to TC employees 2) Assess causes of injury to our staff & "invest" in training, 2) Matt
tools, techniques to eliminate injuries. Digman
2009 Safety A3 Initiatives
Thanks! This 3) Safeguard our facilities 3) Assess & implement tools & techniques to eliminate pt/staff 3)
Division Initiative Baseline 2009 Target (50% improvement)
environment injuries…invest $ if needed.
AMC/TC INR (% percentage of pts in safe range 64.60% 82.30% Great job is not
OSHA recordables lifting/handling) AMC-2.45 AMC - 1.22 recognizing judgmental so
TC-2.92 TC-1.56 that safety I feel safe in
Medication Reconciliation TBD 50% improvement problem and reporting!
Safe Patient Care NA Nat'l Patient Safety Goals Met telling
Care Giver Communication 6. Plans:
Physician Services INR (% percentage of pts in suboptimal range 7.60% 3.80%
OSHA recordables lifting/handling) 1.29 0.55
Sr Services Falls 180 90
OSHA recordables lifting/handling) 10.2 5.09
Medication incident reporting 168 252
New London INR (% of pts in safe range) 40% 70%
Riverside INR (% of pts in safe range) 40% 70%

4. Analysis (Initial thoughts) Safety A3 Gap Analysis

People Process Patient
No clear expectations for safety Don't involve patients & families in safety efforts

We don't know w hat an error-free environment looks like Physician data not shared Patients don't take ow nership of promoting safety
Lack culture of safety No easy, effective reporting
Leadership inconsistent in safety message Standard w ork/guidelines not alw ays follow ed
Providers/staff don't buy in Not anticipating /proactive
We don't give + feedback for positive behaviors Rely on lagging indicators
No prompts to remind Safety externally focused-"compliance"
Fear of challenging and punishment Dedicated safety rounds not done
Injury/errors are accepted RCA doesn't focus prompts/.behaviors Lack of
Near misses accepted Not enough safety training Unwavering
Disruptive behavior Safety
not alw ays addressed Focus
Don't consider safety w hen
making purchasing decisions Safety not considered in purchasing decisions
Lack of incentive to improve Current unit layout does not support safe practice
7. Follow-up•
Old policy not reflecting new practice We allow defects in w ork environments/practices to save $$
New policy deployment time consuming process Hazards not completely removed from w ork-place; risk for staff/pts
Bylaw s & TC policies don't reflect Not investing $$ in safe w ork place
behavioral expectations Not all w ork areas injury-proof
Policy Plant

© 2007
Page A
“Measurably Better Value”
Deploying Level 1 Priorities
ThedaCare’s to Level 2
ThedaCare’s Breakthrough Objectives

People A3 Safety A3 Productivity A3
Growth A3
(level 1)
Problem statement, (level 1) (level 1)
background and
Plan Plan (level 1) Plan Plan
targets deployed
People Safety Shared Growth Productivity
People Safety Shared Growth Productivity
(level 2) Safety
(level 2) Shared
(level 2)Growth (level 2)
level 2 A3 (level
2) Shared
(level 2)
Growth level 2 A3
2) Shared
(level 2)
2) Shared
(level 2)Growth
2) (level 2)
(level 2) level 2 A3
level 2 A3

Cross Cross Cross Cross

Cross Cross Cross Cross
Function Function
Cross Function
Cross Function
Functional Function
Cross Function
Cross Functional
Team Team
Cross Team
Cross Team
Team Team
Cross Team
Cross Team
Cross Team
Function Team
Functional Team
Team Team
GP Home
Home Hospital

Bed Management


Working Hrs
Working Hrs



Data System



Working Hrs


Handover Nurse Obs Dr Assm’t Imaging Dr Review Spec’ Rev Nurse Obs Dr Assm’t Imaging W/Round Nurse Obs Physio W/Round Discharge


Working Hrs Working Hrs Working Hrs Working Hrs Working Hrs Working Hrs Working Hrs Working Hrs Working Hrs Working Hrs Working Hrs Working Hrs Working Hrs Working Hrs

Capacity Capacity Capacity Capacity Capacity Capacity Capacity Capacity Capacity Capacity Capacity Capacity Capacity Capacity

Freq Freq Freq Freq Freq Freq Freq Freq Freq Freq Freq Freq Freq Freq

20 20 22 20 43 35 15 120 480 1080 360 4320 1440 1440

10 13 10 10 6 7 9 12 15 8 1440 12 8 15 WT = 9415

PT = 1615
A&E MAU Medical Wards
The Patient/Process Matrix
Care Delivery Process Steps

Health Maintenance Prevention

Example: Physical + preventive care

Minor Episodic Illness/Injury

Example: Sore Throat

Episode Major Acute Distress

Treatment Example: Heart Attack
Elective/Restorative Procedures
Example: Hip Replacement

Chronic Disease Management

Example: Diabetes

Collaborative Ambulatory
Care Patient Experience
Value Streams
The 7-Week Cycle of an R.I. Event
• 3 weeks before – Value Stream review, Event
Selection, Select Team Leader/Co-Leader and team
members estimated financial, quality and staff impact
• 1-2 weeks before – RI Checklist, preparation .. Cell
Communication, aim statement, measures

 day 1 - current conditions

 day 2 – create the future
 day 3 - run the new process
 day 4 - standard work
 day 5 - presentation

 1st week after - Capture the savings

•Step 1 “Identify” waste  2nd week after – Update Standard
•Step 2 “Eliminate” waste  3rd week after – CFO validation
Continuous Daily Improvement

• Front line workers and supervisors able to

solve problems, and sustain improvements.
• PDSA Process
• No. of defects identified(front line staff
defect huddles)
• Number of Staff ideas implemented
Color Coding on Tracking Tools

Same colors used – light red/light

green for tracking information.
What is a lean management system?
Can you say yes to these three
questions every day?
• Are my staff and doctors treated with
dignity and respect by everyone in our
• Do my staff and doctors have the training
and encouragement to do work that gives
their life meaning?
• Have I recognized my staff and doctors for
what they do?
White coat leadership vs.
Improvement leadership

• All knowing • Patient

• “In charge” • Knowledgeable
• Autocratic • Facilitator
• “Buck stops here” • Teacher
• Impatient • Student
• Blaming • Helper
• Controlling • Communicator
• Guide
A Community of Problem Solvers
Delivering MBV 100% of employees
Lean “Grad” are problem
School solvers improving
something every
Education/Skill Level

K .
We are Here

5 10 15 ??
Time (years)
Productivity-Clinical Labor Costs/UOS
Lean Management Pilot Managers Percent
Safety/Quality Driver Improvement over 2008 Baseline
Note: Each unit with between 3-6 drivers /All units have different drivers

70% Education

60% Pain
50% 1st Call Bed
20% competency

10% Delays in
AMC Inpt Oncology AMC 2S TC 2nd Floor AMC 3SW Interactions
within 4 days of
Employee Engagement
2009 Employee Opinion Survey Percent Improvement
Lean Management Pilot Units
2008 vs 2009
Cancer Services-BPS

Radiation Oncology-BPS


TC 2nd Floor-BPS



Would recommend Organization Inspires Me Likely to be here in 3 yr. Will put forth effort to help org Understands how daily work
-10% organization succeed contributes to mission
• from 80% to 93% within safe range
• from 20% to 96% Plan of Care first pass
• from 5% to 80% labs within 15 min.

• 100% option to
People be seen today Financial Stewardship
• employee & • visit encounters per
physician HRS worked .05
satisfaction • AR days by 10

51 51
Network Purpose

• Accelerate the lean transformation journey

for each organization
• Multiple small learning communities
• Spread of current best practices
• Drive change in the larger healthcare
First Network
• Gunderson Lutheran
• Group Health Cooperative
• Hotel-Dieu Grace
• Iowa Health System
• Johns Hopkins Medical
• Lawrence & Memorial Hospital
• Lehigh Valley Hospital and Health Network
• McLeod Health
• Mercy Medical Center – Cedar Rapids
• Park Nicollet Health Services
• St. Boniface Hospital
• ThedaCare
• University of Michigan Health System
Second Network
• Alberta Health Services
• Akron Children’s Hospital
• Beth Israel Deaconess
• BJC Healthcare
• Christie Clinic
• Harvard Vanguard Medical Associates
• Kaiser Permanente
• Provena Covenant Medical Center
• Seattle Children’s Hospital
• St. Joseph Health System (Orange, CA)