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Every Day Counts Effects Caused by Applying Lean Administration to Hospitals

Christoph Bendick Commercial Director since Oct. 2011 I am especially impressed that this project is not only the achievement of physicians, the nursing department or the administration. The collaboration of staff across all departments has made this project a success. I would not have thought these results to be possible. Katrein Amann Bert Hoffmann This project shows once again that substantial positive effects can not only be achieved for the service providers but that the application of lean methodology can optimize resources successfully in the administration of hospitals, too.

Results
Cash ow increased by 2 million Discharge to invoice reduced by 11days (statutory health insurance) and 12days (private health insurance), respectively Quality of invoices, measured by queries resulting in corrected invoices, kept constant Cash outstanding improved by 50 % Response- and wait times decreased in the overall documentation, coding and settlement processes Predictability of human and nancial resources signicantly improved Implementation of internal lean projects reduces cost-intensive external consulting

Key data BGU Ludwigshafen


The BGU Ludwigshafen is a tertiary care hospital with 440 beds. It is operated by the Heidelberg Association for Therapy and Treatment under the German Employers Liability Insurance Association. This registered society joined the Clinic Association of statutory accident insurance (KUV) in September 2011. The nation-wide merger of the operators of nine Trauma centers and two hospitals for occupational diseases as well as the operator of the statutory accident insurance providers in the KUV takes account of increasing economic pressure and competition. The KUV now represents facilities with revenue of some one billion euros that are medically and economically of major importance in special treatment sectors. More than 100.000 patients are treated as inpatients and more than 300.000 as outpatients every year . The BGU Ludwigshafen is specialized in inpatient as well as in outpatient care of emergency trauma cases. 31.000 surgical procedures were carried out and 21.500 injured patients were treated as outpatients in 2010. The annual report states 11.516 fully inpatient cases for 2010 . The BGU Ludwigshafen is not only a centre for traumatology. It acts as a service provider with proven expertise in the whole rehabilitation process for statutory accident insurers as well .

Initial Situation
Five employees were trained as Lean project managers and seven employees were trained as project staff in Lean Management at the Stryker LeanAcademy in May 2011. The Stryker LeanAcademy was founded in 2006 by Dr. med. Hank Schiffers and is specialized in Lean Management solutions in the health care sector as well as in the cross-functional training of hospital staff. A so-called value stream team, comprising employees along the whole process of accounting, was put together for this training. This team comprised employees of the interfaces: ward, pharmacy, doctors, organization controlling, controlling, IT, laboratory as well as from the divisions: Admission of patients, medical controlling, performance accounting and nancial accounting. The approach according to the Lean methodology was largely unknown territory for project team members. For many team members it was the rst time working together on a problem consequently with colleagues of different occupational background and across divisions.

Authors Ursula Lang**, Katrein Amann*, Sabine Frank**, Bert Hoffmann*, Dr. med. Hank Schiffers, MBA, Alexander Conz, MD, MBA
* Stryker GmbH & Co.KG, * * BG-Unfallklinik Ludwigshafen

Lean Methodology
The Lean methodology was developed in the 1950s by Toyota to optimize processes in the automotive industry. Essential approaches include process

, , cf. Annual Report 2011

Dr. med. Hank Schiffers, MBA I planned this project in close collaboration with the management of the German BG-Unfallklinik Ludwigshafen in the beginning of 2011. We initiated and accompanied it to show, due to the expected nancial success, that Lean Administration is the second pillar of Lean Hospital. I congratulate the project team for their excellent results. It prooves again true; No money no mission

Discharge to invoice reduced by


Index 100 90 80 70 60 50 40 30 20 10 0 2010 Oct. 2011 43,8 100 56,2

optimization in small, quick steps implemented by the local employees and the consideration of all processes from the customers perspective. To this end, the individual process steps are analyzed in a structured way and divided into value-added and non-valueadded activities. This approach and staff training in theory and practice based on a specic project is a major investment in building internal expertise in process optimization.

Summary of Project Achievements


The project team started with the overall analysis of the process from patient admission to treatment and discharge through to payment. Approximately 50 % of all hospital cases were analyzed. The goal was to reduce the effort for the billing process as well as the amount of outstanding invoices in order to minimize the time between patient discharge and billing, as well as the optimization of payment receipt. The date of the invoice is here dened by the dispatch of the bill by the hospital to the Insurance company. After careful analysis, the following actions were identied and successfully implemented from July / August:

Impact on Cash ow
Index

+2 mio

100

Ursula Lang Head of Department of Patient Services and Finances The project was great fun. We had some really tough wrestle. At the beginning of the project, I could not imagine achieving such sustainable and signicant results with the Lean methodology. The approach to reorganization and the plurality of the project team have made this result possible.

2010

Oct. 2011

Secondary Process Indicators


Installation of a work cell to ensure the prompt and competent processing of individual invoices as One Piece ow. Waiting times between the individual steps are thus reduced by up to 50% or avoided completely. Introduction of a fast path, a so-called Easy Track, for simple cases resulting in a signicant reduction of process time. The coordination effort and the waiting time of the remaining cases were signicantly reduced.
Throughput Internal approval time

Cost Invoicing meeting target corridor

By the follow-up project and an on-site coaching led by Mrs. Assmann the efciency could be increased signicantly within the rst ve months. Initial expectations were exceeded by far.

Process quality Percent invoice rework

Legend no change improved massively improved

VA L U E S T R E A M O V E R V I E W

admission

admission diagnosis

preliminary insurance approval

data / validation

plausibility check

approval

discharge

invoicing

receipt of payment

The entire process of accounting includes all areas from admission to payment reception

Optimization of the interface communication to ensure the uninterrupted processing, the so-called owing system, of billing cases. On the one hand, this was achieved by improved organizational processes instead of optimizing sectors. On the other hand, the colleagues trained each other and developed clearly dened responsibilities (job enrichment), ensuring a clear and competent substitution in case of illness or vacation in order to ascertain continuous work ow. Systematization and structuring of the suppliers in terms of transfer of billing data and documentation.

Stabilization and Optimization of Operational and Organizational Processes


The optimization phase was followed by the stabilization phase. By streamlining the process, now less rework and search effort have to be conducted. The introduction of the work cell and the learning achievements of the staff in Lean methodology changed the whole cooperation process. It changed the employees view of the functions and divisions as well as the process-oriented cooperation. The project team agreed upon a regular reporting and meetings to review the project results in the further course. A process owner was named, who will be responsible for the continuous and sustainable development of the entire billing process in the future and who will be in charge of convoking staff meetings in case of changes in order to discuss further problem-solving approaches.

project work, the process was visualized quickly and vividly depicted. The participants quickly realized that every step in the value stream can intervene in the operations of the predecessor or successor, and that these processes can be inuenced.

The Next Steps


The enormous success of the project in the accounting helped us to the detect additional optimization potentials and to use them. Thus, the project team is able to ensure the sustainability of the implemented improvements and to focus on the process stages of invoicing through to the receipt of payment on the basis of best practice approaches.

Measurable Success
Signicant improvements have been achieved in accounting. Since September, the period from discharging until invoicing, which was identied as key performance indicator, shows a good and stable course below the target value. The development of the secondary control parameters is positive, as well. The overall development of the nancial situation is signicantly positive, showing an increase of 2 million in Cashow with the resulting positive impact on interest rates, liquidity, etc.

Sabine Frank Head of Patient Guidance Department, Provisional Head of Medical Controlling Department None of the participating colleagues could probably have imagined the signicance of the accounting process before beginning the project. Nobody could imagine how complex this process would be. Due to the nature of this