Tuesday, January 8, 2013

Lean cuts Healthcare Costs at Virginia Mason Hospital in Seattle



By Ken Boyer, Ohio State University, Boyer_9@fisher.osu.edu

Virginia Mason Hospital in Seattle has employed aspects of the Toyota Production System to its healthcare procedures.  "At the end of the day, the Toyota production system is all about the customer," said Dr. Gary Kaplan, the CEO of Virginia Mason Hospital. "For us the patient."

After a coincidental meeting with Ian Black, the then lean director of Boeing, Gary Kaplan, CEO of Virginia Mason, became convinced that lean production was the solution. In 2002, Kaplan and a team of executives and managers began annual trips to Japan to study at the Shinjijutsu International Center, one of the world leaders in the Toyota production system. On their return, staff immediately put into practice what they had learned and the benefits of implementing this new way of managing hospitals and patient care. Gains in productivity freed up 77 full-time equivalents (the number of full-time employees) with many being reassigned work in the newly developed lean promotion office. Defects in patient care reduced by 47 per cent while kaikaku workshops (see box) saved the hospital over US $12m during the period 2002 to 2004.
One change made in just five days using the kaikaku technique concerned the delay between a doctor's referral to a specialist and the first consultation. By examining the process closely it was found that the secretaries, whose job it was to arrange these referrals, were not needed. Instead the doctor would page or text the consultant the instant he decided a specialist was required. This specialist then had to respond in ten minutes, even if just to confirm receipt of the text. Delays in referral to treatment dropped by 68 per cent as a consequence.
On another occasion, staff in the radiation oncology department began an exercise looking at and mapping out the value stream with the intention of eliminating all the waste they could find. Due to the removal of these unnecessary non-value adding activities, which only soaked up resources, the time a patient spent in the department fell from three quarters of an hour to just 15 minutes.
Kaplan takes staff to Toyota's factories in Japan every year and practices what the car maker preaches. Just as the automaker's executives spend part of each day on the factory floor, Kaplan tours the hospital daily looking for problems and solutions. Everyone is encouraged to look for changes to make work more efficient. Nurses developed ways to spend most of their time with patients instead of at the nursing station.  How?  COWs – short for Computers on Wheels.
At a meeting each week the staff reviews the results of what Toyota calls "Rapid Process Improvement Workshops," looking for ways to increase efficiency.

In their four day workshop, with the help of a home video camera, the staff of one clinic acted out what happens to a new patient. They came up with 10 things they would start doing differently immediately.

Virginia Mason reached out to area employers like COSTCO and asked them what they needed most from hospital visits.

"I care about quick treatment," said Katrina Zittnick with Costco. "Immediate appointments, the right treatment at the traumatic, acute time."

So at Virginia Mason's back clinic there were dramatic changes, where treatment time was cut from an average of 66 days to 12.

The application of lean techniques is expanding in healthcare.  Britain’s National Health Service (NHS) is getting in on the act:
The NHS has been slower to fully embrace lean thinking but is now rapidly making up for lost time. Last January saw the first lean healthcare forum in Birmingham and a second was held in June. Chaired by author and prominent lean thinker Dan Jones, these forums have helped explain and consolidate lean knowledge.
One NHS organisation that has begun the lean journey is Bolton Hospitals NHS Trust. Under the direction of CEO David Fillingham lean has found its way into every department and management decision, reducing waste wherever it occurs and adding value to each step along the patients' care pathway. Staff too have become more motivated and focused on providing quality care to patients, with each employee responsible for analysing what they do and how they can do it better.
Lean has also been successful in decreasing the length of time inpatients stay in the hospital from an average of 34.6 days to just 23.5. The principal method for bringing about these changes involved looking at the whole supply chain's value stream as the patient travelled along his or her unique care pathway. Often, in organisations, change happens in a piecemeal fashion with separate departments initiating changes independently.
A lean approach, on the other hand, requires departments to consider from the start their positions in the supply chain and any impact their changes will make on the whole. By ensuring that all the necessary supporting services, such as health records, pathology and secretarial services, work together and come into play at just the right time, the patient, after entering the hospital and beginning the journey, does not need to be kept waiting between processes.
The patient moves or, rather, flows through the system. As one set of processes or treatment finishes another clicks into place immediately.
The Bolton Hospitals and NHS trust has also enjoyed some dramatic changes which have been made to its accident and emergency department and pathology lab, which now operates in half the space it used previously.
As with the Virginia Mason hospital, Bolton has used the kaikaku technique for implementing rapid change. These multi-disciplinary workshops aim to fix a problem in just five days with the new system up and running by the following Monday.

The way it works is quite simple. On the first Monday, a team made up of the department under review, for example radiology, and members from various departments immediately before and after in the supply chain, get together and map the current processes.

The next day, the ideal future state map is drawn up with all wastes identified and removed leaving the following days free for implementation strategies. The idea is that by Friday all the problems will have been solved and a new method of working will have been discovered and implemented ready to begin the following week.

When redesigning the blood science laboratory at Bolton, the team even invaded the hospital's car park and used cardboard cut-outs of the equipment to map their ideal positions in the lab. They have managed to decrease the number of physical steps it now takes a technician to process a patient's blood sample. Fewer steps equal less walking time, which means a speedier service. Consequently, blood sample turnaround times have dropped by 90 per cent.



Discussion questions:
·        Which techniques/tools of lean can you identify in the stories of Virginia Mason and Bolton Hospitals?
·        What are the potential benefits of lean within healthcare?  Dangers?

Sources:
·         “A Carmaker As A Model For A Hospital?”, John Blackstone, CBS Evening News, June 9, 2009, (http://www.cbsnews.com/stories/2009/06/06/eveningnews/main5068218.shtml)
·        http://www.nqic.org/publication/c4-1-125.shtml

Friday, January 4, 2013

Have you gotten your Flu shot yet?

By Ken Boyer, Fisher College of Business, Ohio State University, Boyer.9@osu.edu
Amidst the public debate these days about whether or not individuals should get shots for either the regular, seasonal flu or for H1N1, there is another challenge.  That is, if you do want to get a shot, where and how can you get one?  This is not a trivial question as there have been numerous delays and canceled clinics around the U.S. in the past two weeks.
What does this have to do with operations and supply chain management?  Several things.
First, manufacturing and distribution of vaccine dosages is a substantial supply chain challenge.  The U.S. Centers for Disease Control and Prevention (CDC) had hoped to have 40 million doses of the H1N1 vaccine ready by the end of October, but there were numerous manufacturing delays.  As of October 30, Dr. Thomas R. Friedan of the CDC stated that there were 26.6 million doses available, up from only 10 million a week prior to that.
Manufacturing flu vaccine is a challenge – each dose must be grown in a chicken egg and carefully handled and harvested to avoid any contamination.  The yield of antigen is unpredictable, making it difficult to forecast how much to produce.  In addition, production must start several months before doses can be administered.  Another challenge is that the revenue is relatively small for a complicated product.  In short, vaccine production is a complicated process, that must be started months ahead of need and the revenue and yield is very unpredictable.

Once the vaccine is produced, then there is the distribution challenge.  The CDC must ship the vaccine to numerous hospitals, clinics, doctor’s offices and pharmacies.  In the current situation, many if not most of these organizations want more doses than are available.  Thus, doses must be allocated and some potential patients will be left without.  Once vaccine is actually delivered to a clinic, it must be administered as efficiently as possible.  In short, the distribution of vaccine is one giant application of the newsvendor problem  (see pages 222-223 of textbook).  In the current case, there seem to be more stockouts than excesses. 

Discussion questions:

  • ·        How does vaccine distribution relate to key operations and supply chain management questions including: quality management, new product development, forecasting and project management?

  • ·        Could more vaccine be made available if the government or patients simply paid more money for it?  What are the pluses and minuses of producing extra at an increased cost?

  1. ·        How should the government and producers balance safety – i.e. carefully assessing the vaccine so that few unintended consequences occur – versus speed of getting the vaccine to patients?

McDonald’s Pursuit of the Perfect Potato


By Ken Boyer, Fisher College of Business, Ohio State University, Boyer.9@osu.edu
Next time you bite into a hot, crunchy, delicious French fry give a moment’s thought to the journey that this lone fry took from the field to your mouth.  This is something that occupies much of the waking thoughts of Mitch Smith, McDonald’s agricultural products director.  The company buys over 3 billion pounds of potatoes per year – that’s a lot of spuds.  And getting on the coveted list of McDonald’s supplier’s is the key goal of farmers around the world.

After Ray Kroc developed the franchising system for McDonald’s in the early 1950s, the company took off, growing to become the world’s biggest restaurant system – with 31,967 restaurants in 118 countries around the globe.  The company had sales of $23.5 billion in 2008 and it is estimated that the company serves food to 1% of the individuals on planet earth on a given day and over 5% of all Americans.  Most of this success is due to the company’s keen attention to the numerous details, challenges and opportunities of managing its daily operations and supply chain.  The company has excelled both in creating a standardized system for providing reliable, consistent quality in service of millions of meals per day as well as a supply chain system par excellence long before the term was coined and in a service sector business rather than a manufacturing oriented business that many people presume “need supply chain expertise”.

Jack Simplot founder of Simplot approached Ray Kroc with the idea of switching from fresh to frozen French fries in the early 1960s.  The company had been having substantial problems managing the distribution, inventory and supply of fresh potatoes – according to Simplot “They were having a hell of a time maintaining potato quality in their stores.  The sugar content of the potatoes was constantly going up and down, and they would get fries with every color of the rainbow.  I told him that frozen fries would allow him to better control the quality and consistency of McDonald’s potato supply.”  In 1964, Simplot invested $400,000 (equivalent to over $5 million today) to put potatoes in cold storage during the summer – but the experiment failed when all of the potatoes rotted.  Undeterred, Simplot returned in 1965 with another proposal – converting from fresh to frozen potatoes.  McDonald’s executives carefully researched the possibilities and discovered that the traditional freezing process drained structure and flavor from French fries.  Ice crystals would form in the potato during freezing, resulting in ruptured starch granulates.  McDonald,s worked with Simplot to develop a process to dry French fries with air, run them through a quick freezing cycle, then freeze them.  The result was a reduction of moisture in the frozen French fry, which improves its crispness.  After Simplot volunteered to build a production line for the new process, McDonalds rewarded the company with 50% of its potato business (up from 20%) – which in 1992 meant a total of 1.8 billion pounds of French fries.  Today, Simplot is a more than $4 billion a year business and supplies approximately 40% of McDonald’s total demand.

Today the competition among suppliers for a piece of the potato pie is intense.  It has been seven years since the fast food behemoth has approved a new variety of potato to the three approved varieties currently on its list.  The mainstay potato is the Russet Burbank which provides the best taste, but has some substantial limitations – it takes a long time to mature/grow, requires huge quantities of water and is vulnerable to rots and disease.  This means that farmers must douse it in chemicals – a practice that customers and socially conscious investors would like McDonald’s to reduce or eliminate.  And yet … these are the best tasting potatoes.  The second major variety is early-maturing Canadian-bred Shepody potatoes that make up a large percentage of fries sold in August – October.  Unfortunately, these potatoes don’t store very well.

So, in November the company switches focus to Ranger Russet fries, followed by Umatilla Russets, which store better and fill our bellies from December until February.  Umatilla Russets were the last potato variety approved by the company in 2002.  The remainder of the year (March – August) consists of the standby Burbank Russets brought west to prime potato country of Idaho, Oregon and Washington by Luther Burbank in 1875.


In 2008, Idaho farmers planted 57% percent of their land with Russet Burbanks, while it accounted for 41% of all potato production across the 8 largest potato-growing states in the U.S.  Yet, because of the high cost of growing Russet Burbanks and the need to use massive quantities of pesticides, the search for a new variety is intense.  The tasting rooms at McDonald’s corporate headquarters in Oak Brook, IL employ scores of people to test for taste, texture and consistency.  Perfume-wearing intruders are chased  from tasting rooms in order to prevent contamination from fry samples randomly pulled from restaurants across the U.S. for monthly examination by representatives of the three main supplier’s to the giant: J.R. Simplot, Canada’s McCain Foods Ltd. And Omaha, Nebraska based Con-Agra Foods.
While these suppliers may resent McDonald’s ability to supervise them and control their actions, they are also eager to maintain or increase their current level of business.  The same is true of the thousands of farmers that contract or sell to Simplot, McCain or Con-Agra.  As Jeanne Debons, the director of the Potato Variety Management Institute notes: “It’s a card game, where McDonald’s holds nine-tenths of the cards”.  The institute was established in 2005 by the Idaho, Oregon and Washington potato commissions to handle licensing and royalties from new varieties developed at federal research facilities and universities. 
So, in this multi-billion dollar business, McDonald’s will test and taste and suppliers/farmers will jockey for position.  According to Mitch Smith: “If we [McDonald’s] can find a variety that … with less inputs, water or whatever, that’s something we’re looking for.  To date, there are not a lot of varieties that perform consistently enough”.   In other words, in the stomachs of people around the world, French fries are no small potatoes.

Airline Security: Safety vs. Efficiency



By Ken Boyer, Fisher College of Business, Ohio State University, Boyer.9@osu.edu
How often have you stood in line to go through security at the airport and been mildly annoyed … or downright angry.  Being an operations professor I can’t help but observe the process and think of ways to ”do it better” – while also feeling pressure to “keep the line moving”.  While there is clearly a need to maintain security, one wonders if the many hoops that we have to jump through are the right hoops.  And then, there is always the one annoying individual who seems to have no comprehension that:
·        There are other people in the line
·        They can’t take their pocket knife, 5 gallons of water or 92 pound suitcase through.
·        The poor TSA employees (in the U.S. – in other countries there is another acronym) face three conflicting pressures: keep the line moving, catch the bad guys/gals and deal with the public -  who often can be inept, clueless or downright difficult.
I’m sure you have bumped into one or more of these people.  Recently, I was in line and in the process of getting naked.  Taking off my shoes, belt, class ring, watch, medical ID bracelet (believe it or not I am not a jewelry wearing kind of guy), phone and spare change .  Did I forget the part about taking out my laptop?  We might as well have to get naked ….

So, I had just put my cellphone in one of the plastic trays – precariously balanced on top of a 6 foot high stack of empty trays – because the people in front of me were taking their precious time and talking to their friends in the next line.  So, this older gentleman takes a break from his critically important conversation with his friend in the other line, turns and without looking, grabs the tray with my cell phone and starts to walk off.  Given that I was busy, and I was in another country where I speak very little of the native tongue, all that I could manage to do was yell – NO! at about 150 decibels.  This stopped cell phone grabber in his tracks and I received an apology – I think in French (I was in a french speaking country) – and we all proceeded on our way.  I was a bit embarrassed, but my cellphone was OK.

Similar scenes play out thousands of times per day at airports around the world.  Almost no one involved in this dance enjoys it, but we must do it. …. And yet, does this process have even a reasonable chance of catching the bad guys/gals?  We all want the process to work – and yet there are enormous operational challenges.  There are tradeoffs between efficiency and the quality of the safety scan.  There are human challenges – no matter how the system is designed and what technology is used, there is always the issue of 1) getting employees to do the proper things thousands of times per day and of 2) getting passengers to understand and follow the rules.

So, next time you are experiencing the security line, see what you can do to make it flow more smoothly, make the TSA employees feel appreciated and observe the process and think about ways it can be improved to make it less burdensome, more efficient, less costly and/or more reliable.

Discussion questions:
·        Describe how managing the security process at airlines uses principles or methods of quality management, process design and analysis, technology or lean production.
·        How might optimization or simulation modeling be employed to improve the process?
·        What suggestion(s) do you have for improving this process?
·        How might TSA officials better “train” or communicate with passengers to streamline security?
·        What is your most interesting security experience?  Why did this occur?  Was this a system flaw or simply an outlier – i.e. is it an assignable cause or is it an alpha error?


Sources:
·        Many, many personal experiences.