lean for lab leaders · 8. patient satisfaction, 9. leadership execution / accountability /...

Lean for Lab Leaders:Understanding Why Lean Delivers Strategic Advantage & How to Launch It in Your Lab

2008 Executive War College

M. Susan Stegall, CMC, MBA, MHSA, MT(ASCP)Managing Partner Sprick, Stegall & Associates, LLCMay 2008

©Sprick, Stegall & Associates, LLC2

What We’ll Talk About Over The Next Hour

Why Lean techniques and management should be applied to healthcare and laboratories (What are the drivers.)

What Lean is, exactly. (Knowledge transfer goal.)

What the benefits are, if a Lean strategy is pursued. (What’s in it for you, if you are willing to change; the Lean business case.)

What a Lean transformation entails: leadership, people, resources, time, and back-fill. (What the transformation journey looks and feels like.)

Lean impact on laboratory management: How will your responsibilities and accountabilities change under the Lean management umbrella. (Improving the business.)


What Are The Drivers For Lean:

Today’s Top 10 Industry Challenges:

1. Financial challenges—ever decreasing reimbursement,

2. Double digit cost increases,

3. Labor shortages,

4. Competition from physicians providing hospital diagnostic services,

5. Patient safety and the 5,000,000 lives campaign,

6. Quality performance disclosure/transparency,

7. Unannounced hospital and laboratory inspections,

8. Patient satisfaction,

9. Leadership execution / accountability / authority / responsibility, and

10. State-wide and nation-wide health insurance initiatives like universal coverage, the coverage for the uninsured, and P4P.


Growing Laboratory Concerns

Labor Shortages:

50% of our work force

will be retired in 5 years!

Unannounced inspections!

What changes are

necessary to pull this off?

Automation—is it the

solution to all our

problems and at what

cost?

Molecular diagnostics

and real time PCR are

here now! Why must

I fight to get funding

and resources for my

program!


Department of Labor Statistics, 2004

4,000 Medical Technologists graduate annually

This is 30% less than 10 years ago and . . .

Is 56% less than 20 years ago

The picture gets worse!

40% of med techs are 46-66 years of age

49% of med techs will be ready to retire in 2010

Here’s the most depressing:

13,800 med techs per year are needed through 2012 to fill

current and upcoming vacancies!




this is 30% less than 10 years ago and . . .

56% less than 20 years ago





13,800 med techs per year are needed through 2012 to fill

current and upcoming vacancies!




this is 30% less than 10 years ago and . . .

56% less than 20 years ago





13,800 med techs are needed each year through 2012

to fill current and upcoming vacancies!



Traditional cost cutting methods were used in the past, however. . .they are not working or do not apply (today) and do not seem to have a lasting affect (flavor of the month thing).

Healthcare Senior Leaders are asking “What can be done?”



Most service organizations have 50-80% waste without even knowing it—hospitals and laboratories included.

Learning to see waste and eliminating it will save the laboratory industry billions of dollars.

Lean techniques help reduce the complexity of work and improve specimen flow in the laboratory.

Lean assessment (value stream mapping) makes work processes visible to all; then they can be analyzed for waste and improvedupon.

Lean practices allow people to execute processes flawlessly (standardized work) every day.

Use the Lean tool kit to remove waste and improve speed; then use Six Sigma tools to reduce process variability.



Use the Lean toolkit where there is a need to:

Improve turnaround times

Stop wasting (resources) time, energy, motion. and effort on current processes

Gain a competitive advantage

Reduce medical errors

Merge cultures

Improve employee satisfaction, safety and work environments

Solve a staffing shortage

Use laboratory space more effectively

Renovate existing space

Plan for growth

Improve financials


What Is Lean?

Not an acronym

Certainly not new, but new to the service industry.

Lean manufacturing techniques = the Toyota Production System (TPS); a management philosophy & production process developed over a 50 year timeframe.

TPS: “All we are doing is looking at the time line from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value-added wastes.” Mr. Taiichi Ohno, Developer of Lean Manufacturing Techniques, formerly with Toyota Motor Company.

Time lineCustomer order Cash

(reduced by removing non-value-added wastes)


What Is Lean? (cont.)

Lean is “doing twice as much work with half as much effort in half the space in half the time with half the needed inventory on site.”

The Toyota Production System is “Lean”because it uses less of everything compared with mass or batch production.

Lean transformations have no ending; they are continuous process improvement journeys.


What Is Lean? (cont.)

Lean Values:

Putting the patient and providers first (voice of the customer mentality),

Defining value in terms of the patients and providers,

Learning to see the eight wastes,

Focusing improvement efforts on driving out wastes, and

Using teams to achieve rapid improvement (Kaizen events).


What Is Lean? (cont.)The Toyota Production System in Lab Speak

A method of production that means putting flow into the work process:

Operations are not segregated by functional areas or processes,

Equipment, instruments and tools are configured in the actual sequence of the testing process,

One staff member operates many machines, or more accurately, one staff member operates many testing processes,

The value-adding staff member is supported by a rapid response team, and

Specimen and material needs are provided just-in-time using a kanban system (sign or signal system).


One tech running 5 instruments (95% of

workload)


How to Spot Waste

Value added activity involves changing the form, fit, or function of the product or service.

Non-value added activity is everything else and in a “Lean”production environment is viewed as an opportunity to eliminate waste.

“LEARNING TO SEE”


The Eight Wastes: Muri, Mura and Muda

Muri = overburdened

Mura = unevenness, fluctuation, variation in the value stream

Muda = Pure waste in the value stream

No Muri, Mura or Muda


The Eight Wastes: Muri, Mura and Muda

1. Overproduction

2. Transportation (conveyance—moving with something)

3. Unnecessary motion (moving but not transporting anything)

4. Waiting

5. Unnecessary processing

6. Excess inventory (specimens, supplies and reagents)

7. Defects (corrections)

8. Not using the knowledge and intellectual ability of staff


Typical Causes of Wastes

When labs organize by type of process (Silos).

When labs create a bottleneck operation (Specimen processing).

When there is no back-up (staff or instruments).

When there is no cross training (too much specialization).

When equipment cycles in a batch testing mode.

When staff members have unbalanced workloads.

When labs have quality problems.

When labs have unreliable equipment.


Typical Causes of Wastes (cont.)

When labs send specimens to reference labs for testing.

When lab personnel do not adhere to standardized work routines.

When labs have poor visual controls.

When labs have a disorganized work place.

When lab staff are not trained.

When lab managers fail to manage.


What are the Benefits of a Lean Transformation?

A clean, organized, safe work environment

Significant reduction in turnaround time

Error and error potential reduction through standardized work practices

Better use of physical space

Reduced inventory

Productivity improvements

Improved financials

Improved patient safety

Improved physician satisfaction

Improved employee morale and reduced employee turnover



Effects of Reducing Waste on Margins

Operating Margin

Tim

e S

pent

on

Was

tefu

l Wor

k:

Mor

eLe

ss Reducing waste by 1% improves operating margins by .25%

Murphy Leadership Institute, 2003 study



Employee Perceptions of Quality

Tim

e S

pent

on

Was

tefu

l Wor

k:

Mor

eLe

ss Reducing waste by 1% improves employee perception of quality by 1%


Effects of Reducing Waste on Quality



Effects of Reducing Waste on Morale

Employee Commitment

Tim

e S

pent

on

Was

tefu

l Wor

k:

Mor

eLe

ss Reducing waste by 1% improves employee commitment by 1%



Example of a Lean Transformation Dashboard

Freed-up cash: $262,500

50% Improvement

1 month of inventory

$262,500 in value

2 months of Inventory:

$525,000 in value

Financial:

Inventory Estimation

58.3% reduction or 7,000 steps less traveled.

5,000 steps per person in automated core

12,000 steps per person in automated core

Operations:

Decreased Walking

Chem: -29.5% (12 min)

Heme: -36.8% (8.2 min)

UA: -37.6% (8.9 min)

Coag: -32.3% (12 min)

Chem: 28.63

Heme: 13.99

UA: 14.86

Coag: 25.18

Chem: 40.63

Heme: 22.14

UA: 23.80

Coag: 37.18

Customer Value:

Production Lead Time in Core

(TAT)

Freed-up 4,335 NSF of Space; 30% increase in available

space10,234 NSF14,569 NSFOperations:

Floor Space for Core Testing

Predicted Percent ImprovementFuture State TargetCurrent StateMetric


Lean Scorecard

40-75%50-90%Lead Time Reduced

20-25%35-50%Space Reduced

50%60-90%Inventory Reduced

20-30%50-90%Defects Reduced

50-75%60-90%Throughput / Flow Increased

10-30%25-55%Cost Reduced

30-65%45-75%Productivity Improved

SS&A Clients’Results

Validated Industry Averages1Lean Metric

1 Source: Institute for Healthcare Improvement, 2005 Companies in the Validated Industry Averages column range from 1 to >7 years in Lean principles application / executions.


Lean Business Case

A 14-week Lean transformation business case:

Annual Savings 7 Yr Average Yr 7 Expense Increase (Decrease)Salaries

Attrition Technical (355,045)$ (409,058)$ Technical overtime (Bench Coverage) 15,377$ -$ Benefits (@26%) (95,107)$ (114,536)$

Supplies (Inventory Reduction) (8,861)$ -$ Salaries, Support

Lab Aids (Technical Support) 148,303$ 171,138$ Attrition Phlebotomy (205,691)$ (234,932)$ Benefits (@26%) (14,749)$ (16,395)$

Depreciation--(Facility & Consulting) 24,603$ 3,175$ Net Exp Increase (Decrease) (491,170)$ (600,609)$

Return On Investment 7 Yr TotalNPV (disc at 10%) 2,194,654$ IRR 167%Payback (Yrs) 0.67

The Lean Transformation Business Case


What A Lean Transformation Journey Looks and Feels Like

The Beginning of a Lean Transformation Journey:Senior laboratory leadership champions (Sponsors)Dedicated Lean team composed of management and staff members in value stream of choiceInternal or external consultant (Sensei/Teacher) for 3 days a weekA twelve to fourteen week timeframeOvertime coverage so team is enabled to learn, participate, and implement the transformationPhases:

Phase I: Lean Initiation and TrainingPhase II: Assessment, Measurement, Mapping, and AnalysisPhase III: Process Improvement Implementation--KaizenOn-going staff training (optional)


What A Lean Transformation Journey Looks and Feels Like

Main Engagement:

Initiation and training

A visit to Toyota’s Georgetown, KY plant or NUMMI in Fremont, CA

Current state assessment and analysis

Kaizen identification, action planning, and implementation

SS&A Lean Transformation Methods

Main Engagement: Lean Transformation Facilitation and Training, plus project add-on options like:

Option 1: Lean decision support and measurement capability

Options 2: Lean Boot Camp training for Staff and Lean Management training for your leaders

Option 3: On-going Audits—Your Insurance Policy


What A Lean Transformation Journey Looks and Feels Like:

Joint Accountabilities

SS&A:Provide professional services:

Initiation & trainingAssessment & analysisImplementation facilitationTraining materials and Lean reference booksPeriodic management updates

Track and report resultsAssure value

Our client:Provide project championSelect the teamSupport the teamProvide the training facilities, LCD projector and screenProvide budget for supplies and materials for kaizen eventsPay for Lean Team travel expenses to visit Toyota’s Georgetown, KY plantPay consulting fees and expenses per written agreement


Lean Impact on Laboratory Management

Traditional Laboratory Management:

Structure: Bosses and employees; command and control; leaders desire to maintain the status quo because it has contributed to their current success

Many department silos

Managers work from their offices, attend meetings, and respond to e-mails with little staff interactions

Quality is a separate department; key metrics are monitored and trended for each area monthly or quarterly

Lean Laboratory Management:

Structure: Sensei (teacher) and value-adding operators; respect for people in a continuous learning organization; embracing change and changing everything

Single laboratory, door-to-door value stream

Managers are daily on the production floor supporting supervisors and the value adding operators

Quality is management’s operating philosophy; focus is on continuous improvement day-in, day-out; metrics are monitored real time.


Lean Impact on Laboratory Management (cont.)

Traditional Laboratory Management:Batch testing enables economies of scale.

Consolidation of testing makes economic sense.Transporting specimens & materials long distances is OK.A lot of inventory is a good thing.Statistics measured and reviewed monthly or quarterly is adequate.Once a new initiative is put in place, it will stay in place.

Lean Laboratory Management:Continuous, single-piece flow testing provides the best customer satisfaction, highest quality, and lowest cost.Decentralized testing makes economic sense. Transportation is considered a waste of resources.Excessive inventory is wasteful.Statistics are measured and reviewed real time.Once new initiatives are put in place, they are audited continuously to ensure they are sustained or improved.



Batch Production DailyAccountability: Did you meet the schedule?

The objective is to meet the schedule.

“Git-er-done” mentality—managers (and staff) are expected to jury rig workarounds to meet the deadlines.

Lean Production DailyAccountability: What caused the problem that interrupted the process and who will do what to solve it?

Focus is on the process—maintaining it and improving it.

Yesterday’s problems are eliminated—no workarounds!


Your Hidden Factory—The Git-er-done” Mentality


Movie Clip Courtesy of Richard Zarbo, MD, DMD

Richard J. Zarbo, MD, DMDSenior Vice President for Pathology and Laboratory Medicine Kathleen D. Ward Endowed Chair of Pathology Henry Ford Health System

Henry Ford Production System: "All Quality All the Time"http://www.henryford.com/HFProductionSystem

Departmental website:http://www.henryford.com/pathology

Personal Profile: http://www.henryford.com/dr_richard_zarbo

"You can’t build a reputation on what you're going to do"-Henry Ford


Effective Lean Leadership—Eight Required Characteristics1

1. A passion for LeanLeaders use the Lean tool kit and Lean thinking all the time.

2. Disciplined adherence to process improvement—accountabilityTo guarantee the integrity of the laboratory operational processes

3. Project management orientation—step by step detailed planning and tracking

4. Lean thinkingKaizen eyesRoot cause problem solver

5. Value stream ownershipSets vision / direction

6. Balanced understanding of application and theory—one learns Lean through action

1 Creating a Lean Culture by David Mann, Productivity Press, New York, 2005


Effective Lean Leadership—Eight Required Characteristics1

7. Committed to Lean management system and continuous process improvement—you know you have a problem if you think you’ve “leaned your operation”—it’s never done!

8. Requires appropriate use of the organization’s support structure to solve production problems to effect Lean improvements—human resources, finance, development, quality, safety, materials management, and maintenance.

1 Creating a Lean Culture by David Mann, Productivity Press, New York, 2005



Institute Lean management—meet your deliverables while improving the processes

Set the expectation

Compare actual to the expectation

Hold the management team accountable

Remember—You get what you expect and

you deserve what you tolerate! You are the chief accountability officer!


Key Take Away

It’s not enough to just run the business as a manager!

You must find a way to run the business and improve the business at the same time!

All things implemented through hard work must be tended in order to sustain them.

Lean transformations and Lean management require change and discipline to sustain!

Too many of us have our old ways of doing things to fall back on if we do not practice self-discipline.

It’s not about process improvement on steroids; it’s about “changing” the way you manage your laboratory!

lean for lab leaders · 8. patient satisfaction, 9. leadership execution / accountability /...

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