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36 McKINSEY HEALTH EUROPE NUMBER 4 THE QUALITY PERSPECTIVE 37

Lean for hospitals:

the quality perspective

Brendan Buescher, Bob Kocher, Russell Richmond, and Saumya Sutaria

To achieve a performance transformation in hospitals, administrators need to combine

an economic strategy with a clinical strategy. The lean manufacturing system address-

es both needs. To be successful, however, this approach requires not just technical

know-how but also a fundamental alteration in mind–sets and behaviors of the

hospital’s clinicians. In the two essays that follow we explore these two sides of the

lean equation, with the goal of raising the bar for medical quality across the board.

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The lean manufacturing concepts developed in the Japanese automobile industry

include many tools that are applicable to hospitals. They reduce costs, align incen-

tives, and improve overall outcomes and quality of care.

European hospitals are under pressure. Cost, quality, operations, and com-

petition are very much in play for patients, policy makers, and govern-

ments. Rising costs and frustrated patients are resulting in a variety of reforms

ranging from experiments with privatization in the United Kingdom

to DRG-based reimbursement in Germany. While it is un-

clear whether a common model of reimbursement will

emerge, what is clear is that hospitals will need to

clearly demonstrate to patients, policy makers,

and governments the value that they create, and

in many cases they must reduce costs.

Often, hospitals have been reluctant to re-

duce costs for fear of compromising the quality

of care. Partly because of their reluctance tomanage costs, European hospitals have developed

some of the most complex, variable, and inefficient

care processes in the world. Length of stay is long,

compared to international peers, and outcomes are no

better. Today, there is a big opportunity for virtually every

European hospital to streamline care delivery. By applying lean

principles, hospitals have been able to achieve dramatic improvement in

care quality, costs, and operational efficiency. We believe that hospitals that

excel across these dimensions will be the winners in Europe.

Many efficiency gains benefit patient care. Emergency departments (ED)

that improve processes to reduce the time required to initiate treatment for

cardiac patients or the time it takes to give medications can directly improve

patient outcomes. In the intensive care unit (ICU), earlier extubation results

in fewer pneumonia cases, while reducing length of stay throughout the hos-

Many people argue that the aggressive efforts by European hospitals to improve effi-

ciency and financial performance have come at the expense of patient care and quali-

ty. This does not have to be the case. Our experience in dozens of U.S. hospitals

shows that it depends how hospitals approach improving efficiency. In fact, initiatives

to lift efficiency can be powerful tools for raising the quality of care at the same

time.

The highest priority for every hospital is to ensure that patients receive the quali-

ty of care defined as »the right treatments at the right time with the right outcome.«

For too long a laissez-faire attitude toward quality has persisted. The pressure today

from patients and policy makers will no longer permit hospital administrators to ne-

glect attending to the clinical quality gap.

To grapple with this complex issue, forward-thinking hospital leaders have discov-

ered the portfolio of lean management tools developed by Toyota Motors and now

used in numerous other industries. When these tools are combined with new atti-

tudes on the part of managers and clinicians, outcomes and operational efficiency

improve at the same time that costs go down. These lean techniques offer hospitals

a simple and powerful way to eliminate complexity, waste, and variability in care-

delivery processes. The current delays, high costs, and suboptimal outcomes that

are plaguing European hospitals, it could be argued, are consequences of the

absence of such a comprehensive performance transformation approach.

In this edition of Health Europe , we present the two parts of this paradigm in

separate essays. First, in »Lean approaches for better care and lower costs,« we

explain in detail some of the techniques in the lean toolkit and how they can be

adapted to hospitals. In the second essay, »Changing mind-sets to achieve

superior clinical quality,« we discuss the necessary changes in mind-sets

and behaviors that will allow stubborn physicians and frustrated hospi-

tal managers to reach détente and work together to improve quality. In

most hospitals administrators and clinicians spend too little time

arriving at a shared understanding of the problem and agreeing

on a performance goal. In fact, almost every hospital has a

long list of improvement efforts that have fallen short

because administrators and clinicians are not cooperating.

A renewed focus on quality helps align the vital stakehold-

ers around the hospital’s most critical challenges.

Bear in mind, however, that it is not enough to

apply the one without the other. Organizations that

think they can adapt the lean management tools

without reaching inside the heads of their physi-

cians and clinical managers will miss the

boat. Mind-sets and behaviors must be al-

tered for the fundamental changes to

take root.

Lean approaches

for better care andlower costs

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pital reduces hospital-acquired infections. In the operating room (OR), syn-

chronizing processes so that cases start on time has the potential to reduce

patient anesthesia time (and the risks associated with anesthesia). It can also

cut down on delays and cancellations for subsequent patients. This article

describes how hospitals have successfully coupled improvements in qualityand efficiency using techniques adapted from lean manufacturing.

The lean toolkit

Toyota Motors realized 30 years ago that teamwork, managing to perfor-

mance metrics, and reducing variance in key processes produces higher-quali-

ty cars and more efficient manufacturing. During that time, Toyota’s princi-

ples, which became collectively known as »lean production,« have been

copied by car makers, other manufacturing industries, and service industries,

all of which have gone on to achieve impressive improvements in perfor-

mance (Exhibit 1).

Seven principles make up the lean toolkit:

3 Identifying customer-focused outcome metrics

3Coupling and collocating linked processes

3Reducing variability by standardizing procedures

3Eliminating loop-backs and circular processes

3Aligning staffing and capacity with demand

3Designing processes for the norm rather than the exception (and handling

complexity separately)

3Measuring and posting performance

These principles are as simple as they sound. Each is time-tested and hasbeen shown to apply in hospitals. In fact, our experience is that the major

challenge in applying lean tech-

niques is removal of complexity

from existing processes. Usually,

processes have evolved organically

over time to encompass myriad

procedures, controls, and steps so

that it is difficult to answer the 2

questions that drive lean thinking: »How does the customer (usually patients)

view this process?« and »What happens next (and what needs to be accom-

plished prior to the next step)?«

How hospitals use the tools

Applying lean principles in hospitals doesn’t have to be a struggle. Many hos-

pital administrators and managers have been stymied by their assumption

that health care complexity and variability makes lean techniques impossible.

Rather, this is the precise reason why hospitals should be tenacious in their

adherence to lean principles. Since patient care is a complicated task where

delivering consistent quality can be the difference between life and death, it is

critical to apply techniques that are proven to improve quality.

We think the entire lean toolkit applies to hospitals and leads to substantial

quality improvements. But it is not always an easy sell within the hospital.

In practice, hospitals have the greatest challenge persuading physicians andnurses to buy in to the process. We find they have special difficulty applying

lean to the following issues:

3Developing a set of patient-oriented quality outcome metrics

3Reducing unnecessary care variability

3Aligning staffing and capacity with demand

3Designing processes for the typical patient rather than the exception (and

handling complexity separately)

3Measuring and posting performance

It is most critical and difficult to develop a set of patient-oriented quality

metrics, determine how to measure the metrics in real time, and gain the cour-

age to post performance. All of the others are simpler to overcome. Clinical

pathways reduce variability, cross-training workers matches resources with

demand, and clinical criteria can be used to identify »typical« versus »com-

plex« patients for care processes (for instance, through fast tracks in the ED).

Many hospitals can easily measure

inputs, such as nursing utilization or

number of procedures, but few hospitals

can measure the outputs that matter to

patients, such as readmission rates.

Source: McKinsey analysis

Exhibit 1

The lean hospital

uMeasures inputs

uFocus on high-profile diseasesrather than common diagnoses

Typical hospital »Lean« hospital

Identifying

metrics

Coupling and

collocatingprocesses

Reducingvariability

Eliminating

»loop-backs«

Adjustingto demand

Designing

processes forthe norm

Measuring

and postingperformance

uTests done in central locations

uPatients moved frequently

uDiagnoses treated differently

by different physicians

uFrequent need to repeat tests

or procedures

uUnplanned returns to OR or

higher levels of care

uComplex processes designed

for all patients

uPoor adherence to processes

uData rarely shared beyond

leadershipuLittle accountability for

performance

uLong delays due to staffing

mismatched with demand

uMeasure outputs

uFocus on common diseasesand outcomes

uTests done at the bedside

uServices brought to thepatients

uDiagnoses treated similarly

by all physicians

uQuality control of tests and

procedures

uFewer patient hand-offs

uFlexible staffing to adjust to

changes in demand

uSimple processes and clear

criteria for use

uHigh compliance with processes

uData shared widely

uBroad accountability forperformance

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Choosing the right metrics makes all the difference

Many hospitals are expert at measuring input-oriented metrics (e.g., number

of procedures performed, nursing utilization) but few focus on output-orient-

ed metrics (e.g., patient readmission rates for related problems, performance

compared to evidenced-based clinical end-points). It is rare to find hospitalsthat measure the outcomes that matter most to patients, such as time from

discharge to being able to resume normal activities (e.g., driving or returning

to work). Moreover, hospitals normally spend far more time and effort track-

ing outcomes for relatively rare diagnoses and procedures (e.g., transplants

morbidity and mortality compared to pneumonia or hernia surgery outcomes).

Our approach to identifying the right set of metrics is simple. Metrics

should be balanced across quality, operations, and financial performance.

Quality metrics should be oriented around the most frequent diagnoses, with

the objective to represent outcomes that matter to patients. These quality

metrics should be proven in the medical literature to improve outcomes.

Importantly, they also must be able to be measured in close proximity to the

care delivered. Finally, more metrics is not better. They should be limited to

less than 5 metrics per diagnosis. Not more than 20 to 30 operational and

financial metrics should be put in place for any area or individual (Exhibit 2).

Creating transparency by measuring and posting performance is essential

Measuring metrics impacts performance. However, driving continuous im-

provement requires sharing performance information and empowering people

to improve the process. Hospitals often have difficulty measuring performance

and are reluctant to share results. Much of the data hospitals want to measureis on paper, not collected, or not accessible. Hierarchy, animosity, fears of

offending physicians, and fear of

legal liability are often cited as

reasons for not sharing perfor-

mance data.

Technical difficulty measuring

data is overcome by resorting to

simpler means. Using paper or Excel data collection templates and simple

databases, instead of complex hospital management systems, usually enables

any hospital to track any metric daily. Many hospitals have developed simple

and inexpensive middleware software solutions to automate metric measure-

ment. It is best practice to measure performance daily, so that success can be

celebrated and gaps addressed while they are still fresh.

Time and time again, we have observed that the concerns related to per-

formance data evaporate once they are posted. In fact, most physicians and

nurses are curious about the quality of care they deliver, how they can im-

prove, and how they compare to their peers. Therefore, we believe that all

data (risk adjusted as necessary) should be un-blinded (always protecting con-

fidential patient data). Performance transparency allows hospitals, physicians,

nurses, and service lines to identify and share best practices while encourag-

ing health competition to improve performance. Current efforts to control

costs and improve quality, like DRG adoption in Germany and NHS reforms

in the U.K., are having the effect of making hospitals and physicians moreinterested in performance data.

Lean tools transform care quality

Lean principles improve performance throughout the hospital. Best practice

is to create a daily management dashboard summarizing overall performance.

Each service line or area should have a set of complementary metrics that

they measure and respond to daily. With such metrics in place, hospitals are

able to implement and realize improvements very rapidly — typically in a

few months (Exhibit 3, next page).

Improving care in the ED

Most EDs are very good at rapidly triaging patients and less effective at

starting treatments. Unfortunately, quality outcomes are dependent on how

rapidly the right treatment is started instead of how fast the patients are

Hospitals don’t like to share perfor-

mance data for a number of reasons,

including a fear they will alienate their

physicians or upset the hierarchy.


Exhibit 2

Lean performance metrics

Quality

uGeneral standards of care

- 30-day readmission rate

- Medication errors per

1,000 patient days

- Falls per 100 patient days

- Skin ulcers per 100 patient days

uCoronary Artery Bypass Grafting - Prophylactic antibiotics prior to surgery

- Percent of surgeries performed off-pump

- Percent of surgeries using IMA

- Hours from surgery to extubation

uCoronary Artery Disease

- Patients on 4 drug therapy at discharge

- Percent of patients with EF<0.3

receiving spironolactone

uDiabetes Mellitus

- Percent blood sugar readings between

100-120mg/dL

- Percent patients with creatinine

< t2.0mg/dL receiving ACE

inhibitor therapy

Operations

uAverage daily census

uAverage length of stay

uAverage discharge time

uAverage OR utilization

uAverage first case

start delay

uPercent OR cancellations

uED visits

uED average length of stay

Financial

uRevenues

uCosts - Labor

- Overtime

- Supplies

- Medical devices/

surgical implants

- Pharmacy

Report cards should be shared by administrators,

physicians, and frontline staff

Metrics

for most

commondiagnoses

Sample lean report card

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moved into a treatment area. For heart attacks, the metric that matters most

is the time from arrival to restoring blood flow to the heart, with the bench-

mark being less than 90 minutes. Typical EDs have protocols for treating

heart attacks, but fall short of the goal of restoring blood flow within 90

minutes. Most often, bottlenecks occur at the step of mobilizing cardiac

teams or releasing medications from the pharmacy. Usually, this is because of

excessive complexity and diagnostic criteria.

Applying lean principles eliminates this bottleneck through a combinationof parallel processing and simplifying complex processes. Additionally,

designs where the cath lab and pharmacy are collocated with the ED can

augment performance. Lean cardiac care reduces the time to restoring blood

flow by simplifying the criteria needed to mobilize cardiac teams or medica-

tions to allow the call to be made earlier in the process and more efficiently

by the primary caregiver (who is not necessarily the most senior physician).

Criteria should be redesigned so that they are based on high positive predic-

tive value rather then a complete set of tests. A single pager number or phone

number should be assigned, and ready sets of supplies and medications

should stocked in the ED. Using this approach, we have seen EDs improve

efficiency by 20 percent to 40 percent (Exhibit 4).

Similarly, by applying the same principles, EDs can decrease the time it

takes to start antibiotics for pneumonia patients. Again, parallel processes

and simplifying the process prove to be critical levers. Ensuring that X-rays

are ordered according to symptoms (ideally at time of triage) and blood cul-

tures are drawn with the initial labs often save hours. Also important is reduc-

ing variability in care by ensuring that patients get the correct medication,

based upon evidence. In most hospitals this translates to a first-line medica-

tion for all patients, with exceptions for allergies and complex patients. EDsshould post their treatment times for cardiac patients and pneumonia patients.

Improving care in the ICU

Mechanical ventilation is one of the most stressful experiences for patients

and families. Managing respiratory physiology is one of the most complex

tasks performed by physicians and respiratory therapists. Clinical studies

have shown that frequent weaning trials and earlier extubation improves

outcomes. The priority for extubation is heightened because patients who

cannot be extubated within 3 days have a much greater risk of becoming

ventilator dependent, which leads to prolonged hospitalization and death.

Unfortunately, few hospitals have robust processes to ensure that ventilated

patients are extubated efficiently.

Lean principles yield several lessons for the ICU: the quality metric of

total intubation time should be measured in hours rather than days, and sim-

ple criteria to evaluate weaning trials (e.g., rapid shallow breathing index)

should be evaluated frequently. All of this should be done in parallel with

other physician activities by respiratory therapy or by nurses rather than pri-

marily by physicians. With appropriate oversight, delegating care to skilled

non-physicians actually leads to more attentive and specialized care. En-

abling less expensive staff to perform previously unimaginable tasks has

been successful time and time again in other industries like airlines, shipping,

banking, and publishing. Physicians should be mobilized when patients meet

extubation criteria, regardless of time of day or day of the week, so that

Exhibit 3

Example of a daily performance management tool

Hospitals should track and widely share their 20 or 30 most critical metrics for

operations, quality, and service performance.

Example metrics Today

u Inpatient throughput

Length of stay (days)

Discharge time

u Operating theaters

Start delays (mins)

Cancellations (%)

Utilization (hours/day)

u Accident and emergency

Length of stay (mins) Leave without being seen (%)

uQuality outcomes

Time to antibiotics (mins)

Extubation time after

surgery (hours)

Time to cardiac treatment(mins)

5.5

2:20 pm

12

0

7

166

2

63

14

82

5.2

2:15 pm

15

2

6.5

149

1

66

13.7

66

5.1

2:28 pm

11

2.5

6.1

155

2

70

14.5

67

4.8

12:30 pm

5

2

7

150

2

30

12

60

Yesterday Monthl y

average

Illustrative

targets

Note: Data are fictitious for this example.


Sharing data daily is powerful. It keeps the orga-

nization focused on improvement and outcomes.

Exhibit 4

Lean emergency departments


Emergency department

length of stay foradmitted patients

Hours: minutes

Emergency department

length of stay fordischarged patients

Hours: minutes

Impact of lean operations

uResults were

achieved after only

3 months, with

improvement ongo-

ing

uHospitals attract

more patients with

faster service

uHigher patient and

staff satisfactionscores; lower nurse

turnover

7:36

4:28 2:54 2:13

Baseline Lean Baseline Lean

25%decrease

40%decrease

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patients can be liberated from ventilators at the right hour. From a quality

perspective, performing timely extubations in the ICU is no different from

delivering timely treatment for heart attacks in the ED. ICUs that adopt these

principles have seen dramatic reductions in ventilator-associated pneumonias,

ventilator dependence, and mortality. ICUs should post their intubationtimes, re-intubation rates, and ventilator-associated pneumonia rates.

Improving care in the OR

Because of the financial implications of sub-optimal OR performance and

the outspoken styles of many surgeons, hospital administrators expend dis-

proportionate amounts of energy trying to improve ORs. Most often, these

efforts result in little sustained improvement and frustration for everyone.

Worldwide, ORs have the tendency to start cases late, manage pre-op process-

es erratically, and inconsistently deliver the right supplies at the right time.

Applying lean principles greatly simplifies OR improvement and creates

an atmosphere of cooperation rather than animosity. The first step is to rede-

fine scheduled time as »cut time« and to track actual cut time versus sched-

uled time. The revelation for most ORs is that the real problem is the pre-op

process. Hospitals should redesign the pre-op process from the perspective

of the patient who desires to have his or her surgery experience from arrival

to completion performed safely and without delay. Again, the principles of

simplicity and standardization in terms of pre-op evaluation and testing re-

sult in large improvements. Additionally, evaluating the next day’s cases in

parallel to identify potential delays (for example, missing history and physical,

consents, and blood requests) pays large dividends and e liminates most can-

cellations. Using these principles, ORs are typically able to reduce start

delays and cancellations by more than 50 percent over a few weeks. ORs

should post their average start delays and cancellation rate (Exhibit 5).

Lean aligns all parties around quality

Many people in health care share the misconception that quality is someone

else’s responsibility. Hospital administrators say it depends on physicians,

physicians says it depends on nurses, nurses say it depends on the system and

management holding physicians accountable. The advantage of using lean

techniques for managing performance is that it makes everyone’s role and

responsibility clear. In a lean hospital everyone is responsible for improving

metric performance. Performance is measured at the individual level (physi-

cian) and service line or unit level (nurses and management). By posting un-

blinded performance everyone can work together to address shortcomings

and achieve targets. Ideally, incentives and accountability are linked to per-

formance (Exhibit 6).

Defining roles and aligning physicians, nurses, and administrators using

lean techniques is accomplished as follows:

3 Physicians are responsible for initiating the right care and designing and

following clinical pathways. Physicians are aligned by improved patient out-

comes, better cost profiles, reduced likelihood of malpractice suits, and sim-

pler care-delivery processes.

3Nurses are responsible for ensuring that pathways are executed and for

helping to measure metrics. Nurses are aligned because it is simpler to care

for patients according to treatment pathways and they are more confident

that patients are receiving the appropriate care. Additionally, efforts should

Exhibit 5

Lean operating rooms

Source: McKinsey

OR utilizationAverage hours per room per day

First case start delaysAverage minutes

Impact of lean operations for a hospital systemAverage improvement across over 30 hospitals

3:30

5:30

Baseline Lean

55%increase

3118

Baseline Lean

106

Baseline Lean

Same day cancellationsPercent of cases

uLean management allows systems tomake step-change in operations

uLean gives individual hospitals autono-my to manage processes and account-

ability for performance

40%decrease

40%decrease

Exhibit 6

Lean management roles: simple, clear, and more effective

Source: McKinsey

Physicians

Lean hospital

High-quality,operationally

efficient, and

low-cost

clinical care

Administrators

uEnsure correct path-

ways are implemented

consistently

uAssist with measuringmetrics

uBe accountable for

metric performance

uProvide resources andtools for physicians

and nurses

uSet targets and hold

others accountableuBe ultimately respon-

sible for quality and

overall performance

uMake the

right

diagnoses

u Initiate

clinical

pathways

uBe account-

able for

metric perfor-

mance

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be made to streamline documentation for patients cared for according to

pathways.

3 Hospital administrators are responsible for ensuring that performance

metrics are measured and managed. They also must provide physicians and

nurses the resources and tools that they need to deliver care. Administratorsare aligned because lean metrics makes quality performance comprehensible

and transparent. Moreover, improving metrics results in both efficiency gains

and financial improvements.

Cheaper and better

Hospitals wishing to pursue a lean transformation for the sake of raising

their clinical quality should enjoy a comparable improvement in financial

results, whether measured in

terms of more patients served for

the same amount of resources

consumed, or possibly even higher

revenues. Eliminating errors,

waste, delays, and variability

reduces costs and eliminates many

of the most frustrating and frightening aspects of care for patients and care-

givers.

Expediting treatment in the ED reduces labor costs and generates capacity

for incremental patients. Moreover, better outcomes for heart attack patients

results in fewer ICU stays and fewer expensive implantable defibrillators.

Extubating patients earlier in the ICU prevents length-of-stay outliers, which

are extremely expensive, and the challenge of finding suitable discharge set-

tings for these patients. Starting OR cases on time creates capacity for addi-

tional cases and reduces overtime costs. Importantly, incremental patients inthe ED, OR, and inpatient units can normally be treated without additional

fixed costs.

The take-away:

1. The time is right for European hospitals to focus attention on quality-of-

care metrics.

2. A judicious application of lean principles, derived from other industries,

can help hospital administrators identify key drivers of clinical quality. These

are often different from the resource inputs that have traditionally been

measured.

3. Lean principles let administrators, physicians, nurses, and other clinical staff

align their priorities around patient-care quality in a transparent way that

encourages accountability and a natural desire for process improvement.o

Changing mind-sets

to achieve superiorclinical quality

To implement lean methods, hospital managers must persuade physicians and nurs-

es of the merits of this system. But it’s not so easy. First, establish clinical quality

as the goal toward which all hospital processes are oriented.

As patient choice comes to play a larger role in European health care, hos-

pitals will have to learn to compete — both economically and clinically

— in ways that were previously unknown. Quality of care plays a role in

both realms. European hospitals are facing rising labor and supply costs at the

same time as patients are demanding higher service levels and clinical quality.

Moreover, the nursing shortage and medical technology innovations are long-

lasting trends that hospitals cannot ignore. Traditional responses,

such as budget increases to offset costs, are unpalatable. It is

time for Europe’s hospitals to re-think the way they deliver

care to arrive at a sustainable, leaner, and higher-quality

model.

Why have hospitals failed to focus on quality

and lean operations? We believe that costs areovershadowing the quality debate. Health

care managers have forgotten that it is

possible to optimize both cost and quali-

ty. Confusing the issue further is the

fact that most hospitals are more

focused on what metrics to mea-

sure, and less on how to influence

the metrics in the desired direc-

tion. In fact, our recent survey of

70 U.S. hospitals and their

directors of clinical quality

supports this. We found a

tremendous attentiveness

to measurement, which

Hospitals that can move more patients

through their existing systems faster

can save on capital investments that

would otherwise be needed to expand

their physical plant.

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seemed to distract from the more proper goal of improving the outcomes of

those metrics.

In the United States, hospitals expend considerable efforts attempting to

measure everything. This has proved misguided and myopic. Europeans

have the possibility to skip this unproductive evolutionary phase in quality

improvement if they pay attention and set their priorities correctly. This is

corroborated by the fact that there has been relatively little improvement in

clinical quality results in the United States over the last 10 years, despite a

concerted focus by many governments, health systems, advocacy groups,

and hospitals. Clearly, it is time for hospitals to focus on execution ratherthan measurement. After all, it is the clinical quality results that matter

(Exhibit 1).

In addition, we believe that achieving superior results in clinical quality

will lead to a sustainable competitive advantage. Demonstrably higher qual-

ity will increase the barriers to entry for competition on lucrative service

lines, and it will make it more difficult for consumers to commoditize their

care, easily substituting one provider for another. In addition, superior

results in clinical quality will make the hospital a more attractive place to

work, which will influence physician and nurse recruitment in tight labor

markets.

Improving performance on clinical quality metrics in hospitals is difficult.

There are multiple stakeholders to consider and influence — physicians, nurs-

es, administrators — and success requires both redesigning processes and

changing behaviors. Unfortunately, the overemphasis on measurement has

prevented many hospitals from acquiring the skillset required to achieve sus-

tained clinical quality metric improvement. Said another way, using current

approaches, many hospitals are unable to actually influence the clinical qual-

ity results that they have worked so hard to measure. Our survey of directors

of clinical quality corroborates this. Hospitals lack a systematic approach toimproving quality results, making inpatient health care one of the last indus-

tries to realize the value of programmatic quality improvement. This must

change, and quickly.

The pieces to the puzzle

Each hospital is different. However, every hospital has the potential to

address in its own way the 3 core elements of performance improvement:

process redesign, clinician behavior, and management capability. Time and

time again, we have witnessed rapid step-change in hospital performance

when these 3 elements are approached together (Exhibit 2).

Making change stick: redesigning processes at the front line

Changing clinical processes works best when those at the front line design

the change — nurses, physicians, housekeepers, phlebotomists, and so forth.

As obvious as this seems, it is the exception rather than the rule for most

hospitals. Most hospitals design new processes and push them down from

the administrative suite to the front line. Usually these are implemented only

for a short time before management’s attention wanders and staff revert to

their former ways.

Exhibit 1

It is not so easy to improve hospital mortality

Source: HCUP Nationwide Inpatient Sample (NIS); Agency for Healthcare Research and Quality (AHRQ); McKinsey analysis

US hospital inpatient mortality Percent, 1993 -2002

uDespite many advances in medical care as well as

tremendous effort and investment by hospitals,

mortality has barely changed over the last decade

u Mortality reduction is the ultimate goal of quality

improvement efforts

* FDA approval of Gianturco - Roubin

Coronary Flex stent.

** FDA approval of Guardian

defibrillator.

10.0

9.0

8.0

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0

1993 1995 1997 1999 2001

2002 Average = 2.2 %

10-year improvement

CAGR = - 2 %

Stents*

Implantable

defibrillators**

Exhibit 2

The pieces of the puzzle

Source: McKinsey

Assembled, these pieces result in a step-change in quality

uEngage clinical staff by

forming working teams

uMap existing quality

process

uRedesign using

»lean manufacturing«principles

u Implement and refine

uEmpower physicians to

improve performance

– Make performance

and targets trans-

parent

uFix operations first!

uSupport and reinforce

the changes required

uTrack and share

quality data

– Daily metrics

– Monthly management

reviews

– Quarterly physicianreports

uHold everyone

accountable for quality

Influencing

clinician

behavior

Process

redesign

Performance

management

leadership

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It is critical, therefore, to engage a variety of front-line employees and

physicians in jointly evaluating, designing, and recommending approaches

for improving clinical-care delivery processes. This can occur in a small

group setting, such as a weekly 45-minute team meeting with a defined agen-

da and clear objectives. These teams should have regular access to hospitalleadership to help overcome barriers and communicate progress. Participa-

tion on working teams should be considered a privilege and should be based

upon a record of leadership and high performance.

A bias for action must be infused into the process. Many hospitals suffer

from »analysis paralysis« — a desire to study the problem and design a per-

fect solution rather than make continuous improvements. As a result, too

often the outcome of hospital

meetings is identifying issues for

further study rather than man-

dates for action. As a first step,

senior management can build

momentum and set expectations

by invoking a »do it, test it, fix i t«

mentality, within the context, obviously, of safeguarding the patient. Further,

single-point accountability should be established — one employee should be

responsible for the success of each initiative. We have found that hospital

employees find it empowering to be charged with positively influencing their

own environment. We know from other industries that the real change comes

when front-line employees are allowed to determine how best to do their jobs

and achieve quality targets. This idea is at the core of Toyota’s lean manage-

ment approach that has revolutionized manufacturing.

Once responsibilities are clear, the other principles of process redesign

come quite naturally. There are many frameworks for process redesign. Onethat we have used successfully uses the core principles of six sigma, known as

the DMAIC approach — define, measure, analyze, improve, and control.

When coupled with the toolbox of other lean techniques — visual manage-

ment, standardized operations, error proofing, and pull scheduling — this

approach can be amazingly powerful.

Results can be further turbo-charged when incentives are used to reward

superior performance. Incentives can be small — a prioritized parking place,

a free cup of coffee, a pizza party contest between nursing units — yet are a

powerful technique to influence front-line behavior (Exhibit 3).

Three tools for influencing clinician behavior

If hospital administrators around the world met one day in conference, they

would most likely reach unanimous agreement around the following state-

ment: »My hospital would function so much more smoothly if only the phy-

sicians would change their behavior.« Far too often, hospital leaders and

physicians are at loggerheads over issues both large and small. It doesn’t have

to be this way. Delivering high-quality care for patients is one area where

everyone’s interests are aligned. In fact, we have found clinical quality an

ideal platform on which to change many hospital processes, including those

related to patient service and throughput. Here are three time-tested tech-

niques that help align clinicians around quality improvement and process

redesign: 1. empower physicians to improve their performance; 2. fix opera-tions first; 3. support and reinforce the changes.

1. Empower physicians to improve their performance

Empowering physicians to improve their performance requires sharing the

hospital’s clinical performance data publicly, using the existing clinical lead-

ership to lead process redesign, and clearly communicating goals. Physicians

understand and respond to data. In fact, most physicians and nurses are

curious about the quality of care they deliver, how they can improve, and

how they compare to their peers. Hospitals have traditionally been reluctant

to share or post this information, but hospitals with successful quality im-

provement programs have found that performance transparency allows fact-

based discussions with clinicians. Physicians are naturally competitive and

they are used to achieving goals. Communicating personal performance com-

pared to a blinded comparison to peers can engender healthy competition to

improve performance (Exhibit 4, next page).

Exhibit 3

Incentives to reinforce behavior change

Hospitals should avoid the temptation

to study the problem until they come

up with the perfect solution, instead

of making continuous incremental

improvements.

Behavior

change

Type of

incentive

Results

uAdopt treatment

guidelines forcommon diseases

uRecognition for

physicians achieving

90% compliance

– Closer parking

spots

– »Star physician«

lapel pins– Public recognition

uMore than 80% of

physicians using

treatment guidelines

after only 2 months

uReduce LOS for

surgical patients

uRecognition for

physicians who

achieve LOS targets

– Preferential OR times

uFor nursing units

that achieve goals

– Monthly recognition

– Celebration lunch

with leadership

uOver a 40% reduction

in surgical LOS

– Several physicians

achieving goals

– Healthy competition

among nursing units

u Improve speed of

executing physicianorders

uRewards for nurses

who exceed

targets monthly

– Gift certificates

for coffee, lunch,

or movies

uFor nursing units

that surpass goals

– Monthly pizza party

uSignificant improve-

ment in order

execution times

– Fewer missed

orders

uAppreciation from

physicians

Top 10 Academic

Medical Center*Tertiary-care hospital Community hospital

* According to USNews, 2003.


8/13/2019 20081013 Lean Hospitals



Enlisting the support of local physician »champions« to participate in

publicly recognizing their colleagues for successful change can be a powerful

incentive. Visual management techniques can help the hospital avoid the

most common form of resistance to change — lack of clarity about the pur-

pose of change and feedback about progress.

2. Fix operations first

Few things drive an angry physician to an administrator’s office faster thanoperational errors preventing physician performance improvement. It is

essential that hospitals iron the operational kinks out of redesigned processes

before mandating physician compliance. There should be zero tolerance for

front-line operational errors. All staff should be empowered and expected to

do whatever it takes to eliminate errors. Lexus stops the assembly line every

time an operational error is discovered and does not restart operations until

the team is sure that the error can never happen again. Initially, this leads to

several line stoppages while issues are resolved. However, soon the process is

perfect and the line is far more reliable in terms of both quality and produc-

tivity.

A similar approach is necessary to refine clinical processes and eliminate

the bottlenecks that prevent physician improvements. Getting hospital opera-

tions »in line« first (making sure the system functions nearly perfectly with

lab, radiology, nursing, pharmacy) is the necessary quid pro quo to encour-

age physician compliance. An environment that enhances physician produc-

tivity while simultaneously improving quality can also serve as an important

driver of business development.

3. Support and reinforce the changes

Like patients undergoing treatment, physicians need reinforcement that thechanges required are necessary and beneficial. When they doubt the need to

change, physicians are slow to respond — in fact, many take a wait-and-see

attitude toward most hospital initiatives to determine i f leadership is truly

committed to the change. To overcome this inertia, administrative leadership

need to be very firm about their expectations and provide the right incentives

to encourage participation. We have found that public recognition and post-

ing competitive results work quite well. Once physicians understand expec-

tations and recognize incentives, they are quick to respond. In addition, qual-

ity expectations need to be written into job descriptions, the credentialing

process, and hospital bylaws.

Driving results with performance management

Posting data daily is not enough. Management must make nurses and physi-

cians pay attention to performance. Ideally, performance across quality, oper-

ations, and financial metrics is linked to annual evaluations and compensa-

tion decisions. Some hospitals have had success using balanced scorecards.

While integrating lean-management metrics into the annual evaluation pro-

cess is important, it i s critical that performance management occur daily.

Exhibit 5

Performance management approach

Exhibit 4

Sample physician performance data

* DRG 106, 107, 109. ** For all surgeons, 1,077 total admits to FICU.Source: McKinsey analysis

Source: McKinsey

uReview of performance

relative to best practice

u Identify opportunities for

improvement and elimination

of barriers

uRefine current initiatives,

identify issues and barriers

to overcome

uConsider additional areas

for improvement

uLaunch next wave of initiatives

uCreate transparency across

the hospital for performance

in the key opportunity areas

uRespond rapidly to key

throughput metrics and proxies

uShape working team meetings

Timing

Monthly

Steering

committee

meetings

Working teams

responding to metrics

and implementing

initiatives

Daily monitoring of metrics

Weekly

Daily

Purpose

ICU length of stay for CABG-related DRGs* Best practices for sharing

physician performance data

u Performance compared to

peer group (by specialtygroup) and best practices

u F ull portfolio of quality

measures including:

– ALOS– Severity

– CMI

– Mortality

– Disease-specific metrics

u Specific suggestions for

how to improve per formance

and sharing of hospital best

practices

u Peer review and financial

data

u F requent reporting

(e.g., daily metrics andquarterly reports)

Days

Dr. A

Dr. B

Dr. C

Dr. D

Dr. E

Dr. F

Dr. G

Dr. H

Dr. I

Dr. K

All others

205

53

37

294

38

138

93

25

26

136

32

Average:2.3**

Best inclass: 1.5*

1.5

1.8

1.8

2.0

2.2

2.3

2.6

2.7

3.2

4.2

2.6

ICU

admits

8/13/2019 20081013 Lean Hospitals



Do you have any questions, suggestions, or comments?

E-mail us at: [email protected]

The authors of this article:

Brendan Buescher

is a Principal in

McKinsey’s

Cleveland office.

He specializes in

health care,

hospitals, andoperational studies.

Bob Kocher, M.D.,

is an Engagement

Manager in

McKinsey’s

Washington, DC,

office, who works

often on hospitalstudies.

Russell Richmond,

M.D., is an Asso-

ciate Principal in

McKinsey’s Boston

office. He has

served clients in

the health care,high-tech, auto-

motive, and finance

industries.

Saumya Sutaria,

M.D., is an Asso-

ciate Principal in

McKinsey’s Silicon

Valley office. His in-

terests are provider

systems, biophar-maceuticals, and

medical devices

and diagnostics.

We recommend a sequential approach for driving continuous improve-

ment consisting of daily data reviews, weekly team meetings to manage

metrics, and monthly steering committees to discuss results (Exhibit 5, pre-

vious page).

Steering committees should be composed of administrators, physicians,nurses, and front-line staff, with the primary objective of demonstrating the

importance of performance and helping teams overcome barriers. An addi-

tional benefit of creating a steering committee is that it keeps clinicians and

senior leadership connected with front-line staff and the day-to-day challeng-

es of delivering high-quality and lean care. Ultimately, this group should set

targets, allocate resources, and be responsible for overall performance.

Lean techniques and these established change techniques — process rede-

sign, influencing clinician behavior, and management leadership — offer hos-

pitals a simple and powerful set of quality-improvement tools. This approach

resonates with physicians, nurses, and front-line staff because it focuses on

patients — delivering the right treatments at the right time with the right out-

comes. We hope that the urgency of the forces at work will help European

hospitals learn from the mistakes the United States has made. The goal

should be to spend less time on quality measurement and more on delivering

results.

Like other industries, hospitals can undergo transformative improvement

using these approaches. Moreover, we believe that European hospitals have

the potential to improve quality and performance by an order of magnitude

similar to other industries that have adopted lean techniques. After all, there

is no intrinsic reason why the delivery of health care should be riskier than

air travel or of lower quality than the ambulance that delivers patients to

the hospital. It is both necessary and inevitable that a Toyota-style hospital

emerge in Europe that will redefine health care in terms of quality and cost.We believe that faced with this challenge, hospitals will be forced to either

catch up or close. Fortunately, hospitals can make this choice.

The take-away:

1. Hospitals should spend less effort determining what metrics to measure

and more time driving whatever they measure to best-practice performance

levels.

2. Rapid and substantial improvement can be achieved by focusing on 3 ele-ments: lean process redesign, influencing and aligning clinicians, and imple-

menting management tools and accountability.

3. Clinicians will follow, and change, once management demonstrates

their commitment by fixing operations, sharing performance data, and

empowering clinicians to shape solutions.o

20081013 lean hospitals

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