lean healthcare management

Healthcare executives are continually on the lookout for strategies that deliver both cost savings and improved quality of care. Traditionally, staff layoffs were the go-to solution for reducing costs. But recent studies reveal that patient outcomes improve when the nurse-to-patient ratio is low. And under a value-based reimbursement model, it is critical to achieve the desired patient outcome as quickly and with as few mistakes as possible to achieve maximum return.

Layoffs a Short-Term Fix

Layoffs, as a cost cutting measure, should be implemented as a last resort, according to Mark Graban, Lean expert and author of “Hospital Kaizen.” While layoffs will lower operational cost in the short term, it may bring about bigger problems in the long term in the form of negative patient outcomes. Instead, many hospital executives are tearing a page from the manufacturing industry in the adoption of Lean healthcare management.

Lean healthcare management is a process where inefficiency and waste are identified and eliminated from hospital processes to reduce cost and/or improve employee productivity.

Graban explains, “Lean is actually the best alternative to layoffs. It’s all about encouraging everyone to participate in the process improvement. As well as finding creative and interesting ways to save money for healthcare organization and to avoid those unwanted traditional cost slashing endeavors like layoffs. Layoffs don’t lead to long-term cost reduction and if you lay off people, and don’t fix any processes, you’re risking patient safety and quality.”

Lean Healthcare Management for the Long Term

Reduce preventable patient outcomes. Preventable patient outcomes include falls, infections, pressure ulcers and bedsores, and erroneous surgical procedures among others. Beginning in 2009, Medicare ceased reimbursement for preventable patient outcomes and private medical insurers are now adopting the same reimbursement policy. If a patient experiences a preventable outcome, the hospital will have to absorb the treatment costs. With optimal staffing, most preventable outcomes do not occur thereby saving the hospital from costly mistakes.

Restructure the hospital supply chain. Medical supplies are the second highest expense item for hospitals next to labor and are an easy target for cost reduction. Most healthcare facilities already have a membership in at least one GPO that helps to reduce medical supply costs. But that’s not the end of the cost reduction process. Technological advancements such as e-procurement and inventory management enable hospitals to order and stock medical supplies electronically and automatically. Minimum and maximum supply quantities can be set and when the inventory goes below the minimum quantity, an order is automatically generated for approval.

Optimize healthcare staffing. Hospital employees of the largest expense item in healthcare. By utilizing staffing management software, healthcare facilities can strategize and optimize their workforce to reduce costs without layoffs. With healthcare staffing management software, hospitals can automate the sourcing, recruiting, and hiring of medical professionals. Vendor management systems (VMS), managed service provider (MSP), and recruitment process outsourcing (RPO) are a few approaches that hospitals can implement to optimize healthcare staffing.

Manage length-of-stay. In many instances, the length-of-stay is extended due to process errors because of miscommunication or poor planning. By analyzing circumstances that lead to increased length-of-stay, analysts can look for commonalities that disrupt the process and devise interventions that reduce occurrences.

Develop best-practice diagnostics. As the healthcare industry moves towards a value-based reimbursement system it is critical that diagnostic tests are necessary for treatment. By developing best practice protocols for common diseases, hospitals can streamline the diagnostic process and standardize patient care based on diagnosis. Accountable Care Organizations (ACOs) can help to define best practices due to its bundled payment feature. To succeed, best practice protocols must be patient centric and outcome oriented.

Streamline the billing process. Cash flow is king in any business and healthcare is no different. The faster and more accurate the billing process, the better the cash flow.

Lean healthcare management is a set of tools that hospital executives can use to eliminate waste and improve service delivery to patients. Rather than reach for the pink slips to cut costs temporarily, lean healthcare management focuses on long-term process improvements to remove extraneous costs from a hospital’s budget permanently. A healthcare staffing management system is one of those tools that help management optimize their workforce.

Has your healthcare facility adopted Lean healthcare?



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