Decreasing Costs by Improving Quality: An Overview of Lean Principles in Healthcare

Decreasing Costs by Improving Quality: An Overview of Lean Principles in Healthcare

Healthcare spending in the United States was 19.7% of the total GDP in 2020 and it has been projected by CMS to continue increasing. While the United States is a leader in some preventative care measures like breast cancer screenings and flu vaccinations, it is also a leader in chronic disease burden and lower life expectancy among OECD countries. Both the legislative branch and executive branches have attempted to control these costs and enhance outcomes by passing legislation and implementing new regulatory programs. Compliance programs, like MIPS, are an example of the attempt at shifting to a value-based healthcare system from a fee-for-service model. A way that healthcare organizations have attempted to lower costs and improve their processes is by implementing Lean principles.

Lean is a manufacturing method developed by Toyota in the 1930’s to improve their quality at lower costs. Lean focuses on increasing consistency and reliability by adding steps to increase value and eliminating waste. While it started as a manufacturing principle, it has since been utilized by multiple industries to improve processes and increase revenue. Lean has five main principles:

  1. Specify the Value
  2. Identify the Value Stream
  3. Make it Flow
  4. Pull
  5. Always Improving

Lean improvements in healthcare can include shortened wait times for patients, decrease in medication errors, and decreasing administrative burden. When discussing cost reduction and quality improvement, a large takeaway is reducing excess variation and task redundancy. Understanding staff roles and responsibilities to identify where they may be of most value in the organization also helps to reduce administrative burden which in turn can increase meaningful productivity.

Healthcare organizations have carried out the principles of Lean with great success and improvement in their care delivery and business outcomes. For example, Denver Health East side Clinic was experiencing substantial amounts of no-shows for post-partum appointments because of transportation issues and long-wait times. By implementing lean principles, Denver Health East side Clinic was able to reduce the number of patients who did not show up to their appointments from 50% to 5% by merging the mother’s appointments with their child’s appointment.

Similarly, Nicklaus Children’s Hospital implemented Lean tools to decrease the excess supply of equipment resulting in decreased inspection times for crash carts from 3 hours total to 10 minutes.

To put the Lean methodology into effect, there are tools available which can be enforced in any size practice to increase the efficiency and reduce waste. This includes tools like Bottleneck Analysis, Poka-Yoke (mistake proofing), Kanban (signalling), and Kaizen (continuous improvement).Lean can help to emphasize the organizations values and mission while catering to its needs.