Chief Quality Officer: A New Trend in Healthcare

One sign of the growing interest in healthcare in improvement strategies is provided in a recent article from Health Leaders magazine. The publication reports that an increasing number of hospitals are creating a new position of Chief Quality Officer.

The article notes that the role of the CQO is often somewhat nebulous and can cover many different things. But there is no denying the interest.

"Patients, regulatory agencies, the government—they're all demanding quality, says Beka Warren, RN, chief quality officer at The Memorial Hospital in Craig, CO. "In the past, what has been important to the board of trustees is the financial component. If we were doing well financially, we were considered to be doing well. [Today] in this hospital, we look very much at the quality things that are going on."

There are a couple of ways to look at this trend. From a purist, lean perspective I’d be inclined to view quality as an inherent part of everything an organization does. It should be built into the processes, a responsibility of everyone, not just one person.

On the other hand, one might view a hospital CQO as the top process improvement person, providing support for efforts to improve quality. And that might be a good thing, if that is indeed what the person does.

The Health Leaders article doesn’t go into HOW a CQO does his or her job. I’m sure there are different approaches, some positive, some not. A study of these approaches would make for an interesting follow-up.

Have you ever been in an organization that had a chief quality officer? What is your experience?


Using a Virtual Andon Board in the Back Office

While lean principles can be applied to non-manufacturing situations, not every lean tool used in manufacturing has value outside the shop floor.

For example, SMED (single minute exchange of die) is a great tool for reducing machine changeover time, but you may not be able to apply it to streamlining office processes.

You might think that an andon board – a device that calls attention to equipment abnormalities and other problems through a series of different colored lights – is also a manufacturing-only tool. You would be wrong.

OK, I was the one who was wrong for thinking that way.

I discovered the error of my thoughts during a presentation at the recent San Diego regional conference of the
Association for Manufacturing Excellence. My epiphany occurred during a detailed, well thought-out presentation on lean in the back office. It was delivered by Janice Frampton, a senior lean consultant with Jean Cunningham Consulting. (Jean Cunningham is co-author of a Shingo Prize-winning book we publish, Easier, Simpler, Faster: Systems Strategy for Lean IT.)

At one point in her talk, Frampton was discussing application of lean principles to the process of closing a company’s books for a given time period (i.e., a year, a quarter). She described what was, in effect, a virtual andon board.

In this case, the andon board was a spreadsheet that listed all the steps in the closing process. In one column of the spreadsheet, the cell in that column lined up with a particular step appeared as either red, yellow or green, depending on the status of that step.

As with a physical andon board, the color-coding made it easy to spot problems immediately and take action to address them.

I thought this was an innovative approach, both to using technology and to applying lean tools to non-traditional situations.

By the way, is it technically an andon board if it is virtual, with no actual board or lights? Who cares?


Is Dell Better Than Toyota?

Which company is leaner: Dell or Toyota?

Dick Schonberger offers a surprising answer.

Schonberger is a consultant and a well-known figure in lean circles. He is the author of several books on lean topics. I heard him speak recently at the regional conference (in San Diego) of the
Association for Manufacturing Excellence.

His topic was supply chains, and he was discussing research he has conducted on how well companies are achieving lean benefits.

The key metric Schonberger looks at is inventory turns – which at least some people believe is generally a fairly good indicator of a lean operation.

He looked at inventory turns for hundreds of companies. He calculated the number of turns by using figures from the public reports of those companies; if I understood him correctly, he took the value of goods sold from the balance sheet and divided it by the value of inventory from the financial statement.

Recognizing that one figure in isolation is not particularly meaningful, Schonberger looked at how the numbers changed over time. If the number of inventory turns increased over time, that’s good, and a decrease over time is not so good.

Perhaps the most interesting comparison in his presentation was Dell vs. Toyota. Schonberger found that, for an 18-year period beginning in the mid-1980s, inventory turns at Dell increased an average of 5.4 percent per year, in an almost continuous trend. (That trend ended a few years ago when Dell changed its strategy to include sales in retail stores, which required more inventory.)

Toyota, on the other hand, has seen its number of inventory turns go down about 4 percent per year for about the past 13 years.

The reasons? Schonberger suggests that Toyota, while great at manufacturing, is not so great at supply chain management. He also says this kind of trend can occur anytime a company has a strategy of rapid growth.

He commented, “It is less serious for the richest manufacturing company in the world. You can get away with it for many years.”

As an aside, Schonberger also highlighted a variety of companies in various industries that he said, like Dell, have a record of increasing inventory turns. He conceded that his list included some automotive suppliers that are in bankruptcy.

Is Schonberger right? Is Toyota not as good as we have always believed it is? What do you think?


Sustainability: A Critical Issue, With Lean as a Critical Strategy

A lean approach is critical to any strategy of sustainability. But lean alone won’t be enough. And preserving the environment is a long, uphill battle.

That is part of what I came away with from a sobering talk on the environment at the recent San Diego regional conference of the
Association for Manufacturing Excellence.

The speaker on this topic was Frank Dixon, a sustainability consultant who advises governments and businesses, including Wal-Mart.

At the start of his talk, Dixon immediately made the connection between lean and sustainability, something I’ve written about before. He declared that sustainability “will be the primary determinant of business success in the 21st century,” then noted that lean manufacturing “is the core sustainability strategy in many sectors.”

But in Dixon’s view, the issue goes far beyond achieving business success. He painted a disturbing picture of decline in our planet’s life support systems, coupled with increasing social strains.

Dixon’s main theme is the need for system change. It is a need often not fully recognized, he said, because of flaws in our systems and the way we think about them.

And he defined three levels of system change: corporate, focusing on what one company does unilaterally; mid-level, involving a specific sector or stakeholder group (he pointed to AME’s efforts as an example in this category), and high level, focused on improving overarching economic, political and social systems.

He outlined some of the many barriers to system change, as well as key principles that must be followed to achieve what he called SSI – sustainable systems implementation.

Many of Dixon’s ideas can be found on his website,
Global System Change.

His description made the situation sound daunting, though on a more positive note, he did say that “probably 95 to 99 percent of the work is companies working to lower their environmental impact.”

He offered a cautionary comment: “System change is inevitable. The only question is whether it will be voluntary or involuntary. The question is: Can we find a way to voluntarily improve our systems?”

Can we? What do you think?


“We Don’t Make Mistakes; We Have Learning Moments”

I’ve just returned from the regional conference of the Association for Manufacturing Excellence, held last week in San Diego.

It was an enjoyable gathering of several hundred people focusing on many aspects and issues of lean transformations. Over the next few weeks, I’ll be posting articles about a variety of fascinating presentations I heard at the event.

To get things started, I’d like to tell you about an interesting philosophy I heard expressed at the event. It came from Garry Ridge, CEO of WD-40, who was one of the keynote speakers. Ridge – who is originally from Australia – is an engaging, entertaining speaker. If you ever have the opportunity to hear him speak, seize that opportunity.

If you know anything about lean, you know how important it is for employees to know that it’s all right to fail occasionally. If a cross-functional team attempts to make improvements, and they don’t achieve the success they were seeking, that should be all right if the experience can be used to find a better solution.

Ridge takes things a step further. During his presentation, he said, “We don’t make mistakes at WD-40; we have learning moments.”

In a similar vein, he suggested that working with employees should not be about grading their performance. He expressed it as “Don’t mark my paper; help me get an ‘A.’”

For Ridge, those statements are more than just clever catch phrases. They are part of a broader philosophy about leadership and how a company should operate.

In fact, he has set up entire website devoted to this subject, called
The Learning Moment. As far as I can tell, the website is not connected to WD-40, though it does talk about the company and Ridge’s role there.

The website contains statements of philosophy, models, articles and other resources. I urge you to take a look at it.

And may you experience a learning moment today.


Demand for Hybrids Tests the Limits of Lean

Even the best, most flexible lean production systems may not be able to cope with sudden, dramatic shifts in consumer demand.

Case in point: hybrid vehicles. USA Today reports that sales of hybrids were down in May – not because people didn’t want them, but because dealers were running out of them.

"Not only are they out of cars and out of inventory, but the capacity they have for the hybrid components was locked in a year ago," before $4-a-gallon gas, says George Peterson, president of consultants AutoPacific.

The newspaper says the problem is hitting all manufacturers – even Toyota.

Prius. Sales of America's most popular hybrid fell 37%, while the compact Corolla, Toyota's most comparable conventional model, was up 17% in May vs. the month last year. Prius stock on dealer lots "is best measured now in hours, not days," Toyota Group Vice President Bob Carter says…

Toyota, meanwhile, has reached the production limit at the Japanese Prius factory. It just announced it will build a new battery plant and expand another in conjunction with partner Panasonic.

"We knew we didn't have more capacity. We simply cannot turn on more production," Toyota's John Hanson says.

Is there a limit to a lean system’s flexibility? Is it possible the current shortage could have been avoided? What do you think?


Process Improvements Must Support Technology

Recently, I wrote a skeptical posting about a hospital that was installing a huge machine to dispense medication in its pharmacy. What concerned me was that the story about the installation gave no indication the hospital had done anything to improve the processes by which medication is dispensed.

Please understand: I like technology. I’m all in favor of any organization installing new technology that can make things better – provided it is trying to make its business processes better as well.

recent article from Most Wired magazine (published by Health Forum, Inc., a company of the American Hospital Association) describes the efforts of three hospitals to automate their respective pharmacies.

None of the installations seems to involve the kind of huge machine described in my previous posting, though the technology in these case studies is still fairly sophisticated.

However, I believe that the information in this article (written by Lee Ann Runy) supports my point – that technology alone is not enough, that process and cultural issues are key.

In the case of Central DuPage Hospital, a 313-bed facility in Winfield, Illinois, improvements did not begin with technology.

The first step was remodeling the pharmacy to enable a more efficient workflow and building a sterile IV room that met U.S. Pharmacopeia 797 standards.

That was followed by adoption of a variety of technologies, which did help achieve significant improvements. But some of the biggest challenges were not technological, but cultural (a reality well-known by lean advocates).

One of the biggest hurdles was coping with the nursing workflow changes that followed adoption of the bar-code system.

“The technology doesn’t improve flow, and it doesn’t make anything go quicker,” says Deborah O’Donnell, R.N., chief nursing officer. “I wish we had a better idea of the learning curve prior to implementation. We have lots of tenured nurses, and it required more education than we thought it would.” She recommends that organizations carefully develop schedules to support the education component. Lowering the patient-to-nurse ratio during the learning curve can reduce some frustrations because nurses will feel that their patients are being adequately monitored.

Riverside Health System, a group of four hospitals in Newport News, Virginia, also achieved gains with technology. As with most pharmacy automation projects, the technology involves the use of bar codes.

But the system’s experience also illustrates that managers must study how people actually use technology, identify any problems and – lean principle here – address the root cause of those problems.

Riverside carefully tracks usage of the bar-code system to ensure it’s being used to its full capacity, says Cindy Williams, director of pharmacy services. One key metric is whether nurses are overriding the system prior to administering medications, which can be tracked to the unit and individual user level. “We want to be as close to 100 percent as possible,” she says, adding that bar codes are currently scanned at the point of care about 96 percent of the time. Several factors that lead nurses to override the system have been identified, and most of them can be solved by additional training. Some IV bags, for example, have two bar codes. If the nurse scans the wrong one initially, she must override the system to scan the right code.

Do you have experience installing significant new technology? Did you have issues related to the underlying processes? Or to cultural resistance? What were your lessons learned?


What About Diagnostic Errors?

Much of the discussion about applying a lean approach to healthcare focuses on reducing or eliminating medical errors – for example, giving someone the wrong medication, performing the wrong procedure, or not delivering the appropriate treatment.

But in his blog Wachter’s World, Dr. Robert Wachter, Professor and Associate Chairman of the
Department of Medicine at the University of California, San Francisco, raises an interesting question: Can anything can also be done about diagnostic errors?

It is an important question. Wachter notes that diagnostic errors comprised 17 percent of the adverse events in a
Harvard Medical Practice Study and account for twice as many malpractice suits as medication errors.

He comments,

As the quality and safety movements gallop along, the need to fix Diagnostic Errors Exceptionalism grows more pressing. Until we do, we will face a fundamental problem: a hospital can be seen as a high quality organization – receiving awards for being a stellar performer and oodles of cash from P4P programs – if all of its “pneumonia” patients receive the correct antibiotics, all its “CHF” patients are prescribed ACE inhibitors, and all its “MI” patients get aspirin and beta blockers.

Even if every one of the diagnoses was wrong.

What can be done? Wachter says there are two broad categories of solutions. One is training doctors in “better thinking,” which can be difficult. The other is supplementing the doctor’s efforts with analysis from Artificial Intelligence, which has been tried in the past without great success (though technology keeps improving).

Neither approach attracts a lot of attention or funding. Wachter makes a good point in suggesting that the most important first step is generating more interest in the issue. He recently spoke about it at a conference on diagnostic errors sponsored by the Agency for Healthcare Research and Quality. He suggests that the simple fact the conference was held is a good sign.

It makes tremendous sense to apply lean strategies to reducing medical errors. But can they also be applied to reducing diagnostic errors?

What do you think?


NYC Schools Find Changing Processes Can Be Messy

Process change is not always easy, a lesson learned recently by admissions officials of the New York City schools system. According to The New York Times:

This year, Schools Chancellor
Joel I. Klein has streamlined and centralized the dizzying array of admission procedures for the city’s pre-kindergartens and middle schools. He said his goal was to equalize the process, saying that the vast number of individual applications and deadlines made it impossible to know if parents were being treated fairly.

But with the changes have come snags. Children who were supposed to receive the greatest preference for a pre-kindergarten spot because a sibling attended the school were rejected. At some schools, children who lived within the school’s zoned area were rejected in favor of those who lived outside it, the opposite of what was supposed to happen.

Education Department officials said the problems arose either because parents made mistakes in filling out a new standardized form, or because the algorithm to assign siblings to the same school did not take twins and triplets into account. After receiving dozens of complaints, officials combed through 9,000 applications and concluded that the problems were limited to roughly 200 cases, which they said would be corrected. But some city lawmakers and parents say they believe the problems are more widespread.

Middle school admissions notifications have been delayed, leaving parents frustrated and unable to plan for next year, especially if their children do not get their first choice.

Let me interject here that I have a real problem with officials blaming parents for making mistakes in filling out the form. I would bet money that the problem is the form, not the parents.

Getting back to the bigger story, I don’t want to suggest that centralization of the admissions processes was necessarily a bad idea. As the story makes clear, there are valid reasons for the effort.

For years, schools with pre-kindergarten programs — there are 23,000 spots for the next school year citywide — ran their own admissions, largely first come first served. At the most popular schools, parents would line up for hours; there were often-repeated tales of parents sleeping on the sidewalk overnight to get a coveted slot.

This year, a priority was set: siblings, children living in the school’s designated zone, those in the wider neighborhood district, then those outside the district. Parents had to fill out one form and mail it to a data processing center in Pennsylvania.

Ms. Sciabarra hinted that because of the problems, the department may backtrack on its plan to adopt the same system for kindergarten next year. Still, she defended the goal of centralizing admissions in general.

“One of the reasons we decided to go this route is because not all parents had the same access to certain schools because registration was done differently at different times — the equity of access is a very big issue for us,” she said. “None of us had any sense of how many kids got turned away.”

How could this have been done better? Would application of lean approaches have reduced the number of problems? I’m not sure of the answer, but I can’t help but suspect a better understanding of the processes up front, and perhaps better mapping might have made the transition a bit easier. What are your thoughts?


Harbour Report: U.S. Automakers Improve, But Are Still Behind

The latest Harbour Report is out, showing gains in productivity by the U.S. automakers and a narrowing of the gap in productivity between U.S. and Japanese car companies.

But the report also suggests that, in some respects, those gains are not entirely meaningful.

For those of you not familiar with it, the report – now called Oliver Wyman’s The Harbour Report – is put together by a consulting firm and is a widely known independent measure of productivity at auto plants in North America. It was first published in 1989.

According to the firm’s
news release, here are some of the latest findings:

Driven by more consistent, leaner processes and buyouts of tens of thousands workers, the Detroit Three automakers in 2007 nearly erased the productivity deficit against their Japanese-based competitors, despite declining production and shrinking market share.

The difference among the Big Six from the most to least productive in terms of total manufacturing labor (Assembly, Stamping, Engine and Transmission) has dropped to 3.50 hours per vehicle (or about $260 per vehicle), down from 10.51 hours (or $790 per vehicle) in 2003.

Chrysler showed the biggest improvement, cutting its total manufacturing labor hours per vehicle by 7.7% to 30.37, the same number recorded by Toyota.

However, the Big Three are not really catching up with their Asian competitors. First, all U.S. automakers are still losing money on every car (though the report notes that new agreements with the UAW, which let the Big Three employ people at lower wages and use them more flexibly, may help).

Second, the news release notes that being a leading company is not just about how long it takes to build a car.

Despite the convergence of productivity numbers, Toyota proved most impressive during Harbour's visits to their plants. Its productivity improvements, in some cases, were offset by a broader mix of vehicles, including the Tundra pickup and Sequoia SUV, more V8 engines and higher volume of the Camry hybrid. In addition, Toyota showed the most improvement in energy conservation, opening more floor space, reducing manufacturing time and line length, and increasing capital efficiency.

And perhaps most telling is this brief comment from the news release:

It is worth noting that Toyota fabricates and assembles a greater percentage of its vehicle parts with its own employees, while the Detroit Three purchase many modules and subassemblies from suppliers, thus saving labor. Toyota also has retained nearly all its employees even in plants that experienced lower production. In contrast, GM, Ford and Chrysler have used buyouts and layoffs to reduce labor costs.

As any lean devotee knows, purchasing more from suppliers doesn’t really save labor; it just passes it off on to someone else. And laying people off may reduce costs in the face of lower production, but it doesn’t do anything to improve processes.

The Big Three are getting better. But they’ve got a long way to go before they become better than Toyota and the other Asian automakers – if ever.


Doctor Imbalances: Not What the Customer Needs

The healthcare profession is facing serious issues of supply and demand for doctors. I regard this as a lean issue because lean is all about providing value to the customer. And if you are not producing what the customer wants or needs, then something is wrong.

These thoughts are prompted, in part, by a
recent article in the journal Academic Medicine, published by the Association of American Medical Colleges. The article describes the results of a study by three doctors and a research assistant of six medical school programs specifically designed to train doctors to work in rural areas.

Rural areas, the article explains, face a significant shortage of doctors.

Although one of every five Americans (20%) lives in a rural area, only 9% of physicians practice there. The scope of this problem is substantial, because more than 20 million of the 60 million people residing in rural areas live in federally designated Health Professional Shortage Areas (HSPAs).

This rural physician shortage has existed for more than 80 years, despite the fact that, in general, people living in rural areas have a greater need for medical care, being older, sicker, and poorer than their nonrural peers.

Of greater concern, the future rural physician workforce is likely to decline even further, with only 3% of recent medical students planning to practice in small towns and rural areas. Factors associated with this decline include the decreasing number of physicians entering family medicine and primary care, the increasing number of women in medicine, the changing lifestyle preferences of younger physicians, and the increasing level of medical student debt.

The study found that the six medical school programs, for a variety of reasons, are extremely successful in channeling more doctors into rural areas. The authors then developed a projection:

Initiating new programs in every medical school would be expected to result in 1,139 rural physicians yearly, more than twice the number produced if there were no such programs (513). During the next decade, this is projected to result in 6,260 additional rural physicians. Considering the multiplicative effect of increased long-term retention of these graduates, the impact of these programs would likely be even greater.

The geographic imbalance described here is just one supply-and-demand issue involving doctors. Another was highlighted in a
recent article in The New York Times, which described how medical school graduates have to compete fiercely to obtain residencies in dermatology or plastic surgery while relatively few graduates are entering fields like family medicine.

The result is too many doctors in some specialties, and not enough in others.

This has a lot to do with the fact that some specialties lead to better compensation and a better lifestyle than others.

There is also an
interesting commentary in the Boston Globe by Dr. Joseph Martin, professor of neurobiology and former dean of Harvard Medical School, and chairman of the New England Healthcare Institute. Its title is “Where have all the doctors gone?”

Medical schools are not manufacturers, and doctors are not products, but people who can choose what they want to do.

Adjusting market forces to provide incentives that will help address these imbalances of supply and demand won’t be easy. But a dose of lean thinking, focusing on the customer (patient), might help.


A New Link to a Lean Blog

I’ve added a new link to the list of Other Lean Blogs on this page.

Pass the Buck is a blog by Brian Buck, and his stated focus is “personal and professional development with Lean & Project Management emphasis.”

Be sure to check it out.