The Missing Solution for Healthcare Waste

Remember the famous statement by an advertising executive who said he knew half of his advertising was wasted, but he didn’t know which half?

That seems to be the state of healthcare in the U.S. today. Everybody agrees there is a lot of waste. But no one seems to know what to do.

Actually, that’s my assessment. The people in healthcare think they know what to do. But they just don’t get it.

I come to that conclusion after reading a recent article in The Washington Post. The article, by Ceci Connolly, quotes a variety of top healthcare executives as agreeing about the vast extent of waste in healthcare.

The article also says they agree about the solution.

Yet among physicians, insurers, academics and corporate executives from across the ideological spectrum, there is remarkably broad consensus on what ought to be done.

A high-performance 21st-century health system, they say, must revolve around the central goal of paying for results. That will entail managing chronic illnesses better, adopting electronic medical records, coordinating care, researching what treatments work best, realigning financial incentives to reward success, encouraging prevention strategies and, most daunting but perhaps most important, saying no to expensive, unproven therapies.

Those are not bad ideas, but they really don’t get to the nitty gritty of solving the problem. For example, I agree with the idea of realigning financial incentives to reward success. But once a hospital sees that eliminating waste is in its financial best interest, then what? How does it eliminate the waste?

What is missing from the list in the article is a focus on process improvement – aka lean. Healthcare leaders need to understand how to identify waste, how to eliminate it and how to measure improvement.

To be fair, one of the people quoted in the article is Gary Kaplan, chairman of Virginia Mason Medical Center in Seattle. Virginia Mason is one of the few institutions that really is making progress by applying Toyota principles. For example, the article includes a description of how the hospital saved money by focusing on physical therapy for people with back problems, and not requiring them to have MRIs, because they realized there was no evidence the MRIs did much good.

But there are far too few institutions making these kinds of efforts. Here’s hoping that changes in the future.


Dean Bliss said...

Virginia Mason was braver than people realize by reducing the number of MRI's, because that reduced the revenue they received. That's one of the big problems with the payment system - it pays for procedures, not outcomes, so there is a disincentive for seeking the kind of solutions that Virginia Mason has pursued.

The Process Ninja said...

I don't know what it is like in the US but in Australia the hospital system is painfully inefficient in terms of process. The duplication of effort due to manual systems and ancient, paperwork obsessed processes is painful...the difficulty is that these processes are so institutionalised and require such huge change and (initial) investment that it terrifies the government to even consider it.

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