Recently, I talked to hospital administrators who realized that they needed a massive overhaul of their processes, not only to improve performance but also to cut costs. Their patient wait times were astronomical, physicians were dissatisfied, and inefficiency was rife throughout the system. Yet in order to begin the transformation, the hospital’s board needed to get behind the project. The team focused on crafting a business case that stated why lean management was the most efficient method going forward. However, the team had neglected to provide real data or engage their top performers in the brainstorming process. As a result, the board rejected the initiative, and the hospital continued to underperform. When a second case was made to the board with recent ROI data, comparable case studies, and a clear plan for performance, the hospital could finally see the potential in such an overhaul, and approved the initiative.
Spencer Stuart and the American Hospital Association (AHA) recently conducted a leadership study of 1,100 executives from large healthcare systems across the country. They found that 56% of executives felt that “improving efficiency through productivity and financial management” was a key strategic priority. Here’s what administrators need to do in order to get their boards behind proposed lean and strategic planning initiatives.
While the majority of lean efforts happen in the clinical and administrative departments, lean strategies aren’t sustainable without buy-in from administrators and the board. That’s why it’s up to the leaders of a healthcare organization to effectively communicate their lean strategies, and demonstrate the various benefits to ensure that the hospital’s board authorizes the initiative.
Lean management is about eliminating waste, cutting costs, and improving team collaboration. This type of strategic planning requires a formidable plan with various moving parts and people involved in the project. Since high-level strategic planning can be costly and take organizations in entirely new directions, conversations on lean transformation with a board can be challenging. There are several factors hospital administrators need to consider when developing a business case to present to their board.
In an industry that once catered to individual physicians, nurturing a team spirit can prove challenging. In order to engage your healthcare organization’s board, you must first engage your top performers. Doctors and other leaders in the organization must play a central role in the transformation process and embrace the proposed strategies. In order to motivate and drive social action, administrators must give practitioners respect, shared purpose, and room for self-interest. Some hospitals have created strategic committees comprised of top performers that encourage systems thinking, engage with ongoing improvement recommendations, and align operations. Broader clinician participation makes a stronger case for lean management.
An executive overview is not always enough to get a board excited about the potential for lean. A lean healthcare program needs to focus on the development of people and culture, using lean principles, systems, and tools. A customized strategy needs to showcase how a customized program will address the healthcare organization’s biggest challenges.
Healthcare administrators must first be avid observers of the processes already in place, and determine problems in the current system. There are several different methods to observing and uncovering issues, including 5S events, rapid process improvement workshops (RPIW) and value stream mapping. A lean management plan should involve goals like:
When a board understands the potential positive outcomes that come from lean initiatives, they’re more likely to lend their support.
To demonstrate results, you have to be able to measure success. In order to state a case for lean transformation, administrators need the right tools to analyze the situation. Some potential options include:
Achieving smaller goals can help effectively prove your case for a larger lean overhaul. Boards need to be educated about the benefits of lean implementation and structural change and using real-time data is a sound method. Administrators should be asking how they can build awareness and reinforcement for change management.
Calculating the monetary benefits of a lean strategy and comparing it to the cost of the program should present a good ROI projection for a board. Return on investment is generally measured in the long term for lean strategies, so effective forecasting tools and data are essential for making a case.
The Virginia Mason Institute is a prime example of how to use lean techniques to improve ROI. During one RPIW, their gastrointestinal team thought they needed six new procedure rooms to meet the patient demand. Through reorganization and lean practices, they were able to meet the demand and saved the facility more than $2 million in capital expense. These concrete results further helped to fund more lean processes.
A thorough business case for lean management should include as many objective measures as possible, including:
In order to galvanize a board and gain executive buy-in, administrators have to be organized, informed, and engaged. The participation of the board in lean initiatives is the key to a successful strategic program. Targeting top performers, devising a customized plan, equipping the proper tools, and providing concrete results will ensure a smooth transition into lean healthcare.
Are you ready to explore how to implement a lean initiative at your healthcare organization? Contact Incito Consulting today to learn more about how we implement strategic planning and other initiatives that help healthcare providers save money, improve patient satisfaction, and provide better health outcomes.