Clinical Innovation - Systematic Innovation in U.S. Health Care: Toyota’s Lean Manufacturing Method and Its Application to Health Care

“Successful entrepreneurs do not wait until the ”Muse kisses them” and gives them the bright idea, they go to work.”

Peter F. Drucker with Joseph A. Maciariello, “Systemic Innovation,” The Daily Drucker, HarperBusiness, 2004

This blog’s shtick is innovation. I contend if doctors are to take control of their practices and to make them grow, prosper, and improve, they must innovate, or government, health plans, and health systems will control their practices for them.

In a talk I gave in January in Orlando, I quoted an e-mail message sent to me by George Halvorson, chief executive officer of Kaiser Permantente, in which he predicted, “Science and process engineering will help bring health care per capita costs down before we reach the breaking point.”

I pray this is so. Science and process engineering had better work to reduce costs, or the U.S. health system may be headed for a cost meltdown. If current trends continue, health care as proportion of GDP will rise to 40%, by 2050. That would break our system of financing health through employers, pension funds, and Medicare/Medicaid.

As Daniel McFadden, a Nobel Laureate from the University of California, cogently notes, “In terms of health delivered per dollar of cost, our system is grotesquely inefficient. We spent $6,102, nearly 17% of GNP. Our neighbor Canada’s single payer system costs $3,165 per person per year, about half our expenditure, or 10% of GNP.”

McFadden adds, not kindly, “Most Americans are aware that our health-care system is in deep trouble, a dog’s breakfast of private providers and insurers that has weak incentives for quality control and cost containment.”

But how to ensure quality and contain costs? That’s the $2 trillion question, the amount the U.S. now expends for health care.

Cutting this spending may be where the Toyota model of quality improvement and cost control through innovation enters the picture. A cartoon character of a race-driver on the cover of the February cover of The New York Times Magazine explains how Toyota has conquered the universal care world:

• DO KILLER CONSUMER RESEARCH !(WHACK!)
• NEVER SURRENDER THE LONG VIEW!(CRUNCH!)
• INVENT NEW PROCESSES AS WELL AS PRODUCTS ! (AARGH!)
• SEIZE THE HISTORIC MOMENT ! (POW!)

But, critics will surely say, Toyota is a multinational corporation, not a Mom and Pop operation like many small medical practices (60% of doctors are in groups of six or less, and 40% are in one or two person practices). In physiican practices, you need some sort of organizational critical mass to make a Toyota-type philosophy work.

True enough, which is why Toyota’s approach is being tested in groups with enough size to make it work.

• The Virginia Mason Medical Center in Seattle, consisting of 480 doctors, a 336 bed hospital, and a regional network of neighborhood clinics, has been working on perfecting and applying Toyota’s manufacturing to health care since 2002. 2 Doctors are required to understand how Toyota manufactures cars. Virginia Mason’s senior executives have traveled multiple times to Japan to see how Toyota does it. In 2003, Dr. Garry Kaplan, Chairman and CEO of the medical centers said, “We've done two trips to Japan, and will do another in the near future," These trips and subsequent ones were about learning the techniques of what's called "lean manufacturing," and then applying them to health care.

“Lean” mans doing only what’s needed, taking the fluff out of processes, and eliminating waste. W. Edward Deming, an American statistician who pioneered the quality control and continuous improvement movement in Japan, estimated as much as 40% of a company’s expenses result from waste – from poorly designed systems and processes.3

The Deming approach has worked for Virginia Mason, who have slashed 40% to 50% of costs related to respiratory inventory supplies and space needed to provide other services. The radiation oncology staff has cut the time from patient check in to leaving the department from 42 to 15 minutes, and the time spent waiting for chemotherapy has been reduced from 4 hours to 90 minutes.

• The Park Nicollet Clinic in Minneapolis, one of the largest multispecialty clinics in the U.S. with over 960 physicians in 45 specialties and subspecialties, has achieved similarly impressive results using the Toyota Practice System (TPS), also called the “lean model.” The basic idea is to implement standardized processes across the clinic to end waste, reduce costs, and improve quality and safety. In 2006, Park Nicollet announced it had saved $15 million in the previous two years,

Among other things, Park Nicollet changed its old “batching”system of seeing patient in groups of five to a “waterfall” system in which patients arrive and depart one at a time in a continuous flow. The ultimate goal across the Park Nicollet enterprise is to cut the time patients spend in care by one-half and to increase the “throughput” by two while spending more time with each patient. The endoscopy clinic has doubled the number of patients it sees while increasing measured satisfaction. Similar results have been achieved in Park Nicollet’s Cancer Center, Heart Center, Urgent Care, and Wound Clinics.

The Toyota model is probably applicable to other multispecialty clinics and health-based integrated systems.

But will it work in widely dispersed small practices? Will it require doctors to consolidate into larger more centralized groups? Will it work in “virtual groups,” held together by a central electronic medical record system? Could the federal government, under a single payer system, adopt the Toyota model nationwide?

Maybe not now, but in a generation or so when survival of small practices is at stake. The Toyota model works on the premise that all participants work together in teams, resources be spent on analyzing systems of care, traditional practice flow patterns by disrupted and changed, processes be standardized, defects be cut to zero, and statistical goals for improvement and safety be routinely met.

Will this approach work among individual “democratic” physicians who entered medicine to “be their own boss.” I have my doubts. As for the federal government, national and domestic politics and provider resistance would surely hinder standardization across all regions of the country.

Consensus is always possible, but it is hard to visualize working in today’s polarized political environment, swinging left and right, and caught up in the relative virtues of a market vs. a government-driven system.

References

1. McFadden, Daniel, “A Dog’s Breakfast,” Wall Street Journal, February 16, 2007.
2. Gertner, Jon, “From 0 to 60 to World Domination: How Toyota Conquered the Care World,: The New York Times Magazine, February 18, 2007.
3. “Toyota Gives Virginia Mason Doctors a Lesson in Lean,” Puget Sound Business Journal, September 12, 2003.
3. Gabor, Andrea, The Man Who Discovered Quality, Times-Books, 1990.