5 Key Principles for Hospitals From Toyota's Lean Production System

Written by Lindsey Dunn

September 17, 2009

he Toyota Production System, which was developed from the late 1940s through the mid-1970s
by top Toyota executives to improve the company's manufacturing processes, is now used by
numerous companies across various industries to reduce inefficiencies and improve the overall
value of their end product to customers. Although originally developed for the manufacturing
industries, the key goals of lean production — eliminating waste, valuing employees and
continually improving — can be applied to service providers, such as hospitals.

"One thing that hospitals need to keep in mind regarding lean processes is that it is an
approach to management, a philosophy for improving and leading organizations," says Mark
Graban, senior fellow at the Lean Enterprise Institute and author of Lean Hospitals. "[Hospital
leaders and clinicians] will have concerns about how this transfers to healthcare, but the key
management practices are very transferable."

Here are five ways you can apply the key goals of TPS to your hospital to improve efficiency.

Eliminate waste
1. Eliminate non-value-added activity. One key principle of lean management is the
elimination of any activity that does not add value to an organization's end product. For
hospitals, this refers to any activity that is not necessary in providing excellent patient care.

"In an ER visit, a value-added activity would be registering the patient, having a nurse triage the
patient, the doctor making the diagnosis. Waiting in the waiting room or in a patient room is a
non-value-added activity," says Alan Kent, president and CEO of Meadows Regional Medical
Center in Vidalia, Ga. "In the ER, about 80-90 percent of a patient's time is waiting. Lean
attacks time that is non-value added."

Lean management promotes employee participation in process improvement. "It is a staple of

the lean process that the staff actually doing the work figures outs ways to improve it," says Mr.
Kent. "It's not a management-driven process. It's a staff-driven one."

Meadows Regional implemented lean management in 2005, training their staff on lean
principles and then involving them in analyzing ER processes and developing ways to reduce
wait times. The team of ER staff identified 44 action items for reducing times and began to
implement the changes over time. The average length of stay for ER patients at Meadows
Regional dropped from 247 minutes to 139 minutes in just two years as a result of the
employees' efforts.

Other hospitals have successfully reduced wait times in the operating department through
implementing lean principles. Brian Leonard, MS, a performance improvement process
manager at Purdue University's Healthcare Technical Assistance program, recently assisted
Goshen (Ind.) Health System to increase the on-time starts in the hospital's operating

1/3
5 Key Principles for Hospitals From Toyota's Lean Production System

Written by Lindsey Dunn

September 17, 2009

department from 15 percent to 80 percent in only 8 weeks.

A team of operating department employees examined the processes and determined that room
turnover and lack of focus on point-of-use concepts were two factors most responsible for the
late start times. Point of use, in this instance, refered to having everything one needs in the right
place at the right time. This includes supplies, staff, physicians and the patient. As a result, the
team developed process improvements for turnovers and the system worked to educate
physicians and staff on the impact of late arrivals of any needed resource on patient experience
and hospital profitability. As a result of these efforts, the system reduced its average turnover
time from 30 minutes to 15 minutes, says Mr. Leonard.

2. Keep inventory low. Another principle of lean management is using what is referred to as a
"just-in-time" inventory strategy, which aims to reduce inventory and associated carrying costs.
Not overstocking supplies can help hospitals to reduce supply costs associated with supplies
that expire before they are used and the cost of storing extra supplies.

Goshen Health System recently implemented a JIT inventory strategy for its operating
department, which saved the system $1.3 million in supply costs over the course of a year. The
system now replenishes supplies daily based strictly on demand and uses digital tools, including
scanners and bar codes, to track supply use and notify central inventory of what is needed in
each OR every day.

"Healthcare in general hasn't put enough thought into supply management. It's a lot of
guesswork. Someone says we need gloves, so we put 500 on the shelf," says Mr. Leonard.
"Lean systems are more responsive and provide more accurate par levels. It's moving from a
push system to a pull system. In a traditional system, supplies are pushed into a room without
considering what is used on a daily basis."

Hospitals using JIT inventory strategies should not only be concerned with the number of
supplies on hand but also with their accessibility, says Mr. Kent. "We made supplies available in
the areas [of the ER] where they were most likely to be used as opposed to more central
storage room," says Mr. Kent. Such strategies save nursing and clinical staff the time needed to
run between the patient and the storage area, which is a non-value-added activity.

3. Embrace technology. The use of technology to improve processes and eliminate waste is
embraced by the TPS and should be embraced by hospitals as well. Technology can reduce the
manual labor involved in many processes that take place within a hospital and improve overall
efficiency.

Goshen Health System could not have been as successful in it efforts to reduce inventory while
still having all necessary supplies on hand without digital controls, and the use of technology to
manage inventory greatly reduces the labor required for such efforts. Manual inventory counts
are very time consuming and costly, labor wise, as opposed to digital tracking systems that can
provide accurate inventory counts at any time, according to Mr. Leonard.  

Meadows Regional was able to reduce ER wait times, in part, through replacing its paper

2/3
5 Key Principles for Hospitals From Toyota's Lean Production System

Written by Lindsey Dunn

September 17, 2009

medical record system with electronic medical records. "We found that staff spent an amazing
amount of time writing on paper and moving the paper charts around," says Mr. Kent. "We
moved fully to EMR, and no paper has to move from triage nurse to the lab to the x-ray
technician before the patient can receive care."

Value employees
4. Develop people. Lean organizations differ from traditional organizations in putting the power
of improving an organization into the hands of the employees that directly interact with the end
product, rather than management. Lean organizations train employees in lean processes and
entrust them with developing the organization. For hospitals, staff directly involved with patient
care is charged with developing process improvement.

This commitment to the value of employees should be steadfast, even in difficult economic
times. "Traditional management will approach cutting costs by looking at people; lean looks at
the work being done and how it's being done," says Mr. Graban.

Many lean organizations have a straightforward policy against layoffs. Instead, they use
employees to find alternative ways to cut costs through process improvement. "It's not about
making people work harder, it's about figuring out how to do more cases in a day with the same
number of people," says Mr. Graban. "If you can improve productivity by 10 percent [through
process improvement], you can reallocate staff or give them career growth opportunities."

Continually improve
5. Focus on root causes. The largest difference between traditionally managed organizations
and lean organizations is their focus on systemic improvement. Lean organizations focus on
identifying the root causes of all problems and adjusting processes to stop the same problems
from occurring in the future.

If a problem occurs in a lean hospital's operating department, for example, management will put
resources toward identifying where in the process the breakdown occurred and what can be
done to improve it. "If an instrument is missing from the cart during a procedure, in a traditional
hospital, someone would run and scramble to get the needed instrument and move on, leaving
the exact same problem to occur the next day," says Mr. Graban. "In a lean hospital, you look
for the root cause. You recognize there is a problem in the instrument sterilization process, and
you put together a process improvement group to improve it."

To identify root causes, Mr. Graban recommends that leaders ask "why" five times. Continually
asking "why?" the best way to expose root causes because it helps leaders move beyond the
surface explanation of a problem. "In a lean hospital, hospital leadership deems it import to
dedicate time and training to look at systems and processes instead employing a workaround or
blaming individuals," he says. "It's about looking at the overall system and challenging things
that could be done better."

Contact Lindsey Dunn at lindsey@beckersasc.com.

3/3