by Rick Dana Barlow

When these programs are newly minted and popular, they tend to love them; over time, however, particularly if roadblocks tend to be seemingly insurmountable, their attitudes sour.

Healthcare Purchasing News Senior Editor Rick Dana Barlow explored two of these programs – Lean Management and Six Sigma, which can be fused – back in the August 2008 edition of HPN. In a subsequent interview with GE Healthcare Financial Services’ Leslie Wallace, Barlow asked the company’s customer experience leader to weigh in on Lean/Six Sigma’s specific applications and legacy in supply chain management.

Lean management/six sigma is similar to other quality tools in that they all start by looking at an organizational problem at hand; also, they look at data to help solve the problem by using basic statistical concepts. The tools all use a framework, methodology and tools to analyze the problem. Lastly, they all establish goals at different points in the process; it’s just that the goals established using the lean/six sigma tools are easier to measure than those set using TQM/CQI.

In thinking about supply chain management as it relates to healthcare providers, it helps to define the types of processes that would fall in this category. These would include cross functional processes that impact external customers where there is a mutual benefit for both the provider and the customer including (but not limited to the following) reduced lead time, reduced cost, increased quality and reduced denials in addition to streamlined discharge, procurement and authorization process. A few specific examples of where healthcare providers applied supply chain management include ER Admissions Process, Procurement Process, Authorization Process, Operating Room Cost Process and Hospital Inpatient Discharge Process.

Lean management/Six Sigma offers supply chain managers a simple and visual tool to address problems. It starts with bringing together a cross functional team to work on the problem at hand for a few days as a team. In putting together this team, it is critical to involve all employees that touch the process relating to the problem at hand. The lean tools are extremely time efficient. Within the first day of looking at a value stream map, everyone in the group will be able to identify the waste and bottlenecks in the process. The group then will be empowered to put together a desired future state of the process where time will be allocated to start working on the recommendations for improvement. It is critical that senior leadership supports the project and empowers the team members to propose new ways of doing things and challenging the ‘status quo.’

Lastly, the project management part of lean gives supply chain managers the ability for participants to champion ideas that resulted from the recommendations in the new process. This will help to drive buy-in and support from the different stakeholders in the process. It also gives employees an opportunity to shine as they are held accountable for owning their portion of the new process.

It is apparent that lean management/six sigma is extremely valuable to hospital supply chain managers. Several reasons exist why these providers are not adopting and implementing the principles in their facilities.

One, the providers are simply not aware that the problem is that sizable. It is not until you are able to quantify the impact of the process at hand that key stakeholders understand the need to rethink ways of doing business. The supply chain manager who is familiar with the process needs to spend time quantifying the problem and the potential; the organization can then address the hurdle by addressing the challenge.

Two, leadership support, including a time commitment for them and their line staff to address the problem and the additional hours spent during the learning curve when implementing a new process, is lacking.

Three, embracing the idea of change is often challenging for organizations as other priorities exist and the thought of change for most is scary; however, this can easily be addressed by ensuring that the problem is a top priority for the provider.

Four, an outside party is needed to facilitate a session looking at a supply chain problem. The resource requires a commitment to the cost aspect of things as well as the people aspect noted earlier. The concern is addressed again by proving it is a critical project with sizable impact to the provider and customer.

The tools of lean/six sigma help to address the concern around applying the principles to actual workers versus the management team. Typically, when framing a lean event targeting a problem in a supply chain department, the employees that touch the process often know that the problem framed exists. These employees are typically frustrated with parts of the process and/or the entire process, but may not know how to solve it and/or where the bottlenecks and pain points are really occurring. The beauty in the simple value stream mapping is that it will help to pinpoint the wing to wing process where the employees will visually see the high level steps along with wait and work time. It is helpful for the group to then highlight the pain points in the process and brainstorm potential solutions to these pain points. The value stream map is then used to create a desired future state process, which takes into account the pain points, bottlenecks and potential solutions that the collective group determined from the current state process map. It is very common for the group to walk away confused after the first day spending time talking about the current state, as they often are not able to see where things will go from there. The power in lean is felt once the employees are walking through the future state process and start connecting the dots and coming up with great ideas that will translate to bottom line impacts and a happier customer.

Supply chain managers are able to utilize the tools from lean management/six sigma to make capital equipment decisions and acquisition evaluation. By having a structured framework to evaluate purchasing decisions, the healthcare providers are able to see alternative options available. A recent example involved a healthcare provider faced with supply cost increases of 40 percent against an industry average of 10 percent. The majority of the cost increase resulted from operating room supply and technology; however, there was no standard process for sourcing operating room supplies as it was often at the discretion of the physicians who were not aware of the bigger financial impact to the system. Another example relating to capital equipment purchases within a multiple hospital system involved a breakdown in communication and procedures and a lack of a standardized process. It resulted in the individual hospitals making these decisions on their own without keeping in mind the bigger impact on the system. These examples apply to multiple departments within the hospital including clinical, administration and financial.