Healthcare prices are at an all-time high. Evidence suggests pricing is the major difference in cost between the United States and other rich countries.a It’s unlikely significant increases in revenue will be arriving anytime soon for U.S. healthcare delivery, so leaders will need to do more with less. For some organizations, this could mean eliminating jobs, but layoffs never lead to better quality or overall cost improvement. Cutting jobs is a short-term finance measure that destroys culture and trust.
Forward-thinking healthcare leaders, however, will answer the cost challenge by working to build excellence in their organizations. Building excellence in is a long-term strategy that delivers higher value to customers and unleashes the creativity of everyone working on a team. Health care is beginning to catch up with great companies such as Toyota by applying enterprise excellence methods, the core elements of which are discussed below.
The method described here is based on a bedrock of important principles published by the Shingo Institute at Utah State University. The principles are captured from writings and teachings of former Toyota engineer Shigeo Shingo and structured as a pyramid, as shown in the exhibit below. At the top of the pyramid is the principle of creating value for the customer. Other principles are divided into three categories: align, enable, and improve. These principles are designed to guide leaders to establish key behavioral indicators, in turn allowing a culture of continuous improvement to evolve. The expected behaviors must be clearly defined and must be observable. For example, one behavior that is important is asking open-ended questions, rather than asking questions with solutions already embedded. Open-ended questions make people think about the problems they face in a different way. The leader’s job is to ask the right question, not to dictate the answers.
Once behaviors are established, systems need to be built to reinforce them. An example of such a system is a standardized management system. Most healthcare organizations have little say in the way of standard work for management, and this deficiency is at the root of an organization’s constant need to put out fires. The management system builds specific roles and responsibilities at every level. It is clear to all leaders and managers what they are supposed to do each day. The end game is to deliver a significantly better patient experience at a lower cost and higher quality. Establishing management systems allows for the use of specific improvement tools which in the context of the newly defined management system achieves results.
Shingo Principles of Operational Excellence
The enterprise excellence method is a set of principles, behaviors, systems, and tools that provide direction on how to achieve results. This systematic method is reproducible across the healthcare industry. Many hospitals throughout the world have been experimenting with this approach, with stunning results:
- St. Mary’s hospital in Kitchener, Ontario, has been applying enterprise excellence principles for eight years and has been one of the top three safest hospitals in Canada for the past six years in a row.
- Western Sussex hospitals in the United Kingdom are one of only three National Health Service Trusts to achieve the organization’s top quality award. The National Health Service is the public health service for the U.K. that funds healthcare delivery.
- UMass Memorial in Worchester, Mass., saw a 32 percent reduction in mortality over two years through 2017, and it has experienced a $100 million turnaround since it began its enterprise excellence journey in 2013.
- Maternal mortality rates have dropped 80 percent in the Laratong hospital in Johannesburg, South Africa, in only a year.
John Toussaint, MD, is CEO of Catalysis, Appleton Wisc.
Footnotes
a. Knox, R., “Why Are U.S. Health Costs the World's Highest? Study Affirms ‘It's The Prices, Stupid,’” WBUR, March 13, 2018.Publication Date: Monday, April 23, 2018
