Lean in Service Industry Tutorial

5.2 Lean in Service

Hello again and welcome to Lean Management training by Simplilearn! Lesson 1 gave an introduction to Lean while in lesson 2 we learnt to identify different types of waste. In lesson 3 we identified the different types of tools used in Lean while lesson 4 detailed about Lean in manufacturing. This is lesson 5 and here we will talk in detail about “Lean in service.” In the next slide we will start with agenda of what we are going to cover in this lesson and then go in detail about Lean in service industry.

5.3 Agenda

Here is the agenda, we will start with background of Lean in service industry, then, talk about Lean implementation in healthcare service industry with some examples and success stories. In the next slide we will start with Lean in service industry background.

5.4 Background

In this section we will cover how Toyota Production System used Lean manufacturing to come up with Lean for service industry. While all the principles hold true, we need to understand that there are some specific details for Lean for service industry that might not be the same as Lean for manufacturing industry. 'Service’ in this context is not limited to ‘the office’ or ‘administration’, but also wider service situations that are not necessarily repetitive, where ‘takt’ time is not applicable, and where task times may be both long and variable. Service in this context could mean anything from a hospital to a university, from an office process to a consultancy, and from a warehouse to field service maintenance. It is important not to confuse 'service operations' with the economic definition of service sectors (as distinct from manufacturing sectors), since many ‘service sector’ organizations have manufacturing-like operations in that they produce regular outputs along value streams. Instead, ‘service’ refers to the ‘service concept’ or ‘product service bundle’, which are all the activities that provide value to the customer along a value stream. One of the central concepts that distinguish Lean services from Lean manufacturing is the distinction between “Value Demand and Failure Demand.” Value demand is the demand for service from customers, while failure demand is the demand caused by a failure to do something right for the customer. Failure demand is thus demand that only exists because initial demand was not satisfied properly. For example, a large proportion of calls that call centers receive are either chasing down enquiries made earlier, or to correct earlier work that was not done properly. As one of the key aims of Lean is to eliminate waste, “Failure Demand” represents an obvious type of waste in service organizations. Failure demand can also be defined as "the delivery or production of products and services downstream as a result of defects in the system upstream." This will include administrative rework, audits, inspections, and enquires. This non-value-added work can account for the majority of administrative work performed. By treating failure and value demand alike in statistical analysis, failure demand can give the quite false impression of greater productivity. This merely reinforces the need to look at what is really going on, and ask why the service is being rendered. In the next slide we will talk about Lean in service industry with focus on healthcare industry.

5.5 Lean in Healthcare

In this section, we will cover types of waste typically in healthcare industry and then take a case study in Virginia Mason hospital in the USA. In the next slide we will talk about types of waste in healthcare.

5.6 Types of Waste

In earlier lesson you have heard about the 7 main types of waste and couple more. In this slide, we will cover the main 7 waste and the additional one which is underutilization of skills. While there are several examples that could be talked about, I have listed couple of them that you will come across in healthcare industry. First, defects: The severity of this waste can be fatal, some of the examples are, if the work is not done right the first time, the patients may have to go through re-sticks and redraws of blood. Another critical example would be incorrect medicine, insufficient quantity or overdose of medicine is given to the patient in error. Second, overproduction: This is typical type of waste you would see in many places. For example, blood draws done early to accommodate lab schedule, excess amount of blood drawn, etc. Third, inventory: Patients waiting for bed assignment, excess inventory of supplies, bed sheets, medicines, blood bottles, etc. Fourth, movements: You would typically notice lot of movements in hospitals, clinics, etc., while some of these might be necessary, several times it is waste when doctors or nurses are looking for patients, medicines goes missing, or some of the patient’s chart or medical equipment is missing. Fifth, excessive processing: Some of the examples here would be, multiple bed moves for patients, retesting of the blood or urine sample, etc. Sixth, transportation: Transportation of patients for tests, moving medicines and supplies from one place to another would fall into this category of waste. Seventh, waiting: Major example for this type of waste is patients waiting for their turn to be treated by doctors in the hospital lobby. In addition, patients waiting for discharge or doctors waiting for the test results will be examples of waiting waste. Finally, underutilization: When people are doing work that could be done by other people with lower skills, it would fall into this type of waste. An example would be a nurse transporting patients to x-ray room; this could very well be done by ward boy or assistants. Next, we will cover case study of Lean implementation journey of Virginia Mason hospital in USA.

5.7 Case Study Virginia Mason

Virginia Mason's vision is to be the “Quality Leader” in health care. This vision requires adopting a paradigm shift from expecting errors and defects, to believing that the perfect patient experience is possible. Key to accomplishing this is to understand that staff that does the work know what the problems are and have the best solutions. Virginia Mason’s strategies range from small-scale ideas tested and implemented immediately to long-range planning that redesigns new spaces and processes. Virginia Mason was recognized and named as America’s top hospital of the decade. The newspaper-clip is shown here. Virginia Mason uses several continuous improvement activities, such as Rapid Process Improvement Workshops (RPIWs) and kaizen events focused on incremental changes, as well as 3P workshops intended to completely redesign a process. Virginia Mason has held 850 continuous improvement activities involving staff, patients, and guests. The reduction of waste in administrative processes that support patient care but take valuable resources ultimately benefits customers. As a nonprofit organization, savings are reinvested to support Virginia Mason's mission to improve patient health and well-being. Some of the benefits achieved are: Patients spend more value-added time with medical service providers, and Lean helps providers deliver the best possible care. Patients benefit from greater safety, less delay in seeing physicians for care and more timely results and treatments. Virginia Mason’s staff benefits by having less rework and greater opportunities to care for patients - one of the primary reasons many choose health care as a profession. Let us look into the benefits achieved and the success stories. Patient Safety Improved Virginia Mason developed a Patient Safety Alert (PSA) system requiring all staff who encounters a situation likely to harm a patient to make an immediate report and cease any activity that could cause further harm. If the safety of a patient is indeed at risk, an investigation is immediately launched to correct the problem. From the program's inception in 2002 through 2009, a total of 14,604 PSAs were reported. Most reports are processed within 24 hours — a significant improvement from when reports took three to 18 months to resolve. Patient safety at Virginia Mason has increased and professional liability claims have dropped. One-Stop Care for Patients with Cancer The Floyd & Delores Jones Cancer Institute at Virginia Mason were redesigned with a laboratory and pharmacy inside, eliminating the need for patients to travel throughout the hospital for chemotherapy. Now what type of waste is eliminated here? If your answer is waste due to transportation, then you are right. Now, all cancer services are brought directly to the patient in his or her private treatment room. For one patient, this reduced the length of a chemotherapy visit from 10 hours to two and saved about 500 feet of walking at each visit. Getting Back to Nursing In most hospitals, nurses spend about 35 percent of their time in direct patient care. Virginia Mason’s nursing teams increased it to 90 percent. They used Rapid Process Improvement Workshops (RPIWs) to evaluate their work and make improvements. Instead of caring for patients throughout a unit, nurses worked as a team with a patient-care technician in "cells" (groups of rooms located near each other). The cell model allows nurses to monitor patients and quickly attend to needs. Also, the most commonly used supplies for each unit were moved to patient rooms so nurses reduced walking back and forth to get supplies. Steps walked per day fell from 10,000 to roughly 1,200. This is again elimination of waste due to transportation. Remember our discussion in previous slide. Hyperbaric Center Increases Patient Capacity When the Virginia Mason Center for Hyperbaric Medicine could no longer accommodate all the patients needing treatment, many assumed the solution was a new building to house larger chambers. Instead, Virginia Mason used Lean tools to design and build a new hyperbaric center in existing hospital space, which saved $2 million in construction costs and increased capacity from two to three patients at a time to as many as 20. Express Treatment in the Emergency Department Emergency departments (ED) are a major entry point for hospitals and can be a bottleneck. ED patient care is typically more expensive and involves longer wait times. Using Lean techniques, the ED team at Virginia Mason learned to predict appropriate staffing levels for times of greatest demand. A "team sort" process using standard clinical assessment tools to quickly identify and sort patients' care needs was implemented. Those requiring minimal services receive express treatment and were discharged without going to patient-care beds. This created capacity for patients who require more extensive services. This work helped Virginia Mason decrease the number of hours the ED was closed and unable to receive new patients by more than 90 percent over the past two years. Here we can see elimination of waste due to waiting. Faster Revenue Cycle Lean principles are used in all areas of the organization in Virginia Mason, not just in clinical settings. The finance department began using Lean to address outstanding revenue (revenue owed to the organization that had not been paid in a timely manner). The team improved Days Revenue Outstanding (DRO) in the clinic from 52.3 in 2003 to 29.4 in 2009 and in the hospital from 66.5 in 2003 to 42.6 in 2009. Cash deposits improved from $471 million in 2003 to $794 million in 2009. Primary Care Achieves Positive Net Margins Primary care has long been a money-losing area of health care and often a good year means breaking even. Primary care teams in Virginia Mason's eight locations used Lean to realign their work and improve the patient experience. Teams analyzed how supplies and providers "flowed" through the day. By making key changes, such as doing non-direct patient care (reviewing lab results, calling the pharmacy) in between patient visits and setting up each exam room identically with needed supplies, providers were able to see more patients in shorter work days with better quality care. Doctors, who previously stayed until 8 or 9 p.m. doing paperwork, now leave by 6 p.m. The turnaround time for lab results also improved from 25 days for normal results to two days or fewer. Today, these clinics consistently achieve positive net margins and see more patients without sacrificing time spent with each patient. Match these with the examples of types of waste in previous slide to understand what type of waste is eliminated. This concludes the case study on Virginia Mason’s Lean implementation journey and concludes our Lean for service industry lesson. We will next summarize what we have learnt in this lesson.

5.8 Summary

Here is what we have covered in this lesson. We covered Lean in service industry, we understood the word service, its context and concept, covered some of the examples of waste and then covered in detail the case study of the USA’s Virginia Mason hospital, and how it embraced and implemented Lean for service industry. I hope you had great time learning about Lean for service industry.

5.10 Thank You

Thank you everybody.

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  • PMP, PMI, PMBOK, CAPM, PgMP, PfMP, ACP, PBA, RMP, SP, and OPM3 are registered marks of the Project Management Institute, Inc.

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