Comparisons of Lean in Healthcare: Comparing UK and Australian Hospitals Experiences

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1 Page 1 of 12 ANZAM Comparisons of Lean in Healthcare: Comparing UK and Australian Hospitals Experiences ABSTRACT There is increasing interest in applying Lean in healthcare to improve patient care whilst minimising waste. As part of on-going research, this study examined how hospitals in Australia and UK have adapted the Lean principles using a case study approach. It was found that the initiatives varied in scale and scope. In Australia the initiatives were generally small scale and bottom up approaches worked better than top down. In the UK, Lean was seen as part of a transformational change programme; having a clearly articulated vision and a compact that shaped the psychological contract of employees helped facilitate change. Future research will look at the sustainability of lean healthcare improvements in UK and Australia. Keywords: Healthcare, Hospital, Lean, Transformational Change INTRODUCTION Healthcare providers are under increasing pressure to improve patient safety and the quality of care, increase the general efficiency of services provided, reduce errors and reduce the internal and external costs. Many industrialised countries including Australia and the United Kingdom (UK) have undertaken significant investment directed at strengthening the healthcare sector. In Australia, public spending on healthcare has increased from 8.1 per cent of Gross Domestic Product (GDP) in 2001 to 8.7 per cent in 2008 (OECD, 2011). In UK, public spending has increased from 7.2 per cent of GDP in 2001 to 9.8 per cent in 2009 (OECD, 2011). Despite increases in healthcare spending, there is no evidence of, an equivalent improvement in healthcare (Brandao de Souza, 2009). Thus, significant process reforms are needed to improve healthcare delivery. A variety of process improvement methodologies have been proposed to address the reported inefficiencies in health care delivery. Lean thinking is one such method that has been successful in improving quality and efficiency in the automotive and manufacturing industries (Ohno, 1988). Defined as a production process which conceptualises value from a customer perspective, lean aims to eliminate everything that does not directly create or facilitate delivery of that value (activities known as waste ) (J. P. Womack & Jones, 1996)

2 ANZAM 2011 Page 2 of 12 2 More recently, health care systems around the world have begun to utilize Lean methods, with most of the lean healthcare applications occurring in the USA (57 per cent), followed by UK (29 per cent), and Australia at (4 per cent) (Brandao de Souza, 2009). Over 120 publications were found from 2002 onward referring to the use of lean in healthcare, which further provides evidence of the increasing presence of lean healthcare worldwide. The literature reports that there are various approaches to implementing Lean in healthcare, which can be categorised in many ways. Firstly, there is a continuum from small scale interventions (e.g. an operating theatre), medium scale interventions (e.g. a clinical pathway), system interventions (e.g. a hospital) through to very large scale interventions that relate to entire health care systems (Brandao de Souza, 2009; Papadopoulos, Radnor, & Merali, 2011; Spear, 2005; Young & McCLean, 2008). Secondly, Lean may be implemented as a bottom up or a top down initiative (Papadopoulos, et al., 2011). Thirdly, some organisations have only focused upon the application of Lean techniques (Condel, Sharbaugh, & Raab, 2004; Lodge & Bamford, 2008; Spear, 2005), whereas in other cases Lean can be part of a strategic transformational change initiative (McGrath et al., 2008). Despite reports that the implementation of Lean in healthcare can improve patient flow by reducing the gap between demand and capacity; and process streamlining based on the concept of flow and pull (Brandao de Souza, 2009), there is continuing debate as to whether Lean can be applied in the healthcare context. Healthcare is a more complex system than any manufacturing industry. As a service provider with a major human component, there are safety and efficacy issues rather than cost and efficiency, which separate healthcare from the manufacturing industry (Patwardhan & Patwardhan, 2008). Given that Lean healthcare is still in an early stage of development (Brandao de Souza, 2009) further research into lean implementation in health care is needed. In the UK, the NHS is facing significant challenges including financial deficits; hospital-acquired infections; avoidable injury and death; capacity constraints; accusations of endemic inefficiency; and public and political concern about waiting lists and costs (Jones & Mitchell, 2006). The Australian Healthcare system faces similar challenges. Australia s rising health costs, increased demand for health services and the aging population has put a strain on the health system. From to , real health spending on those aged over 65 years is expected to increase around seven-fold. Over the same period, real spending on those aged over 85 years is expected to increase around twelve-fold (Government, 2010). Given these challenges, a number of initiatives have been undertaken in the healthcare system in Australia and UK. In the UK, the

3 Page 3 of 12 ANZAM NHS North East s is attempting to implement a major region-wide transformational change initiative called the North East Transformation System (NETS). In Australia, the Department of Health (DoH) introduced The Redesigning Hospital Care Program in 2007 to deliver significant health system improvements in Victorian hospitals. The purpose of this study is to investigate and classify the Lean implementation approaches in UK and Australian health care system. This work forms the basis of further on-going research. A preliminary comparison between the UK and Australian approach to lean implementation in health care will also be conducted to identify whether any differences in context has any significant impact on quality and safety improvements. The rest of the paper is structured as follows. First, we present the history of lean. We then discuss our research methodology. After that, we present the case results from the North East National Health Service (NHS) and two hospital networks in Australia. Finally, we present a conclusion commenting on the main results and implications derived from this research. LEAN PRODUCTION Lean originated within the Japanese automobile industry and was originally developed to improve the quality and productivity within the Toyota Motor Corporation (Ohno, 1988). It is an integrated system of principles, practices, tools, and techniques that are focused on reducing waste and improving processes. Manufacturing organisations have implemented Lean with varying degrees of success (Li, Rao, Ragu-Nathan, & Ragu- Nathan, 2005; Shah & Ward, 2007). Lean techniques include 5S (Warwood & Knowles, 2004), Kaizen (Imai, 1986), Single Minute Exchange of Dies (SMED) (Shingo, 1985), Six Sigma (Pyzdek, 2003) and Value Stream Mapping (Hines & Rich, 1997) and in order to remove waste and deliver improvements in specific areas. Lean Production can reduce cycle time, decrease cost, reduce of defects and waste, coordinate supply chains, facilitate close collaboration with customers and disciplined management (Liker, 2004; Sakakibara, Flynn, Schroeder, & Morris, 1997; White, Pearson, & Wilson, 1999; J. Womack, Jones, & Roos, 1990). Lean implementation failures are common because there is significant confusion and inconsistency in how Lean Production works and how it is best implemented (Shah & Ward, 2007, p.785). Hines et al., (2004) identified problems with the Lean philosophy including: increased vulnerability to errors or resource

4 ANZAM 2011 Page 4 of 12 shortages; difficulties with demand variability; failure to address human dimensions of work; and a common lack of strategic perspective when implementing Lean tools and techniques. 4 LEAN IN HEALTHCARE Lean exemplars include Virginia Mason Medical Centre in Seattle (USA), Flinders Medical Centre in Australia and the Royal Bolton NHS Foundation Trust in the UK (Spear, 2005). Tangible benefits of Lean include the reduction of processing and waiting times, increases in quality arising from reduced errors and costs (Z. J. Radnor, Holweg, & Waring, 2011; Silvester, Lendon, Bevan, Steyn, & Walley, 2004). Intangible benefits include improved employee motivation and increased patient satisfaction (Z. Radnor & Boaden, 2008). However, implementations have typically been confined to a single process or ward rather than a complete patient pathway. Healthcare organisations are implementing Lean tools and techniques through focused interventions or rapid improvement events (RIEs) that create pockets of best practice (Z. J. Radnor, et al., 2011). These have often focused upon one aspect of the patient pathway (the ward, pathology department, waiting lists, etc.), which have not necessarily improved the whole pathway. For example, Towill and Christopher (2005) stated that a process change in one part of the hospital could shift the bottleneck and create new problems in other parts of the pathway. As a result there is little evidence of hospitals taking a holistic and integrated approach to service improvement (Brandao de Souza, 2009; Z. J. Radnor, et al., 2011; Spear, 2005). There are studies that have investigated the effect of Lean implementation specifically on the improvement of the patient journey. For example, Bushell and Shelest (2002) described a pilot implementation of Lean in a mid-sized hospital in the USA. Similarly, Feinstein et al. (2002) reported good results in clinical and nonclinical areas also in the USA. However, much of the literature is descriptive with a limited evidence base and focuses on common toolbox approaches (e.g., 5S, visual management, rapid improvement workshops), very often in the acute hospital environment. Unfortunately, there is a dearth of research relating to Lean in other areas of healthcare (Erskine et al., 2009). Based on the extant literature (e.g., (Achanga, Shehab, Roy, & Nelder, 2006; de Treville & Antonakis, 2005; Shah & Ward, 2003, 2007) indicators of Lean success include: i) evidence of management commitment, employee autonomy, information transparency, and cultural fit; ii) the successful implementation of Lean practices e.g., JIT, one-piece work flows, continuous improvement, training programs; and iii) evidence of performance improvements and sustainability.

5 Page 5 of 12 ANZAM METHOD This study adopts a case study design endorsed by authors in the domains of general management (Eistenhardt & Graebner, 2007) and healthcare (Brignall & Modell, 2000) to address the research question: how has lean been implemented in healthcare systems in Australia and UK. The research is based upon parallel research that is being undertaken in Victoria in Australia and the North East of England. Data were obtained through semi-structured interviews with staff at all levels of the organisations. In Australia, the researchers have undertaken interviews at two hospitals. The first was SH Hospital in South East Victoria that employs over 13,300 staff across three hospital sites and provides health services to a third of the Melbourne population. The second was AH Hospital, which is a network of three public hospitals in inner South East Suburbs of Melbourne. Both hospital networks have received funding from the Department of Health (DoH) to apply Lean process redesign methodologies to improve the efficiency and quality of care. In Australia, interviews were carried out with 11 individuals at SH Hospital and 3 individuals at AH Hospitals. Individuals who had an Executive role or had an involvement in Lean implementation were targeted. Semi-structured interviews were based around common thematic guides. In the UK, the research was in collaboration with the North East Strategic Health Authority (SHA) which has a turnover of over 5bn, employs 72,000 staff and serves a population of 2.5 million people. Interviews were conducted with 16 key staff including chief executives, medical directors and senior managers between April and June Secondary data included meeting minutes and other background policy documents(erskine, et al., 2009). This work formed the basis of further on-going research that is funded by the National Institute for Health Research (NIHR) Service Delivery Organisation (SDO) by Durham and Newcastle Universities. The content approach was used for qualitative data analysis. Coding categories were derived directly and inductively from the raw data. The categories that were deemed relevant to the research question included but are not limited to: quality and coherence of policy, key people leading change, environmental pressure, supportive organizational culture, managerial-clinical relations, cooperative inter-organizational networks, simplicity and clarity of goals and priorities; and change agenda and its locale. LEAN IN AUSTRALIAN HOSPITALS SH Hospital developed the Target Best Care Programme (TBCP), which focuses on implementing Lean at ward level. The wards were selected by staff volunteering or by management if they had concerns about medication errors or staff safety. The TBCP provided a ten week Lean training course for groups of eight

6 ANZAM 2011 Page 6 of 12 6 people, including nursing staff, nurse unit managers and allied health staff. The widespread use of Lean tools was facilitated by the involvement of a mix of staff roles. On completion of training participants became responsible for training a group of their peers, which helped disseminate Lean throughout the organization. The TBCP was aligned with the organisation s strategic objectives and was measured in terms of quality outcomes and accreditation. It was rolled out according to a structured plan to ensure penetration within the organisation. SH Hospital used a bottom-up approach, where staff members were encouraged to contribute ideas and propose projects. Staff members were encouraged to use Lean tools and methods to identify and solve problems in their wards. The A3 problem-solving method and Value Stream Mapping (VSM) provided a standardized approach for solving problems. VSM was used to analyse patient flows, record process times and to identify value-added and non value-added activities. This process-based view identified inefficiencies and helped identify possible improvements. The bottom-up approach developed a culture of commitment and continuous improvement. Executives commented that empowered employees were more receptive to change. The interviews suggested that Lean implementation led to a number of positive outcomes at SH Hospital. From a patient perspective, eliminating non-value added activities provided nurses with more time to care for patients. By standardising processes, the hospital reduced medication errors and falls. Thus, implementing Lean had a positive effect on quality outcomes. Lean provided employees with more responsibility, greater involvement, and a sense of ownership of their work. One of the outcomes most frequently mentioned in the interviews was that employees had become focused on waste elimination and had a more proactive attitude to problem solving. This had helped create a culture of continuous improvement. The Lean implementation at SH Hospital may be categorised as a series of small scale, bottom up interventions at ward level that focused on Lean tools. The AH Hospital implementation was top-down and based upon the UK Productive Ward approach for providing ward based training in Lean. Projects were selected by the Management with staff involvement limited to data collection and the application of prescriptive methods. This provoked considerable resistance. It was difficult to change the culture due to the lack of employee engagement. AH Hospital focussed on creating standardised processes within wards. This initiative can be categorised as a series of small scale, top down interventions at ward level that focused upon Lean tools.

7 Page 7 of 12 ANZAM The tailored TBCP developed by SH Hospital was more successful because it was aligned with the organisational context and engaged front-line staff. It was clear from the interviews that support from management was critical. Managers need to lead change, measure performance and provide the necessary resources. Physicians were commonly viewed as impeding the Lean implementation. There was also resistance to the adoption of the language of Lean. Both hospitals now realise the challenge of sustaining the process improvements brought about by Lean. The interviews with Nurse Unit Managers (NUMs) at AH hospital included the following comments: They have sustained a massive reduction in their medication errors... They used to have 20 odd medication errors. This is purely nursing administration errors. They ve reduced it down from 20 down to one a month... With the falls, we actually have decreased our falls with preventions. We worked quite well on that and the category of falls is one, two, three, four. We haven t had any serious injuries or anything. We decreased our falls to basically minimal. We haven t had any serious injuries. One of the problems with sustainability at SH Hospital related to the fact that some of the staff members who had received training through Target Best Care had left. Two have gone now so I think there s probably only eight or seven left of the original team. But I ve actually now said to them they should be engaging and asked them to do it again to keep it theirs to engage other members of our team, educate, bring them in and also give them parts of the project to continue obviously when you re looking at sustainability. Furthermore, many of the individuals that had undertaken the Target Best Care pilot program were not using the tools and techniques that they had learned for process improvement. To combat this issue, SH Hospital has created a sustainability team to continuously support and re-educate those wards which had completed the program. At the moment the SH is training the Leaders. This includes the chief executives, directors and service improvement lead managers. Both of the Australian initiatives focused on Lean at ward level. The major differences was that SH Hospital utilised a bottom up approach, whereas AH Hospital was top down. NHS North East In 2007, the North East NHS embarked on an ambitious transformational initiative called the North East Transformation System (NETS). Its aim is to transform an entire healthcare system including primary and secondary healthcare and administration. The NETS comprises three elements: vision, compact and method

8 ANZAM 2011 Page 8 of 12 8 the three legged stool with the patients and staff in the centre. The vision (SHA, 2008) was framed around the seven nos (no barriers to health and well being; no avoidable deaths, injury or illness; no helplessness; no avoidable suffering or pain; no unnecessary waiting or delays; no waste; no inequality). The compact aimed to shape the psychological contract between clinicians and the NHS to clearly defined what staff give and get under the old and transformed systems (Edwards, Kornacki, & Silversin, 2002). Its aims were to clarify obligations, clarify shared goals (as set out in the vision) and to facilitate change. The method was Lean. Pathfinder organisations implemented the Virginia Mason Production System (VMPS), which is based upon the Toyota Production System (Reinertsen, 2006). Rapid Process Improvement Workshops (RPIWs) were used as a mechanism for staff training and implementing Lean in operational areas together with the establishment of appropriate metrics for measuring improvements (Erskine, et al., 2009). Some nonpathfinders used other Lean methods such as the NHS Productive Ward. Individual pathfinders had different contexts and issues, so there were variations in the emphasis placed on the legs of three legged stool (Erskine, et al., 2009). Thus, the NETS viewed Lean as one component of a strategic change management initiative. The initiative was led by a team based at the strategic health authority (SHA) which took responsibility for promoting the NETS and provided a link with consultants engaged in delivering elements of the initiative. The team hosted meetings and acted as a repository of information about Lean (Erskine, et al., 2009). The researchers worked with the NETS project team on a six month scoping study to capture early learning from the seven Pathfinders leading the initiative. The NETS project team worked closely with the Virginia Mason Medical Center in Seattle where the adoption of the TPS has resulted in significant improvements in performance (Reinertsen, 2006). The NETS, unlike the Australian cases, was a region wide initiative that aimed to achieve transformational change within an entire healthcare system. The emphasis was on change management of which Lean was one of the three elements. The principal themes to emerge from the interviews as highlighted by Erskine et al., (2009, p.275) were: patient safety was viewed as the main driver; transformational change was required to meet the objectives specified by the High Quality Care For All (Darzi, 2008), Our Vision, Our Future (SHA, 2008) and Better Health, Fairer Health (PHNE, 2008) reports;

9 Page 9 of 12 ANZAM the NETS was a long term commitment to achieve region-wide system level change; some quick wins were essential to boost morale and help experiential learning; some interviewees expressed doubts about the transferability of Japanese manufacturing methods; Lean tools were viewed as one leg of the three legged stool, rather than as an end in themselves; appropriate metrics and data collection tools were required; effective leadership and NETS champions were vital; some interviewees saw Lean as a threat to clinical decision making. The vision and the compact facilitated change and helped overcome resistance from clinicians. Clinicians and managers attitudes to the NETS were particularly influenced by the prospect of improvements in patient safety. The NETS was promoted on the basis on improved quality of care and patient safety; there was virtually no mention of cost or efficiency savings. There was a clear view that the key issues in achieving transformational change were cultural alignment and leadership. It was the vision that mattered, not the toolkit. CONCLUSIONS The paper has compared initiatives being conducted in the Australian and British healthcare systems that aimed to improve patient care. These initiatives can be categorised according to the scale, the approach ( top down versus bottom up ) and the scope (just Lean or transformational change incorporating Lean). The Australian cases were both relatively small scale and focused on Lean tools, whereas the UK case was a system wide transformational change initiative of which Lean was an important part. In Australia, the organisation that utilised bottom up appeared to be more successful than the top down approach. In the UK the development of a shared vision together with the compact that aimed to reshape the psychological contract between the staff and the organisation facilitated transformational change which was partly achieved through the application of Lean tools and techniques. The use of consultants from Virginia Mason Hospital meant that the tools and techniques were being transferred from a healthcare rather than a manufacturing context, which reduced the transformational distance (Lillrank, 1995). The Lean interventions were similar in all cases, the differences related to how change management was managed. It would appear that that Lean is more likely to be successful when applied to a complete process (pathway) or system as it helps avoid pockets of best practice. An integrative approach to change management that includes vision and compact appears to help reduce some of the barriers to Lean implementation.

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12 ANZAM 2011 Page 12 of 12 1 Comparisons of Lean in Healthcare: Comparing UK and Australian Hospitals Experiences Peter O Neill and Anna Nguyen Department of Management, Faculty of Business and Economics Monash University, PO Box 197, Caulfield East, Victoria 3145, Australia peter.oneill@monash.edu; anna.nguyen@monash.edu Christian Hicks, Tom McGovern and Adrian Small Newcastle University Business School 5 Barrack Road, Newcastle upon Tyne, NE1 4SE, UK. chris.hicks@ncl.ac.uk; tom.mcgovern@ncl.ac.uk; adrian.small@ncl.ac.uk