Improving global healthcare with the Theory of Constraints

Keynote address Improving global healthcare with the Theory of Constraints Presented By: Alex Knight Date: 8 June 2014 1

The objectives of this presentation Create a shared understanding of the global health environment. Demonstrate the situation is not only important but increasingly urgent. Explain the criteria against which any proposed direction of solution should be judged. Evaluate the effectiveness of the Theory of Constraints as a core methodology to achieve a breakthrough. A call for action. 2

Understanding the current reality 105. For many nations, expenditure on healthcare, although a necessity, is increasingly seen as unaffordable. (See Pride and Joy, pages 63-64) 103. Expenditure and affordability are very different. 102. Many nations continue to spend more and more on this fundamental necessity. 104. For many nations, expenditure on healthcare is already a significant and an increasing % of GDP year on year. 100. Healthcare is a fundamental necessity of all societies. 101. For many nations the total expenditure on healthcare is rising year on year. 3

101: USA spends six times more on healthcare than any other country Source: http://www.data.worldbank.org 4

101: Excluding USA, Japan spends the most on healthcare and China has the fastest growing spend on healthcare Source: http://www.data.worldbank.org 5

101: USA, Denmark and the Netherlands are the top three spenders on healthcare per capita Back Source: http://www.data.worldbank.org 6

104: USA has the highest GDP and China has the fastest growing GDP Source: http://www.data.worldbank.org 7

104: USA spends 18% of GDP on healthcare followed by the Netherlands and France spending 12% Source: http://www.data.worldbank.org 8 Back

105: Healthcare - increasingly seen as unaffordable Source: http://www.hsj.co.uk/the-nhs-is-in-real-danger-of-being-unaffordable/5057645.article#.u2tqepldv7w 9

105: Healthcare - increasingly seen as unaffordable Source: http://www.thepharmaletter.com/article/health-care-in-india-is-largely-unaffordable-says-ims-survey 10

Understanding the current reality 109. The cost and affordability of drugs is under constant scrutiny. 112.The need for a rapid and sustainable breakthrough in productivity is paramount for more and more nations. (See Pride and Joy, pages 70-71) 111. The productivity of front-line clinical staff is understandably and increasingly scrutinised by many nations. 108. In many instances the totally variable costs of the provision of healthcare are a relatively small % of revenues and are largely made up of drug costs. (See Pride and Joy, pages 25-27) 107. The productivity of the provision of healthcare is understandably scrutinised (more and more) by many nations. 105. For many nations, expenditure on healthcare, although a necessity, is increasingly seen as unaffordable. (See Pride and Joy, pages 63-64) 12 110. In many instances operating expenses are a major % of total costs and are largely made up of frontline clinical staff. (See Pride and Joy, pages 25-27) 106. When something that is necessary becomes unaffordable it is understandable every penny spent is heavily scrutinised

107: Productivity is scrutinised (more and more) 13 Source: http://www.newswire.ca/en/ story/1226485/canada-scurrent-health-caresystem-is-not-sustainableaction-needed-to-maintainthe-system-s-survival

107: Productivity is scrutinised (more and more) Right now the Spanish National Health System is not economically sustainable. What this means is that current spending trends cannot be allowed to continue into the future because they would lead to healthcare becoming an expenditure item for the country that is too big a percentage of State income. Source: Sabeva T R (2013) Sustainability and Future of the Spanish Healthcare System, Available: http://www.eco.uab.es/ue/trabajos%20premi/tfc%2048%2023%20rosenova.pdf 14 Back

108: Totally variable costs Pride and Joy General Hospital accounts for the year ending April 2014. Sales 400m Totally variable costs 80m Throughput 320m Operating expenses 335m Profit Staff costs 270m Building, service charges 35m Others 30m ( 15m) Back 15

109: Drugs are under constant scrutiny Source: http://www.nice.org.uk/newsroom/pressreleases/twobreastcancerdrugsnotcosteffective.jsp 16

109: Drugs are under constant scrutiny 17 Source: http://www.pmlive.com/phar ma_news/pfizer_slams_uk_ drug_pricing_plan_516204

109: Drugs are under constant scrutiny 18 Source: http://www.telegraph.co.uk/health/health news/8791979/the-big-c-cancertreatment-is-increasinglyunaffordable.html

109: Drugs are under constant scrutiny Source: http://www.forbes.com/sites/edsilverman/2013/11/11/will-the-new-hepatitis-c-drugs-trigger-a-battle-over-cost/ 19 Back

110: Operating expenses - a major percentage of total costs. Largely made up of front- line clinical staff Pride and Joy General Hospital accounts for the year ending April 2014. Sales 400m Totally variable costs 80m Throughput 320m Operating expenses 335m Profit Staff costs 270m Building, service charges 35m Others 30m ( 15m) 20 Back

111: Productivity of front-line clinical staff increasingly scrutinised Source: http://www.ft.com/cms/s/d15d51cc-b8dd-11e3-a189-00144feabdc0,authorised=false.html?i_location=http%3a%2f%2f www.ft.com%2fcms%2fs%2f0%2fd15d51cc-b8dd-11e3-a189-00144feabdc0.html%3fsiteedition%3duk&siteedition=uk&_ i_referer=#axzz2xd2wut6p 21

Understanding the current reality 109. The cost and affordability of drugs is under constant scrutiny. 112.The need for a rapid and sustainable breakthrough in productivity is paramount for more and more nations. (See Pride and Joy, pages 70-71) 111. The productivity of front-line clinical staff is understandably and increasingly scrutinised by many nations. 108. In many instances, the totally variable costs of the provision of healthcare are a relatively small % of revenues and are largely made up of drug costs. (See Pride and Joy, pages 25-27) 107. The productivity of the provision of healthcare is understandably scrutinised (more and more) by many nations. 105. For many nations, expenditure on healthcare, although a necessity, is increasingly seen as unaffordable. (See Pride and Joy, pages 63-64) 22 110. In many instances operating expenses are a major % of total costs and are largely made up of frontline clinical staff. (See Pride and Joy, pages 25-27) 106. When something that is necessary becomes unaffordable it is understandable every penny spent is heavily scrutinised

Understanding the current reality 100. Healthcare is a fundamental necessity of all societies. 116. Healthcare is sitting between a rock and a hard place and the walls are closing in fast. 114. Trimming front-line clinical staff costs is increasingly considered as the only option. (See Pride and Joy, Pages 74-75) 115. Research and the common experience of clinical staff validates when front-line staff are increasingly pressurised, quality/timeliness of care suffers and catastrophic incidents of care increase. 113. Many nations are not achieving an immediate breakthrough in productivity. 112.The need for a rapid and sustainable breakthrough in productivity is paramount for more and more nations. 23 111. The productivity of front-line clinical staff is understandably and increasingly scrutinised by many nations.

114: Trimming front-line clinical staff costs Source: http://www.theguardian.com/societ y/2013/dec/31/nhs-staff-laid-offamid-savings-drive 24

114: Trimming front-line clinical staff costs 25 Source: http://thehealthcareblog.com/blo g/2013/07/06/hospitals-lost-jobslast-month-should-we-besurprised/

114: Trimming front-line clinical staff costs Source: http://www.mirror.co.uk/news/uk-news/nurses-heckle-andrew-lansley-over-833286 26

114: Trimming front-line clinical staff costs Source: http://www.dailymail.co.uk/health/article-2068661/midwife-cuts-nhs-20-billion-savings-target-threatening-frontline-nursingcare.html 27

114: Trimming front-line clinical staff costs Source: http://www.beckershospitalreview.com/l eadership-management/11-recent- hospital-and-health-system-layoffs-1-17-14.html 28 Back

115: Quality/timeliness of care suffers and catastrophic incidents of care increase Dr Mike Williams PhD Developing A System Resilience Approach To The Improvement Of Patient Safety In NHS Hospitals Submitted by: MIKE D A WILLIAMS to the University of Exeter as a thesis for the degree of DOCTOR OF PHILOSOPHY IN MANAGEMENT April 2011 Atul Gawande 29

115: A recent UK retrospective case note study 8.7% of admissions had at least one adverse event Of which 31% were judged preventable 15% of adverse events led to impairment or disability that lasted > than 6 months 10% contributed to patient deaths Increased mean length of stay of 8 days (95% CI 6.5-9) Adverse event: any unintended event caused at least partly by healthcare and which resulted in harm. Source: Sari AB-A, Sheldon TA, Cracknell A. (2007) Extent, nature and consequences of adverse events: results of a retrospective casenote review in a large NHS hospital. Qual Saf Health Care 16:434-9 30

115: The incidence and nature of in-hospital adverse events - a systematic review Eight studies covering 74,485 patient records showed: Median of 9.2% of admissions had an adverse event With a median of preventability of 43.5% 56.3% of adverse event led to no or minor disability 7.4% of events were lethal Adverse event: an unintended injury or complication resulting in prolonged hospital stay, disability at the time of discharge or death caused by healthcare management rather than by the patient s underlying disease process. Source: De Vries E.N. et al (2008). The incidence and nature of in hospital adverse events: a systematic review Qual Saf Health Care 17:216-223 31

115: Is there still room for improvement? Total lives lost per year 100,000 10,000 1,000 100 10 1 HAZARDOUS (>1/1000) Health Care Mountain Climbing Bungee Jumping REGULATED Driving Chemical Manufacturing Chartered Flights ULTRA-SAFE (<1/100K) Scheduled Airlines European Railroads Nuclear Power 1 10 100 1,000 10,000 100,000 1million 10million Number of encounters for each fatality Source: Mike Williams PHD 32

Understanding the current reality 100. Healthcare is a fundamental necessity of all societies. 116. Healthcare is sitting between a rock and a hard place and the walls are closing in fast. 114. Trimming front-line clinical staff costs is increasingly considered as the only option. (See Pride and Joy, Pages 74-75) 115. Research and the common experience of clinical staff validates when front-line staff are increasingly pressurised, quality/timeliness of care suffers and catastrophic incidents of care increase. 113. Many nations are not achieving an immediate breakthrough in productivity. 112.The need for a rapid and sustainable breakthrough in productivity is paramount for more and more nations. 33 111. The productivity of front-line clinical staff is understandably and increasingly scrutinised by many nations.

Yes, but Has the quality of care benefited from this massive increase in expenditure? Has the timeliness of care been improved? Are there less waiting lists? Has the affordability of care improved? Are people going elsewhere? 34

There is some improvement but what is the cause? Source: http://www.data.worldbank.org 35

There is some improvement but what is the cause? Source: http://www.data.worldbank.org 36

Timeliness of care and waiting lists 38

Timeliness of care and waiting lists Waiting time of four weeks or more for a specialist appointment 39

Yes, but Has the quality of care benefited from this massive increase in expenditure? Have the timeliness of care been improved? Are there less waiting lists? Has the affordability of care improved? Are people going elsewhere? 40

Affordability of care improved 41

Yes but Has the quality of care benefited from this massive increase in expenditure? Have the timeliness of care been improved? Are there less waiting lists? Has the affordability of care improved? Are people going elsewhere? 42

Waiting lists won t wait 43

Waiting lists won t wait Source: http://www.transparencymarketresearch.com/medical-tourism.html 44

Waiting lists won t wait Source: OECD (2012), Waiting Time Policies in the Health Sector: What works? 45

Conclusions This is an environment where a rapid and sustainable breakthrough in performance is both necessary and increasingly urgent. For many countries there is now a situation where this fundamental necessity is being compromised more and more every day. Even the so-called wealthy or growing countries are not immunised from this effect. Eli taught us never to allow something important to become urgent. 46

Important and increasingly urgent 47

Criteria against which any solution should be judged Any solution must deliver for a nation the ability to simultaneously improve: the quality and timely availability of care AND the affordability of care AND in a rapid timescale Without simply asking staff to work harder 48

So we need a breakthrough, but let s not be hasty Let us examine some of the important facts about this industry. We are dealing with: 49

A health and social care system the chain of activities GP referrals Electives 4 hours Home Days Home Home Home Social & Health Care Days Social & Health Care Days Social & Health Care Ambulances Minors ED AU Acute Rehab Residential & Nursing Care Outpatients Emergency Room Medical Assessment Unit Home 12 hours Days Acute Social & Health Care Social & Health Care Days Rehabilitation Hospital Residential & Nursing Care 50

Seemingly complex systems BHRUT organisational structure 51

Seemingly complex systems Seemingly complex systems 52

Seemingly complex systems Seemingly complex systems 53

So we need a breakthrough, but let s not be hasty Let us examine some of the important facts about this industry. We are dealing with: 54

What methodologies should we consider? Lean? Six Sigma? Theory of Constraints? Let us judge them not against each other but against the criteria 56

Methodology Matrix (1) Reference Social Science & Medicine 74 (2012) 364 371 Paper Lean in Healthcare unfulfilled promise as above as above as above as above as above Project Organisation Method Quality improvements Scotland Cancer treatment, UK Nebraska Medical Centre., USA Pittsburgh General Hospital, USA "Pottery" unnamed NHS Trust UK "Iron" unnamed NHS Trust UK "Ring" unnamed NHS Trust UK Lean Lean Lean Lean Lean Lean not known not known reduced intravenous line infections by 90% improved patient services increased time spent with patients reduced waste and increased communication 57 Timeliness reduced patient waiting time for 1st appointment from 23 to 12 days (average) reduced specimen process time by 20% reduced length of stay by 10% Improve care costs Rapid Change? All Criteria met? not known not known? reduced local manpower by 11 FTE used elsewhere not known? not measured $500k pa saved 90 days? reduced waiting times not known not known? reduced waiting lists not known not known? none not known not known?

Methodology Matrix (2) Reference Social Science & Medicine 74 (2012) 364 371 North Carolina Medical Journal (2013) 74 (2) Transfusion. Sep2010, Vol. 50 Issue 9, p1887 1896 Paper Lean in Healthcare unfulfilled promise Improving Quality of Care as above Blood wastage reduction using Lean Six Sigma methodology Project Organisation Method Quality improvements "Lady" unnamed NHS Trust UK Columbus regional healthcare system, USA Samson regional Care Centre, USA John Hopkins Hospital, Baltimore Maryland, USA Lean Lean / Six Sigma Lean / Six Sigma Lean / Six Sigma increased staff engagement rapid turn around allowed significantly better care and also avoided creating patient anxiety increase in patient satisfaction and compliance unreported Timeliness Improve care costs Rapid Change? All Criteria met? no patient impact not known not known? Time from testing to delivery of results decreased by 83% for diagnostic examinations and by 74% for screening pre op visits reduced from 2+ hours to <1hr. Product wastage decreased from 4.4% to 2%. This reduction decreased the number of RBC units wasted by approximately 4300 per year. not known 2 weeks? not known 1 week? savings approximately $800,000 over the 4 year period of the study. unknown? 58

Methodology Matrix (3) Reference Journal of Healthcare Management, 2012 57. Journal for Healthcare Quality Volume 32, Issue 1, 59 66, an/feb 2010 2012.. Oncology nursing forum, 39, 136 140 Paper Improving patient flow through the Emergency Department Project Organisation Winchester Hospital, Mass, USA Lead Time Reduction Inpatient Utilizing Lean Pharmacy at a Tools Applied Local Hospital to Healthcare: Evaluation of outpatient oncology services using Lean methodology Aurora HealthCare Oncology Infusion Centre, Milwaukee, USA Method Lean / Six Sigma Lean Lean Quality improvements no measure no measure Increased patient satisfaction because of decreased wait time(not quantified) Timeliness Patient wait from ED Door to seeing a Doctor decreased from 70 minutes to 47 minutes 45+% reduction in drug dispensing time Average overall patient More patients wait time from arrival to receiving care chemotherapy infusion because of decreased from 88 minutes time saved (not to 68 minutes. quantified) Improve care Rapid All Criteria costs Change? met? no measure 3 months? no measure unknown? August 2010 onward? 59

Methodology Matrix (4) Reference 2005. Qual Prog, 38, 51 57 Quality Engineering, 21, 222 228 (2009) Quality Engineering, 21:117 131, 2009 Leadership in Health Services Vol. 25 No. 4, 2012 pp. 318 330 Paper Lean Six Sigma Reduces Medication Errors Quality Quandaries Efficiency Improvement in a Nursing Dept. Quality Quandaries Reducing Length of Stay Risk management and cost reduction of cancer drugs using Lean Six Sigma tools Project Organisation not stated University Medical Centre Groningen, The Netherlands Red Cross Hospital, Beverwijk, The Netherlands Italian Hospital, Tuscany (unspecified) Method Quality improvements Timeliness Lean / Six Sigma Lean / Six Sigma Lean / Six Sigma Lean / Six Sigma Increased patient satisfaction and improved employee morale (not quantified) increase time spent on patient care & professional development (up to 30%) reducing COPD outliers increase in drug safety and quality 60 Decrease in the total error rate in medication from 0.33% to 0.14% not measured length of stay reduced by 2.4 days not measured Improve care Rapid All Criteria costs Change? met? reduction in labour costs of $550,000 nursing costs reduced by 147k Costs saved 36k and potential for 70 extra patients / year inventory costs reduced by 200k 5 months? 8 months? unknown? 6 months?

Methodology Matrix (5) Reference Leadership in Health Services Vol. 20 No. 4, 2007 pp. 231 241 The Lancet Volume 367, Issue 9507, 28 January 3 February 2006, Pages 290 291 Australian Day Surgery Nurses Association Inc Volume 12 Number 2 July 2013 Quality in Primary Care 2009;17:271 5 Paper Can Lean save lives? Can car manufacturing techniques improve healthcare? Showcasing the Flinders Medical Centre Day of Surgery Admission Unit Lean experience in primary care Project Organisation Royal Bolton Hospital, Bolton UK Virginia Mason Flinders Medical Centre Surgical Day Unit NHS County Durham, GP Practice UK Method Quality improvements Timeliness Lean Lean Lean Lean Mortality rate reduced by 36% Multiple projects include: Infection down 90% reduction in patient walking distance for additional treatments reduced over crowding in admission waiting. Reduced duration of waiting. delivery same day results service & created a staff room by reducing 61"patient motion" by 25% Access time to hip surgery reduced 38% length of stay reduced by 33% not measured here increased timely and reliable discharges reduced access time to 9 days. Improve care costs not measured 60% reduction in surgical instruments. $11m saved in capital investment 13000 Sq. ft. space saved increase in theatre throughput of 30% Rapid Change? 9 months (trauma project) All Criteria met?? ongoing? no budget increase? not known 2 weeks?

What does the Theory of Constraints bring? 62

What does the Theory of Constraints bring? Improving patient flow is the primary objective of any methodology. A focused process of ongoing improvement to balance patient flow must be in place. A patient-centred, clinically led approach is at the core of the way forward. Eradicating local performance measures is essential to improving the whole chain of activities. 63

The core of the approach: Pride and Joy, page 301 64

The core of the approach: Pride and Joy 65

The core of the approach: Pride and Joy, page 165 66

The Theory of Constraints results 67

The Theory of Constraints results 68

The Theory of Constraints results 69

Experiences of applying the Theory of Constraints in healthcare Chief Executive: Barking Havering and Redbridge University Hospitals Trust, 2011-2014 Barnet and Chase Farm Hospitals NHS Trust, 2004-2011 Barnet Primary Care Trust, 2000-2004 City and Hackney Community Services Trust, 1997-2000 70

BUILDING THE HIGHWAY 71

Building the highway 72

Building the highway Chapter overview Chapters 1-3: undesirable effects Chapters 4-6: analysis of core dilemma and direction of solution Chapters 7-9: leading change Chapters 10-16: details of approach in many environments Chapters 17-19: leading change Chapters 20-24: national and global 73

Building the highway Blogs to-date (www.alex-knight.com/pride-and-joy) The Emergency department The missing link Cutting costs, costs more than you think The assessment unit is at the heart of patient flow Finding the inherent simplicity in outpatients Tell me how you ll measure me and I ll tell you how I ll behave Podcasts (www.alex-knight.com/podcasts) Introduction to Pride and Joy Introduction to each application Introduction to carrying out an analysis 74

The most important learning 75

Level one - Basics Workshop Healthcare: Applying TOC in healthcare In this session we will: Demonstrate the core TOC-based application behind a number of health environments and show the common underlying methodology used. Demonstrate how to establish the answer to the two prime questions: Of all the patients I could treat next, which ones should I treat next. Of all the areas I could improve, which area(s) will give me the greatest breakthrough in performance. 76

Level two - Basics Workshop Healthcare: Achieving ongoing improvement In this session we will: Highlight a number of key assumptions contained in the overall strategy and tactics tree for healthcare. Demonstrate how to expose, challenge and upgrade these key assumptions using the dice game and dice game simulators. Introduce our new healthcare simulator and some of the early learning. Summarise the key steps to follow when starting an implementation. 77

Level three - Basics Workshop Healthcare: Gaining agreement to implement TOC in healthcare In this session we will: Explain how to introduce this approach to a new hospital or wider health system. Talk through the do s and don ts of working in this area. Share the experiences of the most experienced CEO in the world of implementing these ideas. Try and answer any unanswered questions. 78

Why come to these sessions? You want to learn about how to apply TOC in healthcare? You do not want to learn how to apply TOC in healthcare but you do want to learn about what it takes to bring TOC to a new industry. 79

Thank you. Questions 80