For years as a consultant I was told by mentors never to make comparisons between manufacturing companies and medical practices. I would hear things like, “Healthcare providers will never accept your ideas, if you try to use any comparison between what they do and how a manufacturer operates.” And, “You must speak in terms they understand if you want them to buy into the Lean concepts you are trying to teach them.” Well, let me tell you something, medical practices have a lot to learn from the manufacturing industry if they want to provide high quality, on-time, and cost effective care. Here are a few reasons why healthcare isn’t all that different from manufacturing, and a few things that manufacturers tend to do really well that can be adapted to medical practices.
Manufacturers build all kinds of products. Each step of the process adds a component or modifies the product in some way until the manufacturer ends up with something they can sell to a consumer. Each component that is added or modified adds value to the product until a consumer is willing to purchase the product. In medical practices, the patient is the consumer, and quality healthcare is the product they are buying. The patient comes to the practice looking for routine or acute care. The practice orders a series of diagnostic tests to determine the diagnosis. A diagnosis and treatment is provided in order to restore the patient's health. Like the manufacturing process, patients are willing to pay for diagnostic testing and a treatment plan in order to receive good health.
In manufacturing, there are many activities that consumer do not care or know about. They do not care about meetings, accounting processes, paperwork, storage or transportation of goods. So long as all of these processes do not prevent timely delivery of the product, add to the cost, or reduce the quality, they are happy. Likewise, patients do not care about insurance eligibility processes, billing and posting of payments, accounting procedures, or continuous medical education credits for the practitioner. They just want to receive treatment as quickly as possible and 100% insurance company coverage.
Also Read: Improving Scheduling in a Medical Practice
Many of these processes are business critical for manufacturers and medical practices; without them they simply can’t keep the doors open. Manufacturing facilities must keep track of manufactured lots so that they know which products to recall in the event of an issue. Similarly, a practice must determine patient eligibility in order to establish copay amounts and possible deductibles. However, that still doesn’t change the consumer or patient’s perception of value. They just don’t care. This is where manufacturers have learned to streamline processes to reduce cost and provide what the consumer needs, while minimizing what they don’t really care about.
Manufacturers divide their processes into 3 categories:
These 3 categories help them make decisions about where to make improvements to their processes. Value added activities change the form, fit, or function of the product and ultimately lead to the finished product that consumers buy. These are things like molding, extrusion, assembly, etc. In a medical practice, the value added activities are things like diagnostic testing, and ultimately the treatment plan that the doctor prescribes to solve the particular health issue the patient is having. Most of the time, manufacturers do not focus a lot of improvement energy here because these activities are already value added. Unless there is some way of making these activities even more streamlined or cost effective, time is better spent on improving other areas of business. By the same token, medical practices do not need to spend plenty of time on value added activities other than to make sure that the way they are being performed helps keep patients flowing smoothly through the practice. Sometimes little tweaks like rebalancing who does the work, or changing the order of how the value added activities are performed reduces the time it takes for patients to receive services.
Required non-value added activities are business critical activities that the consumer doesn’t really care about but the manufacturing facility wouldn’t be able to function without them. Many of these activities are required by law or are directly related to the financial management of the factory. These are things like complying with OSHA audits, instrument calibrations, and book keeping. Similarly, medical practices have to perform a lot of “Required non-value added” activities in order to stay in business. In medical practices these are things like certifications, continuing education, inventory management, and meeting meaningful use requirements. When factories identify required non-value added activities, they focus a lot of attention on how to reduce as much of the effort, time, and costs associated with these as possible, knowing that they can’t be eliminated completely. A great example here would be studying the stability of tooling to determine what frequency of calibration is needed in hopes that calibration intervals can be lengthened. This helps reduce the amount of time spent on calibration. Similarly, a practice can analyze how effective their current appointment confirmation process is and look for ways to reduce the number of outbound calls that take place.
In part two of this series, we discuss non-value added activities and a couple of techniques that manufacturers use to identify them. We will also discuss some techniques factories use to eliminate non-value added activities that can be applied in medical practices. This will demonstrate how medical practices can solve efficiency problems by learning from other industries.
About the Author
Tony Milian is a Managing Partner at Practice CoPilot, which provides real time location systems and lean consulting services designed to manage patient flow in medical practices.