Going Lean: How to cut costs and improve patient care in todays economy

February 1, 2010
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When applied to healthcare operations, Lean can improve efficiency and change the flow of patients, materials, or information in a specific process, department, or organization. Architects can design a modern healthcare environment that eliminates wasted time, reduces operational costs, and ultimately leads to less mistakes, backflows, and waiting.
Going Lean: How to cut costs and improve patient care in todays economy
The economic realities of today have placed financial burdens on healthcare leaders and executives, causing them to shift their primary focus toward affordability and efficiency. Healthcare expenditures in the United States are currently 18% of the Gross Domestic Product (GDP)—and are expected to rise to nearly 21% by 2019. (In California, healthcare facility construction costs are among the highest in the nation; $2.5 million is the average cost per bed for new hospital construction in the state.) Concurrently, the flow of capital has slowed as credit markets have tightened.

These circumstances may sound grim, but healthcare leaders have an unprecedented opportunity to evaluate building performance and search for new methods to reduce healthcare expenditures and improve patient care in this country.

One of these methods is Lean, a production management-based approach to project design and delivery, which has gained momentum in the last year. Toyota began implementing Lean production management in the 1960s, shifting away from a mass-production assembly line to a decentralized manufacturing design, supply, and assembly process. The Toyota Production System (TPS) focuses on eliminating problems before they occur by encouraging workers to stop production if they find a defect and eliminating waste by pulling inventory or analyzing the root cause.

In healthcare design, Lean applies a series of organizational principles to the built environment with the key objectives of maximizing value and minimizing waste. It could be how we design a hospital facility, which is known as knowledge-based design. It could be what we design, as in Lean operations. Or it could be how we deliver the project, which is called integrated Lean project delivery (ILPD). ILPD changes the way a facility is delivered by including a contractual combination of Lean and an integrated project team consisting of the owner, contractor, and architect. This process reduces the time to design, permit, and build, which ultimately lowers design and construction costs.

When applied to healthcare operations, Lean can improve efficiency and change the flow of patients, materials, or information in a specific process, department, or organization. Architects can design a modern healthcare environment that eliminates wasted time, reduces operational costs, and ultimately leads to less mistakes, backflows, and waiting. The key is to understand the current process flows prior to design, analyze these flows, and create the ideal future state flows, adjacencies, and spaces that provide the best functionality for each process, department, or organization. “Workarounds” created by intelligent, resourceful staff mask waste, which contributes to inefficiencies or quality compromises. At a recent site visit to an emergency department, for example, we observed numbered tags taped to the wall of the corridor. These makeshift ED stations addressed a space need at an enormous cost to patient experience and quality of care.

Why go Lean?
The simplest answer is that Lean methods eliminate waste and increase efficiency. From both construction and operational standpoints, there are eight types of waste that can contribute to disorganized process flows: unused talent, waiting, inventory, transportation, defects, motion, overproduction, and process. Lean also saves money. When less waste is produced, more value is created. For healthcare facilities, Lean methods have been known to decrease the amount of space used by up to 30%, use up to 25% fewer natural resources, and reduce construction times by up to 35%. On the operations side, hospitals can see up to a 50% greater patient throughput with a 40% decrease in full-time equivalent (FTE) staffing. It can also impact a hospital’s bottom line, since Lean principles help reduce labor costs.

Another way to cut costs and improve patient care is to ensure new construction projects are delivered on time and within budget. When Lean methods are combined with the contractual obligations of ILPD, the integrated project team optimizes the whole, rather than the individual pieces. Sutter Health, an integrated nonprofit healthcare system in Northern California, has been an early adapter of ILPD. To date, Sutter Health has completed several projects using ILPD, including the 69,000-square-foot Fairfield Medical Office Building in Fairfield, California. As a result of using ILPD, the project was designed and completed in only 25 months. In addition, the team drove down costs over the construction period to finish below budget.

Lean principles help architects look for innovative ways to improve building systems, as well as stay within budget. A recent example of this can be found at the 106,500-square-foot Acute Rehabilitation Institute (ARI) at the Sutter Roseville Medical Center in Roseville, California, a suburb of Sacramento. The site for the ARI was small, but the space restrictions created opportunity for innovation. The great paradox for ARI operations is this: the rooms should feel isolated and separate, but the nursing staff needs to be able to flex back and forth easily. In the end, we created a “main street” spine that runs through the rehabilitation units. The rooms are in “neighborhoods,” which are compact and efficient yet separated from the primary circulation.

Creating the right relationship
While Lean and ILPD have many benefits, healthcare leaders should understand that it is not a one-size-fits-all model. The design and construction process can be extraordinarily complex, often muddying the roles of the contractor, owner, and architect.

“Relational contracts of this kind involve a philosophical change from traditional construction contracts,” said attorney William Lichtig, who has written extensively about ILPD. “The parties work together in the spirit of cooperation, collaboration, and mutual respect for the benefit of the project, and within the limits of their professional expertise and abilities.”

Because the model shifts from one in which a single party is in control to a collaborative relationship requiring constant communication, it is not for the commitment-phobic. Each team member needs to make sure their personality and work process is right for the Lean process.

Constructible, maintainable, and affordable design requires the participation of all project performers and constituencies. Traditional communication barriers must be broken down so everyone shares a common goal: to do what is best for the client and the project. The collaboration must be built on trust so that they may share mistakes as learning opportunities. In many cases, the players become more open over time, with a growing commitment to the team over their individual interests. With costs so integral to the design process these days, contractors and subcontractors need to contribute their unique ideas for saving money.

Moving towards Lean
Much like the green movement of the 1970s and 1980s, there is a Lean movement rapidly taking shape in the United States. Today, value means both quality and affordability, while the whole is emphasized over the individual pieces.

The momentary pause in capital funding and the urgent need to reduce expenditures have simply provided the healthcare industry with the necessary imperative to look seriously at Lean methodologies. These methodologies can help reduce millions of dollars in construction costs, shave months off project schedules, and decrease operating costs by up to 40%. Yet more importantly, they allow us to deliver a higher level of patient care.

Stan Chiu, AIA, LEED AP, serves as vice-president and lead designer in the Los Angeles office of HGA Architects and Engineers, one of the nation’s leading firms specializing in Lean design and Integrated Project Delivery. With more than 15 years experience, Stan is a leading architectural voice in adapting the traditional Lean production management model to the design of healthcare, higher education and public facilities.

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