Consider This -- Industrial Methods Can Reduce Health Care Costs

Health care providers should heed the lessons learned on the manufacturing floor as they grapple with a costly and complex medical system.

Steve Minter's "The Audacity of Hopelessness" describes the enormous impact of health care costs on American manufacturing competitiveness, and the language of money underscores the enormous waste for all industrial stakeholders: employees, owners, customers and the economic and military power of the United States.

According to some estimates, 30 to 60 cents of every health care dollar are wasted on the cost of poor quality -- activities that do not help patients and may in fact make them sicker. This comes to $2,500 to $5,000 per American per year. Preventable medical mistakes and complications such as hospital-acquired infections kill more people than automobile accidents and violent crime put together. The recently enacted federal legislation, however, fails on almost every count to address the underlying root cause: deficiencies in the complex systems in which today's doctors and nurses must work.

There was a time within living memory when most medical care was similar to that of a skilled trade such as shoemaking, blacksmithing or carpentry. The skilled trade worker, or the master of the shop, controlled the entire job from beginning to end and could therefore take complete responsibility for its quality. The individual physician was, except in very complex cases, similarly in complete charge of the patient's care, so the results were not dependent on the operation of an extensive and complex system over which the doctor has little or no control.

The complexity of the medical system, however, has increased substantially during the past 50 or so years, much as division of labor created manufacturing systems in which no single trade worker or master could possibly control the quality of the end product. Doctors now must rely on external laboratories and diagnostic clinics for tests, which adds the issue of traceability -- that is, making sure one patient's test results do not get assigned to somebody else. Surgeons rely on hospital workers to keep the operating rooms clean, and on nurses to follow basic hygiene procedures when they change dressings. A prescription goes through the hands of not only the doctor who writes it, but also those of the pharmacist who fills it and the nurse who delivers it to the patient.

In other words, the patient is no longer the customer of an individual medical practitioner but of a complicated system, just as an automobile with thousands of parts from perhaps dozens of suppliers is the product of a complex system. Most manufacturing engineers and quality practitioners would find the flowcharts for many medical processes appalling in the absence of a quality management system such as ISO 9001:2008 or ISO/TS 16949, but the truth is that many medical service processes have no such controls whatsoever.

That is why whatever can go wrong usually does, and often with catastrophic human and financial consequences. Remember that failure-mode effect analysis (FMEA) seriousness ratings of 9 and 10 on a 1-to-10 scale are usually reserved for processes or product features whose failure can jeopardize human life or safety, and this applies to most things that happen in a hospital. How many hospitals, though, ever perform FMEAs or fault-tree analysis on processes that range from hygiene to delivery of medications?

It also is a general rule that 80% to 85% of all quality problems are system-related, and we have read about enough medical catastrophes to know that the same proportion applies to our health care system. Patients have, for example, been killed by high-concentration heparin when the doctor prescribed low-concentration heparin because the medications come in similar-looking containers and are often stored in the same place. No self-respecting factory would allow the wrong parts to be stored where they might be assembled into the product, nor would it allow the storage of an oxidizing chemical next to a flammable one. The consequences of these easily preventable medical tragedies affect not only patients but also doctors who must pay higher malpractice insurance premiums as a result.

The only way to insure more patients, cover pre-existing conditions and reduce health care premiums at the same time is to eliminate this enormous waste from our health care system. The legislation the president recently signed does almost nothing to address this issue. The sole exception appears to be a provision that Medicare should begin to "look at" bundled payments for care, i.e. payment by condition or outcome as opposed to individual medical procedures.

This does not mean, however, that manufacturers and other businesses cannot take matters into their own hands. The automakers require their suppliers to meet the requirements of ISO/TS 16949 because they are unwilling to pay for their suppliers' cost of poor qualityeven if rework and finished-goods inspections prevent the shipment of nonconforming parts. They and other manufacturers should be no more willing to pay for poor-quality health care that runs up their costs while harming their employees and retirees. It is entirely reasonable for them to require, whether directly or through the insurers with whom they do business, that the health care systems that treat their work forces meet the requirements of a quality management system standard such as ISO 9001:2008 or the health care-specific modification developed by the Automotive Industry Action Group and American Society for Quality.

William A. Levinson, P.E., is the author of "Henry Ford's Lean Vision: Enduring Principles from the First Ford Motor Plant" (Taylor & Francis, 2001). His previous article for IndustryWeek is, "Henry Ford's Proven Lessons for American Industry."

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