How You Can Help Reduce the Cost of Medical Care

Take a hospital administrator out to lunch and talk about continuous improvement. And pass on the cheese fries!

According to a recent survey by McKinsey & Co., almost 70% of manufacturers provide health insurance for their employees. The other 30% will have to make some decisions in the near future about providing a plan or be subject to the fine outlined in last year's health care reform law. It's clear we all have a stake in the escalating cost of health care. The question is: What can we do about it? As continuous improvement (CI) practitioners, I believe there is much that lean manufacturers can do, and we need to follow others who have led the way.

The Affordable Care Act as passed was more about who was going to pay than it was about making the system more efficient and mapping out a process to reduce the costs. That's where you, as a lean manufacturer and CI practitioner, can help to educate the health care service providers to become more efficient.

There are a number of health care providers that already are learning from industry how to apply CI tools to become lean and reduce their costs. For example, ThedaCare in Appleton, Wis., has been at it for almost 10 years. ThedaCare got started at the urging of Ariens Corp. in Brillion, Wis., which had many of its employees using ThedaCare's services and introduced it to the concept of CI to reduce costs. St. Joseph Medical sent almost 50 people to last year's Association for Manufacturing Excellence conference in Baltimore to learn how to apply CI tools to health care delivery. There are a number of others as well that are interested in learning from industrial practitioners how to improve quality, reduce costs and improve their delivery to get patients back home sooner.

It is up to the industrial practitioners to share this knowledge with the health care industry. As we have all learned, the lessons of CI are applicable to any business process, and they are just as appropriate for the processes followed in hospitals and clinics as they are on your shop floor or in your offices. If you have not been in the habit of sharing your knowledge and best practices with others, I suggest that now is the time to start, and the place to do it is with your local health care service providers. If you have the chance, you may want to read a book by John Torinus Jr., the chairman of Serigraph Inc., West Bend, Wis., called "The Company That Solved Health Care." It's an interesting story about how one company addressed its escalating health care costs and held its increases to less than 25% of the national average over the last eight years.

There's no magic to the power of CI and the implementation of lean tools; it's just knowledge and hard work to implement. For those of you who have applied it to your business, you already have seen tremendous improvements in quality, cost and delivery while substantially improving your cash flow. What might happen to the metrics in health care if these techniques were applied to hospitals and clinics across our country? You can help by talking to the management of your local health care service providers and inviting them to learn from you and your organization.

The delivery of health care services follows business processes just like your organization. They can be improved through the application of CI and lean tools just as in your organization, but these providers need to be exposed to them and taught how to apply them to their operations. There are a number of CI and lean consulting practices that are now marketing their expertise to health care service providers. They could use the help of industry practitioners.

We all have a vested interest in the quality and cost of health care, so let's do what we can to help educate our local service providers about CI and the power of applying it to business processes. Give the CEO of your local hospital or clinic a call, and invite him/her to lunch where you can offer to share your organization's knowledge of CI to help them become more efficient. It's in everyone's best interest. The possibility of holding your health care cost increases to less than 25% of the national average, like Serigraph did, is a strong motivation to make the call.

Ralph Keller is president of the AME Institute and former president of the Association for Manufacturing Excellence.

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