How to make your company more efficient with continuous improvement
Barry Arbuckle wasn’t totally sold on the idea.
Sure, lean philosophies worked in Japanese manufacturing companies, but he wasn’t building cars. Could those waste-reducing principles really organize the five Southern California hospitals in MemorialCare Health System to operate more efficiently?
But Arbuckle, president and CEO, had to do something. Even before the recession struck, technological advances and labor shortages drove up his costs about 6 percent annually — triple the pace of government reimbursement. Medicare alone, which was already 20 percent below his costs, only creeps up six-tenths of a percent annually.
“It doesn’t take a genius to figure out how that math works,” he says. “You draw those lines out, and at some point, they cross where your expenses are rapidly outpacing any increase you can get in revenue. After that, it becomes a downward spiral.”
He tried obvious fixes like scrutinizing programs and laying off employees to save cash.
“You just can’t keep doing that,” he says. “There’s got to be a better way.”
So he started investigating how lean might make MemorialCare more organized and efficient by minimizing waste, errors and unnecessary costs and resources.
That journey required getting approximately 10,000 employees and 3,300 medical staff members on board to embrace a new way of thinking toward continuous improvement — in essence, fundamentally changing how the company operated.
“It’s not like a consulting engagement where they come in, you make some changes, you operate that way for a several months and then you slip back,” Arbuckle says. “We knew we couldn’t go down that path. Lean represents a fundamental change in the way you’ve always done things.”
Educate how change works
A trip to The Boeing Co. headquarters in Seattle opened Arbuckle’s eyes, while visits to lean hospitals sealed the deal. He realized this could actually work.
Seeing may not be believing, but it’s a good starting point to prove proposed change can be successful. In lean terminology, observation involves three actuals.
“Start by going to the actual place, talk with actual people and observe actual processes,” Arbuckle says. “Rather than talking about a situation and solving problems during a meeting, you start out by visiting the area where the work is being done, talking with them and observing key processes, and from there, identifying improvements to prioritize.”
First, expose senior leaders to the concept, then down the line with managers and other employees who will drive the change. Take them to companies that have been there, done that, asking why they went lean and how it worked for them.
You probably can’t transport every employee to other locations, so bring the evidence to them.
“Provide them little snippets of success stories from entities that had done this before — that, yes, it can be done,” says Arbuckle, who also invited lean veterans in to share their testimonies.
You don’t need everyone on board immediately. As long as you have enough people to begin rolling out the change, you can start small and let your own successes secure buy-in from the rest.
“Once you’ve set the stage and created a vision for how we can change, that’s all lovely, but at that point, this is all just words,” Arbuckle says. “But the proof will be in the pudding. Your first series of executions have to really show benefit, not only in improving the process but maybe also improving the workplace morale, employee satisfaction, things that people can really grab onto both tangibly and emotionally.”
You have to know where to start, so you have to identify low-hanging fruit to easily and successfully improve.
“Lean focuses heavily on eliminating waste, so look at processes that have multiple steps,” Arbuckle says. “(Look at) anything that has processing, which likely has the opportunity for redundancy. (Look at) any area that involves inventory, as you can have excess inventory or idle time while you wait for that inventory to get from point A to point B. Wait time — which can apply to clients waiting or staff waiting — that’s another area where you can focus.”
Basically, look for unnecessary, repetitive steps or breaks in the workflow.
Arbuckle started in a laboratory where the time between ordering lab tests and returning results averaged 88 minutes. After reorganizing the workflow through lean philosophies, he cut that to four minutes.
“I said, ‘Oh, for God’s sakes, that’s almost embarrassing,’” he says. “People thought they were doing all the right things, but it was just the processes that had been put in place for so many years. That was really what got things going: ‘Wow, you can make change. Yes, management’s serious about it. It makes life easier.’”
While Arbuckle brought in lean experts to train lean “fellows” — who now educate others internally about lean formulas, measurements and steps — the solutions to streamlining don’t come from a secret handbook. They come from the employees who deal with the problem.
When someone requests a slim-down in their area, lean fellows interview the staff there to better understand their frustrations and the scope of their work.
“Rather than just talking hypothetically during a meeting and saying, ‘Oh, that should be easy to fix; just do a few of these things,’ we actually went there and talked to people who have done it for years,” Arbuckle says. “[We] talked to them about, ‘Why do you do it that way? What could we change that could make your life easier?’
“It was amazing to see some people say, ‘You’d be willing to do that? Because if you could just move my desk from here to there or the laboratory bench from there to here, that would shave off 15 steps every time I walk across this room, and I walk across this room 300 times a day.’ It’s like ‘Why haven’t you told somebody before?’ kind of answers.”
Arbuckle asks a set of questions to prioritize which areas to improve, including: customer benefit, impact on key performance indicators, probability of success, opportunity for increased capacity and potential to apply similar changes elsewhere.
In addition to gathering ideas from employees, look at the facts — which can often speak for themselves to reveal fixes. Collect data around the aspects of the job that made employees identify it as a problem in the first place.
“It’s inventory or steps to get from here to there, number of employees, or minutes — a lot of things are measured in minutes: turnaround times, wait times,” Arbuckle says. “Some of it needs to be reduced to or presented by charts and graphics because the numbers would baffle people.”
Then, all of those details are compiled and mapped out in a value stream analysis. It shows the process, from start to finish, including every step each employee takes along the way. For example, Arbuckle charted the complex workflow at the Long Beach Memorial emergency room before and after a lean revamp.
“Even if you know nothing about lean, you don’t understand how this chart works, the first one looks like an electrical wiring diagram of a fighter jet and the second one looks like, ‘God, that’s easy; I could figure that out myself,’” Arbuckle says. “Once you see it visually, it’s like, ‘Wow, we don’t need these three steps, or did you notice we’re repeating the same thing four times?’”
Run with the solution
In lean, it’s more complicated than looking at data or asking what would make employees’ jobs easier. The more rigorous methods of the lean process include five-day solution-seeking workshops — condensed versions of continuous improvement — to completely redesign or at least drastically alter the process.
Most importantly, the workshops force diligence by immediately implementing change.
“You can do it right then and there,” Arbuckle says. “It’s not like, ‘Eh, we’re going to go off and we’re going to think about this for two weeks and then give you the answer.’ You’ve lost all your momentum.”
In addition to front-line employees, you can also invite feedback from customers, peers from similar companies and even colleagues from other parts of your company.
“You could bring someone from another department in; they just take a fresh perspective,” Arbuckle says. “It’s looking at things differently than you ever have — which sometimes just takes encouraging the people who have always worked there but also may take people from outside coming in. I’m not saying hiring consultants, for goodness’ sakes, but just bringing someone from the pharmacy into the laboratory. They might say, ‘Well, why is it that way? Maybe you could do it this way.’ It gets a dialogue going.”
And that’s the point. After all the facts and opinions are on the table, you must decide which proposed solution is best.
“There is more than one way to solve a problem,” Arbuckle says. “You can actually, using some data collection or a little pilot project, determine which of those two ideas works best — or maybe it’s a hybrid of the two.”
The other consideration in selecting both an area to tackle and a solution for it should be the required cost, time and effort versus the return. If one solution is better but much more difficult to achieve, Arbuckle takes the simpler route — usually as a doable step to the grander plan.
“Don’t delay the process to go for perfection if you can achieve some gains now,” he says. “There’s always going to be opportunity for improvement. If you keep waiting around or doing analysis endlessly trying to achieve perfection, you’ll never get too much done.”
The caveat at MemorialCare is that employees won’t lose their jobs if lean projects eliminate positions. Arbuckle finds other positions within the organization, even investing in training if none fit their skill sets.
“We’re not going to come in and use your ideas and then you or your colleague are out of the job,” he says. “You can imagine that doesn’t really cause people to want to be too participative.”
Now that Arbuckle has embraced lean — even deciding MemorialCare will use it for the long haul — he has to maintain momentum by keeping everyone aware of how it’s working.
“The communication, the publication of these things ... that’s what really keeps people going and thinking about how it might impact their work area,” he says.
Departments that have streamlined with lean can share in Friday report outs, where they stand before a group of peers, executives and sometimes even board members and they explain how things were before and why, what they did, and how it changed the process.
On an everyday basis, both employees and patients can see the changes on visibility boards throughout the workplace.
“Anybody can walk by and see storyboards [of] where we’ve been in certain areas, what was it like before, what’s it like after. There’s sometimes quotes and testimony from people in terms of what was done,” Arbuckle says. “That serves to remind people that this is going on and inspire them that if it’s not impacted their area, it can.
“If you have multiple sites that do some of the same stuff, once we see success in an area, that can easily and immediately translate to another hospital in the same area. It may be slightly different, but it’s a place to start.” Additionally, several of Arbuckle’s 8- to 12-minute webcasts have covered lean events. He uses before and after footage, including visual charts and interviews with the people involved, to share their excitement around the change.
“That has been quite useful in getting people to stop and think about how might it apply in their workplace,” he says. “They see that the organization is committed to it. We’re willing to spend money that we believe can so fundamentally change the work in an area — either increase efficiency, reduce waste or improve the quality, improve engagement.”
The excitement has spread. Arbuckle has more requests for lean intervention than he has staff to handle them — though more than 100 leaders have been certified through MemorialCare’s Lean Leader Training program. After less than three years with a lean outlook, MemorialCare eliminated 342 unnecessary process steps, freed 3,177 square feet and reduced the distance staff travels to do their jobs by 936 miles. The company, which had 2009 revenue of more than $1.5 billion, anticipates savings of more than $17 million over three years.
Through lean philosophies, he continues improving operational efficiencies, employee satisfaction and the patient experience.
“It’s really an elimination of waste, and along the way, you’re improving quality because you’re eliminating waste and unnecessary steps. You’re eliminating the chance for errors to occur so you’re eliminating errors, making it more efficient,” Arbuckle says. “It’s really that whole theme that I think is driving the process and what causes it to resonate with people without regard to what industry they’re in.”