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Building a Profound Lean Infrastructure for Durable Success

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Presentation on theme: "Building a Profound Lean Infrastructure for Durable Success"— Presentation transcript:

1 Building a Profound Lean Infrastructure for Durable Success
Sam Carlson, MD, FACP Chief Medical Officer and EVP, Park Nicollet Health Services John Black, John Black & Associates, LLC SAM: Good morning. I’m Dr. Sam Carlson and am an internist with 27 years of practice before becoming Park Nicollet’s Chief Medical Officer in John and I are delighted to be here this morning to talk with you about Lean and the importance of a deep infrastructure. JOHN: Good morning, I head up John Black and Associates. We consult internationally on implementing Lean, which we call the Global Production System. Our clients include manufacturing and health care. Previously I spent 20, most of it helping to implement Lean Production, retiring in Before that I served in the U.S. Army in a variety of assignments, retiring from the Army as a lieutenant colonel. My book, The Toyota Way to Health Care Excellence will be published by Health Administration Press in April. Lean Production, a World Class System will be published by Industrial Press in October. My current book is “A World Class Production System.” Revised 2/28/08

2 Conflict of Interest John Black of John Black and Associates LLC (JBALLC) John Black is President of JBALLC and his consulting firm consults to Park Nicollet Health Systems on Lean, Global Production System. The presentation could be perceived as a conflict as JBA receives payment for services for consulting to Park Nicollet on the Lean, Global Production System principles presented in this presentation. JOHN: In the interest of full disclosure, we want to alert you that some of this presentation could be perceived as a conflict of interest, due to the consulting relationship between my company and Park Nicollet.

3 Park Nicollet Health Services is…
Non-profit integrated care system 8000+ employees 600+ employed physicians Over $1 billion annual revenue SAM: Park Nicollet is a fully integrated non-profit 501c3 company that consists of Park Nicollet Clinic, a 630 physician practice with 200 mid-level providers, a 426-bed Park Nicollet Methodist community hospital, a philanthropic foundation and Park Nicollet Institute, which does research and education. We have more than 8,000 employees, and have about a billion dollars in annual revenue.

4 Park Nicollet Health Services is…
Park Nicollet Clinic - 45 medical specialties and sub-specialties in 25 clinic locations in suburban Minneapolis 3 million patient visits annually Park Nicollet Methodist Hospital – 426 bed facility 26,000 admissions annually Park Nicollet Institute – Engages in research, education and innovation to improve quality and public and private decision making in healthcare. Park Nicollet Foundation – The fund-raising arm of Park Nicollet Health Services, using philanthropy to build healthy communities by supporting patient care, research and education. SAM: We have 45 medical specialties and subspecialties in 25 clinic locations in Minneapolis and its suburbs west of the Mississippi river. Increasingly, our Institute is focusing on outcomes research of our high impact areas in clinical practice.

5 Why is PNHS Aiming at World-Class Performance?
We realized we were far short of where we needed to be We knew we had lots of ineffective, non-value- added processes and activities AND we knew the U.S. healthcare industry as a whole was not “world class” Prior improvement methodologies weren’t having traction SAM: While we had achieved some successes and won a number of awards for quality and innovation, including 4 AMGA Acclaim awards, and felt very good about that, we didn’t feel we were improving fast enough and we weren’t involving enough people in improvement activities. We didn’t need to look too far to validate this assessment either, as the Commonwealth fund ratings placed US health care below five other comparable countries from JOHN: Park Nicollet had some success with TQM, PDCA cycles, and Six Sigma, but they were not satisfied with the pace of improvement. They would admit they were plodding along. The Institute of Medicine reports also made it clear to Park Nicollet that existing efforts to improve care and safety just weren’t moving them forward fast enough.

6 Why Did We Take a Look at Lean?
Because we knew we weren’t delivering “world class” health care Because we had heard promising reports about implementation of the Virginia Mason Production System (Lean) at VM’s Medical Center in Seattle We were intrigued with its potential, but wanted to do a test run at Park Nicollet before departing from our six sigma improvement strategy SAM: I first heard about Lean in 2002 at a “Clinic Club” meeting Fargo, North Dakota with David Wessner our CEO, from a presentation made by CEO Gary Kaplan and then President Mike Rona of Virginia Mason Medical Center in Seattle What is Lean? As many of us know, “Lean” was a term coined by Womak and Jones in their 1996 book Lean Thinking. It’s basically the Toyota Production System or, more generically, the Global Production System. It’s a powerful system to improve quality and remove waste. Lean was a new concept for me, but the potential to remove non-value-added work from health care, while improving quality and safety, was immediately appealing. At the time, there was very little awareness of the power of the Toyota Production System in health care. We all had the same question: Could a production and management system that worked effectively for building cars and airplanes be applied to health care? After a year of deliberation, we invited John Black to our Management Group meeting to describe the TPS. One of our surgical leaders saw the advantages in the operating room immediately and provided a strong endorsement. JOHN: Yes, and then their CEO, David Wessner, demanded a test of Lean before going with it, an approach that was counter to the upfront commitment Lean needs. We went ahead and accepted David’s challenge “to dramatically improve throughput of Endoscopy.” David did not want to add MDs or rooms. So we tackled it with a week long Kaizen event.

7 SAM: Together, our CEO David Wessner, and John Black, now our Lean consultant, chose our Endoscopy Suite as the work area—what Lean calls a “cell”—to put Lean to the test. This area was chosen because the first impression of need was that we had too many physicians in too small a space, and that space was the limiting factor. The project improvement team consisted of our CEO, COO, CMO, and the manger and Chair of the Endoscopy department. What we learned, using Lean tools, was that our assumptions were all incorrect. We had enough space and too few physicians! We dramatically reduced walking distance for nursing, and improved productivity dramatically. JOHN: Lean is based on the principle of kaizen, or “continuous incremental improvement.” Put another way, it’s taking waste out of the system 50 percent at a time, and then repeating it over and over – cutting waste in half, then in half again, then in half again. A key process for doing this is called the “Rapid Process Improvement Workshop, or RPIW. This five-day, team-based, improvement process also is known as a “kaizen event.” The idea is to improve one small part of the overall healthcare system as rapidly as possible. Park Nicollet’s endoscopy test was a good demonstration of how it works – and the results that can be achieved. You can see the capacity for # of procedures increased from 32 to 72, well over a %100 gain.

8 What Does Infrastructure Mean? Why Is It Important?
PROBABLE CAUSE: Federal investigators have concluded that steel plates on the [I-35W] bridge that collapsed last summer in Minneapolis were inadequate to hold the structure together… Design changes in 1977 and 1998 added additional pavement and concrete barriers that increased the weight of the bridge… Gusset plates are flat steel structures used to bolt together the steel girders that carry the weight of a bridge. Bridge engineers typically design the plates to be far stronger than the girders because if one fails, the whole bridge will collapse. In the wreckage of the I-35W bridge, investigators found 16 gusset plates that were fractured… Eight of the plates were in the location on the south side of the bridge where the collapse began… What [engineers] found was that the half-inch thick plates should have been an inch thick – double the size… USA Today, 1/15/08 I35W Bridge, Minneapolis, MN, before and after collapse JOHN: We hear the term infrastructure a lot these days in terms of decrepit bridges and highways. Or electrical grids or subway systems. Infrastructure is what enables us to get things done – the underlying foundation or framework. On Aug 1, the bridge carrying Interstate 35W over the Mississippi River buckled and broke. 13 people were killed, 100 plus injured. Afterward, we learned the frightening facts: 160,570 of our bridges are in just as dangerous a shape; 1/3rd of our roads are in poor or mediocre condition; some of our biggest cities depend on water and sewage systems over a century old. The infrastructures of our organizations to bring about change are no different. They have decayed as a result of short term thinking, profits over people, tolerance of waste over getting rid of it, and sheer leadership neglect of what matters. Infrastructure is the foundation for how the organization functions and meets the challenges of providing defect free, world class health care to patients. Success in applying Lean operations to your organization depends on a robust, flexible infrastructure that can support change. SAM: Healthcare organizations are not much different from other business entities in that an inordinate amount of time is spent on non-value-added activities – on rework, on firefighting, etc. – but little on improvement. A major reason for the lack of attention to improvement activities – along with all-too-common organizational inertia – is because the improvement infrastructure doesn’t exist. JOHN: The Lean infrastructure includes organizational structure, of course, but it also includes a compelling vision, a strategic plan, and a Lean knowledge base – which means Lean leaders, in-house Lean experts, Japanese trained Lean master teachers (or senseis, in Japanese) as consultants, and employees with, at least initially, an adequate understanding of Lean to apply the processes, practices and tools. We’ll be addressing all of these elements today. Construction of the Bridge in 1967.

9 Creating the Vision “Everyone caring every day, creating with the individuals we serve optimal health and greater value” JOHN: It is very important for the CEO and his or her top team to have a vision. Here is Park Nicollet’s vision. SAM: These words were chosen carefully. When we say “everyone caring,” we mean everyone from the CEO to the parking lot attendant. When we say “every day,” we’re stressing consistency of care and caring. “Optimal health” depends upon optimal care, which, in turn, is the best care a patient could receive anywhere given today’s medical knowledge and technology. The words “optimal health” acknowledge that not everyone can achieve excellent health. And “greater value,” means that we improve quality and take expensive, non-value added waiting time and activities out of processes … and that this is a dynamic, ongoing effort. We define value as patient-centered outcomes and experience, divided by price and time, including the time to resolve a problem.

10 Our Strategic Plan 2012 By 2012, # unique patients served grows by 20%
#1 regionally in state of the art measures of quality & safety for high impact conditions Patients respond positively to: “I get exactly what I want (and need), exactly when I want (and need) it” Reduce total risk-adjusted per capita cost of care relative to other MN care systems to below average Operating margin ≥ 3.5% By 2012, # unique patients served grows by 20% 2012 SAM: We’ve been working on our strategic plan for over a year, including several management team retreats with clinical and operational leadership, convened numerous smaller group planning sessions and are closing in on the necessary focus and granularity for a five year effort. As you’ll hear later in more detail, we call our Lean improvement effort the Park Nicollet System of Care. Implementing Lean deeply within our organization obviously is a large part of our strategic plan. Within our plan, we state that “all people will become knowledgeable about the Park Nicollet System of Care and how it works, and its standard work.” Our 5 year strategic plan has five goals: Quality of care: #1 regionally in evidence-based measures of quality and safety Patient Experience: Patients respond positively to the statement: “I get exactly what I want (and need), exactly when I want (and need) it.” Patient cost: Reduce total risk-adjusted cost of care on a per-person basis relative to other care systems in Minnesota to below average Profit: Earn an operating margin of 3.5 percent or greater Growth: Increase the number of patients we serve by 20 percent by 2012

11 Traditional PN Organization Chart
JOHN: This is the Park Nicollet Organization Chart. This in my view depicts a traditional healthcare organization that could be found anywhere in the world, with many silos, vertical chains of command, a complicated bureaucracy, focused on the next layer of management up or down the chain, and not really on the patient and very political. As our Japanese senseis would say, full of muda or waste and unnecessary complexity.

12 Prototype Lean Organization
Healthcare Lean Organization Prototype Lean Organization CEO Kaizen Promotion Office Finance Operations Purchasing President 25 Marketing Facilities Human Resources Leadership Fellows JBA Consultants *KOT-Kaizen Operations Team 20 Model Lines Special Ops KOT 15 Cancer KOT 10 Hospital KOT 10 Surgery KOT 10 JOHN: Here’s a Prototype Lean Organization. It moves away from a traditional vertical organization chart because the business is defined not in terms of “command and control” but in delivering service to the patient. This organization emphasizes identifying value to the customer (the patient) and delivering that value with syncronized defect free flow directly to the patient. Most present day healthcare organizations are inefficient in delivering value. They’re organized around clinicians, procedures and administration, not the patient. For instance, the anesthesiologists believe they are in the anesthesia business, not the customer care business. To the extent that they think in terms of service lines at all, hospitals normally define them in terms of specialties, such as internal medicine, radiology, surgery, etc. But in a Lean organization, service lines are the primary focus. That focus aims all the tools of Lean – and the entire organizaiton – at optimizing the value stream to the customer, standardizing work processes and relentlessly eliminating defects and waste to continuously improve patient care, timeliness, and responsiveness. Besides optimizing resources, one result of this flatter organization is greater flexibility and ability to respond to change. Take a look at the center of this chart. See the gray bar titled “model lines?” You may ask, “What’s a model line?” I’ll show you. Surgery KOT 10 Cancer KOT 10 Service Lines Hospital KOT 10 Clinics KOT 10 Administration KOT 10

13 Model Line (Future) – Surgical Specialties
Implemented Underway Not Started Pat. Returns to Function In Patient Hospital TBD Pre-Op Preparation Pre-visit L/T Day of Clinic Visit L/T Post-Visit Surgery Pre-Surgery Daily Management Boards Materials Flow Use of Non-Surgeon Clinicians Staggered Starts OR Scheduling Process Case Carts: Standardize, Waste Standardize Rooms Staff Cross Training Visual Control Pull Signals Primary Care 7 days Total Surgical Specialties Patient Lead Time / 208 minutes 8 22 minutes Accurate Surgery Times Interoperative Standard Work for MDs Defining Best Practice Guidelines PICIS: Surgery Information System Instrument room Pre-Op Patient Prep Load Level During Day Load level by DOW Turnover Time Reduced Surg./staff NVA Time OR 21 Standard Rooming Med. Rec. Nurse Post-op Clinics Model Line (Future) – Surgical Specialties JOHN: A model line is basically a service line (or administrative function) where Lean is being fully implemented. Surgery, in this example. It is used both to demonstrate the power of Lean and to become a building block as Lean is implemented across the entire organization over time. The Japanese say to begin with a model line “an inch wide and a mile deep.” That means confine your efforts to a small part of the organization where you’re confident that you have the resources, the educated staff, and leaders as champions, to produce a success. Starting everywhere is a mistake. SAM: So what are some characteristics of a good model line? - Standard work in place. That means that for any given task, the department has decided to do it one way and the best or most efficient way – and everyone does it that way. Standard work makes the work sequence predictable and consistent, whether it’s how we convey results to patients, for example, or how we schedule patients across a department. - A clean and well-organized workplace. - No patients waiting in queue, patients seen on demand. - Less non-value-added work by clinicians (elimination of waste) - Patient satisfaction measures rising (fewer waits and defects)

14 Model Line (Future) – Surgical Specialties
Implemented Underway Not Started Pat. Returns to Function In Patient Hospital TBD Pre-Op Preparation Pre-visit L/T Day of Clinic Visit L/T Post-Visit Surgery Pre-Surgery Daily Management Boards Materials Flow Use of Non-Surgeon Clinicians Staggered Starts OR Scheduling Process Case Carts: Standardize, Waste Standardize Rooms Staff Cross Training Visual Control Pull Signals Primary Care 7 days Total Surgical Specialties Patient Lead Time 208 minutes 8 22 minutes Accurate Surgery Times Interoperative Standard Work for MDs Defining Best Practice Guidelines PICIS: Surgery Information System Instrument room Pre-Op Patient Prep Load Level During Day Load level by DOW Turnover Time Reduced Surg./staff NVA Time OR 21 Standard Rooming Med. Rec. Nurse Post-op Clinics Model Line (Future) – Surgical Specialties SAM: (continuing with characteristics of a good model line): - Patient flow that’s aligned with market demand – that is, patients move through the line at the rate the market demands, without waiting and without patient shortages. This is known as working to takt time. - Mistake-proofing processes are in place. - Patients are “pulled,” not “pushed,” through the system – processed only when they need a product or service, and not before. - Cross-functional management is in place, with leaders focused on improving the value stream without being limited by functional boundaries. - The line as well-thought-out goals, both in terms of how it delivers value and how it continues to improve. Work toward these goals is active and ongoing, and a new goal is created when one is achieved. For the first several years, we considered our service lines too broadly. Our Surgical Services model line, for instance, included 19 operating rooms and over 90 surgeons in 10 offices spread across 35 miles. Primary care represented 400 clinicians across 20 sites. But we realized that to effect real change, we needed to focus improvement efforts on smaller teams, where we could create both a capacity for change and be a place that others could “go and see” (and hear) where waste was noticeably diminished and one piece flow could be observed…a “flow certified” model line.

15 To Care for Patients the Right Way
Park Nicollet System of Care To Care for Patients the Right Way JUST IN TIME Operate with the minimum resource required to consistently deliver Just what is needed. In just the required amount. Just where it is needed. Just when it is needed. Jidoka One-by-one confirmation to detect abnormalities. Stop and respond to every abnormality. Separate machine work from human work. Enable machines to detect abnormalities and stop autonomously. People Standard Work Takt Time Production Materials Standard Work in Process Kanban One Piece Flow Production Supermarket System Machines Andon Operational Availability Pull System Production SAM: (START WITH THE FIRST “JUST IN TIME” WEDGE.) I don’t expect you to understand this slide, but basically, it illustrates the key elements of the Global Production System – i.e., Lean – as applied to Park Nicollet. But this is how senior leaders at Park Nicollet see our system for improvement. JOHN: Let me build the House for you starting with JIT. The “House” is made up of these major components: a foundation, two pillars, resources and processes that go into the system, and a roof. The foundation is continuous cost reduction through the elimination of waste. Muda is the Japanese word for waste; it includes all activities that consume time, money and resources without adding value. Another foundational slab is “leveled production” or heijunka. This means scheduling product and service delivery to eliminate bottlenecks and maximize “throughput.” Doing so enables the organization not only to efficiently meet current demand, but to accommodate increased demand. Leveled production requires studying organizational processes to determine: the sequential steps involved, how much time each step takes, which steps to allocate to each worker, what staffing levels are therefore required, and the total cycle time for the process. Leveled Production (Heijunka) Cost Reduction Through The Elimination of Muda (Waste or Non-Value Added) © 2008, Park Nicollet Health Systems & John Black and Associates LLC

16 To Care for Patients the Right Way
Park Nicollet System of Care To Care for Patients the Right Way JUST IN TIME Operate with the minimum resource required to consistently deliver Just what is needed. In just the required amount. Just where it is needed. Just when it is needed. Jidoka One-by-one confirmation to detect abnormalities. Stop and respond to every abnormality. Separate machine work from human work. Enable machines to detect abnormalities and stop autonomously. People Standard Work Takt Time Production Materials Standard Work in Process Kanban One Piece Flow Production Supermarket System Machines Andon Operational Availability Pull System Production JOHN: The house is supported by two pillars: “Just-In-Time” and “Jidoka.” Just-In-Time is the principle of only producing the product or service needed, and only when, where, and in the quantity needed. Jidoka is creating a defect-free environment. No defect is permitted to be passed from one area into another. Both machines and people are able to detect defects and automatically stop any process to correct them before the process continues. Jidoka includes the concept of intelligently determining which activities are best performed by people and which by machines. This helps avoid the costly mistake of applying technology without really adding value. Inside the house are the necessary resources of people, materials (supplies) and machines, as well as the Lean methods used to achieve standard work, align production time with demand (takt time) and achieve “one-piece flow” and pull production. The roof integrates the whole system under the goal of providing services in the right way, i.e., the most efficient way. This “house” model can be useful for focusing (or refocusing) the team on what they’re doing and why. What’s most important is the foundation – the elimination of waste to bring maximum value to patients. Leveled Production (Heijunka) Cost Reduction Through The Elimination of Muda (Waste or Non-Value Added) © 2008, Park Nicollet Health Systems & John Black and Associates LLC

17 © 2008, Park Nicollet Health Systems & John Black and Associates LLC
SAM: This slide illustrates how Lean has become the operational system of Park Nicollet and critical to our infrastructure. The colored boxes at the top represent the service lines I mentioned, plus corporate functions. Although there seem to be many layers, these boxes beneath the services merely reflect the Kaizen Operations Teams – or people trained in Lean and dedicated to serving as Lean mentors to specific parts of the organization. All these experts, promoted from within, are certified as lean technicians and are on a minimum of three-year assignments. At the bottom are the consultants. JOHN: Another element of the Lean infrastructure comes into play here: the Kaizen Promotion Office (KPO), which is the office supporting Lean system-wide and guiding Kaizen Operations Teams throughout the organization. This office should report directly to the CEO, as it does at Park Nicollet. This structure is based on lessons learned from organizations with great success implementing Lean as a production system and not as a flavor of the month. These include Boeing, Wiremold, Porsche, Virginia Mason Medical Center and many others. SAM: At Park Nicollet, the Primary Care model-line leaders are the chief and the senior vice president of Primary Care. They’re supported by an executive with the title of “Kaizen Director.” All Kaizen Directors are executive leaders and lead a team of highly trained Lean specialists. All positions on the chart except the CEO, CMO (chief medical officer), COO (chief operating officer) and model-line leaders are dedicated full-time to Lean. Responsibility for alignment of all the tools of the Toyota Production System (Lean) belongs to the vice president of the Kaizen Promotion Office. All Kaizen Directors and their teams report on a dotted line to the vice president of the KPO who, as already mentioned, reports directly to the CEO.

18 - Advancing the role of patients to improve our Kaizen efforts.
© 2008, Park Nicollet Health Systems & John Black and Associates LLC SAM (CONTINUING): The vice president and the Physician Chief of KPO support-team members ensure that support for Lean, alignment across the organization, audit of implementation and results, replication of best practices, standard work and communication about Lean occur with our medical staff and all employees. JOHN: The bottom line is that without a disciplined structure, such as Park Nicollet has deployed, Lean will not be successful. The focus of the KPO VP is on the infrastructure for Kaizen efforts, including planning and maintaining the event schedule, Certification, and on-going support to kaizen events in progress. This also includes ensuring that our service lines apply kaizen consistently and that the efforts among the service lines are aligned. Secondarily, the role acts as administrative point person both within PNHS and to external organizations for communicating kaizen efforts. SAM: In addition, the Physician Chief greatly enhances communication with our clinicians and also provides direct leadership in clinical improvement work. For example: - Guiding clinical RPIW processes as needed, particularly when directed to clinical outcome activities - Liaison function with the KOTs, helping them understand the clinicians’ perspective. - Making the best use of clinicians’ skills and time on RPIWs and clinical improvement projects. - Leading by doing (esp. in difficult political areas; e.g., the hospital and endoscopy). - Keeping contact with Risk Management (for processes that need improvement), Patient Advisory Council (Pt. Perspectives), IT (for clinical support functions). - Communication with clinicians to help them understand the purpose of Kaizen; interpreting the language of Lean into medical terms; troubleshooter when needed. - Advancing the role of patients to improve our Kaizen efforts.

19 © 2008, Park Nicollet Health Systems & John Black and Associates LLC
SAM: I’d like to tell you a little about specific roles in our infrastructure, and I’ll start with the Kaizen Director, who reports directly to the service-line Chief/VP. Those in this position are some of our highest-potential people that are not necessarily in high-level leadership positions, but easily could be. They are responsible for improvement planning and day-to-day direction and implementation of the Lean improvements throughout their service line. This position places strong emphasis on producing durable quality outcomes, cost and time reductions, business growth, aggressive development and dissemination of best practices, and the elimination of waste. JOHN: Now we’ll discuss the Lead Specialists, who are the liaisons between the KPO and the KOT to facilitate communication, change and consistency of practice, and are the only KOT members who report to the KPO Director. Other responsibilities of the Lead Specialists include modeling kaizen principles and tools in all projects, assisting the KPO in infrastructure planning and training, and serving as kaizen experts within Park Nicollet, modeling a consistent approach to improvement. SAM: Finally, we have the Kaizen Specialist, who reports to the Kaizen Director for his or her Service Line. The Kaizen Specialist uses and models proper application of lean tools and techniques while supporting their teams, supports implementation of improvements, and assists the Kaizen Director in planning and training.

20 Kaizen Office Locations
Park Nicollet Methodist Hospital Inpatient and Surgical/Orthopedic Services Visibility Room Park Center Campus Specialty Services (CV/Onc/Medical Specialties); Primary Care Corporate Services KPO Offices Stand-up wall JOHN: It’s also helpful to understand how these teams work together effectively. One key is placing them in close contact with each other, all in the same room, similar to Toyota. Park Nicollet has a standard format for these offices in two locations. The Inpatient, and Surgical/Orthopaedic lines are located near the visibility room, where strategic corporate measures impacted by Park Nicollet’s Lean work are posted. SAM: The remaining service line Kaizen Operations Teams are at the Park Center Campus about a mile away, and have a similar office arrangement. On one very long wall (the stand-up wall), which we’ll show you later, are posted measures for processes all Kaizen Operations Teams are responsible for improving. Senior leadership rounds there weekly on a rotating set of measures.

21 Strategy and Tactics Kaizen Guidance Team Kaizen Leadership Team
CEO/CEO/CMO/VP and Chief of KPO/Consultants evaluate the overall plan and progress Kaizen Leadership Team All service-line chiefs/VPs with Sr. Leadership and KDs: yearly plan/timeline and progress CEO weekly “wall walk” and review Progress towards yearly goals Working the visibility room Monthly reviews of corporate health, quality, and access data; setting longer-term strategy SAM: This slide shows the oversight structure for our Lean efforts: the Kaizen Guidance Team and KLT meets 8 times a year to review timelines and detailed progress for the year. I mentioned the weekly reviews of the stand-up wall on the last slide. The visibility room has our longer-term goals for a variety of key measures. Both areas place measures where they’re visible and not available only on our computer hard drives.

22 CEO Weekly Wall Walk JOHN: Results on these rotating measures are presented by the service line leadership and KOT, and reviewed weekly at a standup meeting by senior leaders. Standup meetings are a product of the aerospace industry. When I was assigned decades ago as the personnel supervisor on the Boeing 737 line at Renton, Washington, the Director of Operations held daily, 6 a.m. standup meetings (everybody stands up – no chairs), Monday through Saturday. You stood up and you reported on the status of your line and your action items. Action items were then assigned by the Director to be reported on and/or completed by the next morning. We do the same at PN but meetings are held once a week, every Tuesday, at 1 pm, rain or shine. All service line leaders must stand up and report the weekly status to the CEO and COO of their service line. Here Dr. Steve Connolly, Chief of Surgical Services, reports the status of the Surgical Services line with CEO David Wessner and the full service line leadership team participating.

23 Succession Planning and Replacement Tables
SAM: While planning for the next generation of leaders is important for any organization, it’s especially important once you’ve committed to a Lean improvement strategy. You want the improvement momentum to grow, and for succession to not be disruptive. The next generation of leaders should receive additional opportunities for deep experience in Lean that can be applied within your organization. For us, it means the “Leadership Fellows” program, with its advanced training in Kaizen, kanban (define), “super flow” (define) and the production planning process (3P) (define) over several years. Without this depth of Lean skills, it would be very difficult for Park Nicollet to accelerate its improvement effort with a change in key leadership positions.

24 Park Nicollet Leadership Fellows at Boeing 777 Factory
JOHN: This picture shows the Park Nicollet Leadership Fellows on a recent trip to Seattle, standing in front of a Boeing 777 engine. The group also visited the Boeing 737 factory, where they observed how the 737 is now built the same way Toyota builds the Camry, on a moving assembly line. We spent the day learning about Boeing’s long, lean journey, starting in 1990 and 1991, where seven teams of Boeing’s top brass (14 each) spent 17 days in Japan studying Toyota’s production system and the system of many other Japanese world class companies. We brought back that knowledge similar to what Virginia Mason Medical Center and Children’s Hospital in Seattle, Washington are now doing in their many trips to Japan and certainly similar to Park Nicollet’s trips as well. At Boeing we took that knowledge, put together a course called WCC and taught it to 100,000 employees in 18 months. Later in 1995 we brought in the Shingijutsu Japanese consultants, formerly students of Taiichi Ohno at Toyota, to conduct hundreds of Kaizen events throughout the company. They are still consulting today with 160 weeks of consulting, and Boeing has now sent over 1,500 managers to Japan. All told the three healthcare systems I have mentioned, have as part of JBA’s curriculum and methods of learning have sent over about 500 healthcare leaders to Japan.

25 SAM: Park Nicollet has set for itself what it calls a “1 percent goal
SAM: Park Nicollet has set for itself what it calls a “1 percent goal.” This means that 1 percent of the organization – about 70 people – will be assigned full-time to using Lean tools and concepts directly in support of improvement projects or actually performing Lean-related work. You can see how the infrastructure of Lean at Park Nicollet has grown over the years as a result. The blue portion of each bar represents the Kaizen Promotion Office, the core infrastructure providing training, planning and administrative support. This centralized function has grown at a slower rate than the burgundy Kaizen Operations Teams – those Lean helpers assigned to various service lines and functions, or other people assigned full-time to Lean activities, such as kanban, IT support, etc., as represented by the light-yellow color. Of course, everyone in the organization should have a fairly good grounding in Lean eventually. As you’ll learn later, we have a plan for that. But obviously, not everyone can spend full time to being, in effect, an in-house Lean consultant. © 2008, Park Nicollet Health Systems & John Black and Associates LLC

26 Developing Our Own “World Class” Leaders
RPIWs 5S KEEP 3P VSM Daily Management Boards Just-In-Time Jidoka Wall Walk Leadership Fellows KPO JOHN: Being able to lead or manage Lean changes requires an in-depth understanding of the Global Production System and Lean thinking. All those who will be guiding the Lean journey must be educated and “certified” as to their preparedness to be a kaizen leader. Experience has shown that months is the minimum time necessary for this to occur. You can’t pick this up overnight – you can’t learn TPS and apply it like a salve and expect anything to happen. Nothing further from the truth. PN leaders spend over 80 days getting certified. How tough and realistic is it? How long does it take, to learn the Toyota Way? Toyota CEO Katsuaki Watanabe recently was quoted in an HBR article about how long it takes. He said, “Just yesterday I spent a whole day with 30 of our young executives. At least 50% of them were from outside Japan. They had been broken up into teams to tackle different problems, and they made presentations based on what they had learned about using the Toyota Way to tackle them. I listened and commented. The managers felt happy and said that they had learned a lot. When I asked, many of them said they were now able to understand the Toyota Way fully. That’s totally wrong. Two or three months isn’t a long enough period for anyone to understand the Toyota Way. The managers may have understood what’s on the surface, but what lies beneath is far greater. I asked them to explore that. There’s no end to the process of learning about the Toyota Way. I don’t think I have a complete understanding even today, and I have worked for the company for 43 years.” I have made at least 60 trips to Japan, leading 100s of managers from all types of industries and I’m still just starting to really learn what TPS means. SAM: At Park Nicollet, our certification program includes educational sessions and book-reading about Lean, participation in improvement or “kaizen events,” as well as actual factory-floor experiences in both the United States and Japan. This education amounts to around four months of dedicated training spread over months. We started with our senior executives and have extended the training to Kaizen Directors, managers, and a key group of physician leaders. We’ll soon have about 200 individuals certified to lead workshops and projects.

27 What Does “World Class” Mean?
JOHN: But while we’re talking about world-class leaders, let’s talk about what “world-class” really means — because understanding that term is the first step to getting there. The second step is recognizing that you’re not there yet. As Boeing began the slow and sometimes painful process of changing its ways, we faced the usual obstacles—and one we had overlooked. Business was great! Boeing leaders were making speeches about our 60 percent market share, our number one position in the world and the fact that rival Airbus could never catch us. Yet our performance metrics were mediocre. Boeing’s president hosted Dr. Juran at a private dinner, where he was asked to estimate the cost of poor quality at Boeing. Without hesitating, Juran said “30 percent of sales.” This huge number provoked utter silence. The point of this story: Act as if there is a crisis, because there WILL be one, even if it hasn’t reached you yet.

28 “World Class” Companies Excel in Five Areas
JOHN: Here are five areas where world-class manufacturing companies excel. For health care, we can substitute “service” for “manufacturing” and “process deployment” for “product deployment.” World-class companies focus on satisfying customers and communities. Here’s how the Chairman and President of Toyota defines Toyota: “Our goal is to be a good corporate citizen, constantly winning the trust and respect of the international community… We have placed protection of the global environment among the top items on our agenda, and designated harmonious growth – growth based on harmony between people, society and global environment – as our corporate vision. Under Toyota’s basic principles, we practice openness and fairness in our corporate activities, strive for clean and safe car-making, and work to make the earth a better place to live.” Translated to a health-care organization, this vision might be “Enrich the lives of an increasing number of our patients and meet their desire for safe and caring health care.” Bottom line: The key to world class is your patients.

29 What Does “World Class” in Health Care Mean?
Safe Effective Patient Centered Timely Efficient Equitable SAM: The words on the slide represent our attempt to translate the terms of manufacturing excellence into terms that relate to health care. So, instead of “customer focused,” for instance, we get “patient focused.” World class health care is patient-focused with high quality, effective and timely care; little or zero waste; and efficient flow. And it is safe. Perhaps you’re still asking yourself, “How can a manufacturing model be applied to health care? Patients aren’t products put together on an assembly line.” That’s certainly true. Indeed, patients aren’t the products—they’re the customers. Speaking broadly, there’s just one product you’re trying to provide – high-quality, defect-free health care. Fortunately, health care processes are susceptible to the same improvement methods as other processes – from a process improvement viewpoint, health care processes are no different from the processes for building cars or airplanes. Notice that technology is not on this list. The key to world-class performance is not technology. While technology helps, it’s the people.

30 The Importance of Going to Japan
Understanding the possibilities Seeing with “new eyes” JOHN: From the start, I stressed the importance of Park Nicollet getting its top leaders to Japan to truly understand the possibilities of Lean. This wasn’t an easy sell. SAM: Here’s how our CEO, David Wessner, explained his decision: “We are seeing what is possible. We are understanding the threat of not really getting to the waste…. We are looking at a changing perception of what our reality is by observing something very different here in Japan. We will come back with eyes that are different, unable to look at the same things the same way…. I think we are learning how to gain energy from our obstacles as opposed to being defeated by them.” JOHN: I assure you, this first trip to Japan was an eye-opening experience for Park Nicollet! It was amazing to see how a society had learned to function efficiently in an environment of constraints. It was impressive to see workers with the confidence to solve any problem with the tools of Lean. Everyone could see that the processes and tools of Lean were exactly and immediately transferable to health care. SAM: There’s been a question whether physicians—known to be an independent lot—could accept an improvement system that stresses a great deal of uniformity. Usually the calm, synchrony and flow with an emphasis on safety are observations physicians can see applying to their world. On some of the Japan trips I’ve led, I’ve actually asked the question at the end as to whether what they’ve observed was applicable to health care, and the answer has been a resounding yes!

31 Learning from Manufacturing Companies in Japan
SAM: So, one of the chief benefits of going to Japan is learning to see with “new eyes” —in other words, getting outside of one’s normal frame of reference to look at hitherto hidden possibilities. I’ve led two Japan trips, and all the attendees have been practicing Lean tools in a healthcare environment. We went to plants in Japan that made cars, rubber products and electric motors and flow meters, but those who went were able to readily translate their learnings to their own situations. And, when we’ve participated with those from other disciplines including engineering backgrounds, our medical leaders have effectively led teams of engineers to improve manufacturing processes. This is great validation of the effectiveness of our training and the transferability of the tools. I know that many of you are asking if Japan trips are necessary. We trusted John based on his years of experience – plus Virginia Mason Medical Center’s experience – that it was worth the risk. And the vast majority of our executives and leaders have found it useful in understanding what being the best in the world could mean and what it would take to get there.

32 Learning from Manufacturing Companies in Japan
Yamatake Corporation Isehara Plant Shonan Plant Toyota Motor Corporation Kamigo Plant(Engine) Motomachi Plant(Assembly & Welding) Tsutsumi Plant(Assembly & Welding) Toyota Boshoku Kariya Plant Denso Takatana Plant The Yokohama Rubber Co. Ltd. Hiratsuka Plant Aisin Nishio Plant Yamaha Motor Co. Ltd. Yamaha JOHN: Here are some of the Japanese world-class companies Park Nicollet has visited. TALK TO SLIDE.

33 The Infrastructure Must Be in Sync with the Improvement Plan
Improvement efforts must not get ahead of infrastructure Model lines should be an inch wide and a mile deep SAM: Once you see the possibilities of Lean, there is a temptation to get started with your improvement plan without the supporting infrastructure, since you’re anxious to begin and resources may be constrained. But the infrastructure must be in place to support the improvements and to prevent sliding back into the old ways of doing things. Sometimes the new ways are so different, that until local leadership is well trained in the methodologies and audits, you really can’t expect them to hold the gains demonstrated in the week of the improvement project. So infrastructure describes both trained leaders AND a central discipline that can quickly respond to unanticipated situations, modifying rather than discarding the change, or adding reinforcement when necessary. When choosing model lines, consider the most logical places to start where you expect to see the greatest impact, but also where people are most likely to accept change. “The way we do things here” is always a challenge, so assessing change readiness in an area is important. One of the great gains for improving flow is through what we call “waterfall scheduling,” where you stagger patients or cases at a pre-calculated rate that matches your demand to your available staffing. It has the potential to avoid long queues with their associated delays. We have gone through many iterations of this in surgery and are just beginning to see some impact now, after initial dramatic success in our endoscopy unit.

34 Taiichi Ohno’s Seven Wastes
Overproduction Defective Products Time on Hand (Waiting) MUDA Transportation Movement JOHN: Taiichi Ohno of Toyota—perhaps the true father of Lean—identified these seven types of waste. I can assure you that they exist at Park Nicollet. Let me give you an example of waste of inventory that we identified and fixed. In three departments at one clinic site, there were approximately 628 individual containers of medication with an overall price tag of $32,513. Of this amount, 28 percent were high-cost, low-use medications—items that were stocked regularly, but used infrequently. Through the implementation of kanban, a Lean tool that helps control stock on hand, improvement teams eliminated 29 percent of the stock in one location and reduced cost by 50 percent. Here’s an example of waste of movement. One of our radiology technologists was walking up to five miles a day to take equipment where it was needed. The radiology department is now working on minimizing this waste of time and movement by placing the equipment at point of use, or at least closer to the technician. Stock on Hand (Inventory) Processing © 2008, Park Nicollet Health Systems & John Black and Associates LLC

35 The Seven Flows of Medicine
Flow of patients Flow of clinicians Flow of medication Flow of supplies Flow of information Flow of equipment Flow of process engineering JOHN: Flow is a key concept in a Lean system. As with the human body, when process flow is obstructed or misdirected, problems occur. But when a healthcare system is healthy and operating at peak performance, everything flows. A rate of flow that meets market demand and avoids bottlenecks and obstacles is called takt time. SAM: One way Lean has helped hospitals deal with the flow of patients is in developing “pull” processes that enable the patient to signal when and where he or she needs a service provided. Lean also provides ways to help the other kinds of flows proceed as efficiently as possible. That last flow, flow of process engineering, simply means that there are people and solutions available to address problems and improve processes where needed. In HEALTHCARE, “process engineers” will be those clinicians assigned to be kaizen leaders.

36 Surgical Services Case Study
Background Approximately 17,000 surgeries performed at Methodist Hospital in 2006: Each surgery requires multiple instrument trays with potentially hundreds of instruments/supplies Multiple surgeons means multiple instrument/supply preferences Techniques and instruments added over time, but many old instruments remain unused in trays, demonstrating both reprocessing and inventory waste: Range for unused instruments has been 22-50% Mean score for unused supplies is 25% (but as high as 88% for certain procedures) 16 RPIWs done over 2-year period to reduce unused instruments/ supplies across all surgical specialties. SAM: Some of our most successful work in Lean has been with standardizing our surgical case carts. Over the years, instruments and supplies began to accumulate in the trays and case carts. Without a process to better manage the situation, large amounts of unused instruments and supplies wound up in trays and case carts for any particular operation. The 16 Rapid Process Improvement Workshops referenced in this slide were aimed at reducing the number of unnecessary and unused instruments and supplies being prepared for surgical cases. Our earlier projects were done with a much lesser degree of KOT support. As our lean infrastructure has grown, these projects have become much simpler and we are now moving them out of formal RPIW projects.

37 Surgical Services Case Study
RPIW Methodology Standard Work RPIW target: Reduction of unused instruments/ Supplies across all surgical specialties Baseline for change 5 weeks prior to RPIW: * Scope & procedure/case types selected * Product quantity analysis (PQA) data collected * Supply pick lists color-coded to identify utilization * Instrument counts/tray compiled During Prep Weeks: * Data collected on instruments (used vs. nonused) by following trays after surgery * Cycle times for tray processing & supply picks measured * Surgeon-unique additional instrumentation evaluated Makeup of Teams JOHN: Because of the large number of case-cart standardization improvement workshops, a standard process was created for their implementation. This gave us a roadmap for a complex undertaking and ensured that data was gathered in a similar way for each project, improving data quality and reducing time spent collecting it. It also ensured that input was uniformly sought from affected surgeons at the appropriate time, including before beginning. This was critical not only to making the improvements, but maintaining them. One surgeon commented about one instrument: “This instrument could be in a medical museum somewhere.” Yet it was still being placed in case carts. The results of a similar effort at VM’s first Kaizen event in 2001 were excellent for the kickoff effort, but the real learning of the week, as reported by VMMC was “that teams of process knowledgeable people could make a major change in a one-week period.” For example, Team 1 of 4 Teams that week reduced surgical instruments on the case cart from 74 to 58 items for an annual savings of $26,880. The organization of the OR equipment room was totally redesigned for easier access, visual control and location of equipment. Each team included a circulating nurse & a surgical scrub tech Surgeons used as content experts to RPIW teams Surgeon meetings during RPIW week; discussed: * Display of new recommended trays & supplies by procedure * Consensus on standardization

38 Surgical Services Case Study
Results at End of 2006 % of Case Volume % of Unused Evaluated Instruments Difference ( ) (Pre- vs. Post-Standardization) 18% reduction in processed instruments (translates to 79,530 fewer instruments handled & processed per month) SAM: The results have been impressive: - 83 percent of the volume of our surgical cases have been addressed. Our goal is 90 percent. - We’re now processing nearly 80,000 fewer instruments a month – nearly a million a year. - Not only has this reduced costs, but it has taken pressure off the instrument- processing staff and helped reduce defects.

39 Surgical Services Case Study
Follow-up/Implications: Follow-up Audits 30/60/90/120 day audits in place to maintain gains. Each RPIW audits previous case cart standardizations. One instrument tray is evaluated for compliance with standard. Standard work is in place for surgeons to reintroduce an instrument. (To date, no surgeons have utilized this process.) Time Savings Reduction of instruments significantly affects workload of scrub tech & instrument room staff 79,530 fewer instruments processed per month = 2,615 fewer instruments per day Time savings per day: 20,917 seconds (349 minutes, or 5 hours, 50 minutes) * Assuming 3 staff members touch each instrument for 2 seconds (scrub tech touches them twice) SAM: Auditing the results is a standard part of the Lean process. We faced several challenges as we embarked on our auditing work, including: - Overwhelming volume. Because we had so many projects in this area—with each project requiring 30-, 60-, 90- and 180-day audits—the audit activity quickly became overwhelming. Clarifying the role of the auditor, making auditors part of improvement teams, and dividing the auditing work among several leaders were all important steps in measuring and securing our progress. - Enforcement of standard work. Once we established the core instruments needed for any surgery and specific “adds” for a particular surgical process, we made these sets of instruments “standard work.” At the same time, we implemented a formal application process for reintroducing instruments as a failsafe against cutting back too much. As we look to improve productivity and reduce delays in operating rooms, the processing of fewer instruments is important. Too often, errors and delays in instrument preparation had translated to delays in the operating room.

40 Where Does PN See Itself Now?
Point (Eliminate waste at source - Just start somewhere) Point Improvements Goal: Flow vs. Batch Goal: A Model Line Line Improvements Line Vertical development (Link processes to create a cell) Change production method from “Push” to Plan for Leveling “Pull” Develop Standard Operations Quickly Solve Flow Problems Practice “Visual Control” 5-10 Years Critical Transition from Point to Line 10-15 Years Height 3rd Dimensional (Link all elements from concept to customer) Goal: Raise to Other Planes Spatial Improvements Plane Improvements Plane (Link cells to produce a product) Goal: Spread Across Plane 15-20 Years JOHN: This diagram shows the “kaizen path,” the 20-year journey toward full Lean implementation. Reaching the final box does not mean that the organization quits improving. Kaizen is a never-ending commitment. (Explain slide by talking to it.) SAM: Where is PNHS on this journey? Since we’re just entering year 5 of Lean implementation, we are mainly in the realm of point improvements. This means that our improvements are spreading, but are not necessarily linked with improvements in other areas. Other processes make point and line improvements based on the model line © 2008, Park Nicollet Health Systems & John Black and Associates LLC

41 5 Year Block (Point): Surgical Specialties
Pat. Returns to Function In Patient Hospital TBD Pre-Op Preparation Pre-visit L/T Day of Clinic Visit L/T Post-Visit Day of Surgery L/T Pre-Surgery Daily Management Boards Materials Flow Use of Non-Surgeon Clinicians Staggered Starts OR Scheduling Process Case Carts: Standardize, Waste Standardize Rooms Staff Cross Training Visual Control Pull Signals Primary Care 14.8 days Total Surgical Services Patient Lead Time 415.5 minutes 15.1 days 43.8 minutes Accurate Surgery Times Interoperative Standard Work for MDs Defining Best Practice Guidelines PICIS: Surgery Information System Implemented Underway Not Started Instrument room Pre-Op Patient Prep Load Level During Day Load level by DOW Turnover Time Reduced Surg./staff NVA Time OR 21 Standard Rooming Med. Rec. Nurse Post-op Clinics 5 Year Block (Point): Surgical Specialties SAM: This chart shows our point improvement across the value stream, which begins in primary care and sometimes ends with discharge. Our goal is to continue to make and sustain point improvements and begin to connect them for line improvement. As you can see from the green lights, we have made substantial improvement in several areas. The yellow lights indicate progress in an area, but additional work is required to fully complete this improvement area. The red lights indicate areas where we have yet to begin.

42 10 Year Block (Line): Surgical Specialties
Pat. Returns to Function In Patient Hospital TBD Pre-Op Preparation Pre-visit L/T Day of Clinic Visit L/T Post-Visit Day of Surgery L/T Pre-Surgery Daily Management Boards Materials Flow Use of Non-Surgeon Clinicians Staggered Starts OR Scheduling Process Case Carts: Standardize, Waste Standardize Rooms Staff Cross Training Visual Control Pull Signals Primary Care 7 days Total Surgical Services Patient Lead Time 208 minutes 8 days 22 minutes Accurate Surgery Times Interoperative Standard Work for MDs Defining Best Practice Guidelines PICIS: Surgery Information System Implemented Underway Not Started Instrument room Pre-Op Patient Prep Load Level During Day Load level by DOW Turnover Time Reduced Surg./staff NVA Time OR 21 Standard Rooming Med. Rec. Nurse Post-op Clinics 10 Year Block (Line): Surgical Specialties JOHN: In this chart you can see Park Nicollet’s vision – where all lights are green and the point improvements are beginning to connect for line improvements.

43 Dramatic Improvement in Health Care is Possible Through Lean!
“It was exciting to see the chance for making changes, since there is no time in our typical day to make the changes we would like to make. Also, this process was good because we didn’t have to talk it to death. It was fun, and a good experience.” (Clinician, RPIW team participant) “I was struck by the complexities of our systems, and how presumably small changes in a process can have such an important impact on the work of others in the system. It is a challenge to develop new procedures in a way that benefits all the participants on the clinical side, and keeps focus on the ultimate goal – doing what is best for the patients.” (Clinician) “This was the best RPIW ever! I finally feel as though someone actually cares that I work at home until 12:30 many, many nights. This has changed my life! Please keep the DA!!!” (Clinician) “The improvements will have a great impact to the amount of time saved preparing for a case. This saved time will be directly shifted to the patient, increasing the amount of time the RN will have for patient care.” (Clinician) “I never felt like I was at a hospital, because having worked at the Marriott for over 20 years, I felt that the Park Nicollet staff totally embodied the service philosophy and took care of my father-in- law’s needs.” (Patient, RPIW team participant) JOHN AND SAM TOGETHER: And, most importantly, Lean works! JOHN: Here are a few comments from people in the trenches.

44 QUESTIONS? SAM: Thanks for your time today. What questions do you have?

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