Cleveland Clinic: A Laboratory for Operations Management
Application of lean principles in healthcare sets example for other industries.
ANN ARBOR, Mich. — The Cleveland Clinic is one of the nation's leading medical institutions. But like many large and complex organizations, it can be plagued by operational challenges. A couple years ago, surgeons complained that the correct instruments weren't being delivered to the operating room at the right times. This caused delays, patient dissatisfaction, and cancellations. Instead of hiring more people or throwing money at the problem, the manager of the surgical processing department sought an alternative cure to the problem. He worked with the Performance and Service Improvement team at the clinic to examine each step of the process in question: sterilizing, organizing, packing, and delivering surgical instruments. The team reached out to the actual people doing the work and applied lean principles (with roots in manufacturing) to improve workflow, cut waste, and improve performance. The tangible results: assembly cycle time reduced 26 percent, missing tool counts down 25 percent, missing instrument count down 26 percent, and processing time down 24 percent. Just as important, all of the surgical instrument processors now think about continuous improvement as part of the regular routine.
Professor Izak Duenyas details this success and other applications of operations theory in the case study "Lean Process Improvements at Cleveland Clinic," available online at GlobaLens. As the debate rages on how to reform healthcare, few can argue with the need to cut costs. In the following Q&A, Duenyas says applying lean principles in the medical field can play a big part in the solution. He is the John Psarouthakis Professor of Manufacturing Management; professor and chair of operations and management science; and professor of industrial and operations engineering.
How did you learn about this situation at the Cleveland Clinic?
Duenyas: I have my Executive MBA students write a paper on applications of the concepts they learned in the operations class. One of my EMBA students, Brian Duncan, MBA '08, was a pediatric cardiothoracic surgeon at Cleveland Clinic and was familiar with this work. (Ed. Today, Duncan is the medical director for emerging business at Cleveland Clinic.) Duncan and his team wrote a very nice report on what the Cleveland Clinic had done and outlined some additional opportunities for improvement. I was really impressed by this report so I went to the clinic with a case writer and interviewed the people involved. I wanted to learn more about this specific work and what else they were doing with operational efficiency and lean concepts. What's impressive is they have a nearly 30-person group now focusing on operational improvements in that particular hospital. That's one of the biggest commitments I've seen with respect to systematically thinking about process improvement. It made for a great case study about the use of lean concepts outside of manufacturing, which I now use in my EMBA class.
So one lesson is that these lean techniques, which were developed in manufacturing, can be used in just about any field.
Duenyas: Yes. I'm co-director of a certificate program on lean principles that we started 12 years ago. It was developed initially for manufacturing companies, but then we started doing a version of this for more transactional settings like banks and insurance companies. What you see is the same kind of thinking becoming much more accepted and used in different settings. You hear people saying, "Yes there is an enormous amount of waste in our back office. There is an enormous amount of waste in the way we do purchasing." So it's very important to understand the basic operational principles. But then you can apply these basic principles to different settings. You just have to learn the language in each setting and think creatively on how to apply the principles.
It seems that a common theme here is to solve the problem without spending money and hiring a slew of outside experts or new people. Is that the goal?
Duenyas: It's about understanding how to provide better customer service using the same or fewer resources. So how can I do more with less? To me this is the foundation of all value generation. You either improve upon a solution -- that is, you come up with something better -- or you come up with a new solution to a problem. So a drug company will develop a new, more effective medication that treats a disease. Or they already have a medicine, but can manufacture it more efficiently and at less cost so more people can afford it. This is true value generation for the economy. Operations plays a key role in both helping improve new product discovery lead times and costs and also in reducing costs for existing products.
The debate on healthcare reform really comes down to cutting costs while maintaining quality of care. How can case studies like this serve as a guide both in policy and as a business education topic?
Duenyas: I believe there is an enormous opportunity in hospitals for operational improvements. That certainly should be part of any solution. I'm not a health policy expert, but it is clear that one of the biggest problems we face is medical costs increasing at an unsustainable rate. To the extent that more of these kinds of approaches become popular and are repeated in different hospitals, I think that is one element of the solution. Something like this cannot be the only solution. It does not solve the problem of how to insure the uninsured, for example, but it's definitely one part of the puzzle.
It would seem the Cleveland Clinic was ahead of the game in that they had a team in place with a charter to improve service and care. What if there's not that kind of commitment at the top level?
Duenyas: I work with a lot of companies like this. It's very hard to accomplish anything without top management's buy-in. It is critical that management be supportive and provide resources. Lean improvements do not just happen by themselves. Objectives must be clearly defined as a part of people's responsibilities and those people must be held accountable. Resources have to be allocated because people need to be able to spend time on this. I work with a lot of companies that didn't have any expertise like this when we started. And one of the things we do at the University of Michigan is offer customized, short courses to bring people up to speed so they can form a group like the one that exists at Cleveland Clinic. We have trained people at Merck, Schlumberger, Zimmer, Steelcase, and others. These companies now have formed their own lean improvement groups based on training we provided. So it starts with training people and then expecting a lot out of them. The best approach is to equip your people with the right tools and approaches and then set out clear objectives, timelines, and priorities. Accountability is key. We have helped and continue to help many companies with this approach and their lean journey.
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