The US hospital system is faced with financial pressures that will have a profound effect on the abilities of hospitals to provide quality care for their patients. Value based purchasing will have an effect on Medicare and Medicaid reimbursements to hospitals later this year. Reimbursement for Medicare and Medicaid patients will be based on HCAHPS scores that will result in decreased reimbursements if scores are below the national average. This will put up to 5% of reimbursements at risk for hospitals who do not meet the minimum standard.
The current debt crisis in the United States will have a profound impact on Medicare reimbursement to providers. In the August 15, 2011 edition of Time magazine reports that by late November, a congressional committee must agree to at least $1.2 trillion in additional cuts. If the committee fails or if the plan is not signed into law $1.2 trillion will automatically be cut divided between defense and Medicare providers beginning in January of 2013. This means $500 billion will be clawed back.
How will hospitals absorb this cut in funding?
Simply by becoming LEAN organizations, where every person in the hospital is constantly looking for opportunities to eliminate waste and reduce costs. Some executives wonder if this is truly in alignment with LEAN principles. Reducing cost and making services more affordable is definitely listening to the voice of the customer, an underlying principle of lean. Eliminating waste is also totally alignment with this lean principle. There are many forms of waste in the hospital, one of them being the time that patients wait in the waiting rooms. If we can reduce wait times (waste for the customer) patient satisfaction scores will increase, we will have more time for our primary purpose, caring for people and because of increased efficiencies we are able to serve more people and hence have a corresponding increase in revenues.
An example of this on a small-scale happened in a hospital that I have worked with. Using LEAN tools, an analysis was done of the flow through the radiology department. The analysis was conducted by frontline staff who were trained in the principles and tools of lean. With some adjustments and rearranging, they were able to shave six minutes off each procedure time. This resulted in reduced waiting times for patients, increased patient satisfaction scores and the time to do several additional procedures each day. There was a positive financial impact to the bottom line of the hospital because of project.
Can you afford not to consider what LEAN in healthcare can do for your hospital?