Preparing Senior Leadership and The Lean Office for ... and positively influence a better way of...

Preparing Senior Leadership

and The Lean Office for

Organization Transformation

©Copyright Lee Memorial Health System • All rights reserved

Roger ChenSarah HoltonJessica LindseyEvan LewisJason Yost

June 16, 2016

Who we are

• Four acute care hospitals

• Rehabilitation hospital• Children’s hospital • Over one million patients every year

• 300+ physician group • 10,500+ employees

• Largest public health System in the State of Florida, receiving no direct

tax support

Where we started…

• Process Improvement with a

project approach began more

than 10 years ago

• Intervention approach lead to a

culture of avoidance

• We knew unless we changed we

would be in crisis mode with

declining revenue!

• Silos across the System2003 GM Grant for Healthcare Quality

Reflections on previous methodologies

• Found that change did not sustain

• Improvement was more reliant on improvement coaches

versus operational leaders

• Project approach did not lend to continuous improvement

• Were not empowering the people who do the work

What is Lean? Dr. Antonucci COO reflection

• Lean is all about quality

“Building a culture of stopping to fix problems,

to get quality right the first time.”

• Lean is not a project, but a deep, company-

wide culture change and long term vision

• Lean is not only about processes, but also

about creating a learning organization

“….use our minds, our experience, for the highest

advantage of others in the shortest possible time…..”

“Critical Path”

Inspire and positively influence a better way of living

through my talents and energy

….make a difference for society in my lifetime

Visionary Leadership – Intentional leadership

practices to ensure sustainability.

Patient Centered Focus – Resulted in improved clinical

outcomes and patient satisfaction.

Management by Fact & Focus on Continuous

Improvement – Operational plan includes goals that

cascade throughout the organization with department

action plans to support goals.

Valuing Workforce Members & Partners – Increased

engagement and performance among employees,

volunteers and physicians.

Developing Lean Leaders – Lean office provides

infrastructure and curriculum; staff develop content

to deliver patient value

From Florida Stirling Quality Survey of Cape Coral Hospital

Lean House of Quality – Principles and Tools

Visual Management

Standard Work

Level Scheduling

Tools Tools

Respect for People,

Team Work

&

Continuous

Improvement

Patient

2014 2015 2016

Facilitated

projects

Lean Coach

Department

projects Director /

Supervisor

Facilitated projects

Lean Coach

Individual

improvement

Facilitated projects

Department

projects

Director /

Supervisor

Individual and team

improvement

Effort

2013

Organization Transformation

Qu

alit

y a

nd

Pro

du

ctiv

ity

80

%

20%

Lean Transformation Timeline

Tool Set

Skill Set

Mind Set

Executive

Team

Lean Management System

Middle

Managers

Lean Transformation Office

Front Line

Teams

“Cultural Tipping Point”

12

1201200

12,000

x10x10

x10

Lean Transformation Critical Path

1. Strategy Deployment…process to deploy

2. Standard Work…encourage and develop

3. Organization Report-out…reinforce principles

4. Plan-Do-Check-Act is the organizational currency

for communicating ideas and solving problems

Strategic Alignment & FocusWhere we are going How to get there

Dept.

“Individual ideas support department goals, which serve

facility

strategies and tie into the system strategic initiatives.”

Facility

System

Strategy Deployment

Lean management is a

process to deploy

strategy

Strategic PDCA Wall

Key Performance Indicator Wall

Senior Leader Major Projects Standard Work

Strategic PDCA

17

Income Statement FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Net Patient Revenue 1,077,924 1,158,103 1,185,609 1,227,113 1,319,644 1,430,675

Other Operating Revenue 16,796 19,458 27,410 29,860 44,140 66,869

Total Operating Revenue 1,094,721 1,177,561 1,213,019 1,256,973 1,363,784 1,497,544 Salaries 472,445 531,505 550,476 577,800 597,548 661,076 Benefits 76,123 81,337 93,350 93,050 103,120 110,886 Supplies 227,082 235,761 232,078 233,409 248,473 281,744 Purchased Svcs 116,756 121,906 125,247 134,210 127,305 140,322 HCAA 13,560 14,326 14,878 15,125 16,125 16,836 Other Svcs 61,543 67,954 86,386 68,665 72,435 80,112

Total Operating Expenses 967,508 1,052,789 1,102,415 1,122,260 1,165,007 1,290,977 EBDITA 127,212 124,772 110,604 134,713 198,777 206,568

% 11.6% 10.6% 9.1% 10.7% 14.6% 13.8%

Interest/Depreciation 90,054 95,808 92,996 101,159 100,251 103,076

Net Operating Gain 37,158 28,964 17,608 33,554 98,525 103,492

Operating Margin 3.4% 2.5% 1.5% 2.7% 7.2% 6.9%

Financial results 2010 - 2015

Strategic PDCA

20

So what is the problem? After all, we have been doing

so well financially…..

21

Significant Medicare reductions to fund ACA

Payer Mix – 80% Medicare/Medicaid/Uninsured

Current loss of 10% on every Medicare patient

Aging Population – higher Medicare hospital use

No Medicaid Expansion expected in Florida

Over $1.5 Billion in capital needs over next 10 years

Need to fund merit increases to stay competitive

Supply and Pharmaceutical vendor consolidations

- $50 million average per year

over 10 years

Dependent on 20% commercially

insured to offset all losses and

fund capital needs

Need to generate $150 million

annual cash flow after principal

payments to fund capital need

Increases total loss on Medicare

patients

Shift from volume to value based

increases pressure on

reimbursement

$35-$40 million annual

opportunity lost to other states

Average 3% merit per year is more

than expected reimbursement

increases

Projected Status Quo Financial Model

LMHS will incur -$8 million operating loss by FY 2020

� Assume labor productivity levels stay flat from budgeted 2016 at 139

productive hours per adjusted admission

• Assume rate on supplies, drugs , purchased services expenses grow at a

normal rate of 2 – 3% per year

Income Statement FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Net Patient Revenue 1,491,320 1,551,759 1,604,320 1,657,024 1,709,769

Other Operating Revenue 42,174 38,974 35,374 35,374 35,374

Total Operating Revenue 1,533,495 1,590,734 1,639,694 1,692,398 1,745,143

Salaries 725,130 765,668 804,489 845,279 888,138

Benefits 121,091 127,860 134,343 141,155 148,312

Supplies 284,476 298,922 312,553 326,806 341,710

Purchased Svcs 134,174 138,199 142,345 146,615 151,014

HCAA 17,576 17,783 17,993 18,205 18,420

Other Svcs 76,081 77,602 79,154 80,737 82,352

Total Operating Expenses 1,358,527 1,426,034 1,490,878 1,558,798 1,629,944

EBDITA 174,968 164,700 148,816 133,600 115,199

% 11.4% 10.4% 9.1% 7.9% 6.6%

Interest/Depreciation 105,317 108,317 114,317 118,317 123,317

Net Operating Gain 69,651 56,383 34,499 15,283 (8,118)

Operating Margin 4.5% 3.5% 2.1% 0.9% -0.5%

What we are doing: Financial Viability

Accelerate

standardization and

continuous improvement

across the health system

through Lean

Management

Develop Value Stream Maps for acute and surgical

patient flow

Improvement areas identified as system rapid

improvement or “kaizen” opportunities

Resources from Lean Transformation Office partnered

with operational leaders as lean facilitators

Internal Job Instruction and Job Relations training

developed to teach foundation of standard work as

means to reduce unintended variation

Lean leadership competencies implemented through

integration with annual learning and Organizational

Development plan

Implement Visual Management Metrics with Clinical

Operations Group to trend progress of process &

outcomes

Simplify and operationalize Length of Stay tools with IT

and Clinical Operations (Crimson, Truven, VHA)

Dr. Toussaint work shop flip charts Dec. 1, 2015

2016

Phased Transformation

• Cultural

Behavioral shift

Lean thinking

Lean Concept beliefs

• Accountable Business Outcome Measures

Milestones

Metrics

Believe it Demonstrate it

Tool Set

Skill Set

Mind Set

Executive

Team

Lean Management System

Middle

Managers

Lean Transformation Office

Front Line Teams

“Cultural Tipping Point”

12

1201200

12,000

x10x10

x10

Lean Management System Blueprint

Job Instruction

Training

Job Relations

Problem Solving

Critical Thinking

(Plan Do Check Act)

“Empowerment”

Standard

Work

(Reliability)

“Developing people…to develop people”

Continuous

Improvement

(Engagement)

Daily

Management

(Focus)

Operating

System (Shingo)

Lean Leadership

Value Stream

Mapping

Strategy

Deployment

Change

Management

Rapid

Improvement

Workshops

Process Measures and Preparation Results

People

Technical

5S and Visual

Management

Level Scheduling

Pull and Flow

Focus

Sarah Holton

Lean Trans. Business Partner

� B.S. Psychology

� B.S.N.

� MBA

� 21 years health care

� LMHS start – March, 2012

Roger Chen, FACHE

VP, Organization Transformation

� B.S. Electronics Eng. Technology

� MBA International Business

� 23 years GE Healthcare

� Previous 4 years in health care

� LMHS start – January, 2013

Nancy Gurnee


� B.S. Education

� M.S. Training and Organizational

Development

� 18 Years Healthcare

� LMHS Start – Sept. 8, 2015

David Rybicki


� B.S. Business Administration


� LMHS start – May, 1993

Marcelo Zottolo

System Director, Process Analytics

� B.S. Industrial Engineering

� M.S. Industrial Engineering

� 5 years in health care

� LMHS start – February 1, 2011

Jason Yost

Lean Transformation Specialist

� B.A. Political Science

� MPH Health Policy &

Administration

� LMHS Board Member 2006-2009

� LMHS start – April 1, 2013

Julie Marceau


� B.S. Management Inform. Systems

� M.S. Information Technology

� Project Management Professional

� 12 years in health care

� LMHS start – February, 2010

James Moon


� B.A. Economics/Spanish

� Six Sigma Black Belt

� 3 months health care

� LMHS start – January 7, 2013

Jessica Lindsey


�B.S. Healthcare Administration

� MHA

� 13 years in healthcare RT(R)

� LMHS start – Aug.,2004, LTO 2016

Cynthia Dang


� B.S. - Community Health

� M.S. - Health Sys. Mgmt.

� Lean Six Sigma Black Belt

� Previous 4 years health care

� LMHS start – April , 2013

Kristin Bentz


� B.S.N.

� MSHS Healthcare Quality

� Certified Professional in HC Quality

� 21 years healthcare, LMHS 2004

� LMHS LTO Start - May 2016

Evan Lewis


� B.S . Industrial Engineering

� M.S. Industrial Engineering


� LMHS start – June, 2012Jennifer Behling


�B. S. Biology

� Lean Six Sigma Black Belt (Shaw Ind.)

� 0 years healthcare

�LMHS start – Sep. 2015

Duane Kolesar


� B.S. Business Administration


� LMHS start – January , 2010

Interpersonal

Effectiveness

EQ

Professional/

Lean IQ

Process/Change

Mastery

PQ

Business

Acumen

BQ

Lean Facilitator Development

Looking Forward…LTS Role and Responsibility

5/31/2016

Facilitating talent and recruiting transformers

Transformation

Infrastructure

Design

Strategy

Deployment

Plan

Model

Service Lines

Value Stream

Technical/

Behavioral

Competency

Leader

Standard

Work

Technical Continuum

People Development

Hiring Philosophy

-Skills and cultural

values mix

Smart Goals

-Staff Ideas

Implemented

Talent

Management

for Change

Leadership

Core

Competency

Respect for

People

-Empower

Leader

Transformation

Culture

Transformation

PDCA

Thinking

Communicating

Intentionally

Coaching for

Results

Executive

Ownership

Role and Job

Description

Lean

Learning Lab

Enterprise

Alignment

Lean Office

Organization

A learning showcase: System Wide Report Out3. Organization Report-out…reinforce principles

Strategic Importance of VSM Project Approach

Previously

management solved problems by devising and mandating

solutions

VSM Project Approach

allows people who do the work to see their work differently and to

redesign their work to add value to the customer

promotes a cultural change from problem identification to

problem solving

Leader Standard Work

• Lean Management Training= “Safety and Quality”

• Value Stream Map Parties = “Think systemically”

• Learning to see, identify waste = ”Making big small”

• Visual Management = “Seeing is believing”

• Continuous Improvement = “Working together to

streamline process”

• Respect for People = “Caring people, caring for people”

LTO Training Timetable

Senior Leadership Lean Management Development

– Original Structure

CAO

VP

Dir Dir

Sup Sup Sup

Lead Lead Lead

Staff Staff Staff Staff Staff

• Top down

approach

• Management

mandated

solutions

40

Senior Leadership Lean Development - Lean Structure

CAO

VP

Dir Dir

Sup Sup Sup

Lead Lead Lead

Staff Staff Staff Staff Staff• Status of the business

• Metrics

• Continuous

Improvement

• Scorecards

• Strategy

• True North

Goals

• Mentoring

• Teaching

• Coaching


The Map

Jan Santerre

Lean Healthcare Transformation Summit 2015

Daily Improvement Huddle Board – links department

metrics and problem solving ideas with LMHS and

facility strategy

Daily Improvement Huddles engage staff and monitor

performance

Continuous Improvement Database

Real innovation does not happen haphazardly or

sporadically in organizations

• New product ideas arise though structured innovation programs

• Improvements identified through scientific process; PDCA

• The Scale of its Impact determines its qualification

• Large scale adoption of solutions

– Tim Berners-Lee/World Wide Web

– IV’s

– Disposable gloves

– Hand sanitizer

46

5/31/2016

Improvement

Innovation

Problem

Realization

Structured

ExperimentationEmployee

Ideas

Transformation

Ideas

IdeasIdeas

Lean Innovation Engine

Employee

Ideas

Shift: Tool Base to Principle Base

Reflection Point

Steering Team Set Goals

Identify

Value

PDCA

Experimentation

Standardize Go & See

Huddle

Coach Align

Leader Standard Work

Model

5/31/2016


Senior Leaders Lean Deployment Assessment

Phenomena of quality with productivity

High

Margin

Limit $

Low

Margin

Limit $

Volume

Waste Eliminated

+ Safety + ServiceQuality

Hardwire higher quality, safety and service with lower cost through standardization

As quality goes up, costs go down and margins increase

Cost reduction without process quality is self destructive

Quality improvement without process waste elimination is unsustainable

Innovation is changing the work. Transformation is changing the culture.

Low Quality

Low Productivity

= Higher Productivity

“CMS is moving from being a passive payer of

healthcare claims to become an active buyer of

healthcare value/outcomes. Value needs to be

measured and demonstrated.”Marcelo Zottolo, LMHS System Director, Process Analytics

Why Lean for Healthcare?

WITHOUT

PRODUCTIVITY

GAINS

WITH

PRODUCTIVITY

GAINS

$

$

Status QuoTIME

Reso

urc

es $

$F

utu

re R

eso

urc

es

TIME

D2N Door to needle stroke process

Arrival

and tPA start

tPA

ordered

Neurology at

bedsideCode S called

CT

ED MD

Evaluation

0 23

Time in Minutes



Thank You

Preparing Senior Leadership and The Lean Office for ... and positively influence a better way of...

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