A lean enterprise continually reduces waste, improving its quality, safety and capacity to serve customers. When healthcare organizations adopt lean operations and management methods, they

• Increase access by improving throughput and reducing the time ittakes clinicians and staff to provide services.

• Improve quality and safety by instituting evidence-based standardwork designed to deliver appropriate clinical outcomes.

• Increase transparency and accountability in reporting, greatlyreducing the time lapse between the discovery of defects and theimplementation of effective countermeasures.

This all adds up to greater value for patients and higher margins for the organization. Unfortunately, current accounting practices do not always make it easy to see the relationships between cause (continuous improvement, or kaizen) and effect (increased revenue, decreased cost, higher quality and improved safety).

Generate timely information forprioritization and selection of improvement targets.

To address this gap, Rona Consulting Group has developed ROK, or Return on Kaizen, an evidence-based system that enables its healthcare clients to capture, calculate and roll up the savings derived from improvements. Surfacing this information enhances frontline decision-making and organizational alignment to accelerate and help sustain the trajectory of improvement.

ROK calculations are based upon the classic equation for return on investment (ROI). ROK quantifies the value of new capacity and of costs avoided through improved quality and safety. ROK discounts annual returns on improvement by the cost of capital and divides by an estimated cost of improvement activity, resulting in a number comparable to ROI. A classic ROI is simultaneously calculated by screening capacity improvements that will not be reflected immediately on the bottom line.

ROK speaks to clinicians in terms of lives saved, and to administrators in terms of the bottom line. It provides superior decision support to

Key features

• Supports planning for value

stream maps and kaizen

workshops.

• Translates documented

improvements into financial

savings, capacity gains and

lives saved.

• Permits easy data input with

user-friendly interface.

• Is supported by new planning

checklists and standard work.

• Totals all calculations

automatically and in real time.

• Provides separate reports for

individual kaizen workshops

and cumulative reports for

value streams.

• Can be customized with

client’s own financial and

clinical assumptions.

• Is preloaded with default

assumptions supported by

extensive literature review.

Key benefits

• Provides one place to record

all key assumptions about

improvement models, plus all

baseline, target and actual data.

• Serves as a complete digital

record of improvements from a

value stream.

• Supports evidence-based

selection of improvement

targets.

• Makes available reports to

support target selection in

strategic planning (hoshin

kanri).

ROK – Return on kaizen

frontline managers, guiding them to pursue improvements that have greater value in terms of patient safety, clinical quality and financial stewardship. When incorporated into the process of strategy deployment (hoshin kanri), ROK can also help align organization-wide improvements with a focused set of strategic targets.

The building blocks of ROK are the seven deadly, non-value-adding wastes: overproduction, transport, inventory, motion, waiting, overprocessing and defects. For each waste eliminated through improvement activity, the benefit is monetized and annualized using assumptions provided by the client’s own finance and risk management departments. (Finance addresses wages, the cost of space, interest rates, and other measurables, while risk management addresses the cost of clinical defects such as falls and infections.)

The entire ROK system is presented in a user-friendly format that requires leaders only to specify baseline data and improvement targets. The value of each target is immediately quantified in terms of monetary and/or clinical outcomes. All calculations and most data inputs have been automated to calculate forecasts and actual results as they are entered.

ROK is entirely evidence-based. Forecasts of improved throughput and reduced cost are all based on time and motion studies conducted by the client on its own operations. Forecasts of cost avoidance and lives improved or lives saved are based upon extensively researched published findings, with references included, as well as on the client’s own small tests of change.

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