A Brief Introduction to Lean - James Madison …...Lean is predicated on two core principles: 1.\⤀...

$Page 1: A Brief Introduction to Lean - James Madison …...Lean is predicated on two core principles: 1.\⤀ 刀攀猀瀀攀挀琀昀漀爀瀀攀漀瀀氀攀愀渀搀尩 Continuous improvement.$
A Brief Introduction to Lean

“Lean: The relentless pursuit of creating value through the

strategic elimination of waste.”

- Elliot Weiss Oliver Wight Professor of Business Administration

Darden School of Business

3 of 33

What is Lean?

• A philosophy, supported by tools, systems, and behaviors that provide a way to:– specify value– line up value-creating activities in the best

possible sequence– conduct these activities without interruption

whenever someone requests them– and do all this more and more effectively over

time.

Presenter

Presentation Notes

Relentless – we never give up Pursuit – we may never reach perfection, but we are obligated to keep trying Strategic – not all waste is created equal. Go after what affects the customer first, go after bottleneck waste first Elimination – let’s get rid of it (self-explanatory) Waste – non-value added activities, Muda. (I sometimes refer to type I and Type II waste. Type I waste is waste that is inherent in the process, such as shipping from the factory to the warehouse. Under current conditions, the inspection process at the airport is necessary, but the wait (a Type II in this case) can be reduced through better operations.))

Slide Number

Two Foundations• Respect for People• Continuous Improvement

What constitutes treating employees with genuine respect, as opposed to being polite and considerate?

Presenter

Presentation Notes

Lean is predicated on two core principles: 1.) Respect for people and 2.) Continuous improvement. Principle 1 is often “forgotten,” “ignored” or “de-emphasized,” usually by sociopathic consultants. In the Lean community, these sociopathic consultants are referred to as “Mean” implementers. Seek out the people who are doing the work, ask them who is their customer and how value gets created. People = staff, management, suppliers, customers, investors, community 1. Everyone needs to know and feel that he or she is needed�2. Everyone wants to be treated as an individual�3. Giving someone the freedom to take responsibility releases resources that would otherwise remain concealed�4. An individual without information cannot take responsibility. 5. An individual who is given information cannot help but take responsibility. When we do these things, our employees are engaged and value is enhanced.

Three Behaviors• Go see: Go to where the work is done to see

things with your own eyes. Visit the point where value is actually being created (“Go to the Gemba”); verify the situation.

• Wonder why: Ask how things are done. Ask what the problems are. Observe.

• Show respect: Be clear regarding roles, responsibilities, processes & roadblocks. Ask questions about people’s work, but don’t dictate “solutions.”

Where is value created in your operation?When was the last time you visited your Gemba?

Presenter

Presentation Notes

Lean is predicated on two core principles: 1.) Respect for people and 2.) Continuous improvement. Principle 1 is often “forgotten,” “ignored” or “de-emphasized,” usually by sociopathic consultants. In the Lean community, these sociopathic consultants are referred to as “Mean” implementers. Seek out the people who are doing the work, ask them who is their customer and how value gets created. People = staff, management, suppliers, customers, investors, community 1. Everyone needs to know and feel that he or she is needed�2. Everyone wants to be treated as an individual�3. Giving someone the freedom to take responsibility releases resources that would otherwise remain concealed�4. An individual without information cannot take responsibility. 5. An individual who is given information cannot help but take responsibility. When we do these things, our employees are engaged and value is enhanced.

Value and Waste

6 of 33

Presenter

Presentation Notes

At the heart of Lean is the idea that waste reduction increases profitability. Waste is defined as any activity that consumes resources but does not add value to the product or service being delivered to the customer. Both waste and value are defined by the customer, so customer identification is critical. “Learning to See” waste is the first step in eliminating it. There are three classes of waste known by their Japanese names: Mura, Muri, and Muda. Mura means unevenness or inconsistency that manifests as material defects—essentially variation. I assert that unclear and/or inconsistent communication that creates confusion is also an example of mura. Muri translates as “unreasonable.” Within Lean it is used to represent the absurdity or overburdening. Doing too much, too fast, with too few resources is an example of muri. Doing the same thing the same way and expecting different results is also muri. Muda translates as wasteful activity, and there are seven manifestations of this type of waste.

7 of 33

How the Three Wastes Interact

Capacity

Demand Over Time

MudaWasteful Activity

(Excess Capacity)

MuriOverburden

Seven (+1) Wasteful Activities (Muda)

• Transportation• Inventory• Motion• Waiting• Over processing• Overproduction• Defects• Unused Employee Creativity

What are some examples of waste in our organization?

Presenter

Presentation Notes

Transportation—moving a product from point A to point B. For example, having to walk a document around to get signatures is an example of this type of waste. Inventory—We tie up our capital in inventory (inventory is often as a hedge against uncertainty, or due to a lack of information). Until we convert inventory, we don’t get our money back. Do we need 8,000 pencils in our supply closets, or can we negotiate acceptable lead times that allow us to “store” our inventory in the supply chain and pay for it when we consume it (“Just in Time”). Large inventories are also a breeding ground for defects. Motion—with transportation waste, the product moves. Motion refers to the movement of everything else. For example, every time we travel to/from a meeting, that is motion waste. Waiting—Whenever goods are not being processed or delivered, they wait. As I mentioned in our meeting, an application for employment sitting in an inbox is waiting, as is a letter waiting for a signature, a patient waiting to see a doctor, and administrator waiting for data. All non-value-add (NVA) or waste. Over-processing—When we do more work on something than the customer requires, i.e., “gilding the lily.” Software applications for which we pay an annual license fee to obtain 100% of the functionality when we use only 7% of that functionality on a day-to-day basis is an example of this kind of waste. I assert that when we require customers to copy and paste, repeat details on forms, or answer the same questions from different sources, that is duplicative, and therefore over-processing waste as well. Over-production—Producing more product than the customer requires. As we discussed in our meeting yesterday, giving a customer the entire list of documents/reports when all they asked for was the one document or report that would help them is this type of waste. Defects—When a defect occurs, we incur the cost of rework and sometimes we lose the customer. I assert that poor customer service is also a defect. If our customer service is defective, we waste potential positive customer interactions, and have to work to win them back. --You can remember the wastes by their initial letters which spell TIM WOOD. Unused Employee Creativity This includes not fully utilizing their knowledge, skills and abilities. When it comes to improving processes, no one knows the process better than the worker that is involved in that processes each day. The eighth waste was not identified as a waste in Japan and there is some debate about this within the Lean community. In the Japanese culture emphasizes collaboration and teamwork and as a result, they did not see much of this eighth waste because their culture did not produce much of this waste. AND if we remember that the first foundation of Lean is “Respect for People” this waste should NEVER occur.

Three Sources of Conflict

• Disagreement regarding current state.• Disagreement regarding target condition.• Disagreement regarding how to achieve the

target condition.

How do we gain agreement in these three areas in a way that promotes excellence?

Current State

Root Cause Analysis Action Plan

Target Condition

A3 Method

10 of 33

Presenter

Presentation Notes

An 11 x 17 size piece of paper (A3 size) that is used as a template for problem solving and documentation of efforts. A clear, concise, one-page story that promotes focused conversations around things that matter most. A standard, repeatable way to identify and eliminate gaps, thereby achieving and maintaining alignment. A way to facilitate understanding and learning through mentoring. A visual knowledge sharing tool that can be used to build consensus. A way to provoke a desired future by means of the scientific method.

11 of 33

Current State

Root Cause Analysis Action Plan

Target Condition

The right side of the A3 report is used to document the target

condition and the plans to achieve it.

The left side of the A3 report is used to document and analyze the problem or

opportunity

Basic A3 Anatomy

12 of 33

ValueValue is specified by a customer and is created by a producer. • Successful producers solve customer problems by

providing – what customers want– when they want– where they want– at an appropriate and acceptable level quality– safely, easily and cost effectively

• In other words… Successful producers deliver clearly defined value to customers with urgency… and in a sustainable manner.

13 of 33

Value Stream Map

Special type of flow chart that depicts the flow of:

– Inventory– Information & Decisions– Timing

In a way that allows you to identify waste and helps you to eliminate it.

14 of 33

Value Stream Map for Peanut Butter Sandwich

15 of 33

Begin with the Customer

Value Specification

Customer

…

Process N

inputs outputs

1

2

3

Work Backwards

tasks

Process 1

4

Analyze

What is a Lean Process?

• A process in which every step is:– Valuable – as judged by the customer.– Capable – gives a good result every time.– Available – ready whenever needed.– Adequate – just enough capacity.– Flexible – able to switch quickly at low cost from one

product/task to the next.– Velocity is maximized– Lead Time is minimized– Waste is eliminated

How do we achieve and maintain this state?

17 of 33

Standards help you bridge the gap

Current State

Target Condition

Standards

Customer Desire(s)

Door to Door

Work Plan

Value Stream Mapping

“The eyesight is good but the muscle strength is very weak.”

- Sean JacksonCIO UVA School of Medicine &

Physicians Group

19 of 33

Lean Through Internal AuditCurrent State1.) Problem: Auditee’s perceived lack of value of the audit function2.) Invited auditee’s to discuss follow up process; this correctly grew to include our audit process:- Audit Notification Letter (1)- Audit process on standard audit plans (2) - Findings were presented at end of audit (3)- Findings were limited to the auditee (4)

Target ConditionMore dialogue with client so findings are valuable1. Audit Letter includes our objectives and asks

client to offer their objectives & concerns2. Audit includes client’s concerns and client is

more aware of significance of our objectives3. Report status of findings during audit4. Standard workflow upstream root causes

(grew to include all process issues) Lean

Root Cause Analysis1. Too standardized; no interaction with auditee2. Performed audits on our objectives and not

the auditees’ needs or objectives3. Created a “gotcha” mentality; anything of

value was hidden behind auditee’s anxiety 4. The root cause may be upstream. The finding

is manifesting in the audit or with the auditee

Action Plan- Move from audit to advisory - Client owns process; audit helps discussion- Client has to feel safe- Low tech, first- Perfect is the enemy of good Take half loaf- Ask questions, a lot of them, very humbly

Presenter

Presentation Notes

1.) Problem: Manifested in a large O/S Issues Log Audits also closed late Issue became a lack of value from audits 2.) Target Condition & Action Plan: Change from “auditee” to “client” 3.) Action Plan – QUESTION, QUESTION, QUESTION Audit is a great medium for Lean initiatives because we 1.) find problems, 2.) are comfortable with processes for current and future states, 3.) are comfortable enough with numbers to assess value and 4.) ask a lot of questions – and aren’t afraid to do so! Facilitation can include: helping with the A3 or Value Stream Map; keeping the group focused on the risk / problem; identifying new risks / problems; assessing (prioritizing) problems and by asking a lot of questions Client safety: means further findings are off the table and there is no right or wrong.

20 of 33

Charge Capture InitiativeBackground

The UVA Physicians Group (UPG) is a member of the UVA Health System• UPG bills for the professional service and the Medical Center bills for technical• For this project (& presentation), an encounter is a visit with a patient

o An encounter could have multiple services• In FY 2015, UPG billed for ~ 30,000 inpatient and 950,000 outpatient encounters

UPG consists of twenty two (22) clinical departments• Each is an operating segment with chair and administrator and/or billing manager• But share similar resources – e.g. IT systems, Front Desk Staff• Each department can have at least five swim lanes – E&M, Inpatient, Surgery,

Procedures and Emergency Medicine• Ten (10) of the 22 have Surgical Encounters (high dollar / low volume)• UPG Billing & Collections prepares claims & posts payments patient’s account

21 of 33

Charge Capture InitiativeBackground

UPG’s Audit & Compliance Department consists of twenty two (22) employees• Internal Audit: 2; Compliance Audit: 4 (3 filled); Billing Quality: 16 positions (15 filled)• Billing Quality remediates operational & compliance findings from clinical audits

. During FY 2013, Internal Audit (IA) changed its methodology to risk based approach• Documented and tested UPG shared services during FY 2013• For example, we tested Billing & Collections claim generation and posting processes

. During FY 2014, IA continued its risk based approach but extended outside of shared services• For example, charge capture and reconciliation in each clinical department• We grouped departments by swim lane – e.g. the 10 with Surgical Encounters• In the first meeting – and each after - we asked for their charge capture and recon process• We have a total of 1,200 hours – IA, CA & BQ time – for the year

. How long until we identified the lack of a standardized charge reconciliation process?

Within 8 hours

22 of 33

Charge Capture InitiativeHow did we get to the Current State?

Problem: The Health System did not have a consistent way to capture and reconcile charges• Preliminary issues included: Twenty-two clinical departments operating autonomously, each with

as many as four revenue streams each stream with varying source systems and no unifiedapplication or tool to capture (or verify capture) of revenue.

“Modified” because we preliminarily identified the problem during the audit.

23 of 33

Charge Capture InitiativeHow did we get to the Current State?

So, what did Audit do? Remember, we started with a finding but we had to • Verify (and correct, if necessary) our understanding;• Identify the root cause(s); and• Prioritize multiple root causes (if more than one).

1. We assembled our team to include the following, initially: Internal Audit, Compliance Audit, Billing Quality, and (1) Clinical Department Billing Manger* (and one Lean Expert)

2. The Clinical Billing Manger asked for a larger review, covering the Life of Charge3. Quickly, the Lean Expert recommend a Value Stream Map to capture flow of information4. The initially assembled team documented the

• The four revenue streams (or swim lanes) that are prevalent in each department (rows);• The various stages that are prevalent in each swim lane (columns); and• The activities for each swim lane and stage (the body of the report).

5. With an initial Value Stream Map, we brought in other four (4) Clinical Billing Mangers** to corroborate or further refine. 6. Department of Surgery –the Billing Manger and Administrator – requested to be on this project7. In all, we met for one hour each week for six months (approx. 30 hours)

Presenter

Presentation Notes

*Note: This one billing manager has three departments to maximize coverage. **Note: Covered five departments – Surgery, Neurosurgery, Orthopaedics, OTO and Neurology

24 of 33

Charge Capture InitiativeValue Stream Map

25 of 33

Charge Capture InitiativeHow did we get to the Root Cause Analysis?

Over the next four months, the team, including Surgery, finalized the Value Stream Map In addition to the activities, we heard and noted potential waste

• Reviewing the scheduling reports over multiple days for completeness (over processing)• Waiting for a doctor to close a note• Rebilling – or refunding and rebilling – for inaccurate claims (defects)

Discussed the possible causes of the waste• For example, the surgery schedule is distributed every day in .PDF.

• To track (not reconcile) surgeries and billing, the coders 1.) Manually enter the surgery into an MS Excel log,2.) Search for the medical documentation in our EMR (Epic)3.) If there was no med doc, note in MS Excel and re-perform search the next day4.) If there was a note, manually code and enter into the billing system.

• Categorized waste as over processing, but there is waiting, motion & confusion

After completing Value Stream Map, discussing waste and root causes, we asked -“What is your biggest pain point?” Reconciliation. “Tell me what complete looks like.”

26 of 33

Charge Capture InitiativeThis is significant!

Remember, we previously stated with two problems:

1. Specifically: There was no consistent way to capture and reconcile charges We are past agreement. The issue (finding) is being stated (confessed)

2. Generally: Auditee’s perceived lack of value of the audit function The auditee (really, client at this point) is in the room with us and is

actively engaged the problem, root cause and resolution.

27 of 33

Charge Capture InitiativeMove from Value Stream to A3

1. To address the pain point of reconciliation we moved to the A3 tool• 1As a visual tool to build consensus and 2provide a desired future state

2. Developed flowchart of the current state, agreeing on root causes

3. We identified the Director of OR Systems• It took some time to find the right person• He (regularly) attended our weekly meetings• After briefly reviewing current state flow chart, he said -

“That’s crazy makin”

Presenter

Presentation Notes

Superscripts from S Jackson’s A3 slide.

28 of 33

Charge Capture InitiativeTarget Condition

For surgical encounters across Health System1. Receive the scheduled surgeries, electronically (not in .PDF)2. Notify the coders and billers if a scheduled surgery had a note in Epic3. Allow time for “add ons”

• Resulting in a delay in report distribution to minimize over processing

29 of 33


Two Phased ImplementationFirst Phase

30 of 33


Two Phased ImplementationSecond Phase

31 of 33

Charge Capture InitiativeBenefits

1. High Client Engagement & Satisfaction• Eradicated was the ‘lack of perceived value’• Nor did a finding idle because it was ‘upstream’

2. Costs: Estimated Health System savings of $150,000• 10 departs, approx. 3 coders per dept, each coder saving one hour

3. Revenue: Identified a 1.5% miss rate• Not limited to one department, provider or type of service. • Health Systems bills for prof’l services of (approx.) $80-$100M• Estimated revenue pick up is (approx.) $1.2M

Presenter

Presentation Notes

Hourly Rate: $20 Hours saved per dept: 3 Total depts: 10 ------------------------------- Saved per day: $600 Days per year: 250 ------------------------------- Total savings: $150,000

32 of 33

Charge Capture InitiativeHow we realized our benefits?

The client should lead the conversation• From the problem, the current state to the waste and root causes

Audit should facilitate• Help with the documentation, whether the key risks are being addressed, assess

opportunity costs and benefits• Asking questions. Lots and lots of questions

There are no right or wrong answers• And, leave pride, seniority, etc. at the door. It only gets in the way

Team, especially Audit, are responsible for (re)focusing on the problem

Do not strive for perfection. Perfection is the enemy of good.• Well conceived & agreed upon solutions help this Lean and the next one

33 of 33

Lean Questions?

Date post:	27-Jun-2020
Category:	Documents
Upload:	others
View:	1 times
Download:	0 times

A Brief Introduction to Lean - James Madison …...Lean is predicated on two core principles: 1.\⤀...

Documents