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36 McKINSEY HEALTH EUROPE NUMBER 4 THE QUALITY PERSPECTIVE 37
Lean for hospitals:
the quality perspective
Brendan Buescher, Bob Kocher, Russell Richmond, and Saumya Sutaria
To achieve a performance transformation in hospitals, administrators need to combine
an economic strategy with a clinical strategy. The lean manufacturing system address-
es both needs. To be successful, however, this approach requires not just technical
know-how but also a fundamental alteration in mind–sets and behaviors of the
hospital’s clinicians. In the two essays that follow we explore these two sides of the
lean equation, with the goal of raising the bar for medical quality across the board.
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38 McKINSEY HEALTH EUROPE NUMBER 4 THE QUALITY PERSPECTIVE 39
The lean manufacturing concepts developed in the Japanese automobile industry
include many tools that are applicable to hospitals. They reduce costs, align incen-
tives, and improve overall outcomes and quality of care.
European hospitals are under pressure. Cost, quality, operations, and com-
petition are very much in play for patients, policy makers, and govern-
ments. Rising costs and frustrated patients are resulting in a variety of reforms
ranging from experiments with privatization in the United Kingdom
to DRG-based reimbursement in Germany. While it is un-
clear whether a common model of reimbursement will
emerge, what is clear is that hospitals will need to
clearly demonstrate to patients, policy makers,
and governments the value that they create, and
in many cases they must reduce costs.
Often, hospitals have been reluctant to re-
duce costs for fear of compromising the quality
of care. Partly because of their reluctance tomanage costs, European hospitals have developed
some of the most complex, variable, and inefficient
care processes in the world. Length of stay is long,
compared to international peers, and outcomes are no
better. Today, there is a big opportunity for virtually every
European hospital to streamline care delivery. By applying lean
principles, hospitals have been able to achieve dramatic improvement in
care quality, costs, and operational efficiency. We believe that hospitals that
excel across these dimensions will be the winners in Europe.
Many efficiency gains benefit patient care. Emergency departments (ED)
that improve processes to reduce the time required to initiate treatment for
cardiac patients or the time it takes to give medications can directly improve
patient outcomes. In the intensive care unit (ICU), earlier extubation results
in fewer pneumonia cases, while reducing length of stay throughout the hos-
Many people argue that the aggressive efforts by European hospitals to improve effi-
ciency and financial performance have come at the expense of patient care and quali-
ty. This does not have to be the case. Our experience in dozens of U.S. hospitals
shows that it depends how hospitals approach improving efficiency. In fact, initiatives
to lift efficiency can be powerful tools for raising the quality of care at the same
time.
The highest priority for every hospital is to ensure that patients receive the quali-
ty of care defined as »the right treatments at the right time with the right outcome.«
For too long a laissez-faire attitude toward quality has persisted. The pressure today
from patients and policy makers will no longer permit hospital administrators to ne-
glect attending to the clinical quality gap.
To grapple with this complex issue, forward-thinking hospital leaders have discov-
ered the portfolio of lean management tools developed by Toyota Motors and now
used in numerous other industries. When these tools are combined with new atti-
tudes on the part of managers and clinicians, outcomes and operational efficiency
improve at the same time that costs go down. These lean techniques offer hospitals
a simple and powerful way to eliminate complexity, waste, and variability in care-
delivery processes. The current delays, high costs, and suboptimal outcomes that
are plaguing European hospitals, it could be argued, are consequences of the
absence of such a comprehensive performance transformation approach.
In this edition of Health Europe , we present the two parts of this paradigm in
separate essays. First, in »Lean approaches for better care and lower costs,« we
explain in detail some of the techniques in the lean toolkit and how they can be
adapted to hospitals. In the second essay, »Changing mind-sets to achieve
superior clinical quality,« we discuss the necessary changes in mind-sets
and behaviors that will allow stubborn physicians and frustrated hospi-
tal managers to reach détente and work together to improve quality. In
most hospitals administrators and clinicians spend too little time
arriving at a shared understanding of the problem and agreeing
on a performance goal. In fact, almost every hospital has a
long list of improvement efforts that have fallen short
because administrators and clinicians are not cooperating.
A renewed focus on quality helps align the vital stakehold-
ers around the hospital’s most critical challenges.
Bear in mind, however, that it is not enough to
apply the one without the other. Organizations that
think they can adapt the lean management tools
without reaching inside the heads of their physi-
cians and clinical managers will miss the
boat. Mind-sets and behaviors must be al-
tered for the fundamental changes to
take root.
Lean approaches
for better care andlower costs
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40 McKINSEY HEALTH EUROPE NUMBER 4 THE QUALITY PERSPECTIVE 41
pital reduces hospital-acquired infections. In the operating room (OR), syn-
chronizing processes so that cases start on time has the potential to reduce
patient anesthesia time (and the risks associated with anesthesia). It can also
cut down on delays and cancellations for subsequent patients. This article
describes how hospitals have successfully coupled improvements in qualityand efficiency using techniques adapted from lean manufacturing.
The lean toolkit
Toyota Motors realized 30 years ago that teamwork, managing to perfor-
mance metrics, and reducing variance in key processes produces higher-quali-
ty cars and more efficient manufacturing. During that time, Toyota’s princi-
ples, which became collectively known as »lean production,« have been
copied by car makers, other manufacturing industries, and service industries,
all of which have gone on to achieve impressive improvements in perfor-
mance (Exhibit 1).
Seven principles make up the lean toolkit:
3 Identifying customer-focused outcome metrics
3Coupling and collocating linked processes
3Reducing variability by standardizing procedures
3Eliminating loop-backs and circular processes
3Aligning staffing and capacity with demand
3Designing processes for the norm rather than the exception (and handling
complexity separately)
3Measuring and posting performance
These principles are as simple as they sound. Each is time-tested and hasbeen shown to apply in hospitals. In fact, our experience is that the major
challenge in applying lean tech-
niques is removal of complexity
from existing processes. Usually,
processes have evolved organically
over time to encompass myriad
procedures, controls, and steps so
that it is difficult to answer the 2
questions that drive lean thinking: »How does the customer (usually patients)
view this process?« and »What happens next (and what needs to be accom-
plished prior to the next step)?«
How hospitals use the tools
Applying lean principles in hospitals doesn’t have to be a struggle. Many hos-
pital administrators and managers have been stymied by their assumption
that health care complexity and variability makes lean techniques impossible.
Rather, this is the precise reason why hospitals should be tenacious in their
adherence to lean principles. Since patient care is a complicated task where
delivering consistent quality can be the difference between life and death, it is
critical to apply techniques that are proven to improve quality.
We think the entire lean toolkit applies to hospitals and leads to substantial
quality improvements. But it is not always an easy sell within the hospital.
In practice, hospitals have the greatest challenge persuading physicians andnurses to buy in to the process. We find they have special difficulty applying
lean to the following issues:
3Developing a set of patient-oriented quality outcome metrics
3Reducing unnecessary care variability
3Aligning staffing and capacity with demand
3Designing processes for the typical patient rather than the exception (and
handling complexity separately)
3Measuring and posting performance
It is most critical and difficult to develop a set of patient-oriented quality
metrics, determine how to measure the metrics in real time, and gain the cour-
age to post performance. All of the others are simpler to overcome. Clinical
pathways reduce variability, cross-training workers matches resources with
demand, and clinical criteria can be used to identify »typical« versus »com-
plex« patients for care processes (for instance, through fast tracks in the ED).
Many hospitals can easily measure
inputs, such as nursing utilization or
number of procedures, but few hospitals
can measure the outputs that matter to
patients, such as readmission rates.
Source: McKinsey analysis
Exhibit 1
The lean hospital
uMeasures inputs
uFocus on high-profile diseasesrather than common diagnoses
Typical hospital »Lean« hospital
Identifying
metrics
Coupling and
collocatingprocesses
Reducingvariability
Eliminating
»loop-backs«
Adjustingto demand
Designing
processes forthe norm
Measuring
and postingperformance
uTests done in central locations
uPatients moved frequently
uDiagnoses treated differently
by different physicians
uFrequent need to repeat tests
or procedures
uUnplanned returns to OR or
higher levels of care
uComplex processes designed
for all patients
uPoor adherence to processes
uData rarely shared beyond
leadershipuLittle accountability for
performance
uLong delays due to staffing
mismatched with demand
uMeasure outputs
uFocus on common diseasesand outcomes
uTests done at the bedside
uServices brought to thepatients
uDiagnoses treated similarly
by all physicians
uQuality control of tests and
procedures
uFewer patient hand-offs
uFlexible staffing to adjust to
changes in demand
uSimple processes and clear
criteria for use
uHigh compliance with processes
uData shared widely
uBroad accountability forperformance
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42 McKINSEY HEALTH EUROPE NUMBER 4 THE QUALITY PERSPECTIVE 43
Choosing the right metrics makes all the difference
Many hospitals are expert at measuring input-oriented metrics (e.g., number
of procedures performed, nursing utilization) but few focus on output-orient-
ed metrics (e.g., patient readmission rates for related problems, performance
compared to evidenced-based clinical end-points). It is rare to find hospitalsthat measure the outcomes that matter most to patients, such as time from
discharge to being able to resume normal activities (e.g., driving or returning
to work). Moreover, hospitals normally spend far more time and effort track-
ing outcomes for relatively rare diagnoses and procedures (e.g., transplants
morbidity and mortality compared to pneumonia or hernia surgery outcomes).
Our approach to identifying the right set of metrics is simple. Metrics
should be balanced across quality, operations, and financial performance.
Quality metrics should be oriented around the most frequent diagnoses, with
the objective to represent outcomes that matter to patients. These quality
metrics should be proven in the medical literature to improve outcomes.
Importantly, they also must be able to be measured in close proximity to the
care delivered. Finally, more metrics is not better. They should be limited to
less than 5 metrics per diagnosis. Not more than 20 to 30 operational and
financial metrics should be put in place for any area or individual (Exhibit 2).
Creating transparency by measuring and posting performance is essential
Measuring metrics impacts performance. However, driving continuous im-
provement requires sharing performance information and empowering people
to improve the process. Hospitals often have difficulty measuring performance
and are reluctant to share results. Much of the data hospitals want to measureis on paper, not collected, or not accessible. Hierarchy, animosity, fears of
offending physicians, and fear of
legal liability are often cited as
reasons for not sharing perfor-
mance data.
Technical difficulty measuring
data is overcome by resorting to
simpler means. Using paper or Excel data collection templates and simple
databases, instead of complex hospital management systems, usually enables
any hospital to track any metric daily. Many hospitals have developed simple
and inexpensive middleware software solutions to automate metric measure-
ment. It is best practice to measure performance daily, so that success can be
celebrated and gaps addressed while they are still fresh.
Time and time again, we have observed that the concerns related to per-
formance data evaporate once they are posted. In fact, most physicians and
nurses are curious about the quality of care they deliver, how they can im-
prove, and how they compare to their peers. Therefore, we believe that all
data (risk adjusted as necessary) should be un-blinded (always protecting con-
fidential patient data). Performance transparency allows hospitals, physicians,
nurses, and service lines to identify and share best practices while encourag-
ing health competition to improve performance. Current efforts to control
costs and improve quality, like DRG adoption in Germany and NHS reforms
in the U.K., are having the effect of making hospitals and physicians moreinterested in performance data.
Lean tools transform care quality
Lean principles improve performance throughout the hospital. Best practice
is to create a daily management dashboard summarizing overall performance.
Each service line or area should have a set of complementary metrics that
they measure and respond to daily. With such metrics in place, hospitals are
able to implement and realize improvements very rapidly — typically in a
few months (Exhibit 3, next page).
Improving care in the ED
Most EDs are very good at rapidly triaging patients and less effective at
starting treatments. Unfortunately, quality outcomes are dependent on how
rapidly the right treatment is started instead of how fast the patients are
Hospitals don’t like to share perfor-
mance data for a number of reasons,
including a fear they will alienate their
physicians or upset the hierarchy.
Source: McKinsey analysis
Exhibit 2
Lean performance metrics
Quality
uGeneral standards of care
- 30-day readmission rate
- Medication errors per
1,000 patient days
- Falls per 100 patient days
- Skin ulcers per 100 patient days
uCoronary Artery Bypass Grafting - Prophylactic antibiotics prior to surgery
- Percent of surgeries performed off-pump
- Percent of surgeries using IMA
- Hours from surgery to extubation
uCoronary Artery Disease
- Patients on 4 drug therapy at discharge
- Percent of patients with EF<0.3
receiving spironolactone
uDiabetes Mellitus
- Percent blood sugar readings between
100-120mg/dL
- Percent patients with creatinine
< t2.0mg/dL receiving ACE
inhibitor therapy
Operations
uAverage daily census
uAverage length of stay
uAverage discharge time
uAverage OR utilization
uAverage first case
start delay
uPercent OR cancellations
uED visits
uED average length of stay
Financial
uRevenues
uCosts - Labor
- Overtime
- Supplies
- Medical devices/
surgical implants
- Pharmacy
Report cards should be shared by administrators,
physicians, and frontline staff
Metrics
for most
commondiagnoses
Sample lean report card
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44 McKINSEY HEALTH EUROPE NUMBER 4 THE QUALITY PERSPECTIVE 45
moved into a treatment area. For heart attacks, the metric that matters most
is the time from arrival to restoring blood flow to the heart, with the bench-
mark being less than 90 minutes. Typical EDs have protocols for treating
heart attacks, but fall short of the goal of restoring blood flow within 90
minutes. Most often, bottlenecks occur at the step of mobilizing cardiac
teams or releasing medications from the pharmacy. Usually, this is because of
excessive complexity and diagnostic criteria.
Applying lean principles eliminates this bottleneck through a combinationof parallel processing and simplifying complex processes. Additionally,
designs where the cath lab and pharmacy are collocated with the ED can
augment performance. Lean cardiac care reduces the time to restoring blood
flow by simplifying the criteria needed to mobilize cardiac teams or medica-
tions to allow the call to be made earlier in the process and more efficiently
by the primary caregiver (who is not necessarily the most senior physician).
Criteria should be redesigned so that they are based on high positive predic-
tive value rather then a complete set of tests. A single pager number or phone
number should be assigned, and ready sets of supplies and medications
should stocked in the ED. Using this approach, we have seen EDs improve
efficiency by 20 percent to 40 percent (Exhibit 4).
Similarly, by applying the same principles, EDs can decrease the time it
takes to start antibiotics for pneumonia patients. Again, parallel processes
and simplifying the process prove to be critical levers. Ensuring that X-rays
are ordered according to symptoms (ideally at time of triage) and blood cul-
tures are drawn with the initial labs often save hours. Also important is reduc-
ing variability in care by ensuring that patients get the correct medication,
based upon evidence. In most hospitals this translates to a first-line medica-
tion for all patients, with exceptions for allergies and complex patients. EDsshould post their treatment times for cardiac patients and pneumonia patients.
Improving care in the ICU
Mechanical ventilation is one of the most stressful experiences for patients
and families. Managing respiratory physiology is one of the most complex
tasks performed by physicians and respiratory therapists. Clinical studies
have shown that frequent weaning trials and earlier extubation improves
outcomes. The priority for extubation is heightened because patients who
cannot be extubated within 3 days have a much greater risk of becoming
ventilator dependent, which leads to prolonged hospitalization and death.
Unfortunately, few hospitals have robust processes to ensure that ventilated
patients are extubated efficiently.
Lean principles yield several lessons for the ICU: the quality metric of
total intubation time should be measured in hours rather than days, and sim-
ple criteria to evaluate weaning trials (e.g., rapid shallow breathing index)
should be evaluated frequently. All of this should be done in parallel with
other physician activities by respiratory therapy or by nurses rather than pri-
marily by physicians. With appropriate oversight, delegating care to skilled
non-physicians actually leads to more attentive and specialized care. En-
abling less expensive staff to perform previously unimaginable tasks has
been successful time and time again in other industries like airlines, shipping,
banking, and publishing. Physicians should be mobilized when patients meet
extubation criteria, regardless of time of day or day of the week, so that
Exhibit 3
Example of a daily performance management tool
Hospitals should track and widely share their 20 or 30 most critical metrics for
operations, quality, and service performance.
Example metrics Today
u Inpatient throughput
Length of stay (days)
Discharge time
u Operating theaters
Start delays (mins)
Cancellations (%)
Utilization (hours/day)
u Accident and emergency
Length of stay (mins) Leave without being seen (%)
uQuality outcomes
Time to antibiotics (mins)
Extubation time after
surgery (hours)
Time to cardiac treatment(mins)
5.5
2:20 pm
12
0
7
166
2
63
14
82
5.2
2:15 pm
15
2
6.5
149
1
66
13.7
66
5.1
2:28 pm
11
2.5
6.1
155
2
70
14.5
67
4.8
12:30 pm
5
2
7
150
2
30
12
60
Yesterday Monthl y
average
Illustrative
targets
Note: Data are fictitious for this example.
Source: McKinsey analysis
Sharing data daily is powerful. It keeps the orga-
nization focused on improvement and outcomes.
Exhibit 4
Lean emergency departments
Source: McKinsey analysis
Emergency department
length of stay foradmitted patients
Hours: minutes
Emergency department
length of stay fordischarged patients
Hours: minutes
Impact of lean operations
uResults were
achieved after only
3 months, with
improvement ongo-
ing
uHospitals attract
more patients with
faster service
uHigher patient and
staff satisfactionscores; lower nurse
turnover
7:36
4:28 2:54 2:13
Baseline Lean Baseline Lean
25%decrease
40%decrease
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46 McKINSEY HEALTH EUROPE NUMBER 4 THE QUALITY PERSPECTIVE 47
patients can be liberated from ventilators at the right hour. From a quality
perspective, performing timely extubations in the ICU is no different from
delivering timely treatment for heart attacks in the ED. ICUs that adopt these
principles have seen dramatic reductions in ventilator-associated pneumonias,
ventilator dependence, and mortality. ICUs should post their intubationtimes, re-intubation rates, and ventilator-associated pneumonia rates.
Improving care in the OR
Because of the financial implications of sub-optimal OR performance and
the outspoken styles of many surgeons, hospital administrators expend dis-
proportionate amounts of energy trying to improve ORs. Most often, these
efforts result in little sustained improvement and frustration for everyone.
Worldwide, ORs have the tendency to start cases late, manage pre-op process-
es erratically, and inconsistently deliver the right supplies at the right time.
Applying lean principles greatly simplifies OR improvement and creates
an atmosphere of cooperation rather than animosity. The first step is to rede-
fine scheduled time as »cut time« and to track actual cut time versus sched-
uled time. The revelation for most ORs is that the real problem is the pre-op
process. Hospitals should redesign the pre-op process from the perspective
of the patient who desires to have his or her surgery experience from arrival
to completion performed safely and without delay. Again, the principles of
simplicity and standardization in terms of pre-op evaluation and testing re-
sult in large improvements. Additionally, evaluating the next day’s cases in
parallel to identify potential delays (for example, missing history and physical,
consents, and blood requests) pays large dividends and e liminates most can-
cellations. Using these principles, ORs are typically able to reduce start
delays and cancellations by more than 50 percent over a few weeks. ORs
should post their average start delays and cancellation rate (Exhibit 5).
Lean aligns all parties around quality
Many people in health care share the misconception that quality is someone
else’s responsibility. Hospital administrators say it depends on physicians,
physicians says it depends on nurses, nurses say it depends on the system and
management holding physicians accountable. The advantage of using lean
techniques for managing performance is that it makes everyone’s role and
responsibility clear. In a lean hospital everyone is responsible for improving
metric performance. Performance is measured at the individual level (physi-
cian) and service line or unit level (nurses and management). By posting un-
blinded performance everyone can work together to address shortcomings
and achieve targets. Ideally, incentives and accountability are linked to per-
formance (Exhibit 6).
Defining roles and aligning physicians, nurses, and administrators using
lean techniques is accomplished as follows:
3 Physicians are responsible for initiating the right care and designing and
following clinical pathways. Physicians are aligned by improved patient out-
comes, better cost profiles, reduced likelihood of malpractice suits, and sim-
pler care-delivery processes.
3Nurses are responsible for ensuring that pathways are executed and for
helping to measure metrics. Nurses are aligned because it is simpler to care
for patients according to treatment pathways and they are more confident
that patients are receiving the appropriate care. Additionally, efforts should
Exhibit 5
Lean operating rooms
Source: McKinsey
OR utilizationAverage hours per room per day
First case start delaysAverage minutes
Impact of lean operations for a hospital systemAverage improvement across over 30 hospitals
3:30
5:30
Baseline Lean
55%increase
3118
Baseline Lean
106
Baseline Lean
Same day cancellationsPercent of cases
uLean management allows systems tomake step-change in operations
uLean gives individual hospitals autono-my to manage processes and account-
ability for performance
40%decrease
40%decrease
Exhibit 6
Lean management roles: simple, clear, and more effective
Source: McKinsey
Physicians
Lean hospital
High-quality,operationally
efficient, and
low-cost
clinical care
Administrators
uEnsure correct path-
ways are implemented
consistently
uAssist with measuringmetrics
uBe accountable for
metric performance
uProvide resources andtools for physicians
and nurses
uSet targets and hold
others accountableuBe ultimately respon-
sible for quality and
overall performance
uMake the
right
diagnoses
u Initiate
clinical
pathways
uBe account-
able for
metric perfor-
mance
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48 McKINSEY HEALTH EUROPE NUMBER 4 THE QUALITY PERSPECTIVE 49
be made to streamline documentation for patients cared for according to
pathways.
3 Hospital administrators are responsible for ensuring that performance
metrics are measured and managed. They also must provide physicians and
nurses the resources and tools that they need to deliver care. Administratorsare aligned because lean metrics makes quality performance comprehensible
and transparent. Moreover, improving metrics results in both efficiency gains
and financial improvements.
Cheaper and better
Hospitals wishing to pursue a lean transformation for the sake of raising
their clinical quality should enjoy a comparable improvement in financial
results, whether measured in
terms of more patients served for
the same amount of resources
consumed, or possibly even higher
revenues. Eliminating errors,
waste, delays, and variability
reduces costs and eliminates many
of the most frustrating and frightening aspects of care for patients and care-
givers.
Expediting treatment in the ED reduces labor costs and generates capacity
for incremental patients. Moreover, better outcomes for heart attack patients
results in fewer ICU stays and fewer expensive implantable defibrillators.
Extubating patients earlier in the ICU prevents length-of-stay outliers, which
are extremely expensive, and the challenge of finding suitable discharge set-
tings for these patients. Starting OR cases on time creates capacity for addi-
tional cases and reduces overtime costs. Importantly, incremental patients inthe ED, OR, and inpatient units can normally be treated without additional
fixed costs.
The take-away:
1. The time is right for European hospitals to focus attention on quality-of-
care metrics.
2. A judicious application of lean principles, derived from other industries,
can help hospital administrators identify key drivers of clinical quality. These
are often different from the resource inputs that have traditionally been
measured.
3. Lean principles let administrators, physicians, nurses, and other clinical staff
align their priorities around patient-care quality in a transparent way that
encourages accountability and a natural desire for process improvement.o
Changing mind-sets
to achieve superiorclinical quality
To implement lean methods, hospital managers must persuade physicians and nurs-
es of the merits of this system. But it’s not so easy. First, establish clinical quality
as the goal toward which all hospital processes are oriented.
As patient choice comes to play a larger role in European health care, hos-
pitals will have to learn to compete — both economically and clinically
— in ways that were previously unknown. Quality of care plays a role in
both realms. European hospitals are facing rising labor and supply costs at the
same time as patients are demanding higher service levels and clinical quality.
Moreover, the nursing shortage and medical technology innovations are long-
lasting trends that hospitals cannot ignore. Traditional responses,
such as budget increases to offset costs, are unpalatable. It is
time for Europe’s hospitals to re-think the way they deliver
care to arrive at a sustainable, leaner, and higher-quality
model.
Why have hospitals failed to focus on quality
and lean operations? We believe that costs areovershadowing the quality debate. Health
care managers have forgotten that it is
possible to optimize both cost and quali-
ty. Confusing the issue further is the
fact that most hospitals are more
focused on what metrics to mea-
sure, and less on how to influence
the metrics in the desired direc-
tion. In fact, our recent survey of
70 U.S. hospitals and their
directors of clinical quality
supports this. We found a
tremendous attentiveness
to measurement, which
Hospitals that can move more patients
through their existing systems faster
can save on capital investments that
would otherwise be needed to expand
their physical plant.
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50 McKINSEY HEALTH EUROPE NUMBER 4 THE QUALITY PERSPECTIVE 51
seemed to distract from the more proper goal of improving the outcomes of
those metrics.
In the United States, hospitals expend considerable efforts attempting to
measure everything. This has proved misguided and myopic. Europeans
have the possibility to skip this unproductive evolutionary phase in quality
improvement if they pay attention and set their priorities correctly. This is
corroborated by the fact that there has been relatively little improvement in
clinical quality results in the United States over the last 10 years, despite a
concerted focus by many governments, health systems, advocacy groups,
and hospitals. Clearly, it is time for hospitals to focus on execution ratherthan measurement. After all, it is the clinical quality results that matter
(Exhibit 1).
In addition, we believe that achieving superior results in clinical quality
will lead to a sustainable competitive advantage. Demonstrably higher qual-
ity will increase the barriers to entry for competition on lucrative service
lines, and it will make it more difficult for consumers to commoditize their
care, easily substituting one provider for another. In addition, superior
results in clinical quality will make the hospital a more attractive place to
work, which will influence physician and nurse recruitment in tight labor
markets.
Improving performance on clinical quality metrics in hospitals is difficult.
There are multiple stakeholders to consider and influence — physicians, nurs-
es, administrators — and success requires both redesigning processes and
changing behaviors. Unfortunately, the overemphasis on measurement has
prevented many hospitals from acquiring the skillset required to achieve sus-
tained clinical quality metric improvement. Said another way, using current
approaches, many hospitals are unable to actually influence the clinical qual-
ity results that they have worked so hard to measure. Our survey of directors
of clinical quality corroborates this. Hospitals lack a systematic approach toimproving quality results, making inpatient health care one of the last indus-
tries to realize the value of programmatic quality improvement. This must
change, and quickly.
The pieces to the puzzle
Each hospital is different. However, every hospital has the potential to
address in its own way the 3 core elements of performance improvement:
process redesign, clinician behavior, and management capability. Time and
time again, we have witnessed rapid step-change in hospital performance
when these 3 elements are approached together (Exhibit 2).
Making change stick: redesigning processes at the front line
Changing clinical processes works best when those at the front line design
the change — nurses, physicians, housekeepers, phlebotomists, and so forth.
As obvious as this seems, it is the exception rather than the rule for most
hospitals. Most hospitals design new processes and push them down from
the administrative suite to the front line. Usually these are implemented only
for a short time before management’s attention wanders and staff revert to
their former ways.
Exhibit 1
It is not so easy to improve hospital mortality
Source: HCUP Nationwide Inpatient Sample (NIS); Agency for Healthcare Research and Quality (AHRQ); McKinsey analysis
US hospital inpatient mortality Percent, 1993 -2002
uDespite many advances in medical care as well as
tremendous effort and investment by hospitals,
mortality has barely changed over the last decade
u Mortality reduction is the ultimate goal of quality
improvement efforts
* FDA approval of Gianturco - Roubin
Coronary Flex stent.
** FDA approval of Guardian
defibrillator.
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
1993 1995 1997 1999 2001
2002 Average = 2.2 %
10-year improvement
CAGR = - 2 %
Stents*
Implantable
defibrillators**
Exhibit 2
The pieces of the puzzle
Source: McKinsey
Assembled, these pieces result in a step-change in quality
uEngage clinical staff by
forming working teams
uMap existing quality
process
uRedesign using
»lean manufacturing«principles
u Implement and refine
uEmpower physicians to
improve performance
– Make performance
and targets trans-
parent
uFix operations first!
uSupport and reinforce
the changes required
uTrack and share
quality data
– Daily metrics
– Monthly management
reviews
– Quarterly physicianreports
uHold everyone
accountable for quality
Influencing
clinician
behavior
Process
redesign
Performance
management
leadership
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52 McKINSEY HEALTH EUROPE NUMBER 4 THE QUALITY PERSPECTIVE 53
It is critical, therefore, to engage a variety of front-line employees and
physicians in jointly evaluating, designing, and recommending approaches
for improving clinical-care delivery processes. This can occur in a small
group setting, such as a weekly 45-minute team meeting with a defined agen-
da and clear objectives. These teams should have regular access to hospitalleadership to help overcome barriers and communicate progress. Participa-
tion on working teams should be considered a privilege and should be based
upon a record of leadership and high performance.
A bias for action must be infused into the process. Many hospitals suffer
from »analysis paralysis« — a desire to study the problem and design a per-
fect solution rather than make continuous improvements. As a result, too
often the outcome of hospital
meetings is identifying issues for
further study rather than man-
dates for action. As a first step,
senior management can build
momentum and set expectations
by invoking a »do it, test it, fix i t«
mentality, within the context, obviously, of safeguarding the patient. Further,
single-point accountability should be established — one employee should be
responsible for the success of each initiative. We have found that hospital
employees find it empowering to be charged with positively influencing their
own environment. We know from other industries that the real change comes
when front-line employees are allowed to determine how best to do their jobs
and achieve quality targets. This idea is at the core of Toyota’s lean manage-
ment approach that has revolutionized manufacturing.
Once responsibilities are clear, the other principles of process redesign
come quite naturally. There are many frameworks for process redesign. Onethat we have used successfully uses the core principles of six sigma, known as
the DMAIC approach — define, measure, analyze, improve, and control.
When coupled with the toolbox of other lean techniques — visual manage-
ment, standardized operations, error proofing, and pull scheduling — this
approach can be amazingly powerful.
Results can be further turbo-charged when incentives are used to reward
superior performance. Incentives can be small — a prioritized parking place,
a free cup of coffee, a pizza party contest between nursing units — yet are a
powerful technique to influence front-line behavior (Exhibit 3).
Three tools for influencing clinician behavior
If hospital administrators around the world met one day in conference, they
would most likely reach unanimous agreement around the following state-
ment: »My hospital would function so much more smoothly if only the phy-
sicians would change their behavior.« Far too often, hospital leaders and
physicians are at loggerheads over issues both large and small. It doesn’t have
to be this way. Delivering high-quality care for patients is one area where
everyone’s interests are aligned. In fact, we have found clinical quality an
ideal platform on which to change many hospital processes, including those
related to patient service and throughput. Here are three time-tested tech-
niques that help align clinicians around quality improvement and process
redesign: 1. empower physicians to improve their performance; 2. fix opera-tions first; 3. support and reinforce the changes.
1. Empower physicians to improve their performance
Empowering physicians to improve their performance requires sharing the
hospital’s clinical performance data publicly, using the existing clinical lead-
ership to lead process redesign, and clearly communicating goals. Physicians
understand and respond to data. In fact, most physicians and nurses are
curious about the quality of care they deliver, how they can improve, and
how they compare to their peers. Hospitals have traditionally been reluctant
to share or post this information, but hospitals with successful quality im-
provement programs have found that performance transparency allows fact-
based discussions with clinicians. Physicians are naturally competitive and
they are used to achieving goals. Communicating personal performance com-
pared to a blinded comparison to peers can engender healthy competition to
improve performance (Exhibit 4, next page).
Exhibit 3
Incentives to reinforce behavior change
Hospitals should avoid the temptation
to study the problem until they come
up with the perfect solution, instead
of making continuous incremental
improvements.
Behavior
change
Type of
incentive
Results
uAdopt treatment
guidelines forcommon diseases
uRecognition for
physicians achieving
90% compliance
– Closer parking
spots
– »Star physician«
lapel pins– Public recognition
uMore than 80% of
physicians using
treatment guidelines
after only 2 months
uReduce LOS for
surgical patients
uRecognition for
physicians who
achieve LOS targets
– Preferential OR times
uFor nursing units
that achieve goals
– Monthly recognition
– Celebration lunch
with leadership
uOver a 40% reduction
in surgical LOS
– Several physicians
achieving goals
– Healthy competition
among nursing units
u Improve speed of
executing physicianorders
uRewards for nurses
who exceed
targets monthly
– Gift certificates
for coffee, lunch,
or movies
uFor nursing units
that surpass goals
– Monthly pizza party
uSignificant improve-
ment in order
execution times
– Fewer missed
orders
uAppreciation from
physicians
Top 10 Academic
Medical Center*Tertiary-care hospital Community hospital
* According to USNews, 2003.
Source: McKinsey analysis
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54 McKINSEY HEALTH EUROPE NUMBER 4 THE QUALITY PERSPECTIVE 55
Enlisting the support of local physician »champions« to participate in
publicly recognizing their colleagues for successful change can be a powerful
incentive. Visual management techniques can help the hospital avoid the
most common form of resistance to change — lack of clarity about the pur-
pose of change and feedback about progress.
2. Fix operations first
Few things drive an angry physician to an administrator’s office faster thanoperational errors preventing physician performance improvement. It is
essential that hospitals iron the operational kinks out of redesigned processes
before mandating physician compliance. There should be zero tolerance for
front-line operational errors. All staff should be empowered and expected to
do whatever it takes to eliminate errors. Lexus stops the assembly line every
time an operational error is discovered and does not restart operations until
the team is sure that the error can never happen again. Initially, this leads to
several line stoppages while issues are resolved. However, soon the process is
perfect and the line is far more reliable in terms of both quality and produc-
tivity.
A similar approach is necessary to refine clinical processes and eliminate
the bottlenecks that prevent physician improvements. Getting hospital opera-
tions »in line« first (making sure the system functions nearly perfectly with
lab, radiology, nursing, pharmacy) is the necessary quid pro quo to encour-
age physician compliance. An environment that enhances physician produc-
tivity while simultaneously improving quality can also serve as an important
driver of business development.
3. Support and reinforce the changes
Like patients undergoing treatment, physicians need reinforcement that thechanges required are necessary and beneficial. When they doubt the need to
change, physicians are slow to respond — in fact, many take a wait-and-see
attitude toward most hospital initiatives to determine i f leadership is truly
committed to the change. To overcome this inertia, administrative leadership
need to be very firm about their expectations and provide the right incentives
to encourage participation. We have found that public recognition and post-
ing competitive results work quite well. Once physicians understand expec-
tations and recognize incentives, they are quick to respond. In addition, qual-
ity expectations need to be written into job descriptions, the credentialing
process, and hospital bylaws.
Driving results with performance management
Posting data daily is not enough. Management must make nurses and physi-
cians pay attention to performance. Ideally, performance across quality, oper-
ations, and financial metrics is linked to annual evaluations and compensa-
tion decisions. Some hospitals have had success using balanced scorecards.
While integrating lean-management metrics into the annual evaluation pro-
cess is important, it i s critical that performance management occur daily.
Exhibit 5
Performance management approach
Exhibit 4
Sample physician performance data
* DRG 106, 107, 109. ** For all surgeons, 1,077 total admits to FICU.Source: McKinsey analysis
Source: McKinsey
uReview of performance
relative to best practice
u Identify opportunities for
improvement and elimination
of barriers
uRefine current initiatives,
identify issues and barriers
to overcome
uConsider additional areas
for improvement
uLaunch next wave of initiatives
uCreate transparency across
the hospital for performance
in the key opportunity areas
uRespond rapidly to key
throughput metrics and proxies
uShape working team meetings
Timing
Monthly
Steering
committee
meetings
Working teams
responding to metrics
and implementing
initiatives
Daily monitoring of metrics
Weekly
Daily
Purpose
ICU length of stay for CABG-related DRGs* Best practices for sharing
physician performance data
u Performance compared to
peer group (by specialtygroup) and best practices
u F ull portfolio of quality
measures including:
– ALOS– Severity
– CMI
– Mortality
– Disease-specific metrics
u Specific suggestions for
how to improve per formance
and sharing of hospital best
practices
u Peer review and financial
data
u F requent reporting
(e.g., daily metrics andquarterly reports)
Days
Dr. A
Dr. B
Dr. C
Dr. D
Dr. E
Dr. F
Dr. G
Dr. H
Dr. I
Dr. K
All others
205
53
37
294
38
138
93
25
26
136
32
Average:2.3**
Best inclass: 1.5*
1.5
1.8
1.8
2.0
2.2
2.3
2.6
2.7
3.2
4.2
2.6
ICU
admits
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56 McKINSEY HEALTH EUROPE NUMBER 4 THE QUALITY PERSPECTIVE 57
Do you have any questions, suggestions, or comments?
E-mail us at: [email protected]
The authors of this article:
Brendan Buescher
is a Principal in
McKinsey’s
Cleveland office.
He specializes in
health care,
hospitals, andoperational studies.
Bob Kocher, M.D.,
is an Engagement
Manager in
McKinsey’s
Washington, DC,
office, who works
often on hospitalstudies.
Russell Richmond,
M.D., is an Asso-
ciate Principal in
McKinsey’s Boston
office. He has
served clients in
the health care,high-tech, auto-
motive, and finance
industries.
Saumya Sutaria,
M.D., is an Asso-
ciate Principal in
McKinsey’s Silicon
Valley office. His in-
terests are provider
systems, biophar-maceuticals, and
medical devices
and diagnostics.
We recommend a sequential approach for driving continuous improve-
ment consisting of daily data reviews, weekly team meetings to manage
metrics, and monthly steering committees to discuss results (Exhibit 5, pre-
vious page).
Steering committees should be composed of administrators, physicians,nurses, and front-line staff, with the primary objective of demonstrating the
importance of performance and helping teams overcome barriers. An addi-
tional benefit of creating a steering committee is that it keeps clinicians and
senior leadership connected with front-line staff and the day-to-day challeng-
es of delivering high-quality and lean care. Ultimately, this group should set
targets, allocate resources, and be responsible for overall performance.
Lean techniques and these established change techniques — process rede-
sign, influencing clinician behavior, and management leadership — offer hos-
pitals a simple and powerful set of quality-improvement tools. This approach
resonates with physicians, nurses, and front-line staff because it focuses on
patients — delivering the right treatments at the right time with the right out-
comes. We hope that the urgency of the forces at work will help European
hospitals learn from the mistakes the United States has made. The goal
should be to spend less time on quality measurement and more on delivering
results.
Like other industries, hospitals can undergo transformative improvement
using these approaches. Moreover, we believe that European hospitals have
the potential to improve quality and performance by an order of magnitude
similar to other industries that have adopted lean techniques. After all, there
is no intrinsic reason why the delivery of health care should be riskier than
air travel or of lower quality than the ambulance that delivers patients to
the hospital. It is both necessary and inevitable that a Toyota-style hospital
emerge in Europe that will redefine health care in terms of quality and cost.We believe that faced with this challenge, hospitals will be forced to either
catch up or close. Fortunately, hospitals can make this choice.
The take-away:
1. Hospitals should spend less effort determining what metrics to measure
and more time driving whatever they measure to best-practice performance
levels.
2. Rapid and substantial improvement can be achieved by focusing on 3 ele-ments: lean process redesign, influencing and aligning clinicians, and imple-
menting management tools and accountability.
3. Clinicians will follow, and change, once management demonstrates
their commitment by fixing operations, sharing performance data, and
empowering clinicians to shape solutions.o