Using minimal training and a four-part strategy, a hired gun helped an academic health center save $54 million in hard cash over a three-year period.
By the time Alicia Schulhof came on the scene, Indiana University Health had already tried some performance improvement projects aimed at improving its cost competitiveness.
The problem: IU Health is an academic health center with more than 2,500 beds. Its projects, though effective, were scattershot and not deployed system-wide, limiting their effectiveness.
The board and CEO recognized that the process needed to be more unified, and it needed to move faster. To improve the speed of the transformation, then-IU Health CEO Dean Evans brought in Schulhof, a former HCA chief operating officer, to direct an effort to reduce the cost of care at IU Health.
She was put in charge of convening a study group to find a system-wide value-improvement tool that could enlist all employees.
Schulhof ultimately chose Lean because of its ability to engage large swaths of employees by transforming culture. Named to lead performance improvement at IU Health's Office of Transformation, she was ready to roll.
She credits four critical strategic steps that ultimately helped the health system save $54 million in actual costs, and overall, more than $130 million "if you add in efficiency," she says.
1.Convince your work force that transformation is not a euphemism for layoffs.
The Office of Transformation was created concurrently, but unrelated to, a reduction in force. Schulhof had to convince the first of 12 local offices of transformation she would open during 2013 of the fact that Lean was not brought in to cut jobs. Indeed, she says, it was intended instead to remove redundancies in processes and reduce expenses to avoid the need to cut jobs.
2.Base your transformation on a 'unified philosophy.'
When Schulhof was evaluating performance improvement methods, she was agnostic. But what appealed in Lean was the fact that it allowed anyone in the organization not only to participate but lead projects to improve their work efficiency with minimal training, unlike methods such as Six Sigma, which requires a skill set many team members don't have, she says.
Employee surveys show that their perception of engagement with IU Health is higher if they have been involved in the Lean program, which now reaches all 15 hospitals and has been introduced through 1,150 "events" and 345 "projects" to 9,411 employees.
"Physicians are the best example of this," says Schulhof. "Their time is precious. They'll always say they can't commit two-to-three days for an event. I would always ask if they could just come in for first hour or two hours. Time after time they would come in and never leave."
3.Let employees lead it.
"[Lean] allows every one of our 35,000 team members to be a problem solver," says Schulhof.
That may be a slight exaggeration. Slightly fewer than 10,000 employees have participated in a distinct performance project so far, but the transformation effort has reached wide. It's been installed at all 12 regions and 15 hospitals.
And it goes and deep, as Lean performance improvement projects can be extremely specialized. Schulhof does not prescribe efficiency projects. Her office and the consulting company IU Health hired to help with the process rollout train local offices in the statewide health system to find promising projects.
While many companies use industrial engineers as project managers, at IU Health, those engineers are ordered not to solve problems themselves. Instead they are instructed to act as coaches.
4.Use a dashboard to track progress.
Each IU Health region tracks its Lean projects using about 15 metrics that are the same across the system, and are based on quality, people (employees), service (patients), finance and growth. On Schulhof's dashboard and those of people who are managing the projects locally, those metrics for each project appear either red or green based on progress against goals.
"That's how we can save $54 million," says Schulhof. "If you add in efficiency, we're over $130 million now."
Philip Betbeze is the senior leadership editor at HealthLeaders.