Reducing waste, removing cost?

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It is difficult to read most newspaper and digital stories about healthcare without at some point there being some reference to ‘reducing waste’, often in the context in England of the NHS’s financial woes. Waste has a very specific meaning in Lean thinking. One of the two Lean values is ‘continuous removal of waste’, or as I prefer to appreciatively frame it: ‘continuous focus on value’. And value is defined by patients, service users and the public: not staff, nor policy makers. Waste in Lean thinking can anything that is non-valued added as defined by the service user/patient. In addition, eliminating non-valued added steps is a never-ending feat. There will always be more waste, more ‘muda, mura and muri’ (waste, un-evenness and excess-variation; muda is then split further into the 7 wastes). Therefore, there will always be more value to focus on, more to continuously improve.

I remember reading somewhere that a journalist once asked Ohno of Toyota fame, why they focused on the seven wastes and why there was seven? (NB in healthcare we often call it the eight wastes, we like to be different). My recall of this (and I may have remembered this incorrectly) was that he said he thought of waste rather like the seven deadly sins – think of greed as overproduction, sloth as waiting, etc. I’m not sure that having ‘seven’ or ‘eight’ is really the point. It is more about helping staff identify waste, in all its forms, so that improvement work can be done to eliminate waste. Particularly when that waste is preventing value from flowing at the rate of demand and to ensure the achievement of organisational challenges.

In healthcare, there is a lot of waste. Looking for stuff and waiting for something being pretty common, and therefore waste removal in all its forms can be common too. There is a lean saying: Capacity = work + waste. Note, it says capacity. It doesn’t say: Cost = work + waste. Waste reduction and cost reduction aren’t one and the same, even if they are conflated often, especially in those newspaper articles.

When waste is removed and capacity is released there is a choice. What will you do with the capacity released? Do you, as a leader, restructure a team or take out a post and ‘post the cost saving’? Or do you use that capacity to reinvest in the team to reduce some of the overburden on staff, (another of Ohno’s wastes), train up folks to multi-skill them, help staff to go home on time and so on. Or a bit of a combination, related to local context and local challenges, remembering the second lean value of respect for people and society, now and for the future. Some folks don’t make a choice at all, and the freed up capacity just atrophies, as improvement stagnates and becomes a new form of waste. Make a choice, that makes teams feel like they have improved themselves or their colleagues out of job, and the lean improvement work is as good as over. Respect for people is out the window. Yet sadly, many ‘lean’ programmes have done just that, (quite often led by external management consultancies) give lean it’s bad name of ‘lean is mean’: lean is about ‘waste (£)’ rather than quality and value. To my mind perpetuating a really deep seated view that waste removal is all about cost reduction (imho false).

What does that mean? Can Lean not help with cost improvement? Of course it can, but rarely if this is its main aim. Instead, we need to focus on purpose, the ‘why’ first. Why do we have healthcare services? Whom do we serve? Then focusing on how to make that value flow relentlessly at the rate of demand (i.e. focus on quality), then waste drops out, mostly in small increments. Some of that will be cash gains, most won’t. Over time (possibly longer than a typical savings cycle in healthcare) as the small increments start to add up, the cost of poor quality, defects and harm starts to fall and continuous improvement becomes a habit, then the financial benefits become much clearer, [sometimes they can be quicker].

Using an example, let’s say, improving a clinic, so that it runs more often on time rather than 10-20 mins or so late, meaning patients have more predictability (reduced variation and anxiety, less waiting waste, less overburden for the harried receptionist). This, most probably, will have a good impact on patient and staff satisfaction and this type of improvement is, in my experience, usually valued highly by patients. But, unless more patients are scheduled in the clinic or the ratio of new to follow up appointments changes, or the staffing model changes or the number of tests ordered reduce; there probably won’t be much financial benefit to that improvement; marginally less capacity (staff time) handling formal complaints maybe.

However, the improved staff retention rate by making the roles less stressful, therefore lowering the costs of job advertising, recruitment and induction; and temporary staffing issues; improving the consistency through better team work, reducing time looking for stuff and reducing excess variation in practice and reducing errors and harm, probably will. All, waste reduction driven, yet all so much harder to count easily and quickly, and say here is the cost saving. In healthcare, I find it can be very hard to directly link to Lean based improvement activity to cost savings and cash, and hard to say that this one person did this. Yet, this often asked for, even when planning projects, sometimes even before the seven wastes have even been mentioned or any direct observation or measurement has been completed, for a process or value stream to be improved.

Yet, these benefits are some of the significant gains, in a Lean based waste reduction effort nonetheless. I think that sort of respectful waste reduction is worth the cost.

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