How many Sigmas does it take to change a hospital?

I wrote this in response to some comments I received on my piece in HospitalImpact.org.

I do not advocate assembly line medicine, especially at a hospital. I go out of my way to stay out of the healthcare business, the clinical side of healthcare, an area in which I have no background other than having been a patient.

If the hip replacement analogy was a poor choice–my bad. The point of the piece was not the hip replacement, rather the seemingly inability to answer basic business questions relating to how the business of healthcare is run.

I think there is a need for the independence and the je ne sais quoi nature of care. I just happen to think that the business of healthcare and the healthcare business can coexist in a more business-like manner. There are hospitals which get it right, and those which get it much less right.

Some of it has to do with costs, some with waste–wasted time, wasted opportunity, some with ineffectiveness, and some with planning. If one hospital can do X for thirty percent less than another, I think it is worth exploring what accounts for the delta. If another hospital can perform twenty percent more procedures with the same level of resources, that is worth investigating. There is no point keeping metrics unless one is willing to improve them.

I am not big on efficiency. In many cases, efficiency implies speed. It is possible to perform poor processes at a speed which will make your head spin. Lots of hospitals are toying with Lean. Lean works best with a valid set of processes. Without a valid set of processes–best processes–there are not enough Sigmas to justify the expense.

Then there are the cost cutting advocates. Cost cutting is a dead end strategy. Every manager worth their salt can cut costs–less than one in a hundred can increase revenues. What do you do when there are no more costs to cut? Are you more effective, or net-net did you simply replace the brewed coffee with Folgers? Want to cut costs? Lock the doors. But that does not solve anything.

If none of these questions can be answered today, what happens in five years? New entrants will have gobbled up many profitable services and will be able to do so because they do not have “Big Box” overhead. Reform will have forced another business model on large providers. Payors and pharma will continue to battle for their share of each healthcare dollar.

I think hospitals can grab an even larger portion of that dollar, but I do not think they can do it without changing how they approach the business of healthcare.

Paul M. Roemer
Chief Imaginist, Healthcare IT Strategy