'Lean' adoption at public hospitals has improved finances and efficiency, reports survey

Over half of public hospitals in the United States have adopted the "Lean" management strategy, leading to improvement in financial performance and efficiency, reports a national survey in the November/December issue of the Journal of Healthcare Management, an official publication of the American College of Healthcare Executives (ACHE). The journal is published in the Lippincott portfolio by Wolters Kluwer.

Although Lean management in public hospitals is associated with increased efficiency and financial metrics, it hasn't yet been associated with improvement in patient outcomes, according to the study by Justine Po and colleagues at the University of California, Berkeley.

Lean adoption at public hospitals – How has it affected performance?

Originally developed in the Japanese automotive industry, Lean management has become a popular approach to continuous improvement across a wide range of industries. In healthcare, Lean may be defined as "an overall management and operating system that uses a continuous improvement culture that empowers frontline workers...to solve problems and eliminate waste by standardizing work to improve the value of care delivered to patients."

Using hospital survey data from 2017, Po and colleagues assessed rates of Lean adoption at US public hospitals. The relationships among Lean methods and financial performance, patient outcomes, and patient satisfaction were assessed through linkage of data from the hospital survey on adoption of Lean methods as of 2014 and 2015 Medicare/Medicaid data (the most recent year for which outcome data were available).

Of 288 public hospitals included in the study, 54 percent had adopted Lean methods. Average time since Lean implementation was about 4.5 years. Lean was implemented in 12 out of 29 possible hospital units – most commonly the emergency department (ED). Commonly used Lean tools and activities included daily huddles, "plan-do-study-act" cycles, visual management, and use of standard work.

By comparison, the rate of Lean adoption was higher at private, non-profit hospitals, 78 percent; but lower at for-profit hospitals, 36.5 percent. But even compared to for-profit hospitals, public hospitals had a lower extent of Lean implementation and were more likely to say they were in the "new start-up" stage in their Lean program.

Lean implementation at public hospitals was favorably associated with an important measure of an organization's operating profitability: earnings before interest, taxes, depreciation, and amortization margin (EBITDA). Lean-adopting public hospitals also had a lower percentage of patients leaving the ED without being seen – a key indicator of efficiency.

But Lean adoption at public hospitals was not significantly related to important patient outcomes, such as mortality or hospital readmission rates; or to patient satisfaction scores. Po and co-authors write, "It is possible that the primary interest in Lean implementation at public hospitals has been on improving efficiency, with lesser attention given to improving patient outcomes."

While more hospitals have been adopting Lean methods, few studies have focused on public hospitals, which are a "crucial part of the healthcare safety net in the United States," according to the authors. "Despite their importance, public hospitals generally have fewer resources to deliver care than their private nonprofit and for-profit counterparts do."

The study is the first in-depth analysis of Lean adoption at US public hospitals. Po and colleagues conclude:

The findings provide public hospital leaders and policy makers with improved data to benchmark Lean implementation and explore opportunities for improvement."

At a relatively early stage of implementation, Lean adoption seems to be significantly associated with financial performance, but not with patient-reported outcomes. That raises a rhetorical question, suggests JHM editor Eric W. Ford, PhD: "What is the intended end of Lean adoption? Maybe it performs as intended, and health systems use it primarily to focus on efficiency."