The Value of Lean in Healthcare

On November 11, 2010, in Uncategorized, by Shannon Kennedy

The recession impacted every industry across the world, and healthcare is no exception.  Hospitals saw margins shrink and relied on cost-cutting measures and techniques to maintain profits.  The Lean philosophies are some of the many techniques enabling hospitals to cut costs and increase productivity.  Originally designed for use in the manufacturing facilities, lean techniques and philosophies are being increasingly used in office and functional settings.  One of the areas in a hospital where lean initiatives can cut costs and increase productivity is within storage and inventory flow.  With a little training and education, hospitals can find a significant amount of benefits from applying lean.  I recently had the opportunity to sit down with Suzi Collins*, Stanley Healthcare Lean Project Facilitator, and discuss the benefits of Lean:

  • Decrease in inventory loss: Hospitals can lose upwards of 5%-7% of their total inventory every year due to a poorly managed inventory system.  A significant amount of this loss comes from inventory expiring before use.  With lean processes in place, many of these losses can be prevented.  A system of checkpoints can be implemented into the inventory flow to ensure products are used on a First In, First out (FIFO) basis, reducing the possibility of expired items.
  • Locating Items:  Lives depend on the ability of nurses and doctors to locate items quickly within a hospital.  Lean sets a strict inventory flow for the entire building, ensuring that the correct item is in the same place, every day.  Nurses will no longer have to search multiple carts or racks in an attempt to find an item for a patient.  The ability to locate items faster will give the nurse more time at the patient’s bedside.
  • Inventory Stock: One of the biggest fears of a nurse is being unable to find an item in an emergency situation.  Stock-outs are not an option for healthcare facilities.  Lean decreases the possibility of an inventory area having a stock-out through implementing a Kanban system, also known as a 2-bin system.  The 2-bin system ensures that there are two separate supplies of the same item at each inventory location.  When the first “active” supply runs out, the back-up supply is opened and the warehouse is notified that the active supply needs to be restocked. The 2-bin system reduces the amount of time a nurse spends managing inventory, ultimately increasing time for patient care.

The overall goal of lean is to remove waste from the work flow.  With training and guidance, healthcare facilities can realize significant cost reductions and improved productivity by eliminating waste like inventory loss, time lost locating items, and nurse time lost restocking inventory.  Lean is a growing part of the healthcare culture and is proving to be helpful in every facility.

For more information on Lean, see the additional resources below:

http://solutionsforleanhealthcare.blogspot.com/2010/09/lean-is-way-of-future-in-healthcare.html

http://www.hfma.org/Publications/Leadership-Publication/Archives/Special-Reports/Fall-2010/Cutting-Costs-as-Payments-Decline/

http://www.leanblog.org/tag/Healthcare/

http://runningahospital.blogspot.com/2008/08/lean-is-not-about-dieting.html

*Suzi Collins has been a storage and inventory consultant in the healthcare industry for over thirteen years.  Suzi is Lean Green Belt certified and is the Lean Project Facilitator for Stanley InnerSpace.  Specialized training and an understanding of clinical workflow enables Suzi to direct 5S Projects, Value Stream Maps, A3 problem solving, and consult with architect and equipment planning firms.

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