Wednesday, June 10, 2009

Can hospitals learn a bit from the fall of the automobile industry?

currentcoverus_large I read two articles today and it is funny how the mind makes linkages. The first was from the Economist magazine, where they discussed lessons learned from the largest collapse of an industry in our nation’s history (link) and the second was an article on Virginia Mason Hospital in Seattle (link and related link).

From the Economist:

…The problem in the 1970s was not really the arrival of better, smaller, lighter Japanese cars; it was GM’s failure to respond in kind. Rather than hitting back with superior products, the company hid behind politicians who appeared to help it in the short term. Rules on fuel economy distorted the market because they had a loophole for pickups and other light trucks—a sop to farmers and tool-toting artisans. The American carmakers exploited that by producing squadrons of SUVs, while the government restricted the import of small, efficient Japanese cars. If Detroit had spent less time lobbying for government protection and more on improving its products it might have fared better. Sensible fuel taxes would have hurt for a while, but unlike market-distorting fuel-efficiency rules, they would have forced GM to evolve.

From the CBS Evening News:

Virginia Mason changed the way it practices medicine based on an unlikely model - the way Toyota builds cars. "At the end of the day, the Toyota production system is all about the customer," said Dr. Gary Kaplan, the CEO of Virginia Mason Hospital. "For us the patient."

Kaplan takes staff to Toyota's factories in Japan every year and practices what the car maker preaches. Just as the automaker's executives spend part of each day on the factory floor, Kaplan tours the hospital daily looking for problems and solutions.

Everyone is encouraged to look for changes to make work more efficient. Nurses developed ways to spend most of their time with patients instead of at the nursing station…

So at Virginia Mason's back clinic there were dramatic changes, where treatment time was cut from an average of 66 days to 12.

Just like with carmakers, hospitals have focused less on continually improving their products and more on lobbying governments for short-term protection and negotiating with other stakeholders for increases/concessions (insurers/labor). And what do we end up with?expensive cost-guzzling procedures (the SUVs of health care…though, to their credit, customers demanded SUVs until recently…let us hope the same can be said for wasteful health care).

Now, why is this? Well, first off, it is hard to blame hospitals because they are only responding to the incentives that exist in our health care system. Secondly, it is easier. Hospitals are usually the largest employer in their area and they can throw a lot of political weight around. But more importantly, looking inward and improving oneself is much more difficult than looking for someone else to solve your problems. Changing a culture, team-building, and staff empowerment, just like what they did at Virginia Mason, is a very difficult task that necessitates a significant amount of leadership.

The shame is that in today’s health care system, there is a greater financial incentive for hospitals to operate like the GMs of the world rather than the Toyotas of the world. So, rather than focusing on the “stick” and saying that we will know health reform is working when we have fewer areas like McAllen, Texas (see post and article), we should be focusing on the “carrot” and say that we will know health reform is working when we have more hospitals like Virginia Mason. ~BAA

Note: I just found it interesting that Toyota and their “lean manufacturing” techniques pushed one industry to the brink but may be the saving grace for the other.

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