Hospital cuts costs through continuous improvements

At Seattle Children's Hospital, nurses used to stash supplies like catheters in the closet and clamps in the nurse's office because the supply system was so unreliable, according to the New York Times.

Thanks to a new supply system, there are now two bins per item. When one is empty, it goes to the central supply office and bar codes are scanned, generating a new order, and the second bin is pulled to the front of the shelf. The new system made it possible for the hospital storeroom to shrink to half its earlier size, meaning fewer supplies are wasted.

The system is part of the hospital's continuous performance improvement (C.P.I.) program that examines every aspect of patients' stays from the time they arrive in the parking lot to when they're discharged to see what could work better for patients and their families. The approach has roots in kaizen, which means "continuous improvement" in Japanese and aims to reduce waste. Toyota is perhaps best known for popularizing this approach

The standardization and nonstop brainstorming with frontline staff and customers that is associated with continuous improvements have paid off for Seattle Children's. Incremental changes have helped cut the facility's costs per patient by 3.7 percent, or a total savings of $23 million, Patrick Hagan, the hospital's president told NYT.

Large medical centers could expect a significant return on investment by using operations management techniques like C.P.I., said Eugene Litvak, president and chief executive of the Institute for Healthcare Optimization. "The healthcare industry could be on the verge of an efficiency revolution, because it is currently so far behind in applying operations management methodologies," he said.

In another project, the chief administrative officer used C.P.I. to design a new $70 million clinic and surgical facility. She and her team mapped out the flow of patients, staff, supplies, and information. Some 50 staff members acted out various scenarios to test the design. The final plan cuts walking distances and waiting times for patients by grouping related facilities together. Creating rooms with more than one purpose also helped the hospital chop 30,000 square feet and $20 million off the new building.

To learn more:
- read the New York Times article

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