When a guest stays at a hotel, they are, at-the-minimum, promised a clean, safe and comfortable accommodation. In addition, depending on the type of hotel, they may also have the opportunity to relax by the pool, workout in the fitness center, or get some work done at the business center. They may also choose to place a room service order for breakfast or visit the restaurant located within the facility.
When a patient is admitted to a hospital for a surgical procedure, then they too need a clean, safe and comfortable accommodation – in addition to appropriate clinical and medical care, of-course. In fact, depending on the nature of the hospital visit, the patient needs include many of the same aspects of a hotel stay such as food & beverage, service, and so on.
So to enhance their effectiveness, should the healthcare facilities focus on what they do best (i.e. clinical and medical care) and partner with hospitality firms to offer the services which are their core competence?
Does the above idea seem far-fetched? Maybe not so — we have witnessed outsourcing and supply-chain partnerships between manufacturing firms located around the world for the last several decades. Similarly, during the last few years, there have been many-many successful examples of service outsourcing and supply chain partnerships across many industries including financial services and other business processes.
Maybe hospitality and healthcare organizations should seriously consider active partnerships and build on each other’s strengths. Whenever possible, this approach will allow them to focus on their own competitive priorities and core competences and leave the rest on their respective supply chain partners. Still not convinced – take a look a this news article which describes how an orthopedic clinic has partnered with Hilton to provide a better care to its patients. A win, win for everyone … and 20% cheaper.
http://www.startribune.com/lifestyle/health/92146304.html
The (Mis)Operations of the BP Oil Disaster
By Ken Boyer, Fisher College of Business and Rohit Verma, Cornell University
Authors: Operations and Supply Chain Management for the 21st Century, 2009, Southwestern Cengage Publishing
Its hard to turn on the TV or access the internet right now without hearing something about the huge oil spill from the Deepwater Horizon oil rig in the Gulf of Mexico. On April 20, 2010 the rig had a huge blowout, blew up, caught on fire and sank. The blowout killed 11 workers, will cost several billion dollars to stop and clean up, and is leaking between 10,000 and 250,000 barrels of oil per day into the Gulf, depending on which estimates you believe. No matter your point of view, this is a disaster of tremendous magnitude. But what does it have to do with operations management? Read on to see a few linkages:
Quality Management: One of the central pieces of equipment in the disaster is the Blowout Preventer (BOP). Essentially a very expensive Poke yoke or mistake proofer, the blowout preventer did not work. For more information on how blowout preventers are supposed to work, go to the following link:
Project Management: A useful rule of thumb for major projects is that “anything that can go wrong, will go wrong” or “expect the unexpected. According to a 60 Minutes interview with Mike Williams aired on May 16, the initial estimate to drill the well, 5000 feet underwater and then 13,000 feet below the bottom of the ocean, was 21 days – at 1 $million a day. But the well took twice that – 42 days. With the schedule slipping, the BP manager ordered the drilling speed to increase. Thousands or millions of project managers over the years have “crashed a project” – speeding up the pace or spending more money to finish earlier, yet often this comes with an increase in the risk of quality problems. In this case, the Williams says “ going faster caused the bottom of the well to split open, swallowing tools and that drilling fluid called “mud.” The original well had to be abandoned and a new one started.
Supply Chain Conflict: BP was the customer of a company named Transocean, which contracted to drill the well. When things get outsourced, there is often tension and competing objectives. According to Mike Williams and CBS:
“In the hours before the disaster, Deepwater Horizon’s work was nearly done. All that was left was to seal the well closed. The oil would be pumped out by another rig later. Williams says, that during a safety meeting, the manager for the rig owner, Transocean, was explaining how they were going to close the well when the manager from BP interrupted.
“I had the BP company man sitting directly beside me. And he literally perked up and said ‘Well my process is different. And I think we’re gonna do it this way.’ And they kind of lined out how he thought it should go that day. So there was short of a chest-bumping kind of deal. The communication seemed to break down as to who was ultimately in charge,” Williams said.”
To see the entire 60 minutes interview, click on the following link. See how many operational challenges can be seen. Clearly, in hindsight, there were numerous decisions that should have been made differently. Unfortunately, hindsight is 20/20 – in oil rig drilling it is hard to determine the proper course of action in the moment.
Sources:
- http://www.cbsnews.com/stories/2010/05/16/60minutes/main6490197.shtml?tag=currentVideoInfo;segmentTitle
- Video of Mike Williams discussing the BP oil disaster on CBS 60 Minutes:
- http://www.cbsnews.com/video/watch/?id=6490348n&tag=related;photovideo
Nurse Kellie Meserve works at a wheeled workstation as physical therapist Laurie Hettinga works at a drop-down computer workstation last week at the acute care of the elderly unit in Virgina Mason Medical. The workstations are an element of Virginia Mason's effort to boost efficiency and reduce waste.
May 16, 2010
By Ken Boyer, Fisher College of Business and Rohit Verma, Cornell University
Authors: Operations and Supply Chain Management for the 21st Century, 2009, Southwestern Cengage Publishing
Virginia Mason Hospital in Seattle has employed aspects of the Toyota Production System to its healthcare procedures. “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.”
After a coincidental meeting with Ian Black, the then lean director of Boeing, Gary Kaplan, CEO of Virginia Mason, became convinced that lean production was the solution. In 2002, Kaplan and a team of executives and managers began annual trips to Japan to study at the Shinjijutsu International Center, one of the world leaders in the Toyota production system. On their return, staff immediately put into practice what they had learned and the benefits of implementing this new way of managing hospitals and patient care. Gains in productivity freed up 77 full-time equivalents (the number of full-time employees) with many being reassigned work in the newly developed lean promotion office. Defects in patient care reduced by 47 per cent while kaikaku workshops (see box) saved the hospital over US $12m during the period 2002 to 2004.
One change made in just five days using the kaikaku technique concerned the delay between a doctor’s referral to a specialist and the first consultation. By examining the process closely it was found that the secretaries, whose job it was to arrange these referrals, were not needed. Instead the doctor would page or text the consultant the instant he decided a specialist was required. This specialist then had to respond in ten minutes, even if just to confirm receipt of the text. Delays in referral to treatment dropped by 68 per cent as a consequence.
On another occasion, staff in the radiation oncology department began an exercise looking at and mapping out the value stream with the intention of eliminating all the waste they could find. Due to the removal of these unnecessary non-value adding activities, which only soaked up resources, the time a patient spent in the department fell from three quarters of an hour to just 15 minutes.
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. How? COWs – short for Computers on Wheels.
At a meeting each week the staff reviews the results of what Toyota calls “Rapid Process Improvement Workshops,” looking for ways to increase efficiency.
In their four day workshop, with the help of a home video camera, the staff of one clinic acted out what happens to a new patient. They came up with 10 things they would start doing differently immediately.
Virginia Mason reached out to area employers like COSTCO and asked them what they needed most from hospital visits.
“I care about quick treatment,” said Katrina Zittnick with Costco. “Immediate appointments, the right treatment at the traumatic, acute time.”
So at Virginia Mason’s back clinic there were dramatic changes, where treatment time was cut from an average of 66 days to 12.
The application of lean techniques is expanding in healthcare. Britain’s National Health Service (NHS) is getting in on the act:
The NHS has been slower to fully embrace lean thinking but is now rapidly making up for lost time. Last January saw the first lean healthcare forum in Birmingham and a second was held in June. Chaired by author and prominent lean thinker Dan Jones, these forums have helped explain and consolidate lean knowledge.
One NHS organisation that has begun the lean journey is Bolton Hospitals NHS Trust. Under the direction of CEO David Fillingham lean has found its way into every department and management decision, reducing waste wherever it occurs and adding value to each step along the patients’ care pathway. Staff too have become more motivated and focused on providing quality care to patients, with each employee responsible for analysing what they do and how they can do it better.
Lean has also been successful in decreasing the length of time inpatients stay in the hospital from an average of 34.6 days to just 23.5. The principal method for bringing about these changes involved looking at the whole supply chain’s value stream as the patient travelled along his or her unique care pathway. Often, in organisations, change happens in a piecemeal fashion with separate departments initiating changes independently.
A lean approach, on the other hand, requires departments to consider from the start their positions in the supply chain and any impact their changes will make on the whole. By ensuring that all the necessary supporting services, such as health records, pathology and secretarial services, work together and come into play at just the right time, the patient, after entering the hospital and beginning the journey, does not need to be kept waiting between processes.
The patient moves or, rather, flows through the system. As one set of processes or treatment finishes another clicks into place immediately.
The Bolton Hospitals and NHS trust has also enjoyed some dramatic changes which have been made to its accident and emergency department and pathology lab, which now operates in half the space it used previously.
As with the Virginia Mason hospital, Bolton has used the kaikaku technique for implementing rapid change. These multi-disciplinary workshops aim to fix a problem in just five days with the new system up and running by the following Monday.
The way it works is quite simple. On the first Monday, a team made up of the department under review, for example radiology, and members from various departments immediately before and after in the supply chain, get together and map the current processes.
The next day, the ideal future state map is drawn up with all wastes identified and removed leaving the following days free for implementation strategies. The idea is that by Friday all the problems will have been solved and a new method of working will have been discovered and implemented ready to begin the following week.
When redesigning the blood science laboratory at Bolton, the team even invaded the hospital’s car park and used cardboard cut-outs of the equipment to map their ideal positions in the lab. They have managed to decrease the number of physical steps it now takes a technician to process a patient’s blood sample. Fewer steps equal less walking time, which means a speedier service. Consequently, blood sample turnaround times have dropped by 90 per cent.
Discussion questions:
- Which techniques/tools of lean can you identify in the stories of Virginia Mason and Bolton Hospitals?
- What are the potential benefits of lean within healthcare? Dangers?
Sources:
- “A Carmaker As A Model For A Hospital?”, John Blackstone, CBS Evening News, June 9, 2009, (http://www.cbsnews.com/stories/2009/06/06/eveningnews/main5068218.shtml)
- http://www.nqic.org/publication/c4-1-125.shtml
Unintended Consequences … of Airline Baggage Charges
Those days are long gone when an economy class passenger could check-in two pieces of luggage for free when flying a commercial airline in the United States. Almost all major airlines now charge $25 or more for each check-in piece of baggage (for example — see baggage rules for United Airlines here: http://www.united.com/page/article/0,6867,52481,00.html). By the way, one notable exception to this policy is Southwest Airlines – they love baggage (see: http://www.youtube.com/watch?v=Pl16hPa1qkQ)!
So why have all major airlines started charging for checked-in baggage? Clearly one motivation behind the new baggage policy is cost reduction due to reduced handing of luggage by the ground staff. Furthermore, if passengers start carrying less baggage then the net weight of an airplane will be reduced leading to lower fuel costs. On the other hand, if passengers continue to carry the same amount of baggage as before then the airline gets additional revenue due to checked-in baggage charges (see: http://blogs.wsj.com/middleseat/2010/05/06/ticket-change-fees-surpass-baggage-charges-at-some-airlines/) for additional details. Win, win both ways for the airlines – or maybe not.
Well, no action goes without reaction, and sometimes they cause many unintended consequences. So let’s discuss some consequences of checked-in baggage fee policy:
Marketplace Effects:
By charging a specific price for every component of a service, the airlines may be converting their market offerings from a “service” to more like a “commodity” and less like an “experience” (see Figure 3.9, page 81 from the textbook inserted below). Past research suggests that such a move will make it harder for airlines to differentiate themselves from each other ultimately leading them to charge only market prices and not premium prices.
Operational Effects:
Since checked-in baggage is not free, passengers are more likely to carry the maximum-size permitted baggage with them as a carry-on luggage. However the storage space in a passenger cabin typically does not have enough capacity to store high volume of luggage carried by majority of passengers. Therefore, during the busy periods and in nearly full-flights, this shortage of capacity requires that the airline check-in the excess baggage (for free!) during the last phase of the passenger boarding process. Such last-min onboard baggage checking means a lot of manual handing of luggage by airline personal in a short amount of time. It is quite possible that during the busy period such last-min loading of luggage may lead to flight delays. Furthermore, some of the last minute luggage may not get loaded on the airplane on time — leading to additional headaches for the passenger and additional costs for the airlines (see http://online.wsj.com/article/SB10001424052748704423504575211960765813420.html?KEYWORDS=airline+baggage+#articleTabs%3Darticle) for a related discussion.
What Next?
Some recent news reports had suggested that now airlines will start charging for carry-on luggage too! Well, this new policy will solve some of the operational problems associated with passengers carrying too much carry-on luggage! At the same time, it will make airlines even more-so like a commodity product. Thankfully, many airlines have decided not to implement such policy (see — http://www.nytimes.com/2010/04/19/business/19bags.html?src=busln).
