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H&HN Daily

Lean Leads to Gains in Quality and to the Bottom Line

01.17.12 by Matthew Weinstock H&HN Assistant Managing Editor

Denver Health's 'spectacular' story of improving efficiency, saving lives and money.

Editor's note: This blog is part of Fiscal Fitness, a regular H&HN series exploring the cost containment strategies hospitals are employing in response to reimbursement pressures and an uncertain economic climate. Read more at our Fiscal Fitness page.

Imagine going to work every day with these numbers jumping off of your executive dashboard:

  • 42 — percentage of your patient population that's uninsured
  • $275 million — amount of uncompensated care your hospital provided in 2007
  • $450 million — estimated amount of uncompensated care your hospital provided in 2011
  • $4.6 billion — total uncompensated care dating back to the early 1990s

"That is not exactly your dream business model," Patricia A. Gabow, M.D., says with a hint of sarcasm.
Now, imagine having numbers like this jump off of the same executive dashboard:

  • #1 — ranking in patient survival among the nation's academic medical centers
  • $135 million — financial benefit to the institution since 2006 as the result of performance improvement
  • 100 percent — number of patients receiving antibiotics in pre-op
  • 80 percent and $1.75 million — drop in blood clots among hospitalized patients and the savings as a result of reduced complications

"We've been in the black every year since 1991," says Gabow, CEO of Denver Health and Hospital Authority, Denver's public hospital and busiest trauma center. "Over that period of time, we've achieved extraordinary quality outcomes. We've added many new buildings to our facilities, so we've increased our footprint and our infrastructure is state of the art. We've put more than $450 million into health information technology. It could be that we just squeaked by while staying in the black, but that's not the story; the story is quite spectacular, I think."

It's hard to argue with Gabow's characterization. The public hospital system, which cares for nearly one-third of Denver's population, consistently ranks among the leaders in quality of care benchmarks. Its use of advanced information technology has garnered recognition not just from H&HN's Most Wired project, but also from HIMSS and others. Denver Health executives are regulars on the speaking circuit, talking about how they've achieved so much success with such a challenging financial model.

Much of the credit, Gabow says, dates back to the institution's adoption of Lean management techniques nearly six years ago. "I was really becoming frustrated that we were doing things pretty much the same way as when I was an intern 40 years earlier," Gabow says. "I started to ask myself, 'Is there any other industry that has been so stuck in time and been successful?' I talked to a service line director about it and he suggested that we did things the same way because it worked. 'Give me a break. We can do better.' I told him."

So, around 2004, Denver Health applied for and got an AHRQ grant to see if there was indeed a better way. They built an advisory panel and brought in experts from other leading industries — Microsoft, Siemens, FedEx. Physician-astronaut-safety expert James Bagian and then-IHI President Don Berwick also served on the panel. Gabow held upwards of 60 focus groups with Denver Health employees, asking two key questions: "What are the things that keep you from being efficient?" And, "what do you see happening to patients that you think is wrong?" There were also focus groups with patients — insured and uninsured. They hired an industrial engineer to map out processes in the hospital.

After a year of studying operations, leadership determined that there wasn't "one magic bullet," Gabow says. Instead, they realized that they needed a series of "linked endeavors." That's when they turned to Lean management. Gabow says Lean is appealing because it is based on respect and innovation. Secondly, she says, the tools used in Lean are intuitive and relatively easy to teach and learn.

Since launching Lean in 2005, Denver Health has trained more than 250 employees as black belts — which Gabow acknowledges is a term stolen from Six Sigma ("But it was too cute not to use," she says). They've done more than 400 rapid-improvement projects, resulting in that $135 million financial benefit mentioned earlier — about one-third is from increased revenue, another third from cost savings and the final third from increased productivity. Last year alone, the hospital saw $46 million in financial benefits from Lean projects. Impressively, Denver Health has achieved the high quality marks and boost to the bottom line without reducing the workforce.

Initially, Gabow randomly picked five areas to focus on — revenue cycle, community health, primary care, hospital flow and the operating room. The process is much more refined now. There are 16 value streams and an organized method for picking improvement projects. Some are short term, others extend over multiple years, such as revenue cycle, the OR and community health. Each value stream has an executive sponsor and a steering committee that meets monthly. Gabow reviews metrics for all of the value streams and rapid-improvement events every month.

And what's Gabow's proudest achievement? An impressive 60 percent drop in Denver Health's observed to expected mortality. "That meant that last year, 250 people walked out of our hospital alive who would have been expected to die at another academic health center."

Gabow is retiring in September but is certain that the emphasis on Lean will continue, noting that it has become a board priority.

"We have shown that if you get rid of waste, not only is there a financial benefit, but there is a quality benefit," she says. "To think that waste improves quality is incredibly difficult for me to understand."

For executives hoping to learn about what Denver Health has done, or even try to mirror its success, you are in luck, the Lean Academy at Denver Health offers training to hospital across the nation.

"We want to be part of the solution," Gabow says. "We want to help. Our goal is to see improvement" in the U.S. health care system.

Matthew Weinstock is senior editor at Hospitals & Health Networks. You can reach him at mweinstock@healthforum.com.

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