When Methodist Le Bonheur Healthcare in Memphis, Tenn., applied the “lean” principles developed by Toyota Motor Corporation to a laboratory renovation, the benefits were so great that the company decided to take the same approach when the proposal for Le Bonheur Children’s Medical Center, a new 608,000-sf, $300 million children’s hospital, grew too big for its budget.

“We were able to achieve a 15-percent square-foot reduction and avoid hiring three full-time equivalents in the lab,” says David Schlappy, vice president of performance excellence at Methodist Le Bonheur Healthcare, Le Bonheur’s parent company. “That was an ‘aha!’ moment for us, and we decided to take a look at (the lean process) in the new hospital.”

Testing “Lean” in the Laboratory

More than a year ago, consultants hired by Le Bonheur spent 14 weeks examining operations and work flow in a laboratory of the existing children’s hospital. The lab was filled with benches and cabinets in a traditional university laboratory configuration.

Once the new hospital opens, the owners intend to demolish most of the old hospital, including where the lab is situated, and renovate the remaining portion of the building to house the lab. The lab was so inefficient that the owners decided to invest $60,000 in renovating the old space even though it is slated to be demolished.

The consultants learned that the testing areas with the highest volume were located farthest from where the samples came into the lab. In addition, the store room was in the back of the lab, which required suppliers to walk through the lab in order to restock it, and made it inconvenient for the lab technicians to retrieve supplies.

“There was a lack of good access to the supply room,” says Sheon Lynch, administrative director of operations for Le Bonheur Children’s Medical Center. “There were examples of that in most of the areas we went to. A key component of lean design is better management of supplies.”

Another key principal is “visual management.” Lab managers used to be in their individual office, so they often did not notice a problem until someone brought it to their attention. The lab was redesigned to have the technical specialists’ desks arranged in an island in the middle of the lab from which they can see the technicians who work for them, watch the process, and flag problems quickly.

These changes might seem minor, but the waste they eliminated is remarkable when quantified. Take, for example, the pneumatic tube system that floor nurses use to send specimens to the lab. The receiving station—where the tubes arrive in the lab—used to be located 40 feet from the technician’s desk, where the specimens are processed. A lab technician needs to walk 80 feet to retrieve each specimen, and the lab analyzes about 150,000 specimens a year. That totals more than 2,270 miles of walking. At three miles per hour, it adds up to 757 hours, or 36 percent of a full-time-equivalent position just walking back and forth with specimens.

“It’s like compounding interest,” says Schlappy. “They removed waste that did not add value to the test results.”

In the one year that the lean design and process improvements have been in place in the lab, volume there has increased by eight percent, overtime and contract labor has dropped by five full-time equivalents, and test turn-around time has been reduced by 35 to 46 percent.

“The lab has more volume, fewer people, and a quicker turnaround,” says Schlappy. “That improves patient care.”

In addition, the improved efficiencies freed up 3,600 sf of space that can now be used for other purposes.

Lesson Learned

By the time it became clear what lean design could accomplish, plans were well under way for the new 13-story children’s hospital. It wasn’t until the initial hospital design came in too big and too expensive that administrators decided to apply lean principles to that project, as well.

“It wasn’t so much the cost as the size,” explains David Rosenbaum, vice president for facilities management for Methodist Le Bonheur Healthcare. “The original design was 678,000 sf. Using lean process and a lot of other methods we got 10 percent less building at a savings of $20 million.”

About $3 million in savings can be attributed exclusively to lean design, he says.

“We did it backwards in the hospital,” admits Schlappy. “The typical, and better, way to do it is to redesign the process and then match the space to achieve that process.”

In a project this size that sequence entails a major up-front investment, including paying for consultants and spending one or two years analyzing existing processes from start to finish.

The cost of lean consulting is “substantial,” says Schlappy, “but the project pays for itself in one to two years.”

Le Bonheur didn’t have the time or the budget for that, and the architect had substantially designed the building already, so the consultants focused only on the most production-oriented areas in the hospital where they would generate the greatest return: the operating room, the emergency department, radiology, pharmacy, and outpatient clinics.

The lean process required the consultants to track the flow of patients, supplies, and information, and find areas where the system fell apart. They found a lot of problems in the existing hospital and in the design for the new one.

“The layout was broken and the pieces were everywhere,” Schlappy says of the initial design. “The architects designed individual departments and stuck them wherever there was space.”

The intensive care and post-anesthesia care units were not adjacent to the operating rooms, for example, which would require transporting patients more than necessary.

Similar inefficiencies were apparent in the emergency department where the highest-volume area was the farthest from the entrance, meaning that the layout forced patients to travel more than they should. Radiology, for example, should be located near the emergency department so people arriving with broken bones don’t need to be transported to other parts of the hospital for x-rays.

A standard part of the lean consulting process is to video tape one product from the start of production to its completion. In a hospital setting, that means video taping patients (with their consent and without identifying them) from the time they enter to the time they leave.

In the emergency department, for example, the video taping uncovered a disconnect between the number of times a patient’s vital signs were taken and the various doctors and technicians who needed to see that information. Managers changed the flow of information by requiring technicians to take vital signs once and passing the results along, rather than repeating the tests numerous times. That kind of process improvement can occur regardless of the physical space, so changes will be made by the end the year, says Schlappy.

Schlappy stresses that increases in efficiency and cost-effectiveness do not translate into decreases in patient care.

“Process improvement cannot come at the expense of patient safety,” he says.

In fact, greater efficiency frequently enhances patient satisfaction. An inefficient emergency department causes a longer wait before patients see a doctor, meaning some will give up and leave without being treated.

Approximately 6.2 percent of emergency department patients leave Le Bonheur without being seen. The rate is expected to drop to less than three percent once lean processes are in place, resulting in an annual revenue gain of about $250,000.

“That is money walking out the door,” says Schlappy. “Preventing that from happening is revenue capture, but it is also better patient care.”

Continuous Improvement

Groundbreaking for the new children’s hospital is scheduled for February 2008, with completion projected for fall 2010. Most of the existing hospital will then be demolished, with renovation of the remaining portion for the lab scheduled to be completed in 2011. Occupying the new buildings will not mark the end of the project, however.

Schlappy says lean is 20 percent tools—including visual management—and 80 percent management.

“Lean requires discipline not just to get it done, but to hold the gains, and more importantly, continuously improve long after the initial project is over,” says Schlappy.

He likens the process to cleaning and reorganizing your garage. No matter how neat it is when you finish, you will not benefit from the more efficient organization unless everyone is committed to putting things back where they belong. If not, the garage soon will return to a disorganized mess. Likewise, no matter how well-designed the new facility is, and how organized the new processes are, they will not generate efficiencies unless people are willing to change how they work.

The lean process relies on the strength of managers to lead and support front-line employees whose jobs may change dramatically as a result, says Lynch.

“This completely changes the way they do their work, and change is difficult for everyone,” she says.

In Le Bonheur’s case, the process also generated recommendations for process improvements that far exceed the limits of the original project.

“In the operating room, we found more than 100 things that need to be fixed—mostly having to do with scheduling and patient flow—but they are not part of the original scope of work,” says Schlappy. “We will continue to work on those.”

By Lisa Wesel

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