Last Sunday’s issue of Parade, that rather cheesy newspaper insert that predominantly deals with important news from the world of Britney Spears and Justin Timberlake, had an article listing various health care statistics. One of them was "hospital beds per capita," where the U.S. "lagged behind" forty-nine other countries. I’m glad we do.
Why is the number of beds important? From the perception of the customer, does it really add true value? If there’s a hospital with a hundred extra beds, or better yet a hospital with a hundred extra beds but no or lower tech support equipment, is it delivering better value to the customer… the patient? Of course not. In fact, it’s doing the opposite… there is excess capacity with excess infrastructure, thereby driving up waste and cost that must be directly or indirectly distributed to the patient.
The key metric from the customer’s perspective is whether high quality care is delivered when it is needed, and an example of that is "wait time." This is of particular importance in health care where time is not only money, but could also mean life or death. Many people look to Canada as an example of an effective health care system, but as Canada’s Fraser Institute points out each year, wait times continue to increase. In the U.S., diagnostic tests occur within a couple days, critical surgery within a week, and even noncritical surgery within two or three weeks. As the Fraser report points out, wait times in Canada average over 17 weeks for even critical procedures.
So the U.S. has fewer beds but virtually no wait time, and Canada has more beds per capita but longer wait times. The "beds per capita" is not an effective measure of healthcare quality. As an analogy to the lean enterprise world, beds are capacity and wait time is cycle time. We always try to optimize capacity while reducing cycle time, as that creates value from the perspective of the customer.
Per capita healthcare spending is another such metric. Traditional thought believes that more spending must be better, but lean, and data, show otherwise. The U.S. spends more per capita on healthcare than any other country, but is that a good thing? Of course not; we all know there’s a lot of administrative waste. Would "single payer" reduce that? Perhaps, but it would also eliminate most market forces that naturally work to depress costs and improve technology. So somewhere there’s a balance between the complexity (and cost) of multi-payer but market-driven efficiency (reduced cost), and the simplicity (reduced cost) of single-payer but lack of inherent market-driven cost management (cost). No easy answer.
Mark at the Lean Blog has been doing quite a bit of work with lean healthcare. Last month he had an interesting post on cost vs. quality that discussed a study in Denver showing that, on average, hospitals charging the least also provided the highest quality care. The reasoning and data suggests that poor quality, aka poor care, creates the need for additional procedures and longer patient stays, thereby driving up full costs that need to be distributed directly or indirectly to patients. Again, a nice analogy to the lean world where quality problems create defects that create increased cycle time and organization costs to resolve, thereby making the company less competitive.
This all creates an interesting dynamic. On one hand you have price controls creating a brain drain of Canadian physicians moving to the U.S. so they can be compensated better, with better-off Canadian citizens also coming to the U.S. to escape the long wait times (at a price). This in effect creates a dual class healthcare system in Canada, although a judge recently ruled that Canadians can spend more money to reduce the intangible cost of their system. On the other hand you have a flawed system in the U.S., where taking the expensive route of going to the emergency room is the only option for the unacceptably large numbers of uninsured, preventive care is not effectively provided thereby leading to more expensive care later on, and navigating the convoluted web of providers (and the bills than come later) has an incredible waste of unnecessary complexity. (How’s that for being fair and balanced?!)
Hopefully a satisfactory middle ground can be found that truly decreases tangible and intangible cost while preserving or improving quality. However in the meantime, think about the underlying value of the myriad of metrics that are flying around from the perspective of the customer… the patient.
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UPDATE: Mark (Lean Blog) and I were having an e-conversation late last night, and he brought up the similar problem with "ratios." Those ratio metrics like "students per teacher" and "patients per nurse." If you think about it, those types of numbers almost codify waste. In California, in fact, the ratio of patients per nurse is actually regulated at something like 6:1. Mark estimates, via direct experience, that 70% of a nurse’s work is waste… unnecessary movement, trying to find equipment, filling out unnecessary forms, and the like. If a hospital makes the effort to reduce waste, they should be able to increase the ratio without impacting patient care while also decreasing cost and adding value to the patient… but think about the reality of that.
The public and regulatory perception doesn’t take waste reduction activities into account, therefore people would assume the hospital is "cutting corner" when in reality it is improving care. Hospitals actually augment the problem by bragging about how many nurses they have. A secondary problem we have in California is that nursing schools can’t keep up with the demand created by the mandated ratio, therefore they are getting "innovative" at recruiting and processing nursing students. I wonder what the impact on quality is. So is regulating the ratio actually reducing quality of care on multiple fronts?
Nathan A says
Great post, and yes you were unexpectedly balanced. I hope people read it for what it is (a discussion of ineffective and confusing metrics… not a political analysis).
Let’s now wait for all the “anti corporatocracy” leftwingnuts and “anti pinko” rightwingnuts to come out of their closets to spew their usual drivle on your nice centrist post.
Mark Graban says
Thanks for all the shout-outs today, Kevin.
You’re right… more beds might mean that we’re doing a worse job in terms of preventative medicine that would require patients to need a hospital bed in the first place.
Another major dysfunction in health care is that folks are paid for WHAT they do, rather than the outcomes that result. Higher spending per capita might just lead to costly and unnecessary tests or the least-efficient/higher-cost path to the same result. The WSJ had a good article about this last week, how Seattle’s Virginia Mason hospital was reducing wasteful treatment but was getting punished by getting paid less. The incentives had to be re-aligned so that the hospital could get paid MORE for the cheaper procedures, so that all of the incentives could be aligned (save money for the payer, but keep the hospital from suffering financially). A related problem is that hospitals get paid more for treating patients (or treating diseases) than they get paid for curing patients or preventing diseases. I’m not accusing doctors of prolonging illnesses or allowing people to get sick, but it’s an example of the dysfunctions that will make your head spin.
Click on my name for a related post referencing the WSJ article that I mentioned.
The U.S. does NOT lag in per-capita spending. We just don’t get the results for our spending. Japan spends much less and has much higher life expectancy. Go figure. And Toyota’s hospital in Toyota City has just started working on lean, so it’s not a lean issue.
Thankfully, the lean work I’m doing isn’t trying to solve such “boil the ocean” problems. I’m trying to reduce waste that’s much more understandable (and local) than that.
Barry "aka the Hillbilly" says
I wanted to comment, so as not to disappoint Mr. Nathan.
The US has many challenges. I am suspicious of our continuous need to spend more and more of our resources upon Education, Government, and Healthcare. Japan would probably be a good place to look for examples of effectiveness.
It seems that one of our metrics that we think matters is how NICE our Schools can be, how NICE our Hospitals can be, and how BIG our Government can be.
We got along fine throughout our history without Olympic Sized Swimming pools at Schools. It’s funny how our One Room schools were able to produce people who did so many things, and yet we can’t seem to get the same results today with a lot more money being spent. How much is spent is not necessarily correlated with the Quality that is delivered.
I think that in the US we tend to focus on about everything except Effectiveness. Our Friends in Japan tend to focus upon Effectiveness and not on how much they have spent on the Building.
The Medical system is a perfect example of the Accounting systems driving the metrics. Both of them distort the delivery and cost of services to the patient.
A major problem with the US Medical System continues to be the rate of ERRORS. Our System could use a good strong dose of Shigeo Shingo. Just recently a Childrens Hospital in Indianapolis killed several infants. The ERROR was the administration of higher dosages (perhaps Adult) of a drug to several infants. What was astonishing to me was it happened once and then a few days later again.
We could begin to improve these systems by following Onosan. Training everyone to focus upon the processes and then continually improving the effectiveness by removing waste. The customers would benefit through improved services at lower costs.
Father Mike says
Barry came close to hitting on a subject I get riled up about. How about churches, whose “customers” are presumably the less fortunate and unconverted. To create maximum value from the perception of the customer, maximum investment should be made into missions, outreach, and the like. However instead money is spent on lavish cathedrals, avish homes for priests, and don’t even get me started on the hundreds of millions spent to pay off kids that suddenly remember they were molested.
Barry "aka the Hillbilly" says
Father Mike,
I have wondered myself about the waste of heating all of the Churches all week long to preserve the buildings. They are only occupied generally for a few days a week. It’s a shame when the homeless and needy might be sleeping in the cold.
You have to wonder what’s more important sometimes the people or the inanimate objects (the buildings) ??? It’s kind of the same things with the Schools. How about not spending so much to build such big buildings which requires a lot of energy to heat and cool.
I am also of the opinion that we don’t need more administrators monitoring and measuring our teachers. That’s just another layer of HIGH PAID WASTE. Let’s lop off the Administrators and Bureaucrats and pay our Teachers more. Let the Teachers make the measurements on their own processes. They could as a group then report on progress to the community.