Small Batch Elderly Care

The idea of one piece flow being more efficient that batch production is one of those counterintuitive concepts that can make lean manufacturing difficult to implement.  Once we see it in action it becomes obvious and many of us then apply it to other parts of our lives… even making cookies.

A similar struggle is emerging with elderly care.

Traditional nursing homes, many of which care for 100 to 200 patients, are predicated on economies of scale — the larger the home, the cheaper it is to care for each individual resident.

Those of us in the lean world know that "economies of scale" are predominantly figments of traditional accounting, and that improved processes and intangible costs and benefits can render such "economies" irrelevant.

Along comes a guy named Dr. Bill Thomas who holds similar views about traditional nursing homes.

A native of upstate New York, Dr. Thomas headed to Massachusetts to get his degree at Harvard Medical School, then returned to work as a doctor in a local nursing home. He says he was troubled by the experience. "I was distressed by the amount of emotional suffering that people were encountering even when they had good medical care," he says.

Dr. Thomas spent years plumbing the issue, even penning a one-man play about a mythical land where elders were the heart of society. Further inspired by his two young daughters, both severely disabled and cared for at home, Dr. Thomas decided that changing nursing homes from within wouldn’t be enough, and sat down "with a clean piece of paper" to re-imagine elder care.

Tall, sporting a beard and a mane of long, curly brown hair, Dr. Thomas showed up at Robert Wood Johnson’s [fourth largest philanthropy in the U.S.) bucolic campus in 2001 attired in his usual casual garb — he says he wasn’t about to change his ways and decided he was "going there to rattle the cages."

So what did he propose?

"Our energy needs to be around how to replace nursing homes. Not replace the building but replace the idea that older people can be taken away and put into an institution," Dr. Thomas recalls saying. He described his vision of homelike places where elderly residents could gather, dine together and sit before a blazing fire.

Though she was taken aback by Dr. Thomas’s attire, [Jane Isaacs Lowe, who oversees the foundation’s "Vulnerable Populations" portfolio] says she grew fascinated by his idea of a place where seniors could flourish and grow, yet still receive the same high level of skilled nursing care that nursing homes offer.

Dr. Thomas sold them on the concept.

Now the country’s fourth-largest philanthropy is throwing its considerable weight behind the 48-year-old physician’s vision of "Green Houses," an eight-year-old movement to replace large nursing homes with small, homelike facilities for 10 to 12 residents. The foundation is hoping that through its support, Green Houses will soon be erected in all 50 states, up from the 41 Green Houses now in 10 states.

It won’t be easy, yet another example of the unintended consequences of excessive regulation.

One big source of resistance is the dizzying array of federal and state regulations. There are "life safety" rules intended to keep residents safe and prevent them from dying in fires and other disasters; "physical plant" standards that deal with building codes; health-care rules that guarantee a modicum of privacy — requiring, for example, a curtain between beds. Infection-control regulations are meant to stop transmission of disease, while quality-of-life codes try to ensure residents receive adequate recreation and activities. Some nursing-home executives argue such rules can make it difficult, if not impossible, to create the homelike environment that is a Green House’s hallmark.

But the largest barrier is… you guessed it… the perception that large batches are more efficient.

Perhaps the most significant hurdle to Green Houses is the perception that they are too expensive. "The biggest criticism I hear is, ‘How do you make it work financially?’" says Mr. Minnix, whose association represents not-for-profit nursing homes as well as assisted-living and retirement communities.

Michael Martin, vice president of Riverside Health System, which owns several traditional nursing homes as well as assisted living and other forms of elder care, says he was hoping to build some Green Houses and move 120 patients out of the traditional nursing-home beds his not-for-profit operates in Newport News, Va. But after intensive study, Mr. Martin says he concluded that Green Houses simply couldn’t work financially. Green Houses "will absolutely provide a quality of life unsurpassed," Mr. Martin says, but "they don’t work financially without subsidy."

We’ll put Mr. Martin in the same category as manufacturers who believe they much chase low labor costs overseas in order to be competitive.  In the same vein, we’ll add the following to the same category of manufacturers as American Apparel and others that know they can be globally competitive from U.S.-based factories by focusing on removing internal waste, tangible and intangible.

Others disagree. Robert Jenkens, who is spearheading the Green House project at NCB Capital for Robert Wood Johnson, says that some not-for-profits and at least one for-profit believe the model to be financially viable. St. John’s Lutheran Ministries in Billings, Mont., operates both a nursing home and some Green Houses. In an internal review, officials found that it cost $192 a day to care for a resident in the traditional nursing home versus $150 a day in their Green Houses.

While building costs were high, Vice President David Trost says the Green House model also has cost savings. "We no longer have to take a resident 200 feet to the dining room — we only have to take them 20 feet, and that is significant," he says.

Robert Wood Johnson executives say financial sustainability is a question they’re scrutinizing intently. Based on this "first round" of Green Houses, they believe that it is financially doable, but they are rigorously testing the model and developing software that should help providers determine whether they can handle Green Houses financially.

The ability to see the value in 20 feet versus 200 feet is what makes the concept work, and thereby create significant value for the final consumer.  We could even call it cellular elderly care.