Background Information
In the recent past, hospitals have grappled with the increasing operational costs. The effect of such increased costs in a hospital setting is an overall increase in the cost of healthcare. In most cases, hospitals pass on operational charges to the patients (Janiszewski, 2017). Given the sensitivity of healthcare services, an increase in the cost of healthcare is increasingly raising concern among stakeholders and consequently becoming an area of focus for most hospital management. As such, there is increasing need to manage operational costs in hospitals and hence maintain the lowest possible cost of healthcare. Moreover, payers are also putting into consideration the quality of service as well as cost performance in the determination of claims reimbursement amounts. Therefore, most hospitals are considering ways of cutting down operational costs and consequently improving their overall cost performance.
Description of Practice
One of the best practices that can help hospital management in cutting down the operational costs significantly relates to adopting lean management practices in their supply chain. In the context of a hospital, supply chain refers to the process through which hospitals get their medical services and goods from their manufactures and how such goods and services get to the patient (Janiszewski, 2017). Lean management practices take the approach of continuous improvement. In this approach, the organization undertakes a systematic approach to creating improvement in small but continuous bits. It involves a continuous reevaluation of the processes and procedures to continuously improving such processes and procedures while monitoring the overall outcome of such improvements. The focus of lean management practices is both on quality and efficiency aspects of the organization. It seeks to improve the process efficiency, and product or service quality is small but incremental changes (Noori, 2015). Therefore, adopting lean management practices in hospitals will help in reducing operational costs in hospitals and hence reduce the overall cost of healthcare.
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The lean management concept dates back to 1799 when Eli Whitney invented cotton grin (Hellner, 2011). He was able to cut down on operational costs significantly and consequently offer products to the U.S Army at greatly reduced prices. His focus in interchangeable parts formed the basis of the development of manufacturing the subsequent years. In the subsequent 100 years, the focus in manufacturing shifted to managing processes and interlinking within a system. Moreover, the methods of accomplishing task were also at the center of this development. The Ford Motor Company then used this approach in cutting down its cost of operations through continuous improvements from 1910 (Hellner, 2011). Therefore, Ford formed the foundation of lean management. The practice of lean management has evolved and found a wide application in several other sectors including the service industry. Its effectiveness in reducing redundancy in the process and improving efficiency has been proven in diverse settings.
Analysis
This analysis is based on the applicability and effectiveness of lean management in hospital in cutting down the cost of operations. The analysis is further based on literature review and comparison of best practices among healthcare facilities. While most hospitals have focused on their billing process as well as their service portion, a holistic approach to lean management still provides great potential for cost reduction in hospitals (Janiszewski, 2017). In healthcare, the management of supply chain involves obtaining medical resources, supplies management, and the delivery of services and goods to patients as well as providers. While most hospitals have focused on improving the quality of their services, they have largely ignored the aspect of cost in such improvements (Noori, 2015). Therefore, improved healthcare services have come with huge cost implications no wonder hospitals offering high-quality services charge high prices as well.
The major gaps in the management of costs relate to the use of redundant practices and procedures in the administration of healthcare. It is imperative to note that each of these practices and procedures requires resources. Consequently, such practices and procedures that do not add value to the final patient experience and quality of healthcare essentially wastes resources and add to the overall cost of operations unnecessarily (Janiszewski, 2017). Moreover, the technological developments in the field continue to render most procedures irrelevant (Noori, 2015). Therefore, a continuous re-evaluation of the relevance of processes and procedures will be critical in the elimination of irrelevant procedures and hence continuously improve the cost performance of the hospitals.
Recommendation
Given the nature of the healthcare system and the sources of healthcare cost discussed above, a lean management system will be effective in reducing the operational cost in hospitals. Through lean management practices, healthcare facilities will be able to define value in healthcare from the perspective of patients as well as other stakeholders in the healthcare system. Moreover, the lean management practices will help in identifying redundancy in every process or procedure employed in the hospital (Janiszewski, 2017). The strategy will help in the elimination of steps, processes, and procedures that overall do not add value to patient experience and quality of healthcare. Consequently, this will eliminate the cost associated with such steps processes and procedures. Furthermore, the use of lean management will lead to a sequential following of value adding steps in any process and procedure. This will optimize the resource used and create efficiency within the hospital. Lastly, repeating the steps above in a continuous process will lead to overall process improvement and continuous reduction in the cost of healthcare (Noori, 2015). The hospitals and the society should advocate for lean processes to reduce the cost of healthcare and consequently make quality healthcare available to everyone.
References
Hellner, B. (2011). A Brief History of Lean Management. Lean management for Systems Engineering, 2 (1), 9-13.
Janiszewski, J. M. (2017). Lean management – organizational innovation in hospitals. Europa Regionum, 31 , 79-92.
Noori, B. (2015). The critical success factors for successful lean implementation in hospitals. International Journal of Productivity and Quality Management, 15 (1), 108.
