The market collapse and the recession of 2008/2009 redefined economic reality for corporations around the world. The downturn was particularly acute in Detroit, Michigan, a region already financially distressed. As a result, Beaumont experienced the first recorded operating loss of $30 million, which significantly stressed the balance sheet. The financial turmoil coincided with another challenge the organization faced, new competition in Beaumont, Royal Oak's primary service area with the opening of two new hospitals featuring all private rooms.
The system's financial position needed significant improvement on a rapid timeline. Work force reductions, benefit changes, executive and physician pay cuts and a staff pay freeze were all quickly implemented. Supply contracts were renegotiated and more sophisticated labor management and benchmarking systems were adopted. After these changes were established, Beaumont's leadership began focusing on long-term approaches to drive improvements in quality, patient experience and efficiency and to position the organization for future growth and a healthier balance sheet.
High Value Organization
Beaumont embraced a vision to become a national leader as a high value organization. To realize this vision, the hospital needed to establish an effective, methodical approach to continuously drive higher value in the form of higher quality care at lower costs. In the past, Beaumont's quality and process improvement initiatives relied upon a highly talented management engineering team. While this resource was highly skilled, it could not be scaled to affect the recent magnitude of change in the required short period of time. More concerning, the culture of the organization had become too reliant on engineering analyses and conference room problem-solving. To counter these problems, we embraced a 180° change that focused on observing front line problems first-hand and engaging staff in developing and implementing their own solutions in the moment. We determined that a cultural transformation was needed in order to create an environment in which all leaders and staff were empowered to identify barriers to quality and efficiency and implement solutions directly themselves.
In 2009, as a part of a larger restructuring initiative, Beaumont eliminated the management engineering function and embraced the Toyota Production System approach to process improvement. Under this method, performance improvement responsibility rested with leaders and staff at the point of care, as opposed to a small group of senior leaders. The theory behind this approach is that small, incremental changes made rapidly by frontline staff will yield greater impact than large, centrally driven initiatives created by senior leadership. To succeed, our staff needed the following:
- Skill - Tools and education needed for improving systems "on the line" and not in the board room (the Toyota Approach)
- Empowerment - Base set of rules outlining when change could be made independently and when permission is required.
- Goals - Clear organizational goals to guide their activities and actions
It is challenging to make process changes within large organizations, but as executive leaders at Beaumont Health System, we were committed to increasing value in healthcare. Once we embraced the Toyota model, we needed to ensure we had the right tools needed for success. The first step was selecting a coach who we felt would be best positioned to guide our initiative. We met with several leading representatives in the industry, and eventually selected a small firm based in Ohio to be our mentors and partner. As a mentor and coach, they guide us on how to master the Toyota model for process improvement on our own by developing our leadership skills, rather than come in and do the work for us.
The Toyota approach places emphasis on small, rapid changes tried in "real time" based on observing front-line staff doing their work. A key to this method's success is staff empowerment. While executive leadership drove the process improvement methodology change, its success hinged on the engagement of staff and managers. We needed them to act as real-time problem solvers and in order to do this they needed to feel confident in their ability to implement change. Four easy rules were established to guide all personnel in implementing change under the new process improvement method: any staff member is permitted to implement a change if their idea is:
- Low cost
- Low risk (especially in regard to patient and staff safety)
- Easy to implement (pilots are strongly encouraged)
- Easy to restore the former system if the new idea proves unsuccessful
We wanted staff to know that if their ideas met each of the four criteria then our leadership expectation was for them to implement the change immediately, without specific instruction or permission from leadership.
Our vision is to position Beaumont as the nation's premiere quaternary teaching center, measured as top decile performer. The driving leadership principle is that our teams are most effective when they are focused on a small number of goals and corresponding metrics. So, we reduced our areas of focus down to just three:
- Quality/safety (risk-adjusted mortality)
- Patient experience (HCAHPS)
- Efficiency (CMI-adjusted expense per discharge)
All leaders in the organization are asked to develop departmental and personal work plans that are tied to achieving improvements in each of these three areas.
Once our goals were set, our coaches in place and our staff felt confident in their ability to implement change, we decided to trial the Toyota Production system improvement process through Kaizen activities. Kaizens are two day events where teams observe and rapidly trial solutions to the problems observed. Our first Kaizens began on a single medical surgical nursing unit with the goal of increasing nurse time with patients. Approximately two times a month, a small team of nurses and managers from the unit would spend two days following nurses and observing what was prohibiting them from spending time with patients. As the team members observed a problem, they quickly put a counter measure in place then re-observed to determine if the counter measure fixed the initial problem. Through the Kaizens, the unit began to collaborate with other hospital departments. For example, the team worked closely with the Patient Transportation department and the Pharmacy department to create changes based on their interactions with the unit. Within a few months, through the Kaizen process of solving small problems one at a time, nurses' time spent with patients went from 23 percent to 59 percent. As nursing time with the patient increased, so did patient and staff satisfaction. Another key result of these two day sessions was that team members left them with the ability to incorporate problem solving through rapid trial of change into their work every day.
Today, we actively use this rapid process improvement method to achieve our hospital goals of improving the culture of safety, the patient experience and financial strength. Twice a month, process improvement teams gather to focus on interdisciplinary patient care, and inpatient and Emergency Center patient flow, coupled with specific targeted initiatives. In addition, teams are working on the development of a patient plan of care utilized by multiple caregivers to communicate and achieve patient milestones, early mobilization of critical care patients and reduced delays in therapy treatments. Teams include managers and front line staff, working closely to observe real-time processes and make immediate changes to the work. Even when not participating in an official Kaizen, team members and other staff throughout the hospital regularly incorporate the Kaizen method in their everyday work to make improvements. This mind set is helping Beaumont to cultivate a culture where improvements happen every day, everywhere, as part of the day-to-day work.
These improvement initiatives foster collaborative connections between hospital departments allowing for better problem-solving on issues regarding patient care quality or flow. This helps us to create an overall better patient experience. Our results include significant reductions in severity-adjusted mortality and direct cost per case. We have had a dramatic decline in inpatient length of stay, essentially providing an additional 50 "virtual" beds at no additional cost. Beaumont Hospital, Royal Oak is now ranked as having the fourth lowest risk-adjusted direct cost per case of all UHC academic hospitals.
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