Lean Manufacturing Principles: Can They Reduce Costs in Healthcare?

Lean Manufacturing Principles: Can They Reduce Costs in Healthcare?

by Jeanne Knutzen | March 12, 2013

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While the economy recovers and many business sectors return to normal rates of purchasing, hiring, and expansion, the healthcare industry is still experiencing enormous—and growing—financial pressures. In the face of these pressures, healthcare managers are predictably turning to staff reductions, workforce shaping, and layoffs. But a closer look often reveals that drastic staffing cuts aren’t the only solution. In fact, relying on layoffs may actually not lead to long term cost reduction and may allow mangers to ignore more pressing cost-control issues inherent in weak processes and procedures.

If you’re in a healthcare management position and you’re looking for ways to cut costs while avoiding layoffs and improving patient care, consider borrowing from the manufacturing sector and incorporating the principles of lean manufacturing into your facility or clinic. Start with the recommendations below.

Cut Costs in Healthcare Using Lean Management

1. Streamline clinic design

Attack construction and expansion projects first during times of high financial pressure. Instead of expanding recklessly, reduce capital spending and find ways to make better use of existing equipment and space. This may require revaluating floor layouts, or redrafting plans to make pending expansions more efficient.

2. Reduce preventable events

Insurers and Medicare are increasingly unwilling to pay for events and conditions considered “preventable”. These can include anything from pressure ulcers, to falls, to accidental amputations. Since these events tend to occur more often when clinics are understaffed and professionals are overworked, reevaluate layoff plans and instead, take a close look at documentation procedures, training protocols, and other ways to reduce these problems at the source.

3. Take a closer look at your supply chain.

Re-examine vendor contracts at least once a year, and in the meantime, consider the ways in which products are ordered and stored. Receiving items in smaller batches, for example, can reduce problems due to rotation, shelf life, and excess capital tied up in overstock.

4. Streamline charting and other processes to cut back on staff overtime.

Cutting back on overtime can go long way toward reducing payroll costs without alienating employees through layoffs. While you’re at it, extend your good stewardship of financial resources by removing extra steps from the billing process, and reducing the degree of unnecessary tests and diagnostic procedures performed by doctors and technicians.

Reach out to the Seattle staffing experts at Pace for specific guidance on reducing cost, waste, mistakes and billing delays at your healthcare facility. If you can make better use of your existing human capital, you’ll reduce the morale problems and other risks that can result from unnecessary staff reductions.


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