CHAPTER-1

INTRODUCTION

1.1 CONCEPTUAL FRAMEWORK

Managing hospital is management of complex and multi disciplinary Healthcare
service chains, where failure is fatal , wastage is inefficiency and quality of service
is quantified by the subjective judgment of the patients, the receiver of the services.
The questions that often bothers senior hospital administrators are how to attain zero
defect, zero wastage zero effect and 100% satisfaction while keeping cost of the
service affordable .This research was undertaken to formulate a framework for the
attainment of operational goals of 3 zero's at affordable cost.

As the premise of the research is related to the service operation management , the
approach that is most appropriate is ―Lean Thinking ".

Hospital and healthcare organizations, as with any other service operation requires a
systemic innovation and new thinking to remain competitive, cost efficient and up to
date. Lean Thinking provides an effective framework for producing systematic
change, controlling cost, improving quality and providing better healthcare. The
hospitals over the last few years face major issues and challenges, the patients aspire
world class health care quality delivery while state and health insurance companies
demand the delivery at the lowest cost.

Lean is an integrated system of principles, practices, tools and techniques focused on

reducing waste, synchronizing work flows and managing variability in production
flows or operations .An essential distinction in lean is between value and non value
added activities. Value added activities contribute to what the customer wants from a
product or service everything else is a non value added activity. The lean principles
have been now successfully applied to the delivery of health care over the last few
years. Lean management primary begins with underlying principle of eliminating
waste. In order for lean methodology to be successful and able to enhance the
operations the hospital must first work to create an organizational culture that is
receptive to lean thinking. The commitment to start lean must start from the top

Page | 1
management and the junior staff must be involved. Whether manufacturing a car or
delivering health care to a patient, the industry worker or health personal rely on
multiple, disorganized, chaotic and complex in built system and processes to
accomplish the goal to deliver value to the customer or patient. It is an widely held
dictum that once the lean principles are applied rigorously and throughout an entire
organization, can have a positive impact on productivity, cost, quality, and timely
delivery in a resource limited settings of Indian Sub-continent. In hospital industry
the operational efficiency means rapid access to care, minimum waiting time while
at the same time delivering defect free quality care at the minimum cost .I am of the
opinion that the Lean thinking in hospitals is an panacea management philosophy to
overcome the burgeoning health and hospital industry challenges.

While the concepts came to us via Toyota, the term Lean is credited to Jon Krafcif,
part of the research team at MIT‘s International Motor Vehicle Program (Womack et
al 1991).

Lean as defined by NIST (2000) as a systematic approach to identifying and

eliminating waste through continuous improvement, flowing the product at the pull
of the customer in pursuit of perfection.

Hospital and associated health support Services‘ inherent characteristics of

intangibility, heterogeneity, inseparability, simultaneity and perishability set it
apart from manufacturing. Service product is combination of service
experience & outcomes (value for money, emotions etc.). Challenge lies in
managing the both simultaneously as customer is buying both together. Another
challenge is presence of customer inside the operation. In services, quality is an
experience, not just a measurement against standards. Many authors have
expressed that the key reasons for inefficient service processes are a lack of
standardization, inconsistency and rework that slows throughput, and an inability
to analyze and manage the drivers of work force productivity and customer
satisfaction. Thus implementing Lean in hospital services is really an exercise in
change management and one that is most effective when people at the front
lines are engaged and involved in problem solving.

Page | 2
The literature research focused on major initiatives taken to improve hospital
operations and management tools applied including hospital-based Lean, Six-Sigma
(LSS) and combined approach performance improvement programs being practiced
and conducted all over the world including India.

All over the world the health care industry is facing a major problem of escalating
costs more so in the middle income country like India where the out of pocket
expenditure is huge further with no regulations and poorly designed care services .
At first glance, assessing financial or operational benefit for these programs
appeared difficult at best, since most acute care organizations and hospitals rarely
share specific financial data also the LSS is still infancy in the country.

We reviewed the existing literature how implementing lean can help the hospitals to
deliver world class quality care and simultaneously bring down the cost.

Lean methodology and techniques have been used very successfully in

manufacturing companies for decades in Japan. The lean principles have been now
successfully applied to the delivery of health care over the last few years .Lean
thinking starts with eliminating waste which does not adds value and serves the
customer needs. Segregation of value-added and non-value-added services is an
important step in implementation of lean.

The lean management philosophy has come up after the development of models
such as total quality management (TQM), continuous quality improvement (CQI),
first developed by W. E. Deming, and Six Sigma methodology developed by
Motorola and General Electric. A key feature which puts lean apart is in its value
stream approach to driving change and ensure the elimination of the waste in the
system before delivering the service or product. The lean approach encourages
individuals within the organization (from top to bottom) “to learn to see” the flow of
their product’s process and thus to help to identify areas of waste, with the ultimate
goal of creating a product with built-in quality with the least amount of waste.

Page | 3
Lean methods is an very efficient and cost effective approach to delivering high-
quality care to patients. Hospitals are striving to deliver quality care by applying the
new principles in diverse clinical settings.

The research undertaken has demonstrated that the application of Lean thinking
yielded significant operational efficiency benefits for tertiary care hospital. In
addition, the research provided an valuable insight as to where, in tertiary hospital,
these programs appear to be most effective. Study intends to contribute and fill the
gap which would lead to better understanding of hospital operations and would lead
to informed decision making by the hospital management in a unified way. Their
perception and decision making of complex hospital operations would be scientific
and predictable so as to deliver world class quality care at affordable price besides
unlocking operational efficiency with limited resources.

Hospitals have now recognized the importance of quality begun to utilize lean
methods in the last decade with reports of improvements just beginning to appear in
the literature. On review some of the basic tenants and principles of lean production
methods and how these concepts can be applied in the hospitals. I am of firm
opinion and strongly believe the hospital is an ideal setting for use of the lean
production method, which could significantly affect how health care is delivered to
patients in future.

So what is meant by ―lean thinking‖? Simply put, lean means using less to do more.
Lean thinking is not typically associated with health care, where waste — of time,
money, supplies, and good will — is a common problem. But the principles of lean
management can, in fact, work in health care in much the same way they do in other
industries. Fortis Healthcare Limited, the fastest growing healthcare provider in
India was incorporated in 1996. The company was founded by the visionary business
leader, Late Shri Dr. Parvinder Singh, the architect of Ranbaxy Laboratories.

The significant contribution of this research is that it provides a path and approach
for the developing a lean health care management system for specific category of
hospitals .The findings of the research provides a vital instrument to assess and
Page | 4
measure the goodness of the hospital Management system termed as Lean Hospital
Index ( LHI).

The extrapolation of the same in the resource limited settings in Indian context can
help us to deliver affordable world class quality healthcare to the masses by
unlocking the operational efficiency at your hospitals. The same readily applies to
the delivery of healthcare services to the teeming masses in both private and public
sector hospitals.

The study conducted examined the impact of Lean thinking on hospital operations
and management strategies in various scenarios and situations the precise and
holistic approach as a composite model for the entire hospital operations and various
departments. As the similar work is lacking all over the globe and its relevance in
the resource limited setting in Indian context cannot be disputed .Study intends to
contribute and fill the gap which would lead to better understanding of hospital
operations and would lead to informed decision making by the hospital management
in a unified way. Their perception and decision making of complex hospital
operations would be scientific and predictable so as to deliver world class quality
care at affordable price besides unlocking operational efficiency with limited
resources.

1.2 HOSPITAL AS A SYSTEM

From a management point of view the Hospital can be treated as an
organized ecosystem and termed as an open system. This hospital system can be
grouped into four distinct sub systems.
a) Clinical and Nursing service- Primary Services
b) Supportive Services
c) General Administration and Business Services
d) Utility Services

Page | 5
Clinical and Nursing Supportive Services General Administration
Services Including Business and
Utility Services

1) Out-patient services 1) Radiological services 1) Personnel management

2) In-patient services 2) Laboratory services 2) Financial management

3) Emergency and 3) Central Sterile supply 3) House keeping

causality services services

4) Operation Theatre 4) Laundry Services 4) Material management

5) Blood bank services 5) Dietary services

6) Mortuary services 6) Hospital Engineering

services

7) Rehabilitation 7) Transport
services (Physical
Medicine)

8) Medical Records 8) Public Relations

9) Medical Social 9) Communications

Worker

10) Pharmacy Services 10) Fire an security

Conceptual Model of a System

Figure 1: Conceptual Model of a System

Page | 6
Ex- OPD
1) No sequential system of appointments for various investigations.
2) Lack of interdepartmental coordination at FEHJOPD.
3) Overload of patients (especially Chest PA & TMT) as there are more patients
and there is shortage of machines & technicians to operate these machines.
4) Lack of role clarity in OPD staff members.
5) Sometimes to oblige VVIP patients TAT increases.
6) Non availability of token & display system at various investigations like
ecg, echo, bone densitometry, mammography, PFT, ultrasound etc.
7) Optimal utilization of resources (man, material, money) seems to be missing.

1.3 HOSPITAL SERVICES & OPERATIONS :

The hospital system as its external environment and linkages. Therefore,
to understand the hospital system one has to look at the hospital as an open system.
A general hospital, within the immediate environment of health care organization
and the larger environment of the community are interdependent. The hospital
services have to be considered as a socio-technical system within the health care
system that copes with the constraints from both the internal and external
environment that includes man , money and material .Hence the need to preserve
the resources and the need for lean thinking in hospital Management.

1.4 HOSPITAL SYSTEM & OPERATION: ISSUES & CHALLENGES

A system has been defined in the Oxford English Dictionary as simply "a set or
assemblage of things, connected, or interdependent, so as to form a complex unity;
a whole composed of parts in orderly arrangement according to some scheme or
plan:" To be more precise a system is a hierarchical chain of systems and sub-
systems, interconnected and interdependent, having clear objectives at each
level of the system or subsystem, obtains enough inputs from its environment
to offset its output, and operates with varying processes or methods to achieve
the ultimate objective of the system. As per Katzand Khan social systems are
anchored in the attitudes, perceptions, beliefs, motivations, habits and expectations
of human beings. The system as defined is illustrated below:

Page | 7
 Figure 2: Hospital System

Hospitals have now recognized the importance of quality begun to utilize lean
methods in the last decade with reports of improvements just beginning to appear in
the literature. On review some of the basic tenants and principles of lean production
methods and how these concepts can be applied in the hospitals. I am of firm
opinion and strongly believe the hospital is an ideal setting for use of the lean
production method, which could significantly affect how health care is delivered to
patients in future.

So what is meant by ―lean thinking‖? Simply put, lean means using less to do more.

Lean thinking is not typically associated with health care, where waste — of time,
money, supplies, and good will — is a common problem. But the principles of lean
management can, in fact, work in health care in much the same way they do in other
industries. Many types of standards exists in healthcare. Determining what types of
standard is needed can be confusing. It was developed a taxonomy (or classification)
of health system standards to assist in the understanding and development of
standard in healthcare. The taxonomy proposes a systematic way of organizing
standards and provides consistent terminology.

Page | 8
As shown in the table below, the taxonomy is divided into system components:
input, process, and outcome standards. Inputs refer to the resources needed to
provide care of services (staff, equipment and supplies), processes refer to a series of
activities of tasks (e.g. admission processes of patient care management) that lead
toward a particular result and outcomes are the results of the processes. The
taxonomy is further divided into two main categories: administrative standards and
technical standards. Some types of standards can be found in either category.

HOSPITAL OPERATIONS MANAGEMENT

Operations management is an area of business concerned with the production of
goods and services, and involves the responsibility of ensuring that business
operations are efficient in terms of using as little resource as needed, and effective in
terms of meeting customer requirements.
 The business function responsible for planning, coordinating, and controlling
the resources needed to produce a company‘s products and services
 It is a management function
 Organization‘s core function
 Every organization has OM function
o Service or Manufacturing
o For profit or Not for profit

Figure 3 : The Transformation Process

Page | 9
EXPANDED TRANSFORMATION MODEL :

Figure 4 : Expanded Transformation Model

TRANSFORMATION PROCESS WITH FEEDBACK LOOP:

Figure 5 : The Transformation Process with Feedback Loop

Page | 10
1.5 HOSPITAL SYSTEM COMPONENTS

SYSTEM CATEGORIES
COMPONENTS
ADMINISTRATIVE TECHNICAL
INPUT Administrative policies rules and Job description and
regulations specification
PROCESSS Standard operational polocies Algorithm Clinical
pathways Clinical
practice Guidelines
Protocol Procedures
Standing Orders

OUTPUT Expected results Health outcomes

1.6 HOSPITAL MANAGERIAL ISSUES AND ROLE OF LEAN

THINKING
Lean Thinking provides an effective framework for producing systematic change,
controlling cost, improving quality and providing better healthcare. The hospitals
over the last few years face major issues and challenges, the patients aspire world
class health care quality delivery while state and health insurance companies
demand the delivery at the lowest prize.

Lean is an integrated system of principles, practices, tools and techniques focused on

reducing waste, synchronizing work flows and managing variability in production
flows or operations .An essential distinction in lean is between value and non value
added activities. Value added activities contribute to what the customer wants from a
product or service everything else is a non value added activity.

Lean which eliminates the waste and six sigma which deceases the variation in
hospital processes are complementary quality improvement tools can help to achieve
these goals. The lean principles have been now successfully applied to the delivery
of health care over the last few years. In order for lean methodology to be successful
and able to enhance the operations the hospital must first work to create an

Page | 11
organizational culture that is receptive to lean thinking. Whether manufacturing a
car or delivering health care to a patient, the industry worker or health personal rely
on multiple, disorganized, chaotic and complex in built system and processes to
accomplish the goal to deliver value to the customer or patient. It is an widely held
dictum that once the lean principles are applied rigorously and throughout an entire
organization, can have a positive impact on productivity, cost, quality, and timely
delivery in a resource limited settings of Indian Sub-continent .In hospital industry
the operational efficiency means rapid access to care, minimum waiting time while
at the same time delivering defect free quality care at the minimum cost.

Hospital and associated health support Services‘ inherent characteristics of

intangibility, heterogeneity, inseparability, simultaneity and perishability set it apart
from manufacturing.

Service product is combination of service experience & outcomes (value for money,
emotions etc.

1.7 HOSPITAL AS SYSTEM AND OPERATIONAL ISSUES

The term ―General Management ―or managerial issues means application
of management tools to ensure effective and efficient running or functioning of
the department and it is not different in the hospital and health sector . To
recapitulate and remember principles of management a commonly used letter is
recommended i.e. POLICE, a concept of guarding to the manager. On
expanding this letter a complete aspect of modern managerial tools is covered.
Expansion of word 'police' is as under;
P Planning
O Organizing
L Leading
I Integrating
C Controlling
E Evaluating

Page | 12
Managerial issues of the Hospital on day today practices involves the common
pathway of flow chart which are commonly seen in all clinical and diagnostic
services:

The hospital system as its external environment and linkages. Therefore, to

understand the hospital system one has to look at the hospital as an open system. A
general hospital, within the immediate environment of health care organization and
the larger environment of the community are interdependent. The hospital services
have to be considered as a socio-technical system within the health care system that
copes with the constraints from both the internal and external environment that
includes man , money and material .Hence the need to preserve the resources and the
need for lean thinking in hospital Management.

Figure 6: Patient Centered Activities and Services offered by the Hospital

Page | 13
1.8 RATIONALE OF THE STUDY & BACKGROUND :
Hospital and healthcare organizations as with any other service operation requires a
systemic innovation and new thinking to remain competitive , cost efficient and up
to date. The rationale of the study was that hospital operations and performance all
over the world is based on a basic set of parameters bench marked against evidence
based guidelines however an Indian version of the composite Hospital Index is
lacking . Most of the hospital operation and parameters have a origin from the
western literature which is of limited utility in the Indian context The lack of a
precise and holistic approach as a composite model of lean methodology for the
entire hospital operations is lacking all over the globe and its relevance in the
resource limited setting in Indian context is further limited ,our study intends to
contribute and fill the gap which would lead to better understanding of hospital
operations and would lead to informed decision making by the hospital management
in a unified way.

Research Approach and Design :

The study of hospital operations is an empirical and exploratory in nature at tertiary
level multi-specialty hospital .

Research Design:
1. Phase 1: Detailed literature review and Analysis of peer-reviewed contents
with a meta-analysis of data available to understand the lean concept and
practices .
2. Phase 2: Analysis of the existing practices , AS –IS - SOP of various hospital
operations and departments
3. Phase 3: Data collection and analysis with application of Lean in hospital
operations and services (via sub steps CTQ /CTP)
- Phase 3a : Critical to Quality (CTQ)
- Phase 3b : Critical to Process (CTP)
4. Phase 4: Data analysis by statistical methods - Factor analysis / Ranking
methods Analytic hierarchy process ( AHP)
5. Phase 5 : Development of new hospital processes, TO –BE –SOP
6. Phase 6 : Lean Hospital Index (LHI)
7. Phase 7 : Validity of Index.

Page | 14
The study conducted in phases identifying the existing hospital operation activities
(AS IS –SOP), gaps in major hospital activities, TO –BE management policies in the
major areas of hospital departments, discriminate those with the statistical tools like
FA, AHA, regression analysis ,discrete analysis to finally arrive at a composite lean
hospital index ( LHI ).

Based on our observations and data collection performed during the study lean
principles were applied for all the operations and subjected to validity testing at
Manipal Hospitals. Finally after examining the various parameters analytically using
the CFA models, measures were suggested to improve the hospital operations lean
hospital index was calculated.

The weights were calculated using Ranking method. Sum of the weights were 1 and
lean hospital index was calculated as follows.
Lean Hospital Index = { (∑ Weight × Standardized value) / ∑ Weight } × 100

Lean analysis gives an opportunity to the organization to dissect the complete

problem statement and come out with the solutions knowing where the organization
can excel and where there is a scope of improvement while eliminating waste to
make the operations efficient and processes better.

In hospital industry the operational efficiency means rapid access to care , minimum
waiting time while at the same time delivering defect free quality care with zero
waste at the minimum cost.

The research undertaken has demonstrated that the application of Lean thinking
yielded significant operational efficiency benefits for tertiary care hospital. The
work is a small contribution to the better understanding of the hospital operations as
an holistic picture and the application of lean thinking to improve the operational
efficiency. Their perception and decision making of complex hospital operations
would be scientific and predictable so as to deliver world class quality care at
affordable price besides unlocking operational efficiency with limited resources.

Page | 15
The significant contribution of this research is that it provides a path and approach
for the developing a lean health care management system for specific category of
hospitals. The findings of the research provides a vital instrument to assess and
measure the goodness of the hospital Management system termed as Lean Hospital
Index (LHI).

Page | 16