The Mölnlycke O.R. blog
Healthcare and the legacy of the 1920s car industry
Dr Magnus Lord is one of Europe’s leading experts in modern healthcare management, including Lean healthcare. He holds three university degrees - medical doctor, master of science and a bachelor of business administration degree. A former strategy director of one of Sweden’s largest university hospitals, Lord is now working as an international lecturer and coach for executive management groups, helping them to lead their transformations.
Problems in the healthcare sector are the same all over the world. Rising costs, queues, quality levels far worse than other comparable sectors and employees weighed down by an increasing work load. The best hospitals have understood that the cause of the difficulties lies within the system itself. We have put excellent people in a bad system, and the system always wins.
Few people in healthcare know that our present production system was invented in the US car industry in the 1920s. The system is based on “mass production” or “economies of scale”, which are said to be made up of two fundamental ideas:
The first one is the total focus on the functions or silos of an organization. Every silo is managed autonomously and the highest possible utilization of each silo is the target for increased efficiency. It also leads to an introverted focus – changes are mainly introduced to make it easier for the unit itself. The intention is that if it becomes better for “us” (the unit), the patient will benefit, but in reality, this is almost never the case. Today, the silo focus is the main reason why lead times are high and the patient, or employee, has to wait for every service provided. New research suggests that this undesired result is also very costly.
The second fundamental idea is causing even bigger problems. It is called Taylorism, after its inventor Frederick Taylor. In the same era as mass production evolved, he formulated the idea of Scientific Management. It embraced several good concepts that are still used and appreciated today, but Taylor unfortunately made another statement that has darkened his legacy. He said that the workers had neither the brains nor the information necessary to make decisions about how to work. He separated thinking from working. Management should think, and workers should work.
The claim that a physician is not thinking may seem alien to us – diagnosing a patient is of course intellectual work. But how many of us are involved in developing the processes of the hospital on a daily basis? The fact is that we are not. Improvements are normally handled and decided by management, external consultants or quality departments.
This is possibly the main reason why the improvement rate is considered to be in the region of a hundred times slower in healthcare than in the best segments. Lack of quality (or rather defect rates) is said to be hundreds or even thousands times higher in healthcare than in other sectors, mainly because our excellent employees do not have the possibility to work with and improve quality on a daily basis. The necessary structures are simply not there.
It is important to emphasize that this is no one’s fault. We have inherited the system, but it is our responsibility now to make the transformation to a better and more modern structure.
A new system, which I will describe in the following two instalments of this article, has been in use in healthcare for 10-15 years now, with excellent results. It is, however, clear that it is challenging to make the transition from the old to the new. A common problem is that you get stuck half way – keeping the Tayloristic leadership style and just adding some improvement methods from the new system. Such a mix could in fact be even worse than pure Taylorism and will most probably alienate the employees. You ask them to improve the processes, and after they have succeeded, you steal the valuable extra time they have created.
To avoid such mistakes, I will in the coming articles briefly describe the state-of-the-art knowledge of both the principles of the new thinking and how to get there.