How “Lean” is Benefiting Early-Adopter Laboratories

One major goal is to slash turnaround time for critical testing of hospital inpatients

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CEO SUMMARY: First steps toward a radical change in clinical laboratory operations are under way in a handful of early-adopter laboratories. This movement is so new that little information about their successes can be published. But the early evidence is compelling. For those labs willing to take the plunge, implementation of quality management systems such as “Lean” and Six Sigma generates major benefits.

IN SEISMIC TERMS, there’s a tectonic shift of great magnitude unfolding in the clinical laboratory industry. It centers around the earliest efforts to apply the latest generation of quality management systems to clinical laboratory operations.

Since January, a handful of hospital laboratories have introduced “Lean” techniques into their lab testing operations. In every case, early results confirm the potential of these techniques to transform laboratory operations in ways that generate substantial and rapid improvements.

The benefits are multiple. When Lean methods are introduced into laboratory operations, quality and productivity go up. Errors and costs go down. Turnaround time and service levels improve. Morale and enthusiasm zooms among the lab staff empowered to use Lean methods to revamp their laboratory.

It is my firm conviction that quality management techniques, ranging from Lean to ISO-9000, Six Sigma, and others, are on the verge of widespread acceptance and adoption by the clinical laboratory industry. Other parts of the healthcare system are embracing them as well. For clients and regular readers of THE DARK REPORT, this is no surprise. In recent years, the pressure on healthcare providers to improve the quality of health services while reducing the cost of care has increased. These pages regularly chronicle such developments.

In fact, on pages 9 to 14 of this issue, you will read how DSI Laboratories of Ft. Meyers, Florida became the first major laboratory organization in the United States to implement and complete a Lean-driven reorganization of a high-volume hospital core laboratory. However, even as DSI Labs was first to complete such a project, four or five other major hospital system laboratories were launching similar Lean initiatives in their lab facilities.

The list includes some prestigious institutions. Fairview Health Services of Minneapolis, Minnesota, Middle Tennessee Health System of Jackson, Tennessee, Evergreen General Hospital of Kirkland, Washington, and MedTox Laboratories, Inc. of St. Paul, Minnesota currently have major Lean/Six Sigma projects unfolding in their laboratories.

Pathologist and laboratory administrators are urged to pay close attention to this development. As each early-adopter laboratory introduces Lean into its organization, it reports major improvements in critical measures of quality, performance, and cost. These improvements come with another significant benefit: laboratory directors who’ve deployed Lean say it reduces the stress on everyone in the lab, while allowing them to constantly improve their performance.

It is worth noting that the leaders in this infant trend are hospital laboratories, not commercial laboratory companies. This may reflect the increasing pressure on hospital laboratories to respond to the changing needs of clinicians for laboratory testing services which are delivered ever-faster, with greater accuracy, from a test menu that is becoming increasingly complex.

Further, this first wave of Lean projects is targeting improvements in
clinical laboratory operations, particularly collection, transport, accessioning, and testing. The goal is to squeeze down the average time from test order received to test result delivered.

Next in the queue is the histology laboratory and anatomic pathology. Several early-adopter hospital laboratories have plans to tackle histology as a second or third phase of their Lean deployment. Outcomes from these efforts will be closely watched, since they represent the first efforts to apply Lean methods to the basic work flow in most anatomic pathology operations.

New, Different Approach

It is important to understand that quality management systems like Lean, Six Sigma, and ISO-9000 represent a very different approach to operational management. They attack the root cause of systemic problems with the goal of improving quality, reducing turnaround time, and eliminating waste. They measure work processes in a different way and use customer expectations as the guide for ongoing improvement.

What sets Lean apart from earlier quality management systems, like Total Quality Management (TQM) and Continuous Quality Improvement (CQI) is the speed with which it can generate results. As you will read in the following pages, laboratories are taking only 12 to 16 weeks to implement major Lean projects in their high-volume testing operations. This includes the time necessary to train the Lean team and have them begin training the lab staff.

These are reasons why I believe Lean management methods will find a welcome place in laboratory operations. As you will read on these pages, early-adopter labs enthusiastically endorse Lean and the way it is transforming their laboratories’ performance. It is these real-world successes which will speed the introduction Lean, and similar quality systems, throughout the laboratory industry.

In particular, hospital labs are learning that Lean management principles can generate substantial improvements in an unexpected area: reduced turnaround time for inpatient laboratory testing.

Evidence to support this tentative conclusion comes from early results posted by the first three hospital laboratories to complete a significant Lean project. The magnitude of reduction in average turnaround time from order to result is between 30% and 50%.

Perceptive lab directors and pathologists will recognize the profound significance of this fact. “Job One” at hospital labs is to enhance inpatient care by delivering accurate and speedy test results. During the past decade, neither innovations in diagnostic technology nor new management strategies in laboratory operations have demonstrated the ability to reduce a hospital lab’s average turnaround time by a factor of 25% to 50%. Now the real-world experience of several major hospital laboratories indicates Lean quality systems can not only slash average lab test turnaround times by as much as 50%—but that such gains can be realized in as few as 12 weeks of operational restructuring.

Most people believe that eliminating waste and boosting productivity are the primary benefits from deployment of Lean and similar quality management systems. The fact that Lean also reduces cycle time in work processes has gone unrecognized by most laboratory managers.

Goal Of More Productivity

Yet laboratories are information factories and the test results they produce are time sensitive. Thus, it may be Lean’s ability to radically reduce the time from test order to result that becomes the primary motive in its adoption by clinical labs.

Even though the first Lean project in histology has yet to be completed, it holds equal potential to transform the work processes of anatomic pathology (AP). Anatomic pathology groups should track this still-nascent trend.

Effective deployment of quality systems will change long-standing operational practices in two primary areas. First, histology labs will under-go fundamental changes in their form and structure. The outcomes will be higher productivity, more work precision, and a better match of services to customer needs.

Second, the process of handling, evaluating, and reporting anatomic pathology specimens will undergo deep change. The methods and techniques of Lean, Six Sigma, and ISO bring every step of the work process under scrutiny, with the goal of eliminating systemic sources of errors and waste. For anatomic pathologists, this means the way cases are presented, diagnosed, and reported will be improved as quality techniques are implemented.

New Lab Management Tool

Lean is the management tool that lab directors and pathologists lacked during the laboratory consolidation wave of the 1990s. During this time, most laboratory consolidation projects cut costs through one primary method: reducing labor.

Not only were layoffs as the primary cost-cutting method a miserable process that caused much human suffering, but the productivity gains were relatively minimal because basic work processes remained unchanged. The fewer people who remained still needed to process the same volume of work—using the same basic work processes.

The good news about Lean and similar quality management systems is that they stimulate positive operational changes in a way that preserves human dignity and enlists the creativity and enthusiasm of both staff and management. The next few years in laboratory management will be much more fun than the last decade. For the first time in a generation, lab administrators and pathologists have potent management tools that can radically improve the status quo, while allowing them to do more for users of laboratory data.

Middle Tennessee Healthcare Generates Major Gains From Deploying Lean in Lab

“BEFORE WE STARTED OUR LEAN PROJECT, average turnaround time (TAT) between specimen collection and lab test result was 71 minutes,” stated Leo Serrano, Administrative Director of Laboratory Services at West Tennessee Healthcare in Jackson, Tennessee. “After our first major Lean project, average turnaround time fell to 41 minutes. That’s a reduction of 42%!

“This surprised us, because we had already installed lots of automation, but the automation had contributed only modest improvements in our average TAT from order to result,” he added. “By contrast, we were able to use Lean methods in our existing laboratory to recast work flow and substantially shrink our average time from order to test result. It was a powerful lesson and confirmed the adage that ‘you don’t want to automate bad processes’.”

Having seen how Lean attacks bad work processes and creates efficiencies, Serrano decided to put Lean to work in another practical way. “Earlier this year, we finished the design for a new laboratory facility,” he explained. “We believed we needed 65,000 square feet to meet our requirements. But administration was not willing to invest the capital required to build a facility that large.

“This left our laboratory with two strategic challenges,” explained Serrano. “First, we cannot hire enough med techs in our market to fully staff our laboratory, so we were already shopping for any management solution which would boost the productivity of labor in our laboratory.

“Second, we needed to pare down the cost of building a new laboratory facility, to meet the budget requirements established by our administration,” he added. “Strategically, we believed the new laboratory was one way to improve productivity.

“Originally, we decided to introduce Lean into our laboratory because we believed it would show us how to run our lab more efficiently and help us meet both of those strategic challenges,” said Serrano. “But we were totally unprepared for the magnitude of gains we experienced.

“In phase one, our Lean project targeted the front end—collection, transport, and accessioning. It also included the blood bank. It took only 14 weeks to reduce aver- age TAT by 42%,” he noted. “That was a major win for us. But it didn’t stop there. We created four work cells and freed up three FTEs. These three people now form an internal mini-Lean team that continues to develop and complete additional Lean pro- jects. This gives us the ongoing ability to continue boosting quality, eliminate waste, and reduce costs.

“Armed with this experience, we then applied Lean methods to the design of our new lab facility,” he continued. “The results were astonishing. Lean methods allowed us to shrink the building by one-third, to 40,000 square feet. Lean methods allowed us to budget $4.4 million less for the new lab. Moreover, we have space to include the blood bank, which, under the original architectural design, was not planned to go into the new laboratory building.”

Fairview Health System’s Lab Division Rolling Lean into Several Different Hospitals

FOLLOWING THE SUCCESS of its first Lean project, the laboratory division of Fairview Health Services in Minneapolis, Minnesota is preparing to introduce Lean into the labs of other hospitals in the system.

“Our first Lean project was in the laboratory at Southdale Hospital,” stated Rick Panning, President of Laboratory Services for Fairview Health Services. “We are closely monitoring performance measures in two categories as part of that project.

“First was average turnaround time (TAT) from order to result,” he said. “Our previous goal was 60 minutes (from order to result) and our Lean goal was to meet a 30 minute TAT 95% of the time for routine chemistry, hematology, coagulation, and urinalysis. Currently, our overall average is down to under 45 minutes. But we’ve greatly reduced variability. For Troponins, the goal will be 45 minutes from order to result.”

The second monitor is labor productivity. “Originally, our automated testing and processing required six to seven professional/technical FTEs during the day shift (Monday–Friday),” Panning noted. “Post-Lean, we now staff three, plus a floater. One handles processing, one manages the primary work cell, one is responsible for the manual test cell, and one floater is available to supplement where needed and to process send-out testing.”

“We are most satisfied with these outcomes from our first Lean project,” he added. “Next, starting in October, we intend to do two 12-week Lean projects. One will involve histology at Southdale Hospital. The other is a Lean makeover in the clinical laboratory on the Riverside campus of Fairview University Medical Center. The Riverside project is tied to a planned remodeling project. In addition, the laboratory at Fairview Northland Hospital has been designed with Lean concepts in mind.”

Panning did note that his team underestimated the human side of the change process in preparing to deploy Lean. “We thought we were aware and ready for the human issues. But Lean triggers rapid and dynamic changes,” he observed. “It allows you to accomplish in weeks what often takes a year or more under other management philosophies. So the lesson is to devote plenty of resources to communication and strongly encourage employee involvement in the change process. The ability to maintain the degree and speed of change while paying attention to employee engagement is the most significant challenge.”

Another valuable lesson learned is to incorporate hospital staff from other departments into the first laboratory Lean team. “We invited an individual who is part of Fairview’s ‘Performance Excellence’ Division to be part of the Lean team,” stated Panning. “We wanted her perspectives and input to balance our views. In fact, this worked out great, just as we had hoped. In addition, it provided an opportunity for the rest of the organization to learn, first-hand, about the concepts of Lean.

Trained And Ready

“It was only later that we recognized the unexpected benefit. Once other departments and sites in the organization saw the success of Lean in transforming our laboratory work processes, they clamored for a Lean team in their area. Because a non-laboratory individual was trained in Lean during our first project, Lean concepts are more easily transferable to other departments, such as surgery. That allows us to keep our trained laboratory Lean team working on projects in our laboratory division,” Panning said.

Panning had interesting advice for other lab directors and pathologists. “Lean works extremely fast and delivers substantial benefits,” he said. “However, if it is done slowly and stretched out over time, it won’t generate comparable benefits. Any laboratory which goes forward with Lean should be fully prepared to implement it on the rapid time-line it requires.”


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