Lean: The Hidden Method to Achieving Success in Value-Based Care

Project details

  • Date

     April 16, 2019

Lean: The Hidden Method to Achieving Success in Value-Based Care

A Shift in Healthcare Reimbursement

There is a drastic shift in healthcare well underway with respect to reimbursement that will have severe consequences for those who fail to change. Value-based care is a form of reimbursement that ties payments for care delivery to the quality of care provided and rewards providers for both efficiency and effectiveness.1 This system is a departure from the traditional fee-for-service reimbursement model that promotes quantity of services. A 2014 State Health Care Cost Containment Committee stated,

For those familiar with the philosophy of Lean popularized by the Toyota Motor Company and coined in the book, The Machine That Changed the World2, this trend comes as no surprise. As described by Pascal Dennis in Lean Production Simplified3, in traditional markets, companies had the power to set their profits by setting whatever price they desired with no regard to cost reduction or to the quality of the product or service they delivered. Ultimately, the customer lost. With few competitors, companies could get away with this sort of wasteful behavior. However, in modern-day markets, as competitors are abundant, the power has shifted to the customer. As such, the price is set by the market, as seen in the equations below.

After carefully studying the two models, the difference is clear. To remain competitive, modern-day enterprises have no option but to focus on cost and quality to survive.

The Traditional Healthcare Model

Most healthcare systems are not equipped to handle the shift to value-based care that the markets are demanding because they lack an effective approach to the elimination of waste (something commonly referred to as muda in the Lean community). As such, with growing demands to minimize costs, frontline staff are made to work long hours. This approach comes with severe consequences as fatigue leads to a higher probability of mistakes, ultimately, leading to patient harm (up to 98,000 patients die annually in hospitals due to medical errors4).

To compound the problem, healthcare systems are typically anything but systems. Rather, patients are passed along from one silo to another, made to wait, asked repetitive questions over-and-over again, and, spoken to by nurses and doctors from behind computer screens.

A Lean Healthcare Model

However, there is hope.

Healthcare systems such as Denver Health, Thedacare, and Virginia Mason, to name a few, have been leveraging Lean to position themselves strongly for the change in the reimbursement model. There are three main shifts made with Lean that better position healthcare systems for value-based care:

Value Stream Focus

In Lean, the patient journey, referred to as a Value Stream, is the focus. A tool called a current state Value Stream Map is used to visualize the end-to-end patient experience at the hand-off level and to highlight waste, i.e. opportunities for improvement. This is typically done by leadership with system authority. A future state Value Stream Map is then created, integrating Lean principles of standardization, organization, flow and pull. This ambitious new future state is a blueprint that moves a patient through the system more efficiently and with better results. Frontline staff then create Standard Work at the process level as the building block to achieving the future state. Through PDSA (Plan Do Study Act), experimentation takes place, to tweak the Standard Work to iterate towards the future. The key is to “fail” forward.

In addition to a value stream approach for the process, Lean also addresses governance. A value stream manager is often assigned to lead the effort of transitioning from the current state to the future state, and manager thereafter. As the adage goes, you can’t improve what you don’t measure, and you certainly can’t improve that which you don’t manage. In healthcare, there will most certainly be a charge nurse in the ED and one in one of the units to which the patient is transported. However, it is rare to find a person accountable for the end-to-end patient journey.

In order to assist a value stream manager, visual management is embedded into the value stream at each of the key processes and at the value stream level to see how the parts affect the whole. A visual management board will have key metrics and targets to indicate how the standard work is performing. Huddles take place regularly notate any gaps and to facilitate the PDSA process of experimentation. A value stream manager’s Leader Standard Work will also include a visit to the area where work happens, often referred to as the gemba, to directly observe.

Servant Leadership with through Humble Inquiry

The implementation of the above-mentioned, in-and-of-itself, is not enough. With Value Stream mapping and visual management in place, problems will become visible. With this new visibility, leaders will be tempted to tell employees how to solve the problems. This form of leadership, known as command and control, is problematic. For starters, leaders are furthest away from the work within each process and do not have a accurate understanding of the obstacles. Secondly, Lean tools and systems advocates leaders to use humble inquiry, a question that does not influence the answer, to encourage frontline staff to exercise their problem-solving capabilities. As such, a healthcare system which may have a dozen leaders at the top who are accustomed to solving problems now becomes one where hundreds or thousands do.

Obstacle-is-the-Way Culture

In 2014, Ryan Holiday published the book, The Obstacle Is the Way: The Timeless Art of Turning Trials into Triumph. The book’s central thesis provokes and encourages the reader to shift their mindset from problems being bad to problems being an opportunity. Only then can we can experience a more fulfilling life which the Lean philosophy fully supports. When leaders visit the gemba, it is imperative that they celebrate problems that come to the surface. There is an old Lean saying; “no problem is a problem.” When frontline staff begin to see that leaders embrace problems, their mindsets will shift from one of fear to one of empowerment. The obstacles that create system pain will come to light. And through cycles of PDSA, waste will be eliminated and value streams will be optimized to world class.


In the healthcare space, one thing is certain: the landscape is changing, and the traditional model of delivery is antiquated. Lean is a powerful tool that will help healthcare systems do much more than survive; they will thrive. Lean systems ensure employees are empowered, and empowered employees lead to better patient outcomes and lower costs. The key to a successful Lean journey is to find the right Sensei, one who has worked the journey before. Here at W3 we have helped transition many healthcare organizations from the traditional model discussed to a more lean oriented model where value streams are fully integrated, humble inquiry is used to coach and empower teams, and obstacles are embraced rather than neglected. We have expert coaches, not entry level analysts, that would be happy to discuss some of the challenges you and your organization are facing and ways in which they can be addressed.

1 https://revcycleintelligence.com/features/what-is-value-based-care-what-it-means-for-providers
2 James P. Womack, Daniel Roos, Daniel T. Jones
3 Dennis Pascal
4 https://www.centerforpatientsafety.org/facts-stats/