Healthcare Reform: Seattle Children's

Dr. Lean… Paging Dr. Lean

Healthcare Reform: How Seattle Children’s Hospital Used Classic Supply Management, Japanese Shop Floor Methods, and 4P to Save Money, Free up Clinicians for More Bedside Care, and Build Their New Smaller Facility

by Patricia E. Moody

They not only got better, they got smaller!

Greg Beach, Seattle Children’s’ Senior Director of Supply Chain, is one of those rare healthcare transformation execs whose best friends are doctors and nurses whose culture change work hasn’t gotten him fired! Nevertheless, this 300+ bed healthcare facility can point to a 15- year history of hard transformations built first by conquering the basics, then practice and more practice, followed by kicking it up another three notches. The result is an impressive team-based series of successes that eliminated costs and time travelled and freed up nurses to deliver more of that most precious human commodity, bedside care.

“When we first started, we were focusing on inpatient and clinic areas for supply management, but now,” says Beach, “we’ve graduated to the labs, operative services, respiratory care, environmental services, dietary services and more. We used to have supplies ordered and delivered on 15+ pallets a night, but now we’re on a two bin kanban system where supplies are delivered in low unit of measure (LUM). We are currently adding surgical implants to our demand flow supply system with the desire to track utilization that will help drive standardization that will ultimately reduce cost. We’re integrating all departments’ supply management system to help reduce staffing required to manage supplies as well as reducing travel time due to the integrated delivery systems.” Beach believes that the integrated delivery system reduced travel times and allowed Seattle Children’s pros to reduce inventories as well as movement. “We’ve got one group delivering – it’s the FedEx model,” he says.

Just systematizing the delivery methods reduced panic and chaos as well. Under the old system, whenever a department needed an item, they would place an immediate request for it. “Now,” says Beach,” we’ve replaced the chaos with the planned delivery model. We did some time studies, and when we opened the new building last April, we wanted to apply what we had learned about delivery systems to this new opportunity to minimize space, to minimize travel as well as the number of trips. Overall, we managed to eliminate 85% of unplanned calls for materials and we reduced nursing search and travel time by over 50%.”

Seattle Children’s didn’t stop at their first lean learnings…

The team didn’t stop at kanbans, however. They continued to take out inventory by asking their distributor to deliver in low unit of measure that allowed them to reduce their on site inventory from $1.5 M to less than $500k. The onsite inventory consists primarily of disaster supplies

The program has continued to grow over time. “In 2007 we managed $6.3M in supplies,” recalls Beach, “but in 2014 as the system has matured the number had more than tripled to $19.77M in distributed supplies, without adding new staffing, plus we maintained our performance metrics and our reduced travel and warehouse space.” One distributor, Medline, holds most supplies, although there are still a few items that the hospital must order directly from manufacturers.

The supply management changes have resulted in a savings of over 80,000 clinical and supply chain hours annually. “The change has not meant any lay-offs,” says Beach, “but it means that our clinicians are able to spend more time bedside with patients and the supply chain can focus on exceptions rather than putting out fires.”

Supply chain evolution at Seattle Children's

Success breeds more success

Beach feels at this point that the operation now enjoys worldwide buy-in based on its 2008-2010 proof of concept. When the first projects were attempted Beach worked with the internal Continuous Process Improvement team to develop a lean culture; following initial successes, says Beach, “my team took over and sold the other leaders – one director does procurement, and the other distribution,” and with high-level advocates, momentum kicked in.

“ I co-led the delivery system design with nursing that was foundational to the way we designed our new building. We knew what we had and we knew when we first brought the concept that it would be beneficial with our current general medical supplies, like labs. There were many opportunities – the model could be applied anywhere. For a scientist, for example, that meant we could apply the model and allow the scientist to go back to the bench.”

Beach and his team did not come totally unprepared into this transformation. “Sure, we learned on the job, but then we went over to Toyota in Japan, and we stole shamelessly. We looked at how the Toyota staff worked and moved. We noticed that things were brought to them – it was real-time and predictable. We saw nurses and clinicians as assemblers, so we knew we had to minimize travel based on the Toyota principles. As for the other end of the supply chain, logistics, the team brought in the University of Michigan Tauber Institute for Global Operations to teach our leaders the basics of Lean supply chain. This effort was foundational for our journey. Prior to the Tauber group arriving, concepts like “lead time” and “fill rate” were foreign concepts for our team. We focused solely on warehouse inventory turns but this did not give us any insight on whether the nurse had the supplies at the bedside in time or in the right quantity. We really had to think about how to apply manufacturing concepts to healthcare. And that’s when it all started expanding – we had focused initially on things we distributed, but then we moved to other supplies, so we were able to cut back on search time.”

Extending the Toyota Production System to the bedside for patient care was a breakthrough. The team found a way to take it one step beyond delivery to the nursing units, with supplies being sent via a 2-bin system into patient rooms. Starting April 2013 a rounding cart began twice daily in- room replenishment of the most common patient supplies – saline solution, for example – in bins, as indicated on a card tracking the highest usage products. Instituting this bin system with the new building allowed Seattle Children’s to reduce search travel time of nurses by 50%.

Looking back, Beach observes, “We have more people in our department, but we haven’t added staff. In the laboratory, for instance, we took on some of their work and found that while they needed 5 people to do supply management, we could do it with .5 FTE. So when we took over their supply management work, we took some of their people because standard work for us was more efficient.”

Supply Chain Professionals doing 3P Design Work

Seattle Children’s dipped into the breakthrough design approach with 3P. For over a year Beach’s team participated in 3P design with nursing and facilities to develop a better nursing unit and patient room design. “We mocked up in cardboard in greater detail with the architects the exact dimensions, and 4P helped us address the fine details – light switches, gas outlets on the walls, for example We had over a year of planning and mockups before we handed it over to the architects. I know it,” recalls Beach, “helped reduce building size by 30%. To answer the question, ‘Can the nurse get what she needs?’ we had to look at lot of great details - all the bottlenecks, the flow of supplies coming in this way, with the patient moving this way, etc. 3P is a very different approach, it’s pretty impressive when you get everybody going over the design, touching and seeing, moving from a cardboard mockup to finished site.” Note: for more on 3P/4P, see The Perfect Engine, How to Win in the New Demand Economy by Building to Order with Fewer Resources, by Anand Sharma and Patricia E. Moody, Simon and Schuster 2001, “The Power of Simulation: Design for Lean Sigma,” for 3P/4P examples illustrating pre-production design work.

When the cardboard mock-ups were complete, the team next moved to a real-time pilot in the warehouse, evaluating all material and work flows.

None of these projects would have gone forward, however, without good working relationships between clinical staff and the supply management logistics pros. “I have a political sense about me, “says Beach. “There is lots of learning and lots of fun if you don’t ruffle features. The nurses in our area like us. We are a magnet hospital and that means it’s important for us to be integrated into the clinical departments because we know that supply management and logistics are key to a better system.”

Note: Seattle Children's features also appeared in the Spring edition of Target magazine, and in Target On-line

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