Rationalizing American Health Care

In 2008, two new surgeons joined the Moffitt Cancer Center & Research Institute, a leading cancer hospital in Tampa. Crazy as it sounds, the new surgeons couldn't officially schedule time in the operating room, because hours had already been allocated to more senior surgeons, who carefully guarded the time.

If the newcomers were frustrated, they weren't alone, says Moffitt chief of surgery, Julio Pow-Sang. The surgeons, nurses, and anesthesiologists alike were frustrated that just 13% of operations started on time. Not even half of the first surgeries of the morning began promptly, and it could take up to an hour to turn the room around between cases. The delays meant fewer operations, and caused nurses and anesthesiologists to work overtime quite regularly.

In short, there was incredible inefficiency in Moffitt's scheduling and use of its ORs. So in late 2008, Moffitt hired GE Healthcare Performance Solutions, a consulting group within General Electric's (GE) $17 billion health-care unit that draws on the giant's technical depth and operating principles to offer a combination of technology and consulting to help hospitals run more efficiently.

Reorganizing the OROne of the big strengths of the Performance Solutions group is its ability to borrow technologies from across GE's divisions. A smart hospital room with cameras watching for patient falls, for instance, was built using a facial-recognition system developed by GE Security. At Moffitt, the Performance Solutions team used simulation software adapted from a program developed by GE Energy to analyze how operating room time was being used and how those hours could be used more efficiently. The software evaluated all surgeons' OR use, their need based on the number of patients they currently had, and also factored in the need to have some open time for emergency surgeries.

To turn over operating rooms more quickly, the GE team helped Moffitt to do two things. First, to cut the prep time, they streamlined the kits of sterilized equipment needed for surgeries. Second, they looked at how nurses were working, implementing new routines to grant them more autonomy to move onto new tasks whenever necessary.

For doctors forced to give up block time, the faster turnaround offered a silver lining. Dr. Pow-Sang used to book two operating rooms simultaneously, so that as soon as he was finished in one, he could go to the next. His attempts at efficiency backfired, meaning the ORs were unavailable for other surgeons. When GE's simulation clearly showed that his parallel bookings were bad for the overall efficiency of the group, he gave them up. And thanks to the process improvements, he has increased the number of operations he does. "Efficiency improved, because we were starting earlier and the turnover improved. So I gained enough time to add short surgeries at the end of the day," says Pow-Sang.

Moffitt, a nonprofit hospital with more than $500 million in revenue in 2008, stands as a valuable lesson that small, seemingly obvious changes can significantly improve performance. It is also evidence that cutting costs doesn't inevitably lead to lower-quality care—a concern of many people currently trying to stop health-care reform. Indeed, by eliminating waste and inefficiency, hospitals can often save money and improve patient care.

Six Sigma ThinkingInefficiency runs rampant through most U.S. hospitals, from unnecessary diagnostic tests to poor staffing schedules to patient bottlenecks which cause problems throughout the system. A recent report by the researchers behind the Dartmouth Atlas, a 20-year study of how medical resources are distributed and used, identified "disorganized, poorly coordinated, and inefficient care" as a key shortcoming of the U.S. health-care system.

Moffitt and GE Healthcare aren't the only organizations thinking about how to bring Six Sigma thinking to the health-care industry. In 2000, Ortho-Clinical Diagnostics, a Johnson & Johnson (JNJ) company that makes transfusion equipment and diagnotics technologies, launched ValuMetrix Consulting Service to help laboratories around the world apply business principles such as "lean thinking". At Washington Hospital Center in the District of Columbia, the ValuMetrix team helped the blood lab cut the turnaround time for results to 46 minutes from 75, saving $79,000 a year.

Since 2007, Kaiser Permanente in Oakland, Calif., has also been focused on improving its efficiency and effectiveness. "By improving our operational efficiency, we're able to deliver better care at a lower cost," says Lisa Schilling, vice-president for health-care performance improvement and execution strategy.

For its part, Moffitt's progress is impressive. The hospital implemented the GE-recommended changes in April. In June, Moffitt surgeons performed 106 more cases than they had in June 2008. Based on the patient flow improvements achieved in the first months of operation, Braulio Vicente, Moffitt's senior vice-president and chief operating officer, estimates that the center will gain more than 3,000 hours of operating room time. That's enough to perform 900 surgeries—and $8 million in savings within the first year.

Before it's here, it's on the Bloomberg Terminal.