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This assignment, you must read and analyze a Case Study about a major project to transform safety, quality of care, and the patient experience at the Virginia Mason Medical Center in Seattle, Washington. Dr. Gary Kaplan, the CEO of Virginia Mason, led the implementation of the new management system, which was based on the Toyota Production System (TPS) – Lean model. The new system was named the Virginia Mason Production System (VMPS). In the paper, we will evaluate and analyze the challenges faced by Virginia Mason, assess the advantages and disadvantages of the new approach, and describe the impact of VMPS on patient services and the patient experience at Virginia Mason. Follow all instructions as it asks you. Do not deviate. Instructions Write a 6-to-8-page paper that analyzes the Virginia Mason Case Study.  Be sure to answer the questions below in your paper: 1. Describe two key challenges Dr. Kaplan faced in implementing VMPS at Virginia Mason. Name two actions taken to overcome those challenges and implement the new system. 2. Articulate the value proposition guiding the decision to implement VMPS. Describe at least two ways in which this approach adds value to patient services. Be specific with your examples and justify your choices. 3. Identify and describe an unintended consequence of this effort – i.e., an outcome that was not intended or foreseen. Was this consequence positive or negative? 4. In what ways was the new management system designed to improve the patient experience? How far was VMPS successful in achieving this goal? Formatting Your assignment must follow these formatting requirements: • Typed, double-spaced, using Times New Roman font (size 12), with one-inch margins on all sides. • Include a Cover page containing the assignment title, student’s name, professor’s name, course title, and date. • Citations and references must follow the formatting instructions found in the JWMI Writing Standards Guide. Check with your professor for any additional instructions. Note: The Cover and References pages are not included in the required page length. Assignment 2: Case Study—Virginia Mason Medical Center Overview For this assignment, you will read and analyze a Case Study about a major project to transform safety, quality of care, and the patient experience at the Virginia Mason Medical Center in Seattle, Washington. Dr. Gary Kaplan, the CEO of Virginia Mason, led the implementation of the new management system, which was based on the Toyota Production System (TPS) – Lean model. The new system was named the Virginia Mason Production System (VMPS). In your paper, you will evaluate and analyze the challenges faced by Virginia Mason, assess the advantages and disadvantages of the new approach, and describe the impact of VMPS on patient services and the patient experience at Virginia Mason. Instructions Write a 6-to-8-page paper that analyzes the Virginia Mason Case Study. Be sure to answer the questions below in your paper: 1. Describe two key challenges Dr. Kaplan faced in implementing VMPS at Virginia Mason. Name two actions taken to overcome those challenges and implement the new system. 2. Articulate the value proposition guiding the decision to implement VMPS. Describe at least two ways in which this approach adds value to patient services. Be specific with your examples and justify your choices. 3. Identify and describe an unintended consequence of this effort – i.e., an outcome that was not intended or foreseen. Was this consequence positive or negative? 4. In what ways was the new management system designed to improve the patient experience? How far was VMPS successful in achieving this goal? Formatting Your assignment must follow these formatting requirements: • Typed, double-spaced, using Times New Roman font (size 12), with one-inch margins on all sides. • Include a Cover page containing the assignment title, student’s name, professor’s name, course title, and date. • Citations and references must follow the formatting instructions found in the JWMI Writing Standards Guide. Check with your professor for any additional instructions. Note: The Cover and References pages are not included in the required page length. RUBRIC - Assignment 2: HBS Case Study—Virginia Mason Medical Center Criteria Unsatisfactory Low Pass Pass High Pass Honors 1. Describe 2 key challenges Dr. Kaplan faced implementing the VPMS at Virginia Mason Medical Center and 2 actions he took to overcome them. Weight: 20\% Does not describe 2 key challenges Dr. Kaplan faced implementing the VPMS at Virginia Mason and 2 actions he took to overcome them. Describes less than 2 key challenges Dr. Kaplan faced implementing the VPMS at Virginia Mason and less than 2 actions he took to overcome them. Describes 2 key challenges Dr. Kaplan faced implementing the VPMS at Virginia Mason and 2 actions he took to overcome them. Limited details. Fully describes 2 key challenges Dr. Kaplan faced implementing the VPMS at Virginia Mason and 2 actions he took to overcome them. Thoroughly describes 2 key challenges Dr. Kaplan faced implementing the VPMS at Virginia Mason and 2 actions he took to overcome them. Each was fully explained. 2. Articulate the value proposition guiding the decision to implement the VPMS. Describe at least two ways in which this approach adds value to patient services. Weight: 20\% Does not articulate the value proposition guiding the decision to implement VPMS. No description of how the approach adds value to patient services. Partially articulates the value proposition guiding the decision to implement VPMS. Limited description of how the approach adds value to patient services. Basic articulation of the value proposition guiding the decision to implement VPMS. Basic description of how the approach adds value to patient services. Fully articulates the value proposition guiding the decision to implement VPMS. Description of two ways in which this approach adds value to patient services. Fully and completely articulates the value proposition guiding the decision to implement VPMS. Describes in detail two ways in which this approach adds value to patient services. 3. Identify and describe an unintended consequence of this effort. Was this positive or negative? Weight: 20\% Does not identify and describe an unintended consequence of this effort. No reference to positive or negative. Partially describes an unintended consequence of this effort. States it as being positive or negative. Identifies and describes an unintended consequence of this effort. States it as being positive or negative Identifies and clearly describes an unintended consequence of this effort. States it as being positive or negative. Identifies and fully describes an unintended consequence of this effort. States it is as being positive or negative and why. 4. Describe the ways in which VMPS was designed to improve the patient experience. Assess how far VMPS was successful in achieving this goal. Weight: 25\% Does not describe the ways in which VMPS was designed to improve the patient experience, and/or does not assess how far VMPS was successful in achieving this goal Partially describes the ways in which VMPS was designed to improve the patient experience. Partially assesses how far VMPS was successful in achieving this goal. Satisfactorily describes the ways in which VMPS was designed to improve the patient experience. Clearly assesses how far VMPS was successful in achieving this goal. Fully describes the ways in which VMPS was designed to improve the patient experience. Provides a good assessment of how far VMPS was successful in achieving this goal. Fully describes the ways in which VMPS was designed to improve the patient experience. Provides a detailed assessment of how far VMPS was successful in achieving this goal. 5. Clarity, Logic, Writing Mechanics, Grammar, and Formatting Weight: 15\% Multiple mechanical errors: much of the text is difficult to understand or the text does not flow; fails to follow formatting instructions. Several mechanical errors make parts of the text difficult for the reader to understand; the text does not flow; the discussion fails to justify conclusions and assertions. More than a few mechanical errors; text flows but lacks conciseness or clarity; assertions and conclusions are generally justified and explained. Few mechanical errors: text flows and concisely and clearly expresses the student’s position in a manner that rationally and logically develops the topics. None to limited minor mechanical errors; text flows and concisely, clearly and exemplarily expresses the student’s position in a manner that rationally and logically develops the topics. 9 - 6 0 6 - 0 4 4 R E V : O C T O B E R 3 , 2 0 0 8 ________________________________________________________________________________________________________________ Professor Richard M.J. Bohmer and Research Associate Erika M. Ferlins prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2005, 2006, 2008 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1- 800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School. R I C H A R D M . J . B O H M E R E R I K A M . F E R L I N S Virginia Mason Medical Center At the turn of the millennium, Dr. Gary Kaplan, an internal medicine physician, became CEO of Virginia Mason Medical Center in Seattle, Washington. The medical center was facing significant challenges—it was losing money for the first time in its history, staff morale was declining, and area hospitals presented ardent competition. Considerable change was imminent. Within two years, Kaplan had rallied the organization around a new strategic direction, first and foremost to become the quality leader in health care. What Kaplan and his top administrators lacked was an effective tool to execute their strategy. Soon thereafter, a series of serendipitous events led to the discovery of the Toyota Production System, a manufacturing management method focused on quality and efficiency created by automaker Toyota. Kaplan and Virginia Mason Medical Center became entrenched in a challenge: how to institute a management model previously utilized only in manufacturing into health care. History of Virginia Mason In the early 1900s, two doctors shared a vision: a single place where patients could receive comprehensive medical care for virtually any medical problem. In 1920, the doctors founded an 80- bed clinic with six physicians designed to offer a system of integrated health services. They pledged to provide the finest patient care by working collaboratively as a team and sought the best and brightest to join in their mission. In a remarkable coincidence, the daughters of both founders, Drs. Mason and Blackford, were named Virginia, and thus Virginia Mason began. For decades, the clinic operated as a physician partnership, a legally separate entity from the nonprofit hospital. The partnership distributed operating surplus among the physicians in an annual bonus program. Partners provided the capital and shouldered the debt burden required for clinic growth. In 1986, impelled by a need to expand services and technology, Virginia Mason restructured its organization from a physician partnership into a single nonprofit entity. The medical center sought debt financing and the physicians sold their group practice, becoming employees of Virginia Mason. This document is authorized for use only in JWMI Professors JWI551 2021-2023 at Strayer University from Aug 2021 to Sep 2023. 606-044 Virginia Mason Medical Center 2 When the physicians became employees of the medical center, they no longer carried the debt load nor received a share of the profits. As a 501(c)(3) nonprofit organization, the medical center was run by an internal administration with oversight by a public board, but physicians still wielded important power. Every three years, physicians elected department chairs, and every four years the CEO. Elections did not necessarily mean rampant change at the executive level; Kaplan’s predecessor, Roger Lindeman, served as CEO for almost 20 years before his retirement. In 2005, Virginia Mason Medical Center (VMMC) was a 336-bed center with over 5,000 employees and 9 locations (a main campus and 8 regional clinics). The center included a graduate medical education program and renowned research center, and its 400 physicians practiced in 45 different medical, surgical, and diagnostic fields. When Kaplan first arrived at VMMC in 1978, he described the collaborative team approach to care as “unlike anything I’d ever experienced.” Over the years, VMMC retained this unique culture that attracted Kaplan and so many others. Virginia Mason at the Millennium In 2000, Lindeman stepped down as CEO, and the physicians at Virginia Mason elected Kaplan as his successor. In November 2000, Kaplan and the board decided to eliminate the electoral process for appointing leaders within VMMC. Instead, the CEO appointed department heads, and the board would assume responsibility for selecting the next CEO. Daunting challenges faced the leadership team, primarily economic: in 1998 and 1999, the medical center lost money for the first time in its history—double-digit millions, no less—and staff morale was low as a result. Competition was fierce in Seattle; VMMC was located in an area of the city known as “pill hill,” which included several hospitals within a one-mile radius. Before Kaplan assumed the role of CEO, in response to the economic downturn, the medical center had begun trimming costs, for example cutting academic spending for travel time, research and the like. As Kaplan explained, “When academics start going by the wayside, the people you want to retain start questioning whether they want to stay.” Within the first six months of Kaplan’s tenure, in attempts toward recovery, the medical center sought to consolidate less profitable business lines and grow highly profitable lines. They closed the obstetrics program and several satellite clinics, reduced mental health provider services, renegotiated contracts with payers, and examined productivity by service lines. “However, we just weren’t satisfied with the long-term economic sustainability of the traditional management initiatives,” explained Kaplan. “We needed more.” Furthermore, the Institute of Medicine (IOM) had recently issued a report on patient safety that jarred the health-care industry when it claimed: “Experts estimate that as many as 98,000 people die in any given year from medical errors that occur in hospitals. . . . Add the financial cost to the human tragedy, and medical error easily rises to the top ranks of urgent, widespread public problems.”1 The safety challenges facing health care combined with VMMC’s financial difficulties were daunting. “I had serious concerns about our long-term survival,” recalled Kaplan. “In our current state, we weren’t able to evolve in response to the rapidly changing environment. We change or we die. It was as simple as that.” Physician Compact One of Kaplan’s early moves as CEO was the initiation of a physician compact. The concept of a compact was simple: an explicit deal between two parties, in this case the physicians and the VMMC This document is authorized for use only in JWMI Professors JWI551 2021-2023 at Strayer University from Aug 2021 to Sep 2023. Virginia Mason Medical Center 606-044 3 organization. Historically, physicians assumed an implicit compact when joining physician practices like VMMC. Kaplan described the old deal: The implicit compact was about entitlement, protection, and autonomy. By virtue of joining the group, each physician felt, “I’m entitled to patients, I’m protected from the environment by the administrators, and I can do whatever I want, whenever I want to—I’m a professional.” That was the premise upon which I joined this group practice back in the 1970s, and most of my colleagues would say the same. Kaplan enlisted the help of Jack Silversin, a leading health-care consultant whom Kaplan had heard speak at conventions around the country. Silversin, who worked with VMMC on their compact, generalized Kaplan’s observations to the entire industry, “Being a doctor has traditionally meant: be the best doctor you can, however you can. It’s difficult to take highly trained professionals and tell them how to do things—that contradicts their professional identity.” The problem with the implicit compact, according to Kaplan, was its inconsistency with where VMMC needed to move in the future in order to address the challenges of the industry. In September 2000, Kaplan organized an off-site retreat for all the medical staff to consider a new compact and asked Silversin to facilitate the discussions. Of the 400 physicians, approximately 230 attended the highly emotional retreat. “Morale was low,” recalled Silversin. “Doctors felt a great deal of loss. The discussion of how the implicit compact needed to change triggered a lot of feelings, which in turn allowed most to move forward and engage in creating a different compact.” Upon their return, Kaplan designated a committee, composed primarily of frontline physicians with administrative support, to create an explicit physician’s compact. The committee solicited input from the entire organization and went through several iterations before finalizing the compact. This highly collaborative, iterative process took over 12 months. When the physician’s compact was completed, leaders and managers created their own compact. The new compact indicated that physicians and the organization had adopted the new goals of the organization: becoming the quality leader by focusing on the patient, working together, and embracing change (see Exhibit 1 for compact). To embed the compact into the organization, Kaplan tied its principles into the performance review and incentive compensation system. For example, all physician performance reviews undertaken by the chiefs of service included an evaluation of “group effort,” and 10\% of the distributed dollars (although not necessarily 10\% of an individual physician’s compensation) were tied to a physician’s group effort and “professional action.” Metrics included in the group effort component included relationship with and respect for other members of the care team, embracing evidence-based practice, and participating in organizational change and improvement. A Strategic Plan Throughout 2001, board members and executives at VMMC, with input from all levels of the organization, concentrated on creating a strategic plan. The strategic plan focused on putting the patient (the customer) first and created a new vision: to become their industry’s quality leader (see Exhibit 2 for final strategic plan). VMMC’s vision was clear, but it lacked a system to achieve this goal—until a serendipitous meeting led to the discovery of the Toyota Production System (TPS). In early 2001, Virginia Mason president Mike Rona sat on an airplane next to John Black, who brought TPS to the large airplane manufacturer Boeing. Rona was intrigued by TPS and believed it was just the tool for VMMC. “It This document is authorized for use only in JWMI Professors JWI551 2021-2023 at Strayer University from Aug 2021 to Sep 2023. 606-044 Virginia Mason Medical Center 4 seemed perfect at every level,” remembered Rona. “Why wouldn’t it work?” He brought the idea back to Kaplan, who was immediately taken with the similarities between VMMC’s goals and Toyota’s—especially putting the customer first, a focus on quality and safety, and a commitment to employees. Toyota Production System2 In 2004, Japanese automobile maker Toyota surpassed legendary Ford Motors to become the world’s second-largest manufacturer of cars and trucks.3 Toyota consistently ranked high in quality, dependability, and value. Over the years, the Japanese auto giant had transformed the Ford assembly-line system into a manufacturing miracle that had long been hailed as the source of Toyota’s consistently outstanding performance: TPS. TPS evolved in the post-World War II era, when the need for severe cost-cutting in a failing economy challenged Toyota management. It was a time of incredible capital constraint; Toyota could not afford to hold inventory as a buffer to fluctuating demand and product flow. With no spare capital, Toyota had to reduce costs yet meet customer needs. The resulting concept was heijunka— leveling production to meet fluctuating demands without holding excess inventory. Heijunka became a building block of TPS. TPS, in essence, reduced cost by thoroughly eliminating muda, or waste—waste of overproduction, time, material, space, movement, any activity that consumed resources but added no value to the customer—and improving production flow. Toyota sought the smoothest possible flow of work, accomplished by mapping out work processes, eliminating waste or unnecessary steps, standardizing the process, and using teamwork to identify and address any defects in the flow. Principles of TPS The identification of waste was almost more important than the process of eliminating it. TPS provided two guiding principles to facilitate the identification of waste. The first was just-in-time (JIT) production: produce only what and how much was needed, and only when it was needed. Any deviation from true production needs was deemed waste. The second principle was jidoka: detect abnormalities in the production process and immediately halt work to respond to these abnormalities in real time. Essentially, jidoka integrated quality control into the production process. Standard work—processes streamlined to eliminate non-value-added activities—was a core principle of TPS. Abnormalities were glaringly obvious due to the standardization of work; any aberration would stand in stark contrast to the process and must be dealt with immediately. JIT production and jidoka reflected key understandings of the production process. First, needs during production would deviate unpredictably from a plan, no matter how detailed that plan was, and second, problems on the shop floor were inevitable. However, Toyota emphasized innovation on the shop floor by frontline workers to solve these problems in real time. The company employed a variety of tools to implement TPS principles. One such tool to illustrate jidoka was the andon cord (or switch), which workers activated upon discovery of a problem on the assembly line. If the worker could not fix the problem within the production cycle time, the entire assembly line halted and a senior supervisor joined the problem- solving effort.4 TPS sent the problem up the hierarchy until someone solved it and the line could begin again. Interestingly, the andon cord was considered a temporary fix—a “countermeasure”— This document is authorized for use only in JWMI Professors JWI551 2021-2023 at Strayer University from Aug 2021 to Sep 2023. Virginia Mason Medical Center 606-044 5 rather than a permanent solution within Toyota.5 The idea was that tools such as the andon cord were not fundamental to the system, because the system was constantly evolving to fit the best approaches to current conditions. The andon cord was an example of yet another key to TPS: kaizen, or continuous incremental improvement. Toyota’s belief was that progress derived from small incremental improvements, and as such encouraged continuous improvement of its TPS processes through “good thinking” and a commitment to learning. Academics who studied TPS found that Toyota “explicitly teaches people how to improve”6 through coaching and internal training programs that taught employees how to get to the root of a problem, quickly. Furthermore, Toyota emphasized the role of frontline workers in process improvement; at Toyota, employees generated an average of 999,000 ideas for improvement annually—90\% of which were implemented. Toyota’s system was primarily about flow—information flow, physical flow of parts, overall production flow—via standardized processes and continuous improvement. All production lines at Toyota were arranged so that everything flowed along a prespecified, specific path. One academic explained, “Goods and services do not flow to the next available person or machine but to a specific person or machine.”7 Anything that hindered the process flow required redesign, and any person in the facility was capable of redesigning any part of the process at any time. TPS emphasized the importance of safety and quality while focusing on the customer to determine value and the operator to detect mistakes, improve efficiency, and develop flow. As TPS principles began to spread, they became known as “lean manufacturing.” The Spread of TPS Following Toyota’s increasing reputation many manufacturing companies, such as General Motors and Dell Computer, began to introduce TPS principles in their own organizations. Curiously, few manufacturers were able to successfully imitate TPS—even though Toyota was candid regarding its practices.8 Even Toyota was having difficulty maintaining its quality success stories, possibly due to the lack of skilled TPS gurus and training masters. Japanese coordinators were in rare supply, and American Toyota factories found their quality prowess plummeting.9 The troubles of Toyota and others in instituting and sustaining TPS led experts to question if the system was as robust as had been believed. Others contended that the difficulties stemmed from a lack of understanding. One academic summarized outsiders’ troubles replicating TPS: Observers confuse the tools and practices they see on their plant visits with the system itself. That makes it impossible for them to resolve an apparent paradox of the system— namely, that activities, connections, and production flows in a Toyota factory are rigidly scripted, yet at the same time Toyota’s operations are enormously flexible and adaptable. . . . To understand Toyota’s success, you have to unravel the paradox—you have to see that the rigid specification is the very thing that makes the flexibility and creativity possible.10 Production Models in Health Care TPS was not the first production model to be imported into health-care delivery organizations. For the past two decades, hospitals had tried several management models drawn from production industries, including critical pathways, Total Quality Management (TQM), and Six Sigma. Of these TQM was particularly noteworthy. TQM was the combination of a collection of philosophic principles with a discrete set of specific analytic and team tools.11 The TQM philosophy centered on This document is authorized for use only in JWMI Professors JWI551 2021-2023 at Strayer University from Aug 2021 to Sep 2023. 606-044 Virginia Mason Medical Center 6 four key assumptions realized through the use of five specific tactics and a set of specific team and analytic tools (Table A). Table A The Principles, Tactics, and Tools of TQM Principles Tactics Tools 1. The costs of poor quality were greater than the costs of developing systems and processes to guarantee quality. 2. Employees primarily wanted to do good quality work. 3. Quality problems typically crossed functional lines. 4. Quality was primarily the responsibility of senior management. 1. Explicitly define and measure customer requirements. 2. Create supplier partnerships. 3. Use cross-functional teams. 4. Apply the scientific method to improving performance. 5. Use process management heuristics to enhance team effectiveness at process design and improvement. Control chart Flow diagram Brainstorming sessions Pareto chart Fishbone diagram Source: J.R. Hackman and R. Wageman, “Total Quality Management: Empirical, conceptual and practical issues,” Administrative Science Quarterly 40(2) (1995): 309–342. Initial use of the principles and tools of TQM was restricted to the “hotel functions” of health-care delivery—billing, laboratory turnaround time, patient transport, and so on. However, by the early 1990s TQM was being applied to clinical processes in health care. Despite initial enthusiasm, skepticism about the utility of TQM had grown, as evidence accumulated that the quality of U.S. health care was not improving. Although TQM had been credited with performance improvement in other industries, a national survey of health-care managers found that none could identify a health-care institution that had fundamentally improved its performance using these methods.12 Moreover, evidence of improvement was particularly lacking in clinical journals.13 Explanations for this trend differed. One group of researchers argued that the problem was one of implementation. Some suggested that poor TQM performance resulted from a lack of senior leadership commitment and skill.14 Others found that lack of physician involvement in hospital governance was associated with lower TQM implementation success (in most hospitals physicians were independent providers, not direct employees).15,16 One argued that hospitals should begin implementation with administrative rather than clinical projects in order to avoid physician revolt,17 while others argued that clinical projects early in implementation could produce physician champions.18 Some researchers contended that while early adopters of TQM customized it to make efficiency gains, later adopters simply implemented normative models of TQM to keep up with the mainstream rather than in a sincere effort to improve.19 In spite of this controversy, whether an organization implemented some or all of the TQM principles and techniques was not found to predict ultimate performance improvement.20 Rather, a culture supporting quality improvement work was found to be more important than the use of any specific tools. In contrast, other researchers proposed that the problem lay not with the implementation of TQM in health care but that TQM was conceptually ill designed for a health-care setting. They argued that TQM, with its emphasis on top management’s hierarchical control over work processes and its presumption of rational decision making, was, by definition, not well suited to health-care delivery because these two characteristics were not present in many health-care delivery organizations.21 This document is authorized for use only in JWMI Professors JWI551 2021-2023 at Strayer University from Aug 2021 to Sep 2023. Virginia Mason Medical Center 606-044 7 TPS had already been applied in a health-care setting. The University of Pittsburgh Medical Center (UPMC) found in a 2000 study that “the staff was spending more time nursing the system than nursing patients.”22 In other words, nurses did more charting and documenting of their activities than actually performing medical services. In response UPMC tried applying TPS, and early results were encouraging. For example, applying the tenets of TPS resulted in the reduction of patient waiting time, as well as time for patient registration and the assembly of medical charts, and improved the availability of supplies. Hospitals in the Pittsburgh Regional Health-care initiative also reduced rates of nosocomial infection.23 However, these improvements were isolated in Pittsburgh. The question remained, how well could all health-care institutions integrate TPS principles, so well suited for the manufacturing industry, into the complex and dynamic service industry? Virginia Mason Production System TPS appeared to be the method the medical center had been seeking to implement its strategic plan. Other alternatives had failed to gain much support within the center. VMMC had utilized TQM in the 1990s, but the concepts had found little traction inside the action-oriented medical center. VMMC executives felt that TQM tended to emphasize top-down management; one person described TQM as “a bunch of administrative teams meeting, deciding on new processes or better ways of doing things, and handing it down to the rest of us.” Administrators had investigated other options such as Six Sigma, a system favored by production giant General Electric, but were disappointed by Six Sigma’s allowance of a defect rate. “Safety and perfection are paramount,” explained Virginia Mason Production System (VMPS) administrative director Christina Saint Martin. “Even a small defect rate is not acceptable. We’re talking about patients’ lives here.” Kaplan and Rona encountered little resistance from the board, whose members were attracted by Toyota’s long history of safety, quality, customer and employee satisfaction, and financial success. In 2002, senior executives from VMMC visited Toyota in Japan—a trip that, according to Kaplan, “was all about discovery.” Rona remembered his realization: “Manufacturing cars is as complex as health care.” Armed with Toyota’s principles, leadership at the medical center began to envision VMPS. No Layoffs Before initiating VMPS, Kaplan and Rona wanted to engender full commitment from the VMMC workforce. Conventional wisdom, explained Kaplan, professed that in order to improve productivity, you had to cut people. The administration’s challenge was to encourage staff to contemplate and change their processes when, as Kaplan put it, “they might improve themselves right out of a job.” VMMC’s solution was a no-layoff policy. When units improved efficiency to the point that they were overstaffed, the medical center redeployed people to other areas. Staffers would receive education and training to equip them for new positions. Kaplan described some of the challenges: It requires rigor around attrition and hiring. When 78\% of your costs are labor, and you want to reduce your labor costs, you have to have fewer people. In a no-layoff environment, the only way to accomplish lower labor costs is not to hire replacements when people leave. It’s a real challenge given technical skill sets. For example, when a certified ultrasound technician leaves and you have no one else, we’re either out of business or we hire someone. You can’t redeploy an operating room nurse and make her into an ultrasound technician. One great example of redeployment was in the audiology department—we did a workshop and This document is authorized for use only in JWMI Professors JWI551 2021-2023 at Strayer University from Aug 2021 to Sep 2023. 606-044 Virginia Mason Medical Center 8 discovered we had two and a half too many audiologists. These are highly trained professionals with advanced degrees! We ended up redeploying one of our best audiologists to a project manager in the operating room, with equal pay, and she’s very happy there. Strategies of VMPS VMPS depended on the use of specific methods as mechanisms for action. These activities were borrowed from TPS and tailored to fit the health-care model. As legendary TPS guru Taiichi Ohno once said, “You can’t improve a process until you have a process.”24 Value-stream mapping The main vehicle for VMPS was value-stream mapping, a lean manufacturing method of visually mapping the flow of information and materials through all production steps. In essence, value-stream mapping was a simple flow chart with associated medical-center metrics. Kaplan saw the value-stream map as the foundation of VMPS. “Understanding the work is critical,” he said. “Unless you understand the steps, you cannot see the waste, you cannot see the opportunity, you cannot see the defects.” At VMMC, early value-stream mapping encompassed patient check-in and visits, flow of equipment, and inventory (see Exhibit 3). Eventually, all departments within the medical center had engaged in value-stream mapping. An example of the evolution of value-stream mapping was in the oncology unit. After value- stream mapping such activities as patient check-in and laboratory processes, the oncology unit decided to track a patient with breast cancer from the point of diagnosis through to the completion of treatment. The resulting value-stream map (see the current value-stream map, Exhibit 4) followed the patient from the moment a provider revealed a positive biopsy through the various departments available to each patient, cancer conferences during which specialists discussed the diagnosis and treatment selection possibilities, and treatment options available. In the future value-stream map (see Exhibit 4), the oncology unit hoped to include standard work around patient follow-up. Patients could choose which provider(s) they wished to follow up with—for example, their primary-care physician or …