NHS turns to the car industry for management ideas, but it won’t save £2 billion

It’s all a blur. NHS cuts are relying on an ageing, flawed business concept. Robert Emmerich

Usually when great national institutions are perceived as being under threat people start to get anxious. And as we know, anxious people can sometimes do strange things. Sometimes they announce grand but impractical plans. Sometimes they bury their head in the sand. Sometimes they turn to the latest management fad. This is seems to be what is happening in the National Health Service at the moment.

The NHS is certainly no stranger to management fashions. Our hospitals have been testing grounds for level five leadership, total quality management, public sector branding, nudging and any number of other management philosophies. The latest fad which has come into the healthcare system is “lean”.

From cars to care

The source. A Toyota factory. Toyota UK, CC BY-ND

Lean is a method which was largely developed in automobile manufacturers like Toyota. It is based on a fairly simple idea of reducing waste throughout the production process. Waste is seen as everything which does not deliver value to the customer. The idea is to go through the whole production process with a fine-toothed comb and eliminate every piece of waste. For instance, if there are unnecessary off-cuts from a piece of sheet metal, you should work out how this can be eliminated. If an employee has to walk two additional steps, this can also be eliminated as well.

There are echoes here of the “marginal gains” strategy that has forged such success in British cycling. The result is that it is cheaper, the products are better quality and there is less impact on the environment. What’s not to like?.

The successes of Lean within the automotive world led other industries to adopt the idea. It rapidly spread into other parts of the manufacturing industry, then into services, and finally into complex services. It also spread into other parts of the world – from its home in Japan to the US, Europe and beyond.

As a result a whole community of Lean practitioners and consultants sprang up across the world. There are techniques with kooky sounds names (such as the Kaizen blitz). There are management gurus who tour the world offering insights into Lean. A company can call in a Lean Sensei to help them eliminate waste. There is a mystical language: lean practitioners eliminate “mura” by using “Kanban cards” or “Heijunka boxes”. There are courses and certification where you can earn a “black belt” in “Six Sigma”. Signing up to Lean sounds more like taking up a martial art than making a few efficiency savings in a factory.

Behind the times

The problem for the NHS is that Lean is very much yesterday’s fashion of the moment in the corporate world. Having lost the attention of fickle corporate clients, it seems that Lean enthusiasts have gone looking for an audience willing to listen to them and of course pay for their black-belt skills. Fortunately, they have found a rather large audience who is desperate and willing to listen to almost any advice about saving money: the people who run the health service.

One block at a time. Breaking down the NHS waste. ThaQeLa, CC BY-ND

Last week, a report was released by the Academy of Medical Royal Colleges which carried the rather audacious claim that the English NHS could save £2 billion through a range of relatively simple measures designed to cut waste and avoid unnecessary procedures and activities. The report is authored by two medical practitioners. It outlines some of the basic principles of Lean such as process mapping to identify unnecessary waste. It then goes through a series of processes and identifies some unnecessary kinds of waste.

No one could argue against many of the examples which are given. For instance, we are told that doctors should not prescribe needless tests, or that sometimes doing more frequent ward rounds actually means small (and relatively cheap) patient problems don’t fester into bigger (and more expensive) problems.

Many have welcomed the report as an important contribution to dealing with the mounting costs of health care in an ageing country like the UK. There are certainly many things to like. It recommends a bottom-up incremental approach which has been sadly missing from many attempts to fix the NHS. It is largely driven by medics, not management consultants. It also asks medical practitioners to think twice about the need for many of the expensive and often needless healthcare interventions on offer today.

But as with all these things, there are some potential problems with the rather grand promises on which this report has been sold. The first and most obvious point is that Lean is a method which was developed to build cars, not to cure patients. It might prove very effective at cutting costs in automotive manufacturing, but whether it can have an impact on healthcare is doubtful.

Examining the evidence

Fortunately, this is not just a matter of conjecture and guess-work. There have actually been a number of studies which have tracked the implementation of Lean methodology in healthcare. Case studies of particularly successful organizations find that implementing Lean methods tended to lead to improvements in customer outcomes such as reducing waiting times, increased patient satisfaction and reduced length of hospital stay to name just a few.

However there are some significant shortcomings in this case-based evidence. The first is that it tends to focus on instances where Lean methods have been most successful. Most cases discussing Lean in healthcare which are published are the success stories. The bad news rarely makes it into print. It is simply wishful thinking to assume that Lean methods are likely to be as effective in other parts of healthcare.

More systematic studies have found that while Lean methods result in better patient outcomes, it is often very uncertain whether they actually save money. The major evidence for cost saving seems to be reducing inventory costs. What this points to is that when Lean initiatives are implemented, they are often successful at creating a reduction in variable costs. However, these are a very small percentage of the overall operating costs in the healthcare context.

Most of the time, efficiency savings tended to create additional capacity rather than save much money. The result is that while Lean initiatives might make local process improvements in healthcare, they are far less likely to make the kind of systems wide improvements which are hoped for.

Leaning in

There are some high profile success stories, but it is not clear whether it is particularly easy to replicate isolated results across the hospital. This is often because the implementation of new models in healthcare is notoriously difficult. Often new practices are either ignored or resisted by medics. This seems to be the case with Lean, where attempts to implement the techniques have sparked conflicts between clinical and administrative staff about who should be responsible for organising the day-to-day interactions involved in delivering health-care.

Having an army of Lean “black-belts” descend on our hospitals might make for good news for senior managers who are under pressure. It might also improve some patient outcomes, and lead to local cost savings. However, it is doubtful that championing Lean will save the NHS £2 billion a year. The savings, if they do materialise, are likely to be modest. And they will likely be burdened by costs such as additional change fatigue, conflicts between admin and clinical staff – and of course the bill for pay for all the Lean gurus and their Kaizen blitz.