The four principles of lean operating systems are waste elimination, increased response and speed of the system, higher quality and reduced costs (Collier & Evans, 2011). In the case of CMA, their redesign of health care delivery system and processes was aligned with each of these principles. The reduction of paper-based part of medical chart and integration of all databases into one resulted in the effective elimination of waste; such elements of waste as excess information flows, duplicate records and analyses, and waste of time spent searching for patients’ records were eliminated. Increased speed and response was reached due to database unification; the fact that patient’s records can be accessed in less than 2 minutes illustrates the increase in speed and response (Collier & Evans, 2011). The quality of care improved as physicians have access to all relevant medical information now. The costs of retrieving medical chart were reduced from $4.46 to $0.82 (Collier & Evans, 2011). So, CMA effective applied all four principles of lean operating systems.
The elements of value chain include primary activities (inbound logistics, operations, outbound logistics, marketing and sales, service) and support activities (company infrastructure, HRM, procurement and technology) (Mahadevan, 2009). At the current state of its value chain, CMA managed to streamline its inbound logistics, operations and service; it is likely that marketing and sales function was also streamlined and optimized. Technology and firm infrastructure were also improved due to the implementation of the new system. In the future, CMA is also likely to integrate procurement and outbound logistics (connecting to suppliers, pharmacies, outside labs) as well as human resource management (involvement of doctor’s home computers into the system). CMA has already optimized the added value of their services, and in the future CMA will further increase this value.
The adoption of Six Sigma concepts and lean principles can be used to improve the quality of U.S. healthcare and reduce healthcare costs. In particular, this approach will reduce costs due to eliminating waste – current estimates of waste in the healthcare system constitute 40% (Challice, 2007). Overhead of insurance companies constitutes 20-30% of all dollars spent on healthcare; this value can be reduced using lean approach (Challice, 2007). The practices of physicians can also be optimized. Lean principles can be applied to reduce the administrative costs of state-sponsored healthcare programs. The costs and quality of medical education can also be improved using Six Sigma.
Challice, R. (2007). Improving Healthcare Using Toyota Lean Production Methods: 46 Steps for Improvement. ASQ Quality Press.
Collier, D.A. & Evans, J.R. (2011). Operations Management. Cengage Learning.
Mahadevan, B. (2009). Operation Management: Theory and Practice. Pearson Education.