Contact: Phyllis Levine at 845.896.6934 X3001 or by Email
HVTDC APPLIES LEAN PRINCIPLES TO MEDICAL FACILITIES
TO INCREASE THEIR PROFITABILITY
HVTDC has applied its award-winning Principles of Lean Manufacturing to two Hudson Valley medical facilities to streamline their billing processes in an effort to increase profitability by decreasing the amount of paperwork. The not-for-profit economic development Center works with small to mid-sized companies to help them adopt new technologies and business practices that will grow their business and be competitive. “In two separate pilot programs with two medical facilities,” explains Robert P. Winrow, HVTDC Field Services Director, “we applied the Lean Principles of Manufacturing and the results have been very positive. These principles are designed to meet the daily operational demands of a business while increasing that business’ productivity, capacity and profitability, and we believe they can be effectively applied to benefit other entities such as hospitals, doctor’s offices and schools.”
To date, HVTDC has primarily focused their attention on applying Lean Principles, and other technical and business techniques, to the manufacturing industry. The Center works with companies to assess and analyze how those companies operate on a day-to-day basis. By utilizing Value Stream Mapping methodology, HVTDC identifies “Value Added” aspects of a business operation that equates to steps required to put actual value into producing a product. “Non Value Added Time” is the time a business devotes to activities that diminish the operations of the business and production of a product. In most businesses, the Value Added activities are actually a small percentage of the process time. “Our objective,” states Winrow, “is to understand how a business operates, then create and implement activities specifically designed to improve that business’ performance.” HVTDC recently chose to apply those Lean Principles to the medical services arena. “We realized that doctor’s offices, hospitals, nursing homes and most medical facilities are experiencing considerable pressures around escalating expenses and a squeeze on operating margins that are compounded by insurance coverage, reimbursement amounts and delays in receiving payments. We want to help them by assessing their operations for greater profitability through value streamlining their operations.”
In May 2005, HVTDC offered pilot Value Stream Mapping assessment programs to a hospital and a practice of four physicians in Kingston, NY. “We interviewed entire staffs, receptionists to doctors, to understand each organization’s history, objectives and directions,” explains Winrow. “We then conducted a SWOT Analysis for each organization identifying Strengths, Weaknesses, Opportunities and Threats to the operation of each business. After the analysis, we went on to recommend action steps to streamline patient processing from checking in a patient, to the physician’s notations, to invoicing. For the hospital, we looked at how patients’ paperwork is transported throughout all offices, from initiation to billing the patient. We looked at the ‘mapping of the paperwork’ to make the process more lean.” By examining the steps of the paper flow process, from start to finish, HVTDC was able to determine how much time was given to process each piece of paper. The Center then provided each facility with a Current State Analysis that outlined the entire process a piece of paper goes through, including the “value added” steps essential to effectively process the paper, and the amount of time spent on each step. “By looking at every step,’” states Winrow, “we could create a system to expedite the processing of the paper.”
Compressing Billing Process to Save Time and Money
With the objective of creating tremendous savings of time and money for the two facilities, HVTDC provided each facility with a Future State Analysis to identify “non-value” steps that could be eliminated. “By combining and compressing steps to streamline the billing process,” explains Winrow, “the result is 95% more accuracy. The step-by-step programs we designed are to be implemented by each staff to make their operations more efficient and effective. The programs give staff members the incentive to form teams to implement those steps.” Winrow believes that some people in businesses believe that streamlining operations eliminates people. He explains that, “streamlining an operation actually makes people more productive and effective while increasing revenue. The process may result in changes of jobs or reassignments, but rarely it does not eliminate people.”