Engineering Better Care

By Jeremy Smerd

Feb. 27, 2009

On a December day, as General Motors chief executive Rick Wagoner beseeched Congress for a bail­out, GM engineer Michelle Valentine stood in a doctor’s office in suburban Detroit, extolling the virtues of efficiency.

    Valentine was visiting the St. John Family Medical Center in St. Clair Shores, Michigan, not as a patient, but as part of an effort by auto industry engineers to show how the techniques that have helped automakers build better cars more efficiently can help reduce medical costs and improve the health of patients.

    Pointing to a homemade flowchart on the wall, Valentine demonstrated the wayward path of a lowly medical form. Half the time, forms are filled out incorrectly at the doctor’s office and sent back there by patients or employers.

    “That’s rework,” says a billing clerk, using the lingo of process improvement that had been imparted by Valentine.

    “Big time!” Valentine says.

    The ethos in car making is to get it right the first time. When it came to such basics as filling out a common medical form, this small medical practice seldom got it right.

    “This is why health care costs are so high in this country,” says Joseph Fortuna, a former medical director with parts maker Delphi. “It’s not because of errors; it’s because of this crap. This waste is what doctors are held responsible for, but have no idea how to fix.”

“Flow is the key to eliminating waste. Waste costs money.”
—Michelle Valentine, GM engineer

    Multiplied across America’s hospitals and doctor’s offices, such inefficiency totals more than half of the $2.1 trillion spent on health care. Defensive medicine, inefficient health care administration and the cost of treating preventable conditions such as obesity account for $1.2 trillion annually, PricewaterhouseCoopers estimated in a study published in April 2008. Employers, which provide insurance to about 60 percent of Americans, absorb the bulk of that cost, which does not include the cost to worker productivity.

    The debilitating economic cost of health care waste is especially painful for struggling Detroit automakers GM, Ford and Chrysler.

    GM spent $5.6 billion on health care in 2006, which the automaker says added at least $1,500 to the sticker price of every automobile. Chrysler spent $2.3 billion on health care, an expense that added 7 percent to a vehicle’s cost. Looming in 2010, the Detroit Three will be expected to fund a multibillion-dollar health care trust that will be operated by the United Auto Workers.

    Concerns over health care costs have spurred a concerted effort by automakers, insurers and medical providers to send engineers like Valentine to volunteer in doctor’s offices, helping primary care physicians improve operational efficiency and the quality of care. At the same time, the effort may offer career opportunities to the engineers, who in some cases find their Detroit careers hanging by a thread.

    The thinking behind the health care process-improvement project is that despite the industry’s woes, automotive engineers are experienced in making companies more efficient and producing better products. They learned their streamlining lessons by using the quality- and cost-improvement techniques that came to prominence in the U.S. with the rise of Japanese automakers in the 1980s. These techniques—known variously as kaizen, lean manufacturing, Six Sigma and total quality management—have become commonplace among businesses across many industries, including health care, where some hospitals and health systems have already embraced them.

“As we downsize our industry, we have a resource, a human resource, that we can use in other verticals.”
—J. Scot Sharland, executive director, Automobile Industry Action Group

    The Detroit project, called Improving Performance in Practice, is sponsored by the Automotive Industry Action Group and the Michigan Primary Care Consortium. The Automotive Industry Action Group is a nonprofit formed by the Detroit Three to improve business practices within the automotive industry and its supply chain. The consortium is a membership organization of employers—including GM, Ford and Chrysler—as well as insurers and medical providers.

    The idea grew out of research among health system experts who found that physicians need to operate more efficiently to meet the needs of chronically ill patients, as well as demands from employers that the care they pay for meet evidence-based standards. While some hospitals and health systems have embraced manufacturing’s process-improvement techniques in piecemeal fashion, new attention is being focused on primary care practices.

    Organizers in Michigan hope that an effort that started last year with more than 50 engineers from auto manufacturers, suppliers and the United Auto Workers working in 14 primary care practices in Michigan will spread across the country. In September, Fortuna, along with the medical directors of Ford and Toyota, pitched their idea to executives at the American Medical Association.

    The hope was that the AMA, along with other health care organizations and the American Society for Quality, would endorse what they are describing as a Marshall Plan for health care: the placement of some of the 100,000 quality engineers in the U.S. in doctor practices with the goal of improving the quality and efficiency of medical care nationwide.

    “We’re not saying we’re experts in health care,” says Ford Brewer, medical director for Toyota Motor North America, explaining his pitch to the health care industry. “We’re saying, ‘We’re experts in logistics, and you’ve got a ton of logistics you’re managing, and you’re managing them poorly. Let us help you with that and you go deal with the health care.’ “

‘Flow is the key’
    A handful of states have launched projects to improve the efficiency of the primary care system, teaching process-improvement methods to health care professionals. But by having auto industry engineers as volunteers in doctor’s offices, Michigan is taking a different tack, one that might provide new career opportunities for laid-off auto engineers.

    “Our culture in the auto industry, even though it’s in a state of chaos, [is that] a lot of people have a lot of good experience in improving efficiency and improving quality,” says Lou Ann Lathrop, a GM engineer and volunteer. “That just didn’t happen by taking a one-day seminar. It’s years of training and applying the principles.”

“We’re not saying we’re experts in health care. We’re saying, ‘We’re experts in logistics, and you’ve got a ton of logistics you’re managing, and you’re managing them poorly. Let us help you with that and you go deal with the health care.’ “
—Ford Brewer, medical director for Toyota Motor North America

    The specter of bankruptcy for U.S. automakers has provided further incentive to automotive engineers to bring their skills to health care.

    “As we downsize our industry, we have a resource, a human resource, that we can use in other verticals, namely health care,” says J. Scot Sharland, executive director of the Automobile Industry Action Group. “We don’t have time to train doctors and nurses in quality improvement when they are desperately needed to treat people.”

    While most practices are set up to react to people’s problems, treat them and send them on their way, they are not organized to manage chronic illnesses, which require ongoing care and greater planning. Making the change requires special skills, says Ed Wagner, director of the MacColl Institute at the Group Health Center for Health Studies in Seattle.

    “What is particularly helpful is having someone—we call them a practice coach—who comes in, understands the changes that need to be made and helps the practice make the changes,” Wagner says.

    Valentine, the GM engineer, helped the managers at St. John Family Medical Center see that the office’s quality varied. It had no way to ensure that medical forms were filled out correctly. She acted as a guide as the practice discovered its shortcomings. The exercise led to changes that will help save the practice $90,000 a year.

    “Flow is the key to eliminating waste,” Valentine says. “Waste costs money.”

    Thirty miles from the Family Medical Center, a similar experiment is unfolding in Pontiac, Michigan. Every day, primary care Dr. Khurrum T. Pirzada confronts the costly diabetes epidemic. More than half of the patients who come to the Baldwin Avenue practice, owned by the not-for-profit POH Regional Medical Center, are insured through Medicare or Medicaid, are elderly, poor or both.

    Because the government has not increased significantly in recent years how much it reimburses primary care doctors, Pirzada’s practice has increased the number of patients it sees each day to remain profitable, he says.

    “If we’re not getting reimbursed more, we need to see more people,” Pirzada says. “But if you see 40 people a day and spend five minutes with them, what kind of quality can you provide? If the patient isn’t getting the time they need and is getting sicker, then we need to look at the quality of care.”

    Pirzada’s predicament is typical. Many doctors know the standards of care for treating diabetics, but they don’t have the time or skills to implement them uniformly in their practice.

    Kush Shah, however, does. A product quality engineer with GM’s powertrain division, Shah has visited the practice several times with a colleague.

    “For a long time, automakers worried, ‘How many cars can you produce?’ ” he says. “But it’s not that simple. You have to focus on quality. It’s the same thing here. We can’t just focus on wait times. We have to focus on quality of care.”

“If we’re not getting reimbursed more, we need to see more people. But if you see 40 people a day and spend five minutes with them, what kind of quality can you provide?”
—Dr. Khurrum T. Pirzada,
POH Regional Medical Center
Baldwin Avenue practice

Managing disease
    Doctors want to cure what ails patients, but only now, with so-called pay-for-performance incentives, are they beginning to get paid specifically for doing so. The assistance of auto engineers is intended to make it easier for doctors to meet the standards that they are increasingly being expected to meet.

    Shah is designing a standard for how to best organize a primary care practice to manage diabetes. Once he completes it, he will move on to asthma and heart disease. He sets forth the guidelines, which also are the tenets of lean manufacturing: Increase standardization, reduce complexity and simplify variation.

    With those principles in mind, the POH Regional Medical Center staff made a few changes and decided it would set aside an hour each morning and afternoon to see only diabetic patients. The practice is establishing a checklist of items that need to be accomplished during every diabetic’s visit: Check the feet, check vision and check sugar levels.

    Shah has developed a questionnaire of commonly asked questions of diabetics. The questionnaire is a classic example of reducing non-value-added work. Doctors are least cost-effective when doing something someone less qualified can do, Shah says. That includes asking routine questions of patients.

    The practice also reasoned that teaching diabetic patients to eat right or to take their insulin was not the best use of a doctor’s time. A better idea would be to hire a medical educator, something the office staff felt would be cost-effective now that a group of diabetics would be visiting the office at a set time.

    One problem arose, however: Doctors are not reimbursed for educating patients, making it impossible for a doctor to recoup the investment. The office decided to accept an offer by Great Lakes Medical Supply, a supplier of diabetes medical devices, to provide a medical educator. Pirzada says he isn’t concerned that a medical supplier might put sales ahead of a patient’s health.

    The more Pirzada talked about improving the way his practice operates, the less he sounded like a typical doctor.

    “We want the focus to be on the patient, customer service and communication,” he says. “This is a service industry, and customer service is important.”

Potential seen
    Shah and other engineers volunteering at practices say with confidence that simple changes could produce big economic savings, given the level of inefficiency they see.

    “When you wait in line at a doctor’s office, you ask: ‘Why don’t they have a better scheduling system? Why don’t they contact me by e-mail? Why do I have to wait 30 minutes to get a 30-second answer from my doctor? Why do I have to fill out the same information every time I go to the doctor?’ ” says Lathrop, the GM engineer and volunteer. “In your day job, you are constantly drilled to take out waste in the system.”

    It is still too early to show savings, says Shah, who has worked at the Baldwin Avenue practice since late fall. But other projects have shown that the tools of manufacturing can reduce costs. An ophthalmology practice in Lansing, Michigan, reduced wait times for patients receiving eye exams. Changes made with the help of engineers allowed the practice to hire fewer people when it brought on two new doctors.

    The ophthalmology project has helped sell others on the idea. The goal of the other pilot programs is to develop a track record of cost savings and quality improvement in the care of chronically ill patients.

    The biggest cost is the engineers’ time, estimated to have totaled $20,000 for the Lansing practice. Currently, the engineers volunteer, with many taking paid community service hours offered by their automotive employers. But given the crisis in the auto industry, companies may decide to withdraw their support, as Chrysler did earlier this decade with a similar health care cost-management project.

    If these initial experiments show success, a new primary care model may emerge that holds the promise of improving care and reducing costs. Auto engineers may find practices willing to pay for their skills.

    “Right now, a lot of the doctors don’t think they need any help,” Lathrop says. “And that’s the same way the auto industry was 25 years ago. … We hope we show doctors something that gets them excited and makes them want more, because in the long run we can’t do this as volunteers.

    “We’re trying to create a market for quality professionals and other engineers.”

Workforce Management, February 16, 2009, p. 1, 18-26Subscribe Now!

Jeremy Smerd writes for Crain’s New York Business, a sister publication of Workforce Management.

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