Barry Arbuckle wasn’t totally sold on the idea.
Sure, lean philosophies worked in Japanese manufacturing companies, but he wasn’t building cars. Could those waste-reducing principles really organize the five Southern California hospitals in MemorialCare Health System to operate more efficiently?
But Arbuckle, president and CEO, had to do something. Even before the recession struck, technological advances and labor shortages drove up his costs about 6 percent annually — triple the pace of government reimbursement. Medicare alone, which was already 20 percent below his costs, only creeps up six-tenths of a percent annually.
“It doesn’t take a genius to figure out how that math works,” he says. “You draw those lines out, and at some point, they cross where your expenses are rapidly outpacing any increase you can get in revenue. After that, it becomes a downward spiral.”
He tried obvious fixes like scrutinizing programs and laying off employees to save cash.
“You just can’t keep doing that,” he says. “There’s got to be a better way.”
So he started investigating how lean might make MemorialCare more organized and efficient by minimizing waste, errors and unnecessary costs and resources.
That journey required getting approximately 10,000 employees and 3,300 medical staff members on board to embrace a new way of thinking toward continuous improvement — in essence, fundamentally changing how the company operated.
“It’s not like a consulting engagement where they come in, you make some changes, you operate that way for a several months and then you slip back,” Arbuckle says. “We knew we couldn’t go down that path. Lean represents a fundamental change in the way you’ve always done things.”
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