Management Trends

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Toyota-styleManagement. ...DnvesVirginiaMasonByDavidOilierWeber

Perched on "pill Hill" in downtown Seattle a fewblocks from Puget Sound, the pavilions of VirginiaMason Medical Center look about as Asian as yournearest urban office block.

Even the term pavilion, which could denote anornate pasha's tent or a warlord's silken banner, is hereused only in the architectural sense: to signify an out-building connected to a central structure, in this case to a336-bed, I7-story acute-care hospital.

Inside the complex, which is operated by a 400-physician multispecialty group that also maintains a net-work of clinics throughout western Washington, thedecor is handsome but in no way recognizably "Asian."Nor are the faces of the patients and 5,000 employeescrisscrossing the lobbies and corridors noticeably-cer-tainly not predominantly-Asian.

Why, then, are exotic words like kaizen, kanban,jidoka, muda, and heijunka part of the everyday vocabu-lary around here? Why do Japanese syllables fall so trip-pingly off the tongues of clinicians and staff with suchun-Asian names as Kaplan, Otero, Pittenger, Diaz, Kingand Cre~er?

Simple, really. It's because VirginiaMason MedicalCenter is busily transforming itself into a health careversion of the Toyota .Mo~orCorporation

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In search of 'perfection'

To be sure, VirginiaMason's leaders are fully awarethat the mission of preventing and treating people's illsdoes not correlate directly with assembling autos andtrucks. But running a business is running a business:When you get right down to it, the key is eliminatingmuda-the Japanese word for "waste." And nobody doesthat better than Toyota.

Building on a rigorously schematized yet internallyflexible set of operating principles grounded in a 1902invention by founder Sakichi Toyoda-an automated

12 JANUARY.FEBRUARY2006 THEPHYSICIAN EXECUTIVE

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Takean in-depth look at how the ToyotaProductionSystemis enhancinghealth care at Virginia MasonMedicalCenter in Seattle.

loom that would shut itself down the instant a singlethread snapped-the Japanese enterprise has grown froma small textile factory to the most profitable automobilemanufacturer in the world. By 2007, it will also becomethe world's largest.

What is now universally admired as the ToyotaProduction System is an intricately woven web of policiesand practices with two main strands:

1. jidoka-equipping every machine and empoweringevery worker to halt the production process at the firstsign of a glitch or an imperfection

2. just-in-time" OIT) work sequencing

The objective is to whittle inputs and outputs at everystage to no more than what is needed, when it's needed,where it's needed and only in the amount needed.

The point of all this is to squeeze out muda. The goalis to eradicate it all, every kind and every last drop. Thatmeans constantly testing and refining processes so thatcostly mistakes don't happen, so that people interact atpeak efficiency-skill, pride and disciplined autonomyfeeding their energy-and so that the final product,whetller a car or a pickup truck or for that matter alaboratory test or a coronary artery bypass graft, is flawless.

Flawless. The target isn't 96.5-percent perfection(the current high estimate of hospital performance asmeasured by medical errors suffered by patients) or even99.9-percent perfection (which, in the airline industry,would work out to two fatal jumbo jet crashes everyweek). The Toyota Production System aims for nothingless than 1O0-percentperfection.

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5 principles of success

Toyota pursues its Platonic idealthrough a commitment to kaizen.That word is translated and widely

if unevenly embraced in the UnitedStates as "continuous improvement."

Kaizen in the Toyota managementsystem rests on a .lattice of princi-ples, techniques and tools. Some ofthem are:

. Standardized work-every stepin every task is defined on thebasis of best practice and mustbe performed according to arigid script (which is immediate-ly mociified if the plotline, notthe actor, proves to be thesource of a problem). Takt time-careful calculation of .

the rate at which a task must be

completed in order to meetdemand; the customer's pull,that is, sets the pace, not theproducer's ability to push it(takt is the German word for thebaton with which an orchestraconductor establishes the musi-

cal beat; it came into use when

Japan and Germany were alliesin World War II)

. 5Sworkplace organization-everyworkspace must be kept scrupu-lously neat, clean, arranged forideal efficiency and cleared of allfurnishings or equipment unneces-sary to the tasks to be performed(the 5 Ss are the initial consonantsof the Japanese words for thesefour concepts, plus shitsuke, orself-discipline)

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. Heijunka-figuring out how toaverage uneven customerdemand over time so as tocreate a predictable and levelprocess flow

. Kanban and andon-signalingtools like information cards and

status boards that visually dis-play what's needed to keep aprocess moving and how wellit's progressing.

UsingToyota management, every worker becomes a scientist, trained toanalyze how things are currently being done, to throw the switch and go

ask for advice if anything seems to be amiss and to step forward withideas for how the process might be simplified or made more reliable.

Continuous improvement, ofcourse-often with the word "qu~li-

ty" thrown in for good measure-isa commitment that has long sincebeen espoused by American healthcare organizations. Virginia Mason isno exception.

The focus of Cl, or CQl, how-. I 1. fever, 1S ong-term-an~accret1on 0incremental changes. Susan Creger,

RN,a former operating room nursewho now fmds herself managingVirginiaMason'sversion of the Toyotaproduction System,shudders at theold days of conventionalCI. Shedismissesit as "death by meeting."

But Toyota puts as muchemphasis on quick-and-dirty resultsas on slow-but-steady upticks.Catch-phrases like "falling forward

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Virginia Mason has been the pacesetter. In fact, the Harvard Business

School,which in 1999 profiled the Toyota Production Systemas one of the casestudies that are the backbone of its curriculum

for future corporate leaders, this year introduced a new case study

detailing the structure and achievementsof a remarkable health care

adaptation. It's called "The Virginia Mason Production System."

fast"and maxims like "It'sbetterto be 50 percent right today than 100percent right some time in the future"encapsulate a readiness to lookaround and then make a leap of faith.

So another important term in theToyota playbook is kaikaku-animprovement "blitz."It can take theform of a "3P"project (for ProductionPreparation Process), which involvesa series of multidisciplinarymeetingsseveral days a week within a shorttime period to propose and testoptions for the redesign of some-thing as complicated and capitalintensive as a service line, ahigh-tech procedure or a facility.(It's a"greenfield"initiativeif starting fromscratch, notes Creger, "brownfield"othelWise.)More abbreviated andintensive Rapid Process ImprovementWorkshops, RPlWs,are convened in specific units whenlocal snags need to be rooted out.

Toyota has been happy toshare its unwritten operating hand-book with others, even its rivals.Hundreds of participants fromcompanies across the industrial

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spectrum, as well as governmentagencies and universities, havereceived training or attended work-shops in the United States or inJapan under Toyota's tutelage.

Health care systems have beenslow to recognize the potential appli-cations of methods refined on indus-trial shop floors to their warm andfuzzy, people-centric world ofbirthirlg centers, ERs,ORs, ICUs,laboratories, kitchens, laundries andbilling offices.All of which, ofcourse, are often in reality cold,chaotic, machine-centric places rifewith miscommunication and invisibleto the cliniciansand patients whoselives they can affect so acutely.

But things are changing. At leasta dozen health care systems-aretoday at various stages of implemen-tation of Toyota's methodology-often rendered in Englishas "lean."

Virginia Mason has been thepacesetter. In fact, the HarvardBusiness School, which in 1999profiled the Toyota ProductionSystem as one of the case studies thatare the backbone of its curriculumfor

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future corporate leaders, this yearintroduced a new case study detailingthe structure and achievements of a

remarkable health care adaptation.It's called "The Vlfginia MasonProduction System."

Taking flight

On a plane ride home toSeatde in 2001, J. Michael Rona,president of Virginia Mason MedicalCenter, struck up a conversationwith the man seated beside him-John Black, then director of leanmanufacturing at The BoeingCompany.

Black is an apostle of kaizenwho had led more than 800 Boeingmanagers on missions to Japan tostudy at the feet of the just-in-timemasters at the Shingijutsu Company,the leading international consultan-cy on the Toyota ProductionSystem. The lean manufacturingprinciples Black preached at Boeinghad been thoroughly absorbed,with dramatic results.

By the time a rapt Ronastepped off that plane, he wasconvinced his organization neededa dose of the same tonic.

"We met with John,"recalls Gary Kaplan,MD, Virginia Mason'schairman and CEO,"and it became clear to

us that the Toyota ProductionSystem was the premier manage-ment system in the world. So wewent to school."

Guided by Black, whonow runs his own internationalmanagement consulting practice inaffiliation with. Shingijutsu and isVirginiaMason's ongoing mentor,the preliminary boning up, notesKaplan, "culminated in our sayingto the executive leadership team, 'Ifyou want to be a senior executive[in this organization], you've got tocome with us to Japan.'"

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And so in June 2002,the occu-pants of the entire top layer of theVirginiaMason organization chart,some 30 in number, dutifullytrooped off for a 13-day immersionin TIS praxis.in its birthplace.(Among the lessons they derived,observes Kaplan, was that "the insti-

tution didn't fall apart without us.")Their experience included

hands-on work in assembly linesoperating under jidoka rules. Theygained insight into the rationale forstrict prescril?tion of how tasks areto be performed. As explained byHarvard Business School professorsSteven Spear and H. Kent Bowen,the "calling for people to do their

work as a hi~hly specifiedsequence ofjsteps...tests the twohypotheses implicit in its design:first, that the person doing theactivity is capable of performing it

correctly an1, second, that perform-ing the activtty [in this way] actuallycreates the expected outcome."!

Every worker, in other words,becomes a scientist, trained to ana-lyze how things are currently being

done, to thrfw the switch and goask for advice if anything seems tobe amiss and to step forward withideas for how the process might besimplified or made more reliable.(According tb Rosemary King, RN,another frontline nurse reassignedto manage the VirginiaMasonKaizen Promotion Office, Toyotaemployees proposed some 570,000

improvemen~ last year alone.)When illey returned from

Japan, the organization's leaderswere kaizen converts, or at leastwell on their way. Kaplan has led

five subseq~Ent trips, each, henotes, with 'jue same effect.Certainly Rona and Kaplan werebelievers.

Two months later, the "Virginia

Mason Prodlction System"was offi-cially the berrock of the organiza-tion's strategic plan.

'The patient is God'

Trim, personable and dapper, asubdued necktie firmly knottedunder his crisp white clinician'scoat, Henry Otero, MD, leads visi-tors through the sparkling new can-cer center, where he's the chief ofmedical oncology.

Two years ago, most of thissecond floor of VirginiaMason'sBuck Pavilion was occupied by thedermatology department, heexplains. Why it no longer is testi-fies to the power of the VMPS.

It began, Otero says, with aproposal to fit out a glossy newhome for outpatient cancer serviceson the ninth floor of the companionLindeman Pavilion, a vacant, airyspace with wrap-around views ofthe Seattle skyline. The goal was toconsolidate many of the outpatientcancer care components scatteredthroughout various floors of thehospital and the Buck Pavilion. Itwas an exciting opportunity-espe-cially for the doctors, who couldlook forward to those vistas fromtheir office windows.

The 3P planning team, whichincluded cancer patients and anarchitect as well as Otero and repre-sentative staffers, eagerly sifteddesigns to achieve ideal internalworkflow and convenience. A finallayout was selected, and then a lin-gering unease began to surfaceamong the 3P participants.

The Virginia Mason ProductionSystem is all about reducingwaste-including any unnecessaryburdens on patients. "The patient isGod," the visiting American execu-tives had been lectured over and

over by their mentor in Japan,Chihiro Nakao, of ShingijutsuInternational. That was Rule Oneat Virginia Mason, too.

But if you thought about it,Otero and his colleagues realized inhindsight, the new cancer centerlocation high up in LindemanPavilion would only redirect, not

significantly shorten, cancerpatients' exhausting treks aroundthe campus on appointment days.

And so, in an unprecedentedturnabout, they belatedly announcedthat they would have to reject theattractivesite "ifwe're really seriousabout our commitment to patientsand to 'lean,'" says Otero.

Since radiation oncology withits heavy equipment was rooted inthe basement of the Buck Pavilion,and labs and pharmacy were on itsupper levels, efficiency and concernfor patients recommended lodgingthe cancer center in the same build-ing. The only problem, theyacknowledged, was that Buck hadno available space.

Their twelfth-hour change ofheart was costly for the organiza-tion, he admits, at least in the shortrun. And resolution of the dilemmait presented required lots of imagi-nation, diplomacy and good will.But in the end, fealty to VMPSpre-cepts produced a major win-win forthe system and its patients.

Dermatology, whose servicesare largely self-contained, agreed torelocate into the expansiveLindeman digs with which, Oterosays, they are delighted. And thecancer center, its design renderedeven tighter and its capabilitiesexpanded by another round of 3Pkaikaku, nestled into the secondfloor of Buck.

Having filled in the back-story,Otero proudly points out the manyanti-muda features of this unit.Notice,he says, that in this iteration itis no longer the doctors' offices thatline the windowed outer walls.Patient rooms, in which waiting andworrying and tedious bouts ofchemotherapy will be assuaged bylight and views, get the windows.Doctors, nurses, socialworkers andsupport staffoccupy the center space.

Otero's own compact, tidy cor-ner office, like his colleagues', hastwo doors. One opens on the aisle,putting him a stride or two away

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from the patient rooms opposite. Theother ppens into the walled centralisland~where he can nip into hisnurse's adjacent office for a word, orwalk a few more steps to the neigh-boring desk of his intake counselor(ope~ and facing the aisle).

lie can visit the interior banksof file cabinets, then retrace hissteps or exit through an openpassage into the aisle, or continuealong

lthe interior route to consult

with ther staff members. They, ofcours , can do the same.

"It's all based on the concept ofthe 'U-shaped cell,'" Otero notes.He traces with index finger on

upturf.ed palm the short, curvedpaths this layout-a staple of leandesign-facilitates.

"At fIrst some of the doctors

didn't like it," he admits. "Theycouldh't just retreat into their officesand shut the door. 'I get all thesepeople coming in to ask me ques-tions,' they complained. 'Well, ifyou're getting a lot of questions,'we s~id, 'that must mean there a lotof thihgs that aren't clear-potentialproblems. They need answers.Don't you think?'"

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Mas~ering tasks~im Pittenger, MD, and Shirl

Diaz happily credit another applica-tion of U-shaped cell design-implemented in support of stan-dardded work sequencing forphysitians-for big jumps in rev-enues, margins, quality of care indi-cators, job satisfaction and patientsatisfaction ratings at VirginiaMasoh's satellite primary care.clinicin Kirkland, Washington. Pittenger ishead of its family practice sectionand Diaz is clinic director.

In this instance, the U is an

arran,ement of wall cubbies outsideeach physician's office door. Thelayout was developed through theRPrw process to facilitate a step-by-step pattern of tasks each doctor is

supprsed to execute immediately

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upon emerging from a patient visit.They are:

. Fill out a charge slip for the visit. Document the visit

. Respond to at least one routinee-mail message frbm the medicalassistants who answer the clinic'stelephones-the role of "advicenurse" has been eliminated bylinking them directly to thedoctors)

. Answer at least one urgentmessage

. Read and reply to at least onepiece of hard-copy mail

. Fill out at least one result report

. See the next patient

This order of business capturescritical fInancial and clinical infor-mation while it's fresh in mindrather than in blurry retrospect atthe end of a wearing day.Communication loops are closedpromptly. The hard-and-fastsequencing helps seal the cracks.

Coupled with a simplified clinicworkflow-patients can now getsame-day appointments, the volumeof calls has been reduced by a thirdwhile visits are up 10 percent-thisprovider script has helped boostgross revenues on the family prac-tice side by more than $650,000since 2003. That has turned a$300,000 loss two years ago into a$112,000 gain.

Meanwhile, say Pittenger andDiaz, the clinic's internists, who ini-tially dragged their feet at the indig-nity of having their moves choreo-graphed, have posted far less dra-matic gains. But since productivityis a factor when individual physi-cians' salaries are being allotted(annual revenue per family doctoris now $36,000higher than forinternists despite having started out$20,000 lower in 2003), theinternists too are earnestly dancingto the VMPSpiper.

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Not everyone, of course, hasbought into the new order. Some ofthem are no longer with the organi-zation. Others, "once they touch it,"says Kaplan, become flip-floppers; hecites the example of a curmudgeonly"opinion leader" who fIrst scorned hisinvitationto join one of the semi-annual kaizen pilgrimages to Japan("over my dead body," Kaplanremembers the physician scoffmg),then after watching colleagues trans-late their newfound knowledge intoeffectiveaction, sheepishly asked ifhe might be included on the nexttrip. (He was, and has become aVMPScheerleader, says Kaplan.)

In any case, Toyota DNA hasinfused VirginiaMason's bone mar-row. Everysenior manager from theassistant director level up is requiredto earn a VMPSWorkshop Leaderqualification(by attending seven day-long sessions over six months).Kaizen fellowships for deeper studyof lean doctrine are awarded to thosedeemed potential future leaders.Otero is a grantee for 2006.

A Patient SafetyAlertsystemhasbeen in place for the past three years.Everyemployee is authorized-indeedcounseled-to blow the whistle if heor she spots a safety breach or acondition that could lead to an error.

Red alerts bring procedures toa screeching halt until the danger isaddressed. Orange and yellow alertssignal less pressing but nonethelessserious problems. Department exec-utives and managers, including thevice president, are committed torespond to an alert scene with dis-patch-a "24/7 drop-and-run policy,"Kaizen Promotion manager Kingcalls it. 'From August 2002 toNovember 2005, she reports, 1,620alerts were sounded. .

More routine improvements arecarried through a "Standard WorkAlert System" and an "Everyday LeanProposal System." The latter promisessmall monetary rewards to those

whose suggestions for paring awayday-to-day muda are implemented.

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To alleviate fear that a labor-

saving idea might result in the lossof one's own job (and at least $1million have Ibeen saved by elimi-nating surplus positions throughattrition sinc~ the VMPSwaslaunched two years ago, Kingreports), there is a no-layoff policy.Every casualty to efficiency is guar-anteed a replacement job some-

where. One possibility is in King'sKaizen promotion office. It startedwith five employees, now has 19and really should, she says, growto 50 to suit an organization ofVirginia Mason's size.

Indeed, though only in itsinfancy, the VirginiaMasonProduction ~ystem is already pay-ing off enormously for the organi-zation, King asserts. Throughdozens of Ili>IWsand application ofthe full range of techniques in thekaizen quivlfr:. Staff have found ways to shorten

the distances they have to walkby 34 milbs and the distancessupplies have to travel to getwhere needed by 70 miles.

. Inventory costs have beenslashed by 51 percent and leadtimes reduced by 708 days.

. Productiv:ity gains have freed up77 FI'E, a 44-percent reduction.

. Defects have declined by 47I

percent.

. On top of that, 3P blitzes haveresulted in cumulative savings ofat least $12 million budgeted forimprovements like the cancercenter.

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IIn his office off the lobby of

the Buck Pavilion, CEO Kaplankeeps five antique wooden shuttleson his desk. Each device-used tocarry the woof thread through thewarp on a loom-is a souvenir ofone of his visits to Japan. Theycommemorate the genius of asystem he has come to revere, the

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mechanism by which a smallweaving factory turned itself intothe world's premier automobilemanufacturer.

"We've spent more than a mil-lion dollars" to launch the VMPS,Kaplan allows-quickly adding:"probably the quote would be:'Our investment on this will be

greater than any investment wehave ever made.'"

Trying to convert a smallishprovincial U.S. health care systeminto a mini-Toyota MotorCorporation might seem a curiousaspiration. But a lot of VirginiaMason's peers now share the samenot-so-quirky vision. Kaplan wasrecently invited to the Mayo Clinicto describe what's happening inSeattle, and a Mayo delegation isscheduled for its own on-site visit,he says.

"I told them that if they want toadopt it," he grins, "they're welcometo call it the Virginia MasonProduction System."

Whatever the rubric, whetherthe original Japanese terminology isretained or translated into Englishequivalents like 'lean' ("we callspaghetti 'spaghetti,' don't we?" Kingargues), the objective is the same.

"It turns out-what we've

learned," summarizes Kaplan, "isthat the best way to improve qualityis to eliminate non-value-added

variation. This is a way, a methodfor that. And it's working!"

David Oilier Weber is a freelancehealth writer and frequent contributorto this journal. He can be reached bye-mail inMendocino.Calif.atdoweber@kilasprings.net

Reference

1. Spear, SJ and Bowen, HK. "Decoding theDNA of the Toyota Production System."Harvard Business Review, September-October 1999.

YaleMBAFOREXECUTIVES:LEADERSHIPIN HEALTHCARE.

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