Over the course of its lean transformation Denver Health has kept careful track of resources deployed and returns. As reported in this January 2011 article in Modern Healthcare (free registration is required), the hospital system uses value stream mapping to help prioritize improvement opportunities. Each value stream is owned by an executive sponsor. Cross-functional teams then tackle the areas of highest potential return using five-day rapid improvement events.
Denver Health monitors performance metrics for each project and at the value stream level to ensure sustainability. For example, as the article notes, the CFO owns the revenue cycle value stream. Her primary goal is to improve collections as measured by “cash collections per 100 discharges.” Since 2005 that indicator has increased 44% from $1.036 to $1.492 million per 100 discharges in October 2010.
Denver Health’s direct continuous improvement costs include a team of facilitators, a senior facilitator and a consultant “sensei,” who was hired full-time in 2010. Each rapid improvement event costs approximately $20,000 for the facilitator and team members’ time. That investment is dwarfed by the estimated returns, which have averaged $522,000 for each event. In total the CFO estimates that Denver Health’s lean efforts have generated $70 million in cost savings or revenue increases since 2006.
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