Classification of Waste in Hospitals

The health care industry today is a complex web of ever-changing relationships among patients, physicians, hospitals, insurers, employers, communities, and government. A combination of factors, including the emergence of intense, dynamic competition (and consolidation) and increasing expectations of demanding patients, has generated a challenging environment for hospitals. Today, spending on health care in the United States has risen to $1.3 trillion, which almost equals 14.5% of the United States GDP. The cost of providing health care in OECD countries ranges from 7% to 9% of GDP (Folland, Goodman & Stano, 1997) and is expected to rise due to the aging population, an increasing number of chronic health conditions, soaring drug costs, and costs of new technology. With health care costs continuing to rise faster than general inflation, a theme that resonates throughout the health care field today and receives increasing attention from policymakers, academia, and industry is the necessity to contain costs without compromising quality of care. Here we interpret the quality of care as how cost effectively the hospital organizes its resources to meet the medical requirements of its patients. Hospitals have to focus their efforts on identifying and eliminating waste of all forms if they are to succeed in today’s competitive landscape. A recent study by the Murphy Leadership Institute (Murphy, 2003) concluded that wasteful work consumes more than 35% of hospital employees’ time. This wasteful work includes activities such as completing multiple forms for the same task, filing inefficient shift-to-shift departmental reports, waiting for medications, and searching for misplaced records. Jimmerson warns that the actual amount of waste in health care lies closer to 60% (Panchek, 2003). In this chapter, we briefly review principles of lean philosophy for improving performance and then present a classification of waste that is relevant to hospital management. This classification is aimed at directing hospital initiatives toward understanding and controlling waste in its health care delivery processes. Through several examples from real-life hospital case studies that we have investigated, we trace much of the waste to various types of variability (both natural and artificial) and offer prescriptions to control variability. We then provide some guidelines for streamlining processes and show how this would benefit various stakeholders. We conclude the chapter with some directions for further research.