Changing the Game:
Hoag Memorial Hospital Presbyterian’s
Lean Approach to Innovation

Hoag was an early adopter of Lean methodology, and to learn about their experience, Syska’s John Passanante discussed their successful approach with Sanford L. Smith, AIA, Senior Vice President of Real Estate and Facilities.

Hoag ER Exterior

One of the premier hospitals in the United States, Hoag Memorial Hospital Presbyterian (Hoag) provides comprehensive healthcare services across a variety of specialties.

What first propelled Hoag to adopt the Lean decision-making process?

One of the key drivers in healthcare over the past 15 years is the increased focus on patient value. We first need to define it, and then understand how to deliver it.
Here at Hoag, we define patient value as the delivery of the desired outcome at the lowest cost. If you can simultaneously improve your patient’s outcome and lower their cost, you’re enhancing patient value.

Healthcare, as it functioned just a few years ago in a fee-for-service environment, was just not sustainable. We needed to adopt a new strategic planning and problem-solving methodology across our entire enterprise, and Lean became our response to that challenge.

I’m responsible for our real estate facility development, which enables the delivery of care. How can our facilities impact patient value? By enhancing the infrastructure where all the care is delivered, we can influence the cost and improve the flow and efficiency of the care processes.

Our clinical departments are focused on the same goal. We look at everything to make sure that we’re delivering the appropriate care in the most efficient and effective manner possible.

That may mean a complete shift in physical location. One major strategy was relocating some services out of the acute care hospital environment and into an ambulatory one. It typically costs less to provide infrastructure in an ambulatory setting because it is not encumbered with as many rules and constraints. For services that don’t need to be provided in the acute care setting, our first big initiative was to “decant” the hospital.

What are the most important considerations when creating an effective decision-making process?

After defining a problem, it can be challenging to avoid the impulse to immediately solve it without exploring the root cause. A careful analysis allows you to explore alternative solutions. It is crucial to legitimately explore all alternatives.

To ensure that we are genuinely exploring alternatives, my team considers at least three options: we could do nothing and maintain the current state, we could establish the preconceived notion, or we could explore alternatives that deliver more robust solutions. This process helps people understand the implications of all scenarios, allow for fact-based decision-making, and arrive at informed consensus.

Effective decision-making means really exploring differences of opinion and allowing constructive conflict into the process. When we achieve consensus and make the decision, that conflict is already behind us. If we move forward without conflict being resolved, the impact to cost, schedule and effectiveness can undermine the process and cause significant delays or cost overruns.

What were the most critical factors to successfully establishing Lean at Hoag?

First, we were successful because our health system was open to change and embraced the notion of improving patient value. In healthcare, timing was key to engaging Lean methodology as care delivery processes are evolving. In almost any industry under significant competitive pressure, we see that same opportunity to evolve.

Second, the senior management team supported this initiative to help culture change take root, which requires perseverance because it’s an imperfect process. There is no one-size-fits-all solution; you should be willing to try many different things and adjust as needed.

You need to be flexible with your business partners. If you’re going to change the entire system, you must include everyone in your ecosystem. Most critical to our success was working with our architects, engineers and our business partners to embrace these tools and the Lean mindset.

What is Lean’s “A3” tool and how has it become a vital part of Hoag’s executive decision-making process?

One of the approaches that I brought to Hoag was the use of the A3—the 11×17 paper we use as the template—as a decision-making support tool. It provides a structure to document the challenge, the hypothesis and the recommended solution.

Our healthcare environment is very academic—we have many brilliant physicians and clinicians that support our patients. I realized that important reports were not being leveraged because they were complex and inaccessible. The A3 tool allows us to step through a process using charts and graphs and simplify complex problems; we can then communicate the intended result clearly and achieve consensus decision-making.

At Hoag, we developed a template toolkit and trained our team how to use it. It was readily embraced within real estate, facilities, construction and operations because we believed in its effectiveness. As we were building consensus with the board and senior administration around moving services off campus, these tools helped us to achieve significant early victories.

What are some of the challenges and rewards in introducing the Lean approach?

When seeking to improve a high-performing organization, the biggest challenge is evolving the cultural mindset from “we’re really good” to “we can be better.” The approach that I brought over from Toyota is: “There is no best. There’s only better.”

Lean methodology is a journey of continuous improvement with the goal of “perfection.” While perfection is impossible to achieve, if you believe “we can always be better,” then you can challenge the organization to strive to reach that elusive ideal.

Asking a high-performing organization to embrace that idea is a very disruptive cultural event. It’s crucial to balance acknowledgement of the teams’ accomplishments with the expectation that we can do it better. We can improve our patient value equation. We can improve patient outcome. Until we’ve made all possible improvements and wrung all the cost out of the system—which is never—we shouldn’t be satisfied.

The Lean approach has driven some really positive things in our care delivery, and our support and infrastructure services. We’ve made great progress optimizing our care delivery platform.

We’ve also seen some incredible results where Lean thinking has been applied to care pathways and used to standardize our approach to clinical conditions like sepsis. Our sepsis care team, which has really embraced Lean thinking, implemented standard protocols and reduced the time for initiation and delivery of their interventions. This process resulted in a significant reduction in mortality, and their work has become the benchmark for our entire health system.

How can the Lean process be translated from real estate into the clinical setting?

One of Lean’s exciting assets is its application in both the infrastructural and clinical realm. My counterpart, Hoag’s Chief Quality Officer, really embraced Lean thinking and its commitment to continuous improvement. Our Performance Improvement Team—which is embedded into clinical departments and has developed strategic initiatives like emergency department throughput and sepsis care—successfully used Lean methodology to establish and meet their goals.

Almost everything in the hospital is interconnected. We embrace that notion and work on initiatives together. Healthcare is very dynamic, with constant technological advances and regulatory changes. Insurance and reimbursement conditions also impact us. With all these constituencies, addressing all the contributing dynamics and collectively focusing on improving patient value allows us to identify the areas where Lean can contribute the most.

What are your recommendations to design firms that are starting this Lean journey?

The commitment to start the journey is the most important thing. Realize that it will never be perfect. Also, embrace the notion that this process is about continuous improvement.

Once you start, if you are committed to learning from your mistakes—and embracing the fact that that change is important and inevitable—then you’ll find Lean is a great way to develop a culture that improves value for your customers.