What is Healthcare Lean?
Healthcare must "Get Lean" for the
same reason other enterprises go Lean: The customer keeps lowering the
price. The healthcare market, controlled by insurance companies and
government payers, is no different from other markets: The supplier cannot set
the price. Healthcare is relentlessly squeezed by mandatory price
reductions. HMO's pay a fixed amount to care for a certain population for
a certain period of time, and Medicare and insurance companies pay a single,
predetermined sum for each admission. The patient is treated, but the
employer, insurance company or government sets the fee and pays the invoice.
Such a system changes healthcare incentives: With revenues prepaid or
predetermined, each service is an expense, not a revenue source. When
insurance companies and Medicare dictate the price, healthcare providers must
reduce cost, and the way to reduce cost is to Get Lean, which is done by
Workshops described on the following pages.