FIGURE 31-13 S&T for base growth-Level 1: VV, 2: base growth, 3: build (meeting promises), and 4: detailed tactics for meeting promises.

Parallel assumption or assumptions behind tactics will be that sustaining quality and reliability in healthcare is easier said than done. Having proven systems and enough support staff to back up our promises to patients is convincing. However, to make the systems capable of a "Wow" experience for patients is not easy. The patients do not talk about their experiences in the health care setting as much as they talk about other services. However, the future referrals depend upon word-of-mouth.

A tactic is to implement dynamic practice management capabilities for quality and reliability of services. We need to have sales and marketing capabilities to grow the practice and to have buffer capacity to respond to emergencies and to avoid lapses in quality when rapid growth takes place.

Sufficiency assumption is that building a DCE advantage is not easy, implementing new processes requires a willingness to increase staff and increase training programs, building capabilities to market and sell is no less difficult. However, sustaining all three elements is the challenge.

This brings us to the next level on the right side of the tree.

Premium Competitive Edge

Parallel assumptions behind strategy are that to increase the probability of achieving the vision, it is helpful to have the ability to charge premiums, even on a small portion of total production. It is like hospitals providing executive health where busy executives can be treated in the shortest possible time with the highest quality for a premium. Some dental groups market to hotels, resorts, and restaurants to provide emergency care for fractured teeth, loose crowns, etc. The teeth-in-an-hour concept was promoted in different parts of the country and is another example of speed of care for a premium. Medical tourism is where patients from the United States and other Western countries go to countries like India, Brazil, and Costa Rico to get treatment. U.S. private insurance companies encourage some people to go to India for hip or knee replacement where the cost to the insurance company is one third of the cost they have to pay to providers in United States. It is cheaper for U.S. companies, but it is a premium for the other countries. They have to develop their reputation, speed, and reliability to accommodate the growing demand for such procedures. Strategy is to know the significant needs of high premium customers and design the treatment plans and delivery systems that result in high quality outcomes in a surprisingly short lead time. It is also important to know how to market and sell to these premium customers effectively.

A tactic is to offer and deliver services for a premium with suitable training in marketing treatment planning, selling, communication, and coordination with the network of doctors, laboratories, imaging services, and suppliers.

The necessary assumption behind this tactic is that it is possible for the lead time to be surprisingly short using TOC, Lean, and Six Sigma tools. In Fig. 31-14 we see, as an example, the steps leading to this dramatic reduction in lead time. Steps in Strategy and Tactic for all of the elements for enhanced growth appear in Appendix A, Tables 3:8, 4:81, 4:82, 3:9, 4:91, 4:92, 3:10, 4:101, 4:102, 3:11, 4:111, and 4:112. It is also possible to train the front office staff and doctors in identifying the right opportunities and, despite the price sensitivity and insurance industry involvement, opportunities still exist to close deals with hefty premium treatment plans.

The sufficiency assumption is that when the patient has the pressing need and is made aware of a certain health care facility capable of fulfilling that need, a sale is likely to occur.

FIGURE 31-14 S&T for enhanced growth-3: build (cut LT to 1/4) and 4: implement improvement program and shorten lead time.

A Case Study of VV Success

VV was developed as a logical step-by-step procedure to help companies convert their sales figures into profits in less than 4 years. This template has been applied in some dental practices and an oral and maxillofacial surgery practice. The company grew from making minimum profits after paying the doctors to $3.5 million in profits. All of the seven steps in 2.1 Base Growth were applied to achieve the success. The practice is again working on another vision to double the value of the practice in the next 4 years. VV helps to develop a common language for all the staff members including doctors, medical support staff, management staff, and front-line staff. It holds different people accountable for the results.

This company set and made a goal of achieving a100 percent increase in the value of practice in 4 years. In order to achieve this goal, the company had to attract the right kind of patients, provide high-quality care, and then flow these patients rapidly without wasting the doctors 'or the patients' time. Increasing the velocity of the flow of patients does not put any stress on doctors to perform faster. They must work to get perfection in their work so that the patients do not have to be readmitted into the system (wasting many resources). The other reason for providing high quality service is to develop good word-of-mouth referrals for future patients. The velocity of patient flow improves when we eliminate queues. The patients usually wait due to improper communication among several providers including laboratories. The company applied various tools to ensure doctor time is not wasted due to poor communications, and used TA to select the right kind of patients to flow through their systems.

Once the staff learned how to provide quality service, which is a POOGI, the staff was trained in marketing and sales. The practice made an unrefusable offer (URO) to the referring doctors by accepting their patients whenever the patients 'need for specialty service was identified. The practice developed the capacity to respond to their urgent patients' needs and developed a concept of providing same-day service. Similarly, the dental practices developed a system of taking patients from hotels where tourists or conference attendees stay. These patients sometimes have an emergent need for a dentist and they are willing to pay a premium fee to get the treatment done immediately.

General Discussion

The health industry has to work at a systemic level and give up its focus on local efficiencies. Global metrics like Throughput, OE, Investment, due date, and on-time performance can align multiple physicians, hospitals, test facilities, etc. in value chains with the overall objective of satisfying the end customer-the patient. TOC provides excellent tools to understand these complex systems. The Lean and Six Sigma tools are tactics that help achieve the goals of the health care systems. The TOC tools provide the focus and measurements. The focus should be on the development of human knowledge and capability of the health care organization by hiring and training personnel, rather than cutting jobs. This strategy will lead to more health care Throughput (well patients at lower costs) and hence meet the goals of the organization.

The process to improve health care systems, however small or large, is the same. This improvement methodology can be applied to small clinics as well as to large hospitals or national health services. Five improvement processes exist in TOC that are useful in a medical practice: the 5FS, TA, the TP, BM, and Critical Chain.

The patient is the key beneficiary and thus dictates the health care system design. The TOC health care methodology also encourages all health care providers to coordinate their services with the one goal of providing fast, reliable services to the patients. This integrated methodology improves Throughput of the patients through the health care system, creating more capacity to treat larger numbers of patients. The doctor is the primary revenue-generating person and hence should be the constraint resource. All other resources should subordinate their actions to the constraint and to the flow of patients through the process. It is important to apply the 5FS to improve the Throughput and patient flow of the system. In hospitals, the radiology tools, operating rooms, etc. should not become a constraint if we want the doctors to maximize the Throughput. The TOC methodology recommends adequate support staff to protect the constraint resources and to absorb high levels of variation in health care systems. Lean and Six Sigma methodology help reduce variation and remove waste from the system, resulting in further improvements for the health system. The methodologies create high quality health care, jobs for workers, wealth for all stakeholders, and the whole value chain benefits.

References

Corbett, T. 1998. Throughput Accounting, Great Barrington, MA: North River Press.

Dennis, P. 2007. Lean Production Simplified. 2nd Edition, New York: Productivity Press.

Goldratt, E. M. 1984. The Goal, Great Barrington, MA: North River Press.

Goldratt, E. M. 1990a. The Haystack Syndrome: Sifting Information Out of the Data Ocean. Crotonon-Hudson, NY: North River Press.

Goldratt, E. M. 1990b. What is This Thing Called Theory of Constraints and How Should It Be Implemented? Croton-on-Hudson, NY: North River Press.

Gygi, C., DeCarlo, N., Williams, B., and Covey, S. R. 2005. Six Sigma for Dummies. Hoboken, NJ: Wiley.

Kendall, G. I. 2004. Viable Vision. Boca Raton, FL: J. Ross.

Kendall, G. I. and Rollins, S. C. 2003. Advanced Project Portfolio Management and the PMO. Boca Raton, FL: J. Ross.

Knight, A. 2003. "Making TOC the main way of managing the health system," presentation at TOCICO Upgrade Conference. Cambridge: Sept. 9.

Mikel, H. and Schroeder, R. 2000. Six Sigma. New York: Doubleday.

Sayer, N. J. and Williams, B. 2007. Lean for Dummies. Hoboken, NJ: Wiley.

Sullivan, T. T., Reid, R. A. and Cartier, B. 2007. TOCICO Dictionary. http://www.tocico.org/? page=dictionary Wright, J. and King, R. 2006. We All Fall Down-Goldratt's Theory of Constraints for Healthcare Systems. Great Barrington, MA: North River Press.

Umble, M. and Umble E. J. 2006. "Utilizing buffer management to improve performance in a healthcare environment,"European Journal of Operational Research. 174. 10601075.

About the Author.

Dr. Gary Wadhwa is the President of Adirondack Oral & Maxillofacial Surgery Group in Albany and Saratoga, NY. He is a Board Certified Oral & Maxillofacial surgeon. He is also a Fellow of American Society of Dental Anesthesiology. He is a board certified Diplomat in International College of Oral Implantology. He was trained in India and then Montefiore Hospital, Albert Einstein College of Medicine, New York.

He received his MBA from University of Tennessee, and Lean Implementation training and certification from University of Tennessee. He received his Black Belt in Six Sigma from American Society of Quality and Juran Institute, and Master Black Belt in Six Sigma from Sigma Pro Consulting Company. He had his TOC training with Dr. James Holt at Washington State University. He has recently started a consulting company, Strategic Planning and Practice Management Institute, with the primary objective to educate health care professionals in implementation of S&T using TOC, Lean, and Six Sigma.

Appendix A: Strategy and Tactic Tree for Viable Vision

The Appendix includes the detailed S&T Trees for a medical practice. In its first four panels, Appendix A repeats information included in the chapter text. This information is included here in order to bring together a complete set of S&T Trees and assumptions for medical practice.

It will be noted that the S&Ts proceed level by level tying strategy to supporting tactics, with tactics at one level becoming an element of strategy for the next lower level. The levels in the S&T structure are designated by the first number inside the S&T Tree boxes across each horizontal level. The number in the upper left corner of the text tables designates the level being discussed for the strategy at that level as shown in the S&T Tree. The tactics discussed in that text table refers to the tactics at the next lower level. This essentially ties the levels of strategy and supporting tactics together logically.

In general, the graphics that follow lay out left to right and top to bottom the S&T Trees for each element of strategic scope. Succeeding lower levels of the S&T Tree follow for each of these broader elements of scope, showing both the strategy and tactics needed to support them. The first S&T Tree and the panel above it show the strategy in overview. The two panels immediately below show the assumptions, strategies, and tactics for each of the two major areas of direction in the strategy: 2:1 Base Growth and 2:2 Enhanced Growth.

You will notice in text boxes that the "Assumptions Behind Strategy" (Necessity Assumptions) state the reason/need for the strategy. Then under "Strategy" is the statement of what the strategy is at this level. (The strategy statement is expressed in terms of the outcomes that will be experienced after the strategy is successfully implemented. Essentially, it says "this is what things will be like when the strategy has been accomplished.") Then, in the same panel under "Assumptions Behind Tactics" (Parallel Assumptions) are the reasons/needs for the planned tactical actions. Under "Tactics" are stated the tactical actions that are to be taken. The "Take Note" statement (Sufficiency Assumptions) in each of the panels gives cautions and advice to be considered.

Therefore, in reading the S&T Trees that follow, you will be led somewhat by the graphics as they show a progression from left to right unveiling succeeding elements of strategic scope. Again, each of these elements of strategy is then discussed at its own level, and related to the tactics that support it one level down. The "levels" of the strategy are numbered in the S&T Tree itself as Levels 1, 2, 3, and 4. The number 2:1 indicates the first element of scope in strategy at Level 2. 2:2 indicates the second element of scope at Level 2, etc. The series begins with a panel giving the starting Practice Vision, then proceeds into the S&T Trees in this step by step, level by level sequence.21 22 4:103 is not included.

Addendum: Excerpt from the Book Vision for Successful Dental Practice by Gerry Kendall and Gary Wadhwa

Steps to success for a private, academic, or government-run dental practice

1. Set a clear goal for the practice. It could be 100 percent increase in the value of the practice or profits in 4 years. Academic, government-run non-profit organizations can have a goal of 100 percent increase in patients served in 4 years while maintaining high quality and low cost.

2. Use a performance measurement system that captures the system performance rather than the individual performance of a department or particular doctor. TA and Finance focus on overall system performance.

a. Net Profits (NP) = Throughput (T) Operating Expenses (OE); Throughput is the payment in the bank after completing the expected treatment on a patient.

b. Investment (I) decisions must filter through this formula. Investments are done in order to provide services to the patients or, in other words, to improve Throughput (T). If T > OE, it is a good investment because it will result in higher profits. Investments require capital and interest payments over a specific time period like 10 to 15 years. Some investments depreciate faster than others do. All investments result in increases in OE over time. The intended purpose of investment is to increase T and this increase must be greater than the OE due to this investment.

c. Return on Investment (ROI) = NP/I (Investment). Investment must be considered over the time period.

d. All marketing and advertising decisions must increase T > cost of marketing and advertisements.

e. All expansion of physical location, addition of operatories, purchase of equipment, and offering of specialized services must go through the tests of TA.

3. TOC's basic premise is that every complex system is easy to manage (inherent simplicity) and it usually has one constraint or weakest link. This constraint determines the productivity or Throughput of the practice. Dental practices ideally should have the doctor as the key constraint, but sometimes the constraint could be an x-ray or CT scan machine or microscope in an endodontist's office or limited physical space like in metropolitan cities where the available space is limited and extremely expensive. If the doctor is sitting idle, the constraint is assumed to be in the marketplace, which means that the practitioner might not be attracting patients to the office, or the constraint is internal and is obstructing the flow of the patients through the key constraining resource, the doctor.

It is usually easy to map out the different steps that the patient has to go through in our system in order to get dental care. We can then approximate the time it takes at each step and the usual delays in the flow of patients through these steps. This can give us an overview of where the constraint is located. If the patient has to go to an orthodontist, periodontist, and endodontist prior to completing the treatment, we could assume that the orthodontist's office will be the key constraint because it takes the longest to complete the orthodontic treatment. We might be surprised that sometimes the wait time to see an endodontist might be 3 months. The whole treatment might take 1 week but the total time to process the patient through the endodontist's office is 3 months and 1 week. This might be the key constraint to completing the patient treatment. The unfinished treatment is not Throughput until the whole service is completed to the patient's satisfaction.

4. Determine how to exploit this constraint. We focus on the means to make our constraint both effective and efficient. Let us assume the constraint in our practice is the doctor time. We have to make effective and efficient use of the doctor time. Effectiveness means a deliberate action of focusing on the correct product mix segments by servicing only the select group of patients. Efficient means that number of patients seen in a given time increases without affecting the quality of service. Frequently decisions about effectiveness are made based upon fees for a particular procedure like a dental implant. Most of the time various other factors, like precious doctor time, investment costs, truly variable costs, and opportunity cost where we must forgo doing restorative work in order to do this implant procedure, are not considered in decision making. The formula to make a decision of product mix (which procedures to focus on) is usually simple: Throughput (T)/Constraint Unit or Doctor Time. When comparing one group of procedures versus others or when considering referring patients to specialist versus learning to do the procedure in house, the above formula will help make the decisions. The efficiency of doctor time increases when we are careful about not wasting the precious doctor time on tasks unrelated to patient care.

a. Total kit concept where everything is ready for the doctor to treat the patients. This includes equipment, tools, laboratory work, radiographs, and information about the patient from other specialists or practitioners including the physician's medical clearance, if necessary.

b. Equipment and tools have preventive maintenance programs so that there is no surprise breakdown of equipment.

c. A standardized flow sheet similar to Basic Life Support or Advance Cardiac Life Support that outlines all the treatment steps is used. This helps the whole team know exactly what is expected in the next step.

d. Workplace organization ensures that everything has a place and everything is in its place.

e. Supplies are always available when the doctor is working; they never expire or run out. On the other hand, the supplies are not ordered excessively because this will increase OE.

f. Emergency equipment and supplies are always updated and checked on a periodic basis.

g. Workplace is meticulously clean and welcomes everyone to come to work.

h. Quality of work is important because time is wasted in redoing the procedures instead of doing a new procedure that we could have done.

i. Health care has a lot of surprises like patients coming late or arriving early, patient's expectations change, patient and staff personality and communication styles, and the procedure can have some unexpected delays or complications. The staff, who helps the doctors offload their work, might be absent or unreliable. If the staff changes the new staff might not have the requisite skills. It is important to have protective capacity (capacity to accommodate Murphy and maintain patient flow) of the staff to ensure that the doctor time is never wasted. The protective capacity is the extra skill sets or extra staff, who might at times appear to be standing around, but they actually help to protect the precious doctor time.

5. Subordinate everything to the above decision: The challenge is to control this environment where every patient is unique and there is never a predictable time to get things done.

a. Understanding that there are two goals, one to protect the doctor time and second to ensure that the patient is not unnecessarily waiting too long, which can result in the patient's dissatisfaction and through blockage can cause loss of throughput.

b. The time prior to the patient seeing the doctor is considered the doctor buffer. The patient might be present prior to the doctor finishing the proceeding patient. Most dentists work at least two or three chairs. This means that the time it takes to register the patient, take an x-ray, or have laboratory work ready for the patient must be done and the patient is ready in the second chair prior to the dentist finishing the first patient. If the dentist takes a long time to complete the first patient, there must be a signaling system to inform the check-in person so that the staff does not make the patient wait in the operatory unnecessarily. If more than two procedures took longer than planned and a long wait will result, then the staff must have a system of informing the patients regarding this delay. The flow manager keeps the patients, who have arrived at the practice, occupied with coffee, tea, magazines, TV or Internet in the waiting room, The flow manager admits the patient into the system only when the doctor catches up. This prevents the staff from multitasking and prevents the staff from being tied to a patient when no work is being done.

c. Since every patient is different, he or she could take different amounts of time to complete treatment. This environment is similar to the multiple projects environment. We must prioritize and have some computer calculate the staff utilization. The flow manager directs staff to different workstations as the need changes. Such software is not available at this time for health care applications; however, it is being developed.

d. Buffer Management helps us identify where and why the delays occur. If most of the delays are due to doctors not starting on time, we can figure out how to influence the behavior of doctors. If the patients always arrive late, we can start reminding them to come 15 minutes earlier.

6. Elevate the constraint: Once the company has fully exploited the doctor time and has subordinated everything else to doctor time, it is time to elevate the constraint to the market by hiring another doctor. The market becomes the key constraint. We can start the same focusing principles to determine how to exploit the market.

7. The last step is to ensure that inertia does not set in that could otherwise become a constraint. Once the practice is doing well, everyone becomes relaxed and happy with his or her achievements. The processes and systems start to slip and they start to go out of control, which results in a downward spiral. Be aware of this tendency.