Sharper Thinking for Lean Times
We must reinvent how Hopkins Medicine does its business.
Illustration by Sherrill Cooper
Call me a cockeyed optimist, but I always look at the glass as half full. Even the nation’s economic tailspin has its silver lining. Yes, this global crisis will have an impact on our health care system. Academic medical centers like Hopkins aren’t immune to recessionary trends. But there can be opportunity.
In an economic downturn, our central mission doesn’t change. We still treat the sick, train the next generation of healers, and bring new treatments and cures from bench to bedside.
Our campus redevelopment plan isn’t affected, either. In fact, some of our initial decisions now seem like strokes of genius. Financing was put in place some time ago for the two clinical towers, the new academic building, and the Wilmer Eye Institute addition. Early on we began amassing capital as part of a 10-year financial plan. Our construction contract for the clinical towers contained a guaranteed maximum price. We paid an upfront premium to lock in a reasonable interest rate when we were ready to float our bonds. And we have already reached most of our fundraising goals for these important projects.
Thus, the transformation of our East Baltimore home remains on schedule. So does our revolutionary “Genes to Society” medical school curriculum that commences next fall.
However, the recession will have an impact on the way we handle the business side of medicine. As various revenue streams slow, we must economize. That’s where opportunity lurks.
This is the moment to examine how we run Hopkins Medicine—from patient flow and potential duplication of efforts to how we spend research dollars and handle invoices. Discovering better methods for conducting our activities not only reduces overhead, it frees the faculty to spend more time on what they do best.
Here’s an example. Last spring a group of our employees put their heads together and modified our university-wide business software so that it quickly processes $150 million worth of annual orders that Hopkins places with a single pharmaceutical company. Now, instead of 70 pharmacy-ordering locations using different procedures and a combination of paper forms, faxed requests, and Web-based requisitions, we have a single electronic ordering system with this company. There are far fewer data entry errors. We no longer need two full-time workers to manually input codes for 30,000 invoices each year. Departments can see what they are ordering and when. They can identify outstanding invoices and pinpoint trends.
This simplified drug ordering procedure helps us do our jobs better. It saves money, too.
We also need to improve handling of financial reports tied to research grants. I hear frequent complaints that researchers can’t get budget numbers in a timely way and consequently overspend. This spells trouble. We need to devise point-in-time grants reporting. That’s how we can save time, money, and energy now being wasted.
Just as we have made huge strides in patient safety by analyzing and redesigning treatment processes with the help of Lean Sigma and Six Sigma techniques, we now must eliminate wasteful or duplicate steps in our business processes.
No one goes into medicine to pursue cost efficiencies. Yet it is becoming an important aspect of the job. Unless we identify and consolidate duplicate services and make business processes crisp and clean, the recession may force us to make unpalatable cuts in research and clinical programs.
Some departments already understand the value that flows from developing smooth business and administrative procedures—Radiology, Pathology, Ophthalmology, Otolaryngology, Psychiatry, and Obstetrics come to mind. They are analyzing their activities and devising more efficient approaches.
Such savings in our departments are also important if we want to increase faculty salaries. Our revenue isn’t likely to grow and yet we need to raise faculty compensation to the 50th percentile to keep this institution competitive and avoid a “brain drain.”
In this recession, we have a chance to reinvent how Hopkins Medicine goes about its business. I want to see us emerge as a leaner and stronger institution that is firmly positioned to grow and prosper.