Community Medical Associates (CMA) is a large health care system with two hospitals, 25 satellite health centers, and 56 outpatient clinics. CMA had 1.5 million outpatient visits and 60,000 inpatient admissions the previous year. Just a few years ago, CMA’s health care delivery system was having significant problems with quality of care. Long patient waiting times, uncoordinated clinical and patient information, and medical errors plagued the system. Doctors, nurses, lab technicians, managers, and medical students in training were very aggravated with the labyrinth of forms, databases, and communication links. Accounting and billing were in a situation of constant confusion and constantly correcting medical bills and insurance payments. The complexity of the CMA information and communication system overwhelmed its people. Prior to redesigning its systems, physicians were faced with a complex array of appointments and schedules in order to see patients in the hospital, centers, and clinics. For example, an elderly patient with shoulder pain would get an X-ray at the clinic but have to set up an appointment for a CAT scan in the hospital. Furthermore, the patient’s blood was sent to an off-site lab, and physician notes were transcribed from tape recorders. Radiology would read and interpret the X-rays and body scans in a consultant report. Past and present medication records were kept in the hospital and off-site pharmacies. Physicians would write paper prescriptions for each patient. Billing and patient insurance information were maintained in a separate database. The patient’s medical chart was part paper based and part electronic. The paper medical file could be stored at the hospital, centers, or clinics. Nurses handwrote their notes on each patient, but their notes were seldom input into the patient’s medical records or chart. “We must access one database for lab results, then log off and access another system for radiology, then log off and access the CMA pharmacy system to gain an integrated view of the patient’s health. If I can’t find the patient’s records within five minutes or so, I have to abandon my search and tell the patient to wait or make another appointment,” said one doctor. The doctor continued, “You have to abandon the patient because you have to move on to patients you truly can diagnose and help. If you don’t abandon the patient, you might make clinical decisions about the patient’s health without having a complete set of information. Not having all the medical information fast has a direct impact on quality of care and patient satisfaction.” Today, CMA uses an integrated operating system that consolidates over 50 CMA databases into one. Health care providers in the CMA system now have access to these records through 7,000 computer terminals. Using many levels of security and some restricted databases, all patient information is accessible in less than two minutes. For example, sensitive categories of patient records such as psychiatric and AIDS problems were kept in super-restricted databases. It cost CMA \($4.46\) to retrieve and transport a single patient’s paper-based medical chart to the proper location, whereas the more complete and quickly updated electronic medical record costs \($1.32\) to electronically retrieve and transport once. A patient’s medical records are retrieved on average 1.4 times for outpatient services and 4.8 times for inpatient admissions. In addition, CMA has spent more money on database security, although it has not been able to place a dollar value on this. Electronic security audit trails show who log on, when, how long they view a specific file, and what information has been viewed. The same doctor who made the previous comments two years ago now said, “The speed of the system is what I like. I can now make informed clinical decisions for my patients. Where it used to take several days and sometimes weeks to transcribe my patient medical notes, it now takes no more than 48 hours to see them pop up on the CMA system. Often my notes are up on the system the same day. I’d say we use about one-half the paper we used with the old system. I also find myself editing and correcting transcription errors in the database—so it is more accurate now.” The next phase in the development of CMA’s integrated system is to connect it to suppliers, outside labs and pharmacies, other hospitals, and to doctors’ home computers.
Case Questions for Discussion:

1.Explain how CMA used the four principles of lean operating systems to improve performance.

2.Using the information from the case, sketch the original, paper-based value chain and compare it to a sketch of the modern, electronic value chain, which uses a common database. Explain how the performance of both systems might compare.

3.What is the total annual record retrieval cost savings with the old (paper-based) versus new (electronic) systems?

4.Does this CMA improvement initiative have any effect on sustainability? If so, how? If not, why?

5.Using lean principles, can you simultaneously improve speed and quality while reducing waste and costs? What are the trade-offs? Explain your reasoning.