SMart Manufacturing

In his October posting, Paul Borawski talks about a “Smart Manufacturing” initiative to make the factory floor into a profit center (as opposed to a cost center).  In reality, the thoughts behind this approach means uniting innovation with production--locating the R&D shop physically close to the production line.  The idea, of course, is to capture ideas from those actually doing the work and translate those into new processes that are more efficient. 

Before you say “Yes, of course,” think about what has been happening in US manufacturing recently.  The primary approach to reducing production costs has been to move production to a cheaper labor environment or to a country without laws on environmental pollution.  R&D stays here, putting both a geographic and a cultural barrier in the way of innovation. 

So what about healthcare?  Much has been written about waste in healthcare, but the definition of waste has focused on “unnecessary” healthcare that could be eliminated with minimal harm to the population, not at improving the processes of providing care.  At present, these are focused nationally on reducing the amount of healthcare provided under Medicare.  The new Accountable Care Act (ACA) even provides a counterpart to the British NICE commission to decide what healthcare will be allowed.  (For more on how this works, see “My Drug Problem” which begins with “If I lived in New Zealand, I’d be dead.”)  Unnecessary care is thus defined as healthcare that the government doesn’t think you ought to have.  Of course, they may be right.  From a population or an economic perspective, they are probably right much of the time.  But not all the time.  This is the classic difference between populations and individuals.  Look at one example:  Every year, I have a PSA blood test to detect prostate cancer.  It’s not a very good test, and causes a lot of men to have additional tests or procedures when the PSA is abnormal.  Most of these are false alarms, but they cost money for Medicare.  Furthermore, some make the point that some prostate cancer is relatively benign and can be ignored.  So it’s not a slam dunk. The key question is who makes that decision.  The government already has.  They think the PSA is a bad idea and advise against it.  Some day, they will instruct my insurance company not to pay for it.  Eventually, they will not even allow me to pay for it myself.  Maybe I’ll be lucky, and that will be OK.

This approach stresses decreasing the products and services provided, not on gaining customers or market share.  There are very few examples of competition in healthcare.  No hospital goes out of business because their competitor provided appendectomies at a lower price. 

This is one situation where you can have it all.  There is a legitimate need to look at taking better care of patients with chronic diseases, so they don’t need so much care.  There are provisions in the ACA to do this.  There is also a need to look at the efficacy of drugs and procedures, but we must also recognize that there are differences of opinion about what works and what doesn’t.  Furthermore, some patients may want something done in spite of your advice to the contrary.  That’s got to be OK.

Some may remember the HMO era in US healthcare.  It was the only time that the annual cost of healthcare actually fell.  HMOs made their money by denying care.  They made access to care so difficult that only dedicated patients would persist.  Eventually the American people rebelled and HMOs have largely changed their strategy. 

There is a need for the “Smart Manufacturing” approach in the healthcare industry.  We could solve our need to reduce the cost of healthcare by making the processes of care more efficient.  Workers on the front lines of healthcare know how to do this.  It’s time to bring the R&D folks in to help capture those ideas and re-design the processes.  There are off-the-shelf techniques for accomplishing this task.  The only thing missing is the motivational threat of a serious competitor.