The Theory of Constraints in health and social care

A unifying approach that helps doctors, nurses and managers work together to achieve a breakthrough in healthcare performanceBy Alex Knight, Founding Partner, QFI Consulting

Contents

Introduction

Understanding the roots of the Theory of Constraints

Summary

Applying the Theory of Constraints in healthcare

Strategy 1: having a robust and trustworthy patient-centred priority system

Strategy 2: managing according to patient priorities

Strategy 3: implementing a sustained breakthrough in performance

A new way forward

Example results achieved in healthcare through the Theory of Constraints

About the author

References

www.qficonsulting.com/healthcare

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For example, in England, “NHS net

expenditure has increased from £40.201

billion in 1999/2000 to a forecast outturn

of £102.985bn in 2010/11. The planned

expenditure for 2011/12 is £105.9bn.”

(NHS Confederation, Key Statistics on

the NHS, October 2011). This equates to

a 2.8% increase in 2011/12 compared

to more than 10% over the previous

twelve-year period. In The Netherlands

the Administrative Coalition Agreement

between the government, hospitals and

health insurers for 2012-2015 (Den Haag,

4th July 2011) has limited budget growth

to a maximum of 2.5%. This applies

primarily at national level but is also

relevant to individual hospitals: “Growth

beyond contractual agreements is not

compensated unless, under the statutory

duty of care, additional contracting has

become necessary.” With overproduction

in 2010 and 2011 being subtracted from

future budgets this means zero budget

growth from 2012 to 2015.

1.

Introduction

There are more and more examples of the Theory of Constraints delivering unprecedented breakthroughs in the quality and timeliness of care and financial performance. Could this be the unifying approach that doctors, nurses and managers have been looking for?

In today’s environment this is intensifying with the growing pressure caused by medical costs rising faster than revenues1. Any attempts to improve the quality and timeliness of patient care while simultaneously pursuing financial sustainability can become a challenge too far. Without a way forward this tension can often result in less than harmonious relationships between clinicians and managers.

The Theory of Constraints (TOC) offers a way forward. TOC is a methodology that is delivering unprecedented breakthroughs in the quality and timeliness of care and financial performance. It is also proving to be a methodology that doctors, nurses and managers can all embrace.

Doctors, nurses and managers are increasingly required to work together to lead and manage a hospital yet they often appear to be approaching the task from different perspectives. While clinicians are striving to master the advances in their respective fields and deliver the best possible care for their patients, managers are coming under ever-increasing pressure to reduce costs.

1

Increased pressure to reduce medical costs

Time

£$€

Increased pressure to limit/reduce healthcare budgets

As the cost of medical treatment increases rapidly in comparison to growth of the available budget the risk to providing quality and timely access to care increases.

This paper will show:

• The similarities and differences between the development of TOC and the development of medicine

• The necessary and sufficient strategy and associated tactics to start to implement TOC

• A practical and proven application of TOC in healthcare.

Figure 1: an ever-increasing problem

2

Understanding the roots of the Theory of Constraints

The Theory of Constraints was developed by Dr Eliyahu M Goldratt as an improvement methodology to create breakthroughs in performance in seemingly complex organisations. As a physicist Dr Goldratt used the history of the study of disease to explain his struggle to find a systematic approach to management and the development of the Theory of Constraints methodology (Goldratt, 1987). He explained the development of a systematic approach as moving through three distinct stages: classification, correlation, and cause and effect2.

The first stage – classification – is as old as the Old Testament. When certain symptoms of disease appeared houses were quarantined and, as symptoms developed, the individual was isolated. However, with other symptoms that were not spread through human contact it was understood that isolation was not necessary. In this way diseases were classified not only by their symptoms but also by their potential for infection. These forms of classification helped to localise and prevent the spread of disease.

In the management of modern hospitals the classification stage of a systematic approach to improvement comes via hospital data. The claimed benefit of classified data is improved communication. However, using this data can be time-consuming and expensive. In England the NHS tried to develop an integrated patient record system, which claimed that “NHS Connecting for Health supports the NHS in providing better, safer care by delivering computer systems and services which improve the way patient information is stored and accessed” (NHS, 2007). However, the project failed and the £12 billion scheme was axed in September 2011. The second stage of a systematic approach to disease – correlation – was only achieved comparatively recently. Edward Jenner found that if serum is transferred from an infected cow to a human body, the human would not

be infected with smallpox. Immunisation had been discovered. Medicine was no longer limited to preventing the spread of the disease but to preventing and, in some future cases, eliminating it. For Dr Goldratt the importance of this stage was in understanding how to improve things. However, the question of why was not yet answered. Without the ‘why’ it is perhaps not surprising that it took over seventy years for Jenner’s methods to be widely accepted.

Correlation today can be seen in any airport bookshop where management titles supporting this stage abound. Unfortunately, many of these books have little more than evocative titles and sensationalism as the basis for their claims of how to improve organisations. One exception is Built to Last: Successful Habits of Visionary Companies (Collins, J.C. and Porras, J.I., 1994). Collins and Porras robustly and elegantly describe the characteristics of long-running, top-performing companies. It breaks many of the myths about the need for charismatic leaders and provides an excellent insight into the question of how these top companies continue to outperform their competitors. Finally, the third stage – cause and effect – was achieved by Louis Pasteur when he made a leap of imagination: an assumption that those tiny things that Leeuwenhoek found under his microscope more than a

Essays on the Theory of

Constraints.

Apologia, pages 23-28

2.

3

hundred years before, those things we call germs, are the cause of diseases. As a result the field of microbiology sprang to life. Many years later Dr Goldratt explained that, through hard work and an understanding of cause and effect, medicine was able to create immunisation for a very broad spectrum of diseases where this was not created spontaneously in nature.

Dr Goldratt’s Theory of Constraints applies this third stage – cause and effect – to the management of organisations. It is described in his business novel, The Goal (Goldratt, E.M. and Cox, J., 2005), which has sold over four million copies worldwide and is commonly found as a core text in business school programmes. Perhaps more interestingly, it has been cited as the business text that has most often been finished by readers and most of the readers claim this book is just common sense, even if it is not common practice. This claim

pleased Dr Goldratt enormously because, as a scientist, he saw common sense as the highest praise for his explanation.

The main purpose of Goldratt’s comparisons of the study of medicine with the study of organisational systems relative to management was to highlight the significance of medicine as a mature science that has, for many years, been in this third stage of cause and effect. It is widely agreed among the scientific community that this stage is based upon the search for the minimum number of assumptions that will explain, by direct logical derivation, the maximum number of natural phenomena.

For example, Dr Goldratt was the first to postulate that the performance of any goal-oriented system can be determined by only three measures: Throughput (T), Investment (I) and Operating Expense (OE).

The rate at which the system generates ‘goal units’ (NB: in healthcare the goal is not, as in business, simply to make money but to provide affordable, high-quality and timely care)

All the money currently tied up in the system

All the money the organisation spends in generating goal units

Throughput (T):

Investment (I):

Operating Expense (OE):

Classification and correlation do not answer the question ‘Why?’

4

Summary

Table 1: Summary of the three stages

Example in medicine Example in managing organisations

Comments

Stage 1: Classification

Diseases were classified not only by their symptoms but also by their ability to infect others. These forms of classification helped to localise diseases and stop them from spreading.

The classification of hospital data. The main benefit of this stage is claimed to be improved communications within this seemingly complex system.

In this stage the value of the classification is directly related to its practical use.

Stage 2: Correlation

Edward Jenner’s work on immunisation. Medicine was no longer limited to preventing the spread of the disease but to preventing and, in some future cases, eliminating it.

Collins and Corras ‘Built to Last’, analysing the characteristics of long- running, high-performing organisations.

The importance of this stage is its contribution to understanding HOW to improve the system.

Stage 3: Cause and Effect

Louis Pasteur’s assumption that those things that Leeuwenhoek found under his microscope more than a hundred years earlier, the things we call germs, are the cause of diseases.

Goldratt’s assumption that inherent simplicity exists in the most seemingly complex goal-oriented organisations and his Five Focusing Steps for developing second-order solutions.

The search for the answer to the question WHY? The search for the minimum number of assumptions that will enable us to explain, by direct logical derivation, the maximum number of natural phenomena.

Applying the Theory of Constraints in healthcare

5

A hospital can seem very complex but at its heart it is a system of dependent events experiencing statistical fluctuations (see Figure 2).

There are literally thousands of different patient pathways and on any one day there is a combination of unplanned and emergency admissions, and planned outpatient and inpatient treatments.

If we look at one effect – the flow of patients through the system – it is easy to recognise that patients’ lengths of stay in hospital vary considerably, from a few hours to many days. One hypothesis might be that the only cause of the spread is the variation in clinical recovery time across patients. However, it is clear to those working in such a system that there is a more dominant cause of variation in length of stay, a cause related to disruption or delay, either during the patient’s journey or at the end of their care.

This underlying cause impacts upon the quality of care and often puts staff under increased pressure. Extensive research3, together with the common experience of health professionals, indicates the quality and timeliness of care rapidly deteriorates when staff are overstretched. Catastrophic failures most often occur during extended periods of unreasonable staff pressure.

However, on the other hand, simply adding additional resource risks financial viability as it increases operating expense in a regime of zero revenue growth. At the same time, trying to find consensus regarding the system-wide underlying cause of this unnecessary disruption or delay is often met with a barrage of finger-pointing and accusations.

Dr Goldratt’s hypothesis is that underlying any seemingly complex, goal-oriented system there is inherent simplicity. In essence there can only be one weakest link in a chain and as a result there are very few governing factors (or, in TOC terms, ‘constraints’). His Five Focusing Steps of improving any organisation are an inevitable and logical derivation of this hypothesis.

He argues that any attempt to calculate the answer to his first step in isolation (identify the system’s constraint) is a waste of time and effort. Instead, he advocates a controlled experiment based on his five steps. Outlined below is a snapshot of the strategy and associated tactics necessary to start the implementation of the Five Focusing Steps in any healthcare environment.

Developing a System Resilience Approach

to the Improvement of Patient Safety in

NHS Hospitals, M Williams (Williams,

April 2011). The Checklist Manifesto, Atul

Gawande (Gawande, 2010)

3.

Figure 3: Goldratt’s Five Focusing Steps

The Five Focusing Steps

Step 1Identify the system’s constraint(s)

Step 2Decide how to exploit the system’s constraint(s)

Step 3Subordinate everything else to the above decision

Step 4Elevate the system’s constraint(s)

Step 5Warning!!!! If in the previous steps a constraint has been broken, go back to step 1, but do not allow inertia to cause a system’s constraint.

Figure 2: an example of a health and social care chain of activities

Emergency Dept.

Medical Ward

Home

Home Home

GP referral

Self referral

Ambulance Assessment Unit Theatre

GP referral

Home Home

Social Services

Home

SurgicalWard

Nursing & Residential Care Home

Social Services

Home

Social Services

Home

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Strategy 1: having a robust and trustworthy patient-centred priority system

The best way to identify the underlying constraint is to start with the creation of a robust and trustworthy patient-centred priority system and then identify which resource or task combination most often disrupts this patient-centred prioritisation.

Diagnosis starts at the beginning of a patient’s care and continues throughout their care.This continuation of diagnosis results in new tasks emerging throughout the patient’s journey. This is caused by, for example:

clinical recovery time varying significantly from patient to patient even when patients are suffering from the same illness type

any patient may have a mix of illnesses

recovery time becoming extended for some patients when they are not treated in a timely manner.

To take account of these emerging and changing needs QFI has invented a patient-centric prioritisation system called QFI Discharge Jonah4. For each patient a clinically derived planned discharge date is initially set in Jonah by a multi-disciplinary team, either on admission or within 24 hours of the patient’s arrival. The patient’s planned discharge date is based only on the expected clinical recovery time of the patient and is challenging but achievable (this clinically derived planned discharge date should never be based on recent experience with other patients or current/best practice from other hospitals). Patients will of course recover faster or slower than expected but the planned discharge date is adjusted, moving forward or back, in light of the rate of clinical recovery.

It is often the case in seemingly complex organisations that the implications of not doing something are larger than might have been supposed. In the above setting a patient can only depart when two conditions are achieved: first, the patient has clinically recovered and, second, when the last associated task has been completed. Capacity is wasted and/or throughput is lost when any one of the associated tasks takes longer than the clinical recovery period.

In the first scenario – where a patient recovers faster than expected – there is a much greater likelihood that one of the outstanding tasks will delay the patient’s departure than in the second scenario. As a result priorities across all patients will change, making it extremely important that the hospital system has the earliest possible notification of one patient recovering faster than expected and another recovering slower than expected.

•

•

•

An analysis of a European 800+ beds acute hospital shows us that in a scenario in which every planned discharge date was reviewed every day and half the patients recovered faster and half slower than expected, then every day gained from those who recovered faster would allow approximately 3,000 extra patients to be treated a year. If we assume the average throughput per patient is €2,000 then this is equivalent to €6.0 million extra throughput.

Jonah is the name of a key character in

Dr Goldratt’s book, The Goal. In the book

Jonah guides the analysis and process on

ongoing improvement. The basis of this

scientific approach is first explained in

Chapter 4.

4.

Strategy 2: managing according to patient priorities

Synchronising the flow of current patients around an initial planned discharge date is not sufficient to maintain a robust and trustworthy patient-centred prioritisation. Priorities must not only be based on updating the actual rate of recovery of the patient but also the latest understanding of disruptions or delays. Hectic priorities – hot, red hot, and do it now! – cause chaos across the system and result in clinical and managerial staff bouncing from crisis to crisis. Even when patient flows are synchronised, a priority system can still lead to chaos.

There are many different sources of variability in the day-to-day running of a hospital. Murphy’s Law is also alive and well. QFI Discharge Jonah is based on a unique modification to Dr Goldratt’s buffer management process. Buffer management sets priorities in a four-colour-coded system according to the degree to which the buffer time is consumed. Each patient’s planned discharge date is buffered (see Figure 4). The impact of changing a planned discharge date and/or disruption/delay to any one patient is understood and taken into account when adjusting the priority list across all patients (see Figure 5). If a patient has passed their planned discharge date or is predicted to pass their planned discharge date because of the remaining duration of an outstanding task taking longer than the remaining time of the planned discharge date, then the patient status will be black.

This enables staff to address the first and most fundamental question: “Of all the patients I could attend to next, which one should I choose?” Having the correct answer to this question provides the most important piece of information a resource, such as a doctor, nurse, manager or central department, requires if it is to play its role in improving patient flow.

7

Patient 1

Patient 2

Patient 3

Patient 4

Patient 5

Figure 4: identifying the causes of disruption/delay for a patient

Figure 5: identifying the cause of disruption/delay across the most patients

Patient 1

Clinically-based Planned Discharge date

Admissiondate ‘Multi-disciplinary team’

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Strategy 3: implementing a sustained breakthrough in performance

When a robust and regularly updated priority list is threatened by a non-clinical cause of disruption or delay it is far better to identify and permanently eradicate the cause than to adjust the priority list. Recording the resource that is causing disruption or delay to a patient journey as the patient moves through the green, amber, red and black buffer zones makes the resource immediately aware it is disrupting the patient’s journey. This then allows the resource the opportunity to take effective and proactive action.

The process also enables analysis of the few resources most often causing the most disruption/delay across the most patients – the constraint(s). This is a robust way to focus improvement initiatives and improve overall performance of the system. QFI Discharge Jonah enables this analysis to be carried out even when the dependency between tasks is unclear or emerges during the patient journey. It also allows clinicians and

managers to answer the second key question: “Which task, resource or task/resource combination is most often causing the most delay across the most patients?”

QFI Discharge Jonah presents managers and clinicians with the above analysis based on live data twenty-four hours a day, seven days a week. Through a series of daily and weekly buffer meetings these sources

of disruption can be identified and eliminated.

However, this is nothing more than a starting point to the analysis needed. Just because a task, a resource or a combination of both has been identified as most often associated with the most disruptions or delay across the most patients, it does not give us the answers to the three cornerstone questions of TOC:

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Figure 6: top delay reasons (all delay types)

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Which task, resource or task/resource combination is most often causing the most delay across the most patients?”

What to change? The process helps focus our initial exploration so that we know what, of all the things that could be changed, will have the biggest impact on the whole system.

What to change to? This is where the development of a second-order breakthrough is possible. Through the rigour of cause-and-effect analysis and an ability to identify and modify proven TOC-based solutions, it is possible

to develop rapidly implementable solutions tailored to the environment.

How to achieve the change? People do not resist change. They resist changes they believe, according to their judgement, will have a negative impact upon them or others they care about or are responsible for. People are willing to adopt an approach when they understand and agree with the underpinning logic, and understand that

the logic is being checked in their own hospital through a series of controlled experiments. It is important that the first (and subsequent) actions are: common sense, even if not common practice; can be rapidly implemented; do not require daring acts of leadership; and deliver immediate and substantial benefits in line with expectations.

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A new way forward

“I believe QFI Consulting is leading the way in the development and delivery of TOC-based performance improvement for health and social care environments. The successes they have achieved are a strong demonstration of the applicability of TOC in this environment. I am proud of their achievements and look forward to continuing to support them as they develop further.” Dr Eliyahu M Goldratt.

Results from more than fifty implementations across the world have shown that the identification and eradication of the few underlying constraints reveal the inherent simplicity of the system. A hospital that follows this approach will quickly find itself with shorter lengths of stay, resulting in higher-quality, more timely care delivered by staff who feel less stretched. However, this is when the real challenge begins. In the past the reaction of senior management to the released beds has been to ‘right size’ the capacity to achieve cost savings. This is understandable in the current economic climate. However, there is a choice. The more sensible way to deal with the exposed excess capacity is to capitalise on it; to encourage clinicians to take advantage of the improved performance and improve the quality and timeliness of the care they provide, eliminate unnecessary backlogs and help the hospital to flourish.

Doctors, nurses and managers working together in a patient-centric system delivering higher quality, more timely care and a breakthrough in financial performance.

Dr Goldratt passed away in June 2011 after a short illness. I would like to take this opportunity to thank Eli for the tireless support and mentorship he gave me over the last twenty-five years. We at QFI will continue to lead the way in applying the Theory of Constraints in healthcare in honour of the support he gave to us.

Alex Knight, Founding Partner, QFI Consulting.

11

Example results achieved in healthcare through the Theory of Constraints

“I have seen many methodologies but,

putting it simply, the combination of the

Theory of Constraints and QFI Consulting

delivers results much faster than anything

else around.”

Averil Dongworth, Chief ExecutiveBarking, Havering & Redbridge University Hospitals NHS Trust

“By working with QFI to apply their

Theory of Constraints approach to our

discharge processes across all our twelve

community hospitals, we have been

able to reduce our length of stay by a

third within a matter of weeks and make

big improvements to the quality of our

patients’ rehabilitation and discharge. The

process has developed staff’s confidence

in their ability to take control and make

changes which improve quality and

productivity and has significantly improved

multi-agency working across health and

social care in Derbyshire.”

Tracy Allen, Managing Director Derbyshire Community Health Services England

“I am delighted we are at the forefront of

productivity initiatives in the NHS Mental

Health service.”

Maria Kane, Chief Executive Barnet Enfield and Haringey Mental Health Trust

“With the start of the TOC-programme in

hospitals in the UK, USA and Australia we

were able to see their results in healthcare

improve. This success was a reason

why we worked with QFI, the developers

of this simple Jonah approach. Within

a few months the results were visible:

the average length of stay decreased. A

practical approach and not just a beautiful

story in a book!”

Mary Groenewould, Service Director Amphia Ziekenhuis The Netherlands

“The Jonah project uses an innovative

approach that cuts across all disciplines

and partner agencies. It has given

us the opportunity to dispel myth and

anecdote around the reasons for delayed

discharges. Even in the early stages of the

pilot, we have identified key issues and

trends which can now be addressed.”

Gary Cockayne, Assistant Director of Operations, Surgical Specialties Kettering General Hospital NHS Foundation Trust

“Following a review of Intermediate Care,

by Derby City PCT Commissioners, we

were challenged to reduce the average

length of stay in our community hospital

from 40 days to 30 days within the next

six months. I knew this would require a

swift, sustainable major change in the way

we delivered our service.

My confidence in QFI Discharge Jonah

was rewarded by an average length of

stay of 20 days which is maintained and

is likely to reduce further, thus benefitting

patients and delivering Best Value.

In addition it has been a joy to watch

the development of the ward teams, the

increase in individual staff confidence,

plus the improved interdisciplinary and

multi-organisational working.”

Glenys Crooks, Associate Director, Rehabilitation and Cancer Directorate

48% reduction in length of stay in five weeks

Acute NHS mental health hospital, England

18% reduction in length of stay in surgical inpatient units

High-performing acute hospital, The Netherlands

37% reduction in length of stay across 12 community hospitals

Community health services, England

44% reduction in length of stay in four months.

Community hospital, England

20% reduction in length of stay in five weeks

Acute NHS trust, England

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About the author

Alex KnightFounding Partner, BSc, MBA, CEng

Alex Knight is a founding partner of QFI Consulting. Prior to this Alex was the managing director of Ashridge Consulting Group (part of the Ashridge Business School) and a board director of Ashridge. At Ashridge Consulting Alex’s passion was to find the best consulting approaches from across the world; approaches that deliver results. At the same time as starting QFI, Alex was the first chief executive of Goldratt Consulting Ltd (whose chairman was Dr Goldratt), helping to steer it through its formative years as a global organisation before handing it on to Rami Goldratt (Dr Goldratt’s son) as part of a planned succession process.

Alex has been personally mentored by Dr Goldratt for over two decades. He has pioneered the application of Dr Goldratt’s Theory of Constraints in many industries across the globe, including health, financial services, manufacturing and FMCG. Alex is the inventor and developer of QFI’s TOC applications - from concept through to software and implementation processes. Alex also led the introduction of the first ever Masters in TOC: QFI’s Masters in TOC (Health and Social Care Management) at Nottingham and Trent Business School. Alex is not satisfied unless our client organisations reach new and unprecedented levels of performance and he is constantly seeking better and faster ways for clients to achieve breakthroughs in performance. Alex is leading the development of QFI’s TOC Strategy and Tactics process, an application that will provide QFI and its clients with a coherent and robust roadmap to achieve whole-system breakthroughs in the fastest possible time. Alex’s career, firstly as a tutor and consultant at Ashridge and then as a leader of organisations, has enabled him to work in many industries and across many continents. Alex has led many TOC implementations in healthcare organisations in the UK, The Netherlands, the United States and Australia. He has provided strategic consulting to many organiations, including the National Childbirth Trust, the Linney Group, Samworth Brothers, the Robert Gordon University, Zurich and Axa.

QFI Consulting LLPP O Box 935TringHertfordshireHP23 4ZX

www.qficonsulting.comenquiries@qficonsulting.com

Copyright © QFI Consulting LLP 2011

References

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Den Haag. (2011). Administrative Coalition Agreement

Gawande, A. (2010). The Checklist Manifesto. London: Profile Books.

Goldratt, E. M. (1987). Essays On The Theory of Constraints. Great Barrington: North River Press.

Goldratt, E.M. and Cox, J. (2005). The Goal (3rd ed.). MA: North River Press.

Collins, J.C. and Porras, J.I., (1994). Built to Last: Successful Habits of Visionary Companies. United States: Harper Collins Publishers.

NHS. (2007). NHS Connecting for Health. NHS Confederation. (2011). Key Statistics on the NHS

Williams, M. D. (April 2011). Developing a System Resilience Approach to the Improvement of Patient Safety in NHS Hospitals.

Copyright © QFI Consulting LLP 2011