Sep 11 2012
When faced with financial pressures, hospital leaders often try to reduce costs by laying off hospital employees. This is, in a way, understandable, since payroll makes up 60 to 70 percent of a typical hospital’s overall costs.
An increasing number of hospitals, however, are questioning the long-term impact of layoffs on morale, cost and quality. As a result, many are turning to “Lean management” practices, based on the Toyota Production System, as an alternative. The Lean methodology reduces costs, with lower costs being the end result of higher staff engagement and better patient care. Denver Health is one such health system with a “no-layoffs philosophy,” having saved over $150 million through their Lean program. Without those savings, Denver Health would “absolutely have had to cut jobs,” said CEO Patricia Gabow, MD, in a Denver Post report.