Written by Dalip Raheja for Sourcing Innovation.
Would You Go to McDonald’s for Surgery? What if I Added the Happy Meal Toys?
Atul Gawande just wrote a piece in The New Yorker in which he applies The Cheesecake Factory (TCF – restaurant chain) model to the healthcare system. He cites soaring costs, mediocre service, unreliable quality and significant variability in outcomes/results as the dominant attributes of the current medical system in the USA. Sounds like the typical Supply Chain/Sourcing issues that almost all of us are trying to deal with on a daily basis.
Why did Atul choose The Cheesecake Factory as a model? Because they are a chain with 160 restaurants with 308 dinner items and 124 beverage choices serving more than 80 million people a year. And they manage to do it with very high quality, every entre cooked fresh, reasonable prices, etc. etc. Oh by the way, they put out a new menu every 6 months! I will let you read why TCF is highly successful but mostly it’s all the stuff that you and I are so used to dealing with in our professional lives. Size gives them buying leverage, centralized common functions, demand forecasting integrated with inventory management, etc. etc. They aim for no more than 2.5% waste in an industry where the shelf life is very short.
In addition, there are some things about TCF that are quite intriguing. They’ve laid out their kitchen like a manufacturing production line. They have a very good POS system integrated with their kitchen to track “manufacturing” and “delivery” times. They make sure that their staff is well trained and provided with all the tools necessary. They have a well -defined oversight process that provides positive and negative feedback at the end of the manufacturing line.
An immediate challenge is that doctors have been historically paid for effort, and not results. While Hammurabi dictated that a surgeon’s hand be cut off if the patient died, we have apparently moved away from that as I don’t see too many one handed surgeons out there. Healthcare reform is now starting to link compensation to outcomes. Standardization has long been looked at very suspiciously by the medical community.
Gawande discusses an attempt at standardizing knee replacement and how it impacted his mother’s surgery – reducing recovery time in the hospital by more than half and reducing rehabilitation time by 3/4ths! And did I mention all at lower costs and better outcomes? The doctor has gathered best practices and then standardized them – an unheard of phenomenon. All the way from anesthesia to rehabilitation, including cutting down on the number of options for prostheses surgeons could order. It is a fascinating must read for ALL supply chain/sourcing people as it reads like a classical case study.
The challenges that Gawande lays out for the medical community are very significant. The first and biggest challenge is the incredible amount of time it takes for this profession to adopt (AEIOU) new ideas – decades for new protocols and guidelines to be adopted. This should come as no surprise to readers of the Doctor’s blog and our numerous discussions on this topic. Competency Development in the medical community is still not focused appropriately – “In medicine, we hardly ever think about how to implement what we’ve learned”. An example he cites is Dr. Armin Ernst who is essentially the Chief Adoption Officer. Ernst does not deal with patients – but works with the doctors at their 10 ICUs in ensuring that best practices are being adopted. He provides the same kind of oversight that was found at TCF. Do you have a Chief Adoption Officer?
The transformation in the health care sector is underway and it will borrow heavily from our profession. Supply Chain/Sourcing can and will contribute significantly. As Dr. Gawande points out, “We’ve let healthcare systems provide us with the equivalent of greasy spoon fare at four-star prices, and the results have been ruinous. The Cheesecake Factory model represents our best prospect for change”
Latest posts by Dalip Raheja (see all)
- The Road to the C-Suite for Procurement / Supply Chain - May 18, 2017
- How Much Attention Are You Paying to Politics? Probably NOT Enough!! - May 4, 2017
- Strategic Sourcing vs. Category Management – Should You Give a Hoot? - April 20, 2017