IHI 'lean accounting' method can help frontline clinicians manage cost of care

Experts argue that frontline clinicians lack the tools they need to play an active role in controlling the costs of care they provide. The Institute for Healthcare Improvement developed a "lean accounting" method for measuring real, unallocated costs of care that combines a version of lean accounting used in manufacturing with a point-of-care management system. The overall approach included three foundational elements:

1. A simplified method to understand quality, cost, and workforce capacity on a weekly basis;
2. A visual management system to present and analyze this data regularly, engaging the entire team and linking measures to active, ongoing efforts to make improvements to cost and quality; and
3. A daily, point-of-care communication method to support continuous improvement through practices such as huddles and staff coaching.

The following tools constitute the basic building blocks of the value-management system:

• The box score. Point-of-care teams use a "box score" for performance measurement that brings together three categories of measures:
  • Five or six performance measures (quality metrics such as length of stay or readmission rates) show unit-level performance against organization-level strategic goals;
  • Measures of staff capacity explicitly track direct care, indirect care, and available staff time; and
  • Financial measures report variable costs broken out by a few major categories along with revenue and margin measures.
• The visual management board. This links the box score to a set of targeted improvement projects, enabling frontline teams to monitor performance over time, identify key gaps in performance, and describe local project-based initiatives to improve cost or quality of the local system; and
• A routine, in-person reporting and communication approach. A management-communication approach is used to integrate these tools into daily work and engage the local team in continuously tracking performance and implementing improvements to reduce costs, increase quality, and better utilize staff capacity.