Blood Industry Shrinks as Transfusions Decline – Survival Is Not Compulsory

I read this article in The New York Times about the current state of the blood banking and transfusion industry.  Changes in medicine have eliminated the need for millions of blood transfusions, which is good news for patients getting procedures like coronary bypasses and other procedures that once required a lot of blood.  But the trend is wreaking havoc in the blood bank business, forcing a wave of mergers and job cutbacks unlike anything the industry has seen.


This isn’t a new phenomenon.  I can recall similar forces back when I was in the clinical laboratory and blood bank industry.  What is new, I think, is the scale of the changes – it’s gone beyond “regional”.
As Dr. Deming said:
“survival is not compulsory.  Improvement is not compulsory, but improvement is necessary for survival.”
There are no laws that say companies must survive, this is true for blood centers, hospitals, clinics, doctors.  There are no laws that say companies need to improve.  Companies can keep doing the same thing and hope that the good old days will return.  But some companies are changing, and not just through incremental improvement but through innovation.  They are asking fundamental questions, “what business are we in?”  “what business should we be in?”  I think companies like The BloodCenter of Wisconsin (a member of the Healthcare Value Network) have a chance.  At least they are trying to improve.  I blogged about them about a year ago.

Healthcare Value Network Members Learning About Principle-Based Lean Transformation

I had the good fortune to visit one of our Healthcare Value Network (HVN) member organizations that hosted a 2-day course that we offer on HVN Assessment model and process.  The host was MemorialCare Health System based near Los Angeles.  Other HVN member organizations that participated include: Stanford Health Care, Tucson Medical Center, and Mayo Clinic Health System – Franciscan Healthcare in La Crosse.

Understanding the relationship between guiding principles, systems and tools is a new paradigm.  Another one is the realization that there are two primary drivers of behaviors: 1) what get’s measured, and 2) our systems.  Organizations that are interested in transforming their culture to one of continuous improvement need to realize that an organization’s culture is the sum of the collective behaviors from top management, through middle management and the front-line workers.

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I’ve blogged about this topic several times before:  10 Lessons, and “one example of the HVN assessment process“.

Is “Management By Scorecard” Merely “Management By Results” in Disguise?

I’ve been employed in the healthcare industry since I was 18 years old when I worked as an orderly in a small hospital in Kansas.  That’s forty years.  I’ve seen a lot of things come and go.  There is always a new “shiny object” that holds some promise for solving the problem of healthcare – how to provide high quality, efficient care at an affordable cost?

In 1985 I met Dr. W. Edwards Deming, and his thinking has affected me ever since.  In his 1993 book The New Economics, he described the common solutions that are attempted, based on what he called the “mythology of management” (see list on left-hand side of the image below).  He described what was needed instead as management based on new knowledge – his system of profound knowledge (right-hand side).

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One of the items on the left-hand side is “management by objective”, another is “management by results” or “management by imposition of results”.  I think I could add another example of this approach and call it “management by scorecard”.

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I have seen this approach used for years.  Sometimes it’s called the “balanced scorecard”.  It is comprised of a list of measures (almost always too many), followed by some goal or target.  How these targets are selected is probably another blog post.  Sometimes it comes from data comparing measures from “similar” departments from around the country (benchmarks).  How “similar” is defined is not always clear.  Typically, some percentage is designated (the top quartile, or something like that).  Call it what you wish, it’s an arbitrary numerical target.

Next there is a determination of colors to be designated the performance by time period (e.g., by month).  Red for outside the target (bad), green for better than the target (good).  The supposition is that management can look at this summary report and determine how things are going.  By sharing this report to others in the organization, the supposition is that it will help people to improve (more greens).

Rules for action are then devised.  Typically, it is something like this: Any time you have a “red” month, you need to explain why and have an action plan.  Sometimes it’s “two months of red in a row”, or maybe 3.

What’s wrong with this approach?  Plenty.

The approach is based on the prevailing style of management, what Dr. Deming called the “mythology of management”.  Below are just two of these assumptions, followed by proposals for different assumptions that are based on “principles for enterprise excellence”.  These principles are not things that you “adopt”.  They are like rules of science and nature – like “gravity”.  They are based on foundational truths that are always present and affect equally those who understand them, and those who do not understand them.  You do not adopt principles, “they adopt you”.

Mythology of Management Assumption #1 – You can divide an organization up into parts, and manage the parts.  You can hold managers responsible for the performance of their part.  By doing so, managers will work harder to improve their part.  When all of the parts are improved, the organization as a whole is improved.  In other words, the performance of the organization is “additive”.

Better Practice Recognizing the Principle of “Think Systemically” – The performance of an organization is more than the sum of the parts.  It is the product of the interactions of the parts.  Work occurs across departmental boundaries in order to provide value to the customer.  Better practice is to view the work as a system and foster collaboration between the people who do the work.

Consequences of Not Understanding This – The likely effect of not thinking systemically will be a lack of collaboration and cooperation between the people in an organization.  If their job becomes to “hit their departmental numbers”, they will do so and it will result in sub-optimization of the whole.  Everyone suffers (not just the customer).  This approach also produces waste, most of which cannot be measured.  We wonder why our organizations behave in “silos”, and we need to look no further.  Management produced the silos through their best efforts.


Mythology of Management Assumption #2 – It is reasonable to take action on any variation from what is desired.  In other words, if we see an undesirable result (red), it is possible to find the cause for the result, and to make corrections so that future performance will be better (green).

Better Practice Recognizing the Principle of “Understand and Manage Variation” – Variation exists, and always will.   Every process and system produces output that varies over time.  There are two types of variation: 1) random (chance) causes, and 2) special (assignable) causes.  Random variation comes from the system, how it is designed, and the interaction of the parts.  It is not possible (and unproductive) to try to find the root cause of random variation.  It does not make sense to ask “why”.  You can even ask “why” five times and will still be stumped.  Special cause variation is something that comes from outside of the system – something different.  Sometimes the special cause produces results that are desirable, sometimes the results are undesirable.  The point is, that it may be possible (and worth our time) to search for the cause.  Just because we have random variation does not mean we do nothing.  The appropriate action is to study and improve the system so as to produce more desirable results in the future.  We do this through testing ideas using the Plan, Do, Study, Act Cycle (another guiding principle – “embrace scientific thinking”).

Consequences of Not Understanding This – When we take the wrong action, we make matters worse.  Dr. Deming had a simple way to demonstrate this.

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Most of the variation we see in processes and systems is random variation (first column).  Sometimes the variation is special cause variation (2nd column).  For illustration purposes, we’ll designate the percentages as 90% and 10%.  Under the prevailing style of management, our typical reaction (common sense) is to take action on individual data points (first row).  Rarely do we step back and study the system.  We’ll assign percentages of 90% (take action), and 10% (study).  When you multiply the incidence of the type of variation and the likelihood of action, we get .9 X .9 = .81 or 81% in the upper, left-hand quadrant.  Dr. Deming called this “tampering” and it makes matters worse.  It actually increases future variation, and produces waste.  The prevailing style of management makes things worse eighty percent of the time – guaranteed.

People are taught to go on “waste walks” to look for waste, when a large percentage of the waste in an organization is produced by management.  This is why Dr. Deming often said, “we’d be far better off if some people just stayed home, maybe took turns going to work”.  The amount of wasted effort and action proceed by management taking the wrong action dwarfs the waste that can be identified and removed by the front line.

If we plotted the data for one of the rows in the score card example, we would see this.  The actual month-to-maonth patient satisfaction performance is the blue line.  It goes up and down.  The purple line is the average, the light green line is the upper control limit and turquoise line is the lower control limit.  The control limits are calculated from the data.  The variation is random and predictable.  It could go as high as 100% or as low as 70%.  On average (unless the system is changed), it will produce about 87% in the near future.  There is no rational basis to ask for an explanation of any of the points within the control limits.  They are there by random variation.  The same system that produced the high points, also produced the low ones.

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The red line is the arbitrary target (90%) that management has imposed.  Months that are at or above the target are colored green (good), those that are below the target are red (bad – explain why, take action).

Improvement will only come from studying the system that is producing the variation, and to test ideas for improving the variation using the PDSA cycle.


I do see some signs of hope, but also some indications for concern.  I see some healthcare organizations that are members of the Healthcare Value Network that recognize the pitfalls of the prevailing style of management and are using different thinking and taking different actions to improve the systems of care.

But I also see an absence of the understanding of these guiding principles, especially “understand and manage variation”.  That’s a different blog post (which I have already written).  Go here, and here, and hear to read that if you are interested, and go here to read a paper that I presented at the March 2014 International Deming Research Summit.

What do you think?  I would be interested in your thoughts on this.

So You Want To Be An HVN Member? Southern Illinois Edition

I had the good fortune to visit 3 of our Healthcare Value Network member organizations earlier this week.  It’s part of what I call “tending the Network”.  I’ve got an update on one of the organizations that I blogged about in April of this year.

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Herrin Hospital is part of Southern Illinois Healthcare.  They have developed some processes to understand the current state of the organization every day.  Their system revolves around the use of daily management boards.  The photo below shows the administrative group getting ready for going on one of 3 routes in the hospital.  They do this every morning.

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Members of management take their turn on these routes.  If it’s not your turn to go on a route, then you will be spending this time rounding on patients.

Here’s an example of one way that the process functioning as part of their communication system.  They had some news about a new physician on staff.  On some of the units, the staff would write this new information on the board for others in the department to get this new information.

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The boards are also used in another manner, a kind of “hybrid” of the administrative routes.  This photo shows one of the nurse managers (left) providing a status update to the chief nursing office (right).

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As the departments become more capable in the use of the boards and lean thinking, more items are added.  Here’s an example of the addition of  the process observation board to be able to see how well the standard work is being used.

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I saw a lot of great things on this visit.  I really like the way they are co-creating the system and experimenting with different approaches.  They have an approach called “just do its”, that may be different from how others think of this term.  At Herrin Hospital a “just do it” is some time devoted to some problem solving.  They do it in short increments, every day.

When I asked them how they learned some of what they are doing (such as forms they were using, etc.), many people told me they learned it themselves or were experimenting.  They are designing their own forms and their own tools.  I like that.  They didn’t get it from some book, or some class, or even from some other organizations (although those can all be valid starting points).  They acknowledged learning a lot from the consultants they were working with, and they learned a great deal about Thedacare’s Business Performance System and have incorporated key components into their daily management system.  The consultants have actively supported them during the development and implementation of what they call the Level 2 (Leader SW) & Level 3 (Monthly Operations Review) daily management processes.  Having the support a sensei has been key in the development because it is first about changing the way they think rather than changing the way they act.  

One manager said, “It goes back to a statement made at the Lean Healthcare conference this year, we need to accelerate the Lean journey in healthcare and acceleration is possible because we have others who we can learn from.  The work is still ours to do, but there are benefits of learning from others.”

I’ve heard the saying “it’s easier to act your way into a new way of thinking, than it is to think your way into a new way of acting”.  That might be true, maybe it is easier.  But it doesn’t always happen.  I see many organizations who are really “acting their way into a new way of acting”.  In other words, it’s all on the surface, and they are not getting the “why behind the what”.  But I don’t think that’s the case at Herrin Hospital.  I think they are also thinking their way in to a new way of acting.

Watch for more updates from SIH and Herrin Hospital.  I plan to return to do some filming for a “virtual gemba visit” and then help them get ready to host their first HVN gemba visit.

Father Of The Bride

I’m a pretty lucky guy.  I’m married to a beautiful, terrific gal (Peg).  I’ve got 3 terrific kids (Jerry, Annie, Danny), a wonderful daughter-in-law (Stacy) and a grandson (Jimmy) who might just be starting to warm up to me (and to men in general).   Now I’ve got a terrific son-in-law (Trevor).

Not all fathers get to do what I did yesterday.  I got to walk my daughter (Annie) down the aisle.

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If you want to see a nice video montage of the wedding, go here:

Some other videos and photos from the big event are below.  Unfortunately, they misspelled “Stultz” (but they spelled “Stoecklein” correctly!  Go figure).

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Isn’t she lovely?

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This video that was taken in early 1990s come in handy at the wedding.

Here’s a photo of me ironing my tux before we traveled to the wedding.


The kids designed this interesting and useful wedding fan/program for the wedding.  It was about 90 degrees outside, so we saw the fan in use a lot.

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Here’s the short video to show it in use.

There was a display of weddings from the past.

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This short video shows all of the photos.

My daughter did something really cool.  She embedded some rings from some people from our family who have passed away.  Her aunt Linda (my sister), uncle Matt and Grandmother (Peg’s Mom, Annie).


Many weddings have a rehearsal dinner.  This one was no different.  This photo shows Trevor’s mom & dad (Ron and Marie).  I think the guy in the background might be Newman!

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Here’s a short video clip:

The wedding also provided another landmark occasion.  I finally got my “dude sweater” (aka, the big lebowski).  Ron got a sweater too.  We immediately ordered “White Russians”.

the dude

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Short video is here:

Before the wedding, the guys need to get their boutonnieres arranged just right.  Apparently, it requires beer (this did take place in Wisconsin).

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This short video gives some clues:

The best man (Garrett) had 2 critical jobs: 1) bring the rings, 2) bring the rope for the hand-tying ceremony.  Guess which one we almost left at the hotel?

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Watch the short video here:

We are exactly where we’re supposed to be, but where is the photographer?

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Dan and Jerry explain:

Who needs a real photographer when you’ve got Grandpa Fred?

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Watch the video to see what’s going on:

Before the ceremony started, I’m with Annie and the bridesmaids.  We’re trying to make sure Trevor doesn’t see Annie before we walk down the isle.

Screen Shot 2014-08-03 at 9.18.54 PMThis short video makes reference to the “neolithic ladies” (which is actually something I talk about in my concession speech – I mean, the father-of-the-bride’s speech):

The judge who officiated at the ceremony was a sort of “Garrison Keillor” type fellow.  He included some of the story of how Trevor traveled to our house (2 hr drive) unannounced to ask for Annie’s hand in marriage.  He also included a bit about how I (purposefully) delayed the process by stopping to take a shower, have a beer, watch TV.  All in fun.  We like Trevor!  We really do!

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I took a short video of the actual ceremony. I hope someone else has a longer video.

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Here’s my short video:

As the father of the bride, I only really have a few jobs: 1) walk the bride down the isle (achievement unlocked), 2) give a speech (see photo below), I hope someone got that on video, I was busy at the time.  And #3, “write the check”.  We did that, and it was worth every penny.

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Oh yeah.  I have another job – the father-daughter dance.  Remember that video from the early 1990s?  Annie and I re-enacted our dance moves to “Isn’t She Lovely”.  Here’s the link to the video (with a photo-bomb from Jerry and Jimmy!):

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After the wedding the reality sets in.

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I call this video “Mr. Stultz on 3 hours of sleep”:

One final item.  Jimmy (everyone else calls him “James”) is my grandson.  He seems to have this aversion to men.  But I think we are making progress.  He budged me.

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Here’s the video:

So You Want To Be A Member of the Healthcare Value Network? – Vancouver Style

As part of my work to support the Healthcare Value Network I have the opportunity to visit many great organizations that are applying lean thinking to health care.  I’ve written about being an HVN member before.

Yesterday I had the good fortune to visit our member organization in Vancouver, British Columbia – Vancouver Coastal Health.

Here are some of the things I saw.

This impressive team of 3 women have had a huge impact on the maternal unit at Richmond Hospital.  Laura is a midwife and facilitates the education process on the unit.  Lynn is the facilitator.  I asked her how she learned what she knows.  She told me that her dad worked at Toyota and that influenced her.  Wendy, the manager of the unit is a really dynamo.  She visited some other HVN organizations, got some ideas and made it happen.  She tried a lot of different things.  She and her team were not afraid to make mistakes.

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This team did not start simple or easy.  They tackled a big hairy audacious goal (BHAG) – the percentage of C-Sections done on the unit.  They wanted to work on something real – something that mattered to patients and to physicians.  This was their current state value stream map.


They involved the patients and asked them how they wanted to process to go.

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They worked on it, and worked on it and made some terrific improvements, including a protocol that everyone could agree on for when it makes sense to perform a c-section on the unit and not transport the mother to the OR.

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They developed these nifty “line of site” tools that show how the department is doing every day, as well as possible causes for not achieving the measures.  They borrowed the original idea from 2 other HVN member organizations,  then they went through lots of iterations of these, and will likely continue to revise and improve them.

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They use a kind of self-assessment to determine how they are doing.  The current state is on a spider diagram.  This is similar to the work we are doing with the HVN assessment team.

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They devised a way to audit key processes.  The current one is “documentation”.  This board is located where staff walk in to the department.  The red card shows how we are doing today.  There is also information to show why it’s a red card and not a green one.  The staff then know what they need to do.  No need to have a long conversation about it.

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Keeping staff up to date on clinical education is also important.  They have a simple method and board for that as well.  This board is also located in the hallway where staff come to work.  Anyone can stop by and read what’s new and then move on.

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They have also developed and documented lots of standard work.  They call it “standard operating procedures” or “SOP”.  The documents feature lots of photos.  Here’s an example of a draft of one of their SOPs.

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These documents don’t just appear.  It requires some teamwork and detailed-thinking to produced these documents and keep them up to date.  Here’s a team working on some of these SOPs.  Some of the team members are from another part of the organization (not on the maternal unit).  They are working on their green belt.

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In the intensive care unit, they are determining what to work on next.  There are lots of priorities (based on a study of their value stream).

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Everyone gets a chance to vote on the items they would like to see worked on.  The “top vote getters” go on a PICK chart to determine the “one thing” they are going to do next.

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On another unit I saw another approach.  They call it “releasing time to care“.

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The unit has a vision statement and the photos of the staff are featured.

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They get lots of thank-you notes from patients.

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Part of a this approach is called a “well organized ward” (WOW).  This is similar to 5S in the lean world.

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This unit has accomplished a lot!  Here’s a running list for everyone to see.

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They also have a method to determine what they are going to work on next.  Everyone gets a chance to vote on the options to pick the next “one thing”.

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So one unit calls their improvement work “lean”, another calls it “releasing time to care”.  Is this a problem? (that there are two approaches in one organization).

I think the answer is “maybe”.  Improvement needs to be owned by the people who do the work, yet at the same time where there is variation there is potential for waste and duplication of efforts.  Top management needs to facilitate collaboration – win-win.  This can’t be mandated, but needs to happen.

I saw some other great things on my brief tour.

Here’s a flow diagram showing a family’s journey in the care system.


Here’s an example of some 3P space redesign work for a pharmacy.

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There’s good stuff happening in this organization!



People Develop, But Do People Develop People?

I don’t think so.  At least I think it’s more complex than that.  I’ve blogged about this before.

Muck of what I hear about “people development” seems to be based on some questionable principles of the prevailing style of management.   Dr. W. Edwards Deming had a term for this “the mythology of management” (referring to what he saw in the Western world).

In his 1993 book, The New Economics, he described “faulty practices of management with suggestions for better practice.  Here is a partial list:

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I like the contributions of Heero Hacquebord as well.  Heero is one of the people who worked very closely with Dr. Deming and would often participate in his 4-day seminars.  Heero provided a helpful presentation at the Ohio Quality and Productivity Forum years ago.  Here is a summary of Heero’s lists:

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I think that the prevailing style of management is described in the left-hand columns from Dr. Deming and Heero Hacquebord.  This style is not fixed.  It’s actually a relatively modern invention.  It’s not the kind of management we need now and in the future.

Yes we need for people to move from the prevailing style to a better style (they must develop), but we must not approach this in a mechanistic, reductionistic, formula-driven approach.  People are complex.  They have a free will.  For instance, we can use extrinsic motivation (one person trying to motivate another), but that approach is based on the left-hand world.  It will not only likely backfire, it will most likely make matters worse.  This s also well-supported in the peer-reviewed literature.  A useful article (Self Determination Theory and the Facilitation of Intrinsic Motivation, Social Development and Well Being) by Edward Deci and Richard Ryan can be found at this link.  Edward Deci has a helpful book titled Why We Do What We Do, and Alfie Kohn has written several books on this topic including Punished By Rewards.

These are my thoughts.  What do you think?