LeadingAge Magazine · September-October 2017 • Volume 07 • Number 05

Incorporating Lean Management Principles in Skilled Nursing

September 18, 2017 | by Maureen McGee and Mike Logan

This provider, seeking greater efficiency in its referral and admissions process for post-acute care, incorporated Lean management principles to great effect.

The occupancy rate in today’s skilled nursing communities is not what it used to be. Per a recent report from The National Investment Center for Seniors Housing & Care, skilled nursing was at 82.6% overall occupancy for the end of the first quarter in 2017. As healthy systems, physicians, clinical technology and surgical practices continue to influence skilled nursing rehabilitation use, it is expected that overall occupancy in skilled nursing facilities will experience nominal increases.

More importantly, recent trends in the expansion of Medicaid waiver assisted living programs, acute care preferred provider agreements, Medicaid payment reform, and increased competition for Medicare skilled occupancy have all caused skilled nursing providers to take a very proactive and aggressive approach in achieving budgeted occupancy.

“I remember when we would budget for 94% overall occupancy and know that we would hit 96% with a wait list for our long-term Medicaid beds,” explains Lynne Davis, administrator for Wellspring Lutheran Services’ Frankenmuth Senior Services.

Based on discussions we’ve had with other Michigan post-acute care providers, competition for Medicare patient days is at an all-time high for skilled nursing property operators. At Wellspring Lutheran Services, we are no different than our peers. We will continue to feel the pressure to “keep heads in beds” until the supply and demand equation comes into balance.

Based on our urgent need to meet our fiduciary obligations and achieve our budgeted Medicare census, we made an investment in incorporating health care Lean management principles to our overall referral/admissions process.

Wellspring photo
Wellspring Lutheran Services has incorporated Lean
management principles into its referral/admissions process
for 5 skilled nursing communities. Photo courtesy of
Wellspring Lutheran Services.

Building a Lean Culture

Lean management principles have been used effectively in manufacturing for decades. Lean thinking begins with driving out waste so that all work adds value and serves the customer’s needs. Identifying value-added and non-value-added steps in every process is the beginning of the journey toward Lean operations. In short, “Lean management” involves eliminating waste by creating efficiency.

Although health care differs in many ways from manufacturing, there are also surprising similarities: complex processes, strong interaction between technology and humans, integrated information systems, time-sensitive processes and a reliance on smooth interdepartmental communication. Lean thinking is not typically associated with health care, where waste—of time, money, supplies and good will—is a common problem. But the principles of Lean management can, in fact, work in health care in much the same way they do in other industries.

While Lean may appear to be daunting at the start, the process supports a problem-solving culture and keeps staff engaged in providing person-centered care.

Here is a basic framework for implementing a Lean culture:

Identify the problem. Utilize a team to brainstorm why the problem is occurring. Root-cause analysis engages the team and allows its members input into the solution. Cause-effect diagrams provide visuals and help determine where to start.

Go and see the work. Observe the work as it exists now. Don’t just observe what staff is doing, but intentionally engage with the staff doing the work. Explain what you are doing so that staff does not feel they are being watched. This ensures that you receive honest feedback and staff will feel part of the problem-solving process.

Ask the why question. As you observe the process you will notice wasted steps, manual processes and technology being used incorrectly. Talk with staff and ask why they are doing things a certain way. Do it respectfully and truly try to understand the barriers they face daily. This is useful information as new processes are designed. It will engage the staff in the problem-solving process and help identify other issues in the future. Respect for the staff and the work they do is a critical component in Lean.

Getting Started

In October 2016, we began our Lean management journey. Based on a noted decrease in overall admission rates, resulting in a decrease in operating revenues, Wellspring selected the admission referral process as the most effective starting point for implementing Lean management strategies. Root-cause analysis was used to determine the scope of the project and discovered that hospital discharge planners wanted quick responses to referrals (see Figure 1).

Figure 1
Figure 1.


In late 2016, a cross-functional Lean project team was formed that included the admission nurse, corporate administration, sales and the community liaison team.

“I really didn’t know what I was getting into in the beginning, but once I understood the Lean process, I became very comfortable with how Lean principles can help me do my job,” explains Lean project team member Sandra Howard, LPN, admissions nurse.

We started with observational studies where the work was being performed. Once the data was collected, the team created a current state process map. We concluded that our process of review and response to hospital discharge planners took 40 minutes, and, more importantly, that it was not standardized across our sites. We set out to reduce the response time to 15 minutes for at least 85% of the referrals received. Utilizing the “Plan-Do-Check-Adjust” (PDCA) model, we created a future state process map.

The map attempted to eliminate manual processes such as printing referrals, reviewing the entire hospital record, making multiple phone calls to the case manager and moving clerical tasks to the appropriate support staff. These manual processes associated with the admissions referral process came to over 100 hours of non-value-added time. This was defined as resource waste, staff time and process inefficiencies.

Ultimately, the improved process took less than 15 minutes and we were able to save $31,000 annually as a result of the revised admission referral process. The team adopted the new process at all sites and created teaching guides to support back-up staff and new staff. The guides included visual screen shots of each step, seeking to ensure reproducibility and consistency. We also created a high-priced medication list, eliminating the time to look up pricing on-line, and created a pre-admission screening tool that identifies referrals that can be responded to immediately, based on diagnosis (see Figure 2).

Figure 2
Figure 2.


“What I learned is how to decrease the length of time spent reviewing a referral through better use of the software. By working through the process, I could eliminate wasted time which has led to a more detailed referral and admission activity report,” says Howard.

Since implementation in February 2017, all 5 Wellspring skilled nursing and rehabilitation communities, in total, have experienced a 1% increase in admission rates, meaning a $305,000 annual increase in operating revenue. As we work toward our 85% goal, we are continuing to monitor the process to identify other barriers.

“I feel the revised referral/admission process has been implemented very smoothly. I have found we are able to do a better job at responding and can now evaluate the types of referrals we deny to further increase our census,” says Davis.

As long-term care continues to change, it is imperative that we, as providers, continue to be more efficient and learn to do more with less. We are entering a pay-for-performance era, and Lean provides the framework and serves as a vehicle for continuous performance improvement.

Wellspring continues to invest in Lean principles within our skilled nursing communities, and we are actively committed to achieve our budgeted occupancy, our referral conversion ratio goal and our admission referral response time goal. While we have seen improvements in our response times and referral conversion ratios, we still have more to accomplish with this process.

Next up for us is evaluating the medication administration process. We want to determine whether our current staffing model supports the time constraints the staff is working under. We will be using the same Lean principles, but are focusing more time on the initial design to encourage more employee buy-in and avoid process barriers. Although process barriers and employee resistance is to be expected, making decisions based on data versus feelings is at times difficult when working in a human-service organization. This is the biggest lesson learned, but we know there will be more as we continue with Lean as our basis for continuous quality improvement.

Maureen McGee, MBA, NHA (a certified six sigma green belt) is vice president of health services, and Mike Logan is senior vice president/COO, for Wellspring Lutheran Services, Flint, MI.