Hospital Productivity

By David Cook, Jeffrey E. Thompson, Elizabeth B. Habermann, Sue L. Visscher, Joseph A. Dearani,
doi: 10.1377/hlthaff.2013.1266 Veronique L. Roger, and Bijan J. Borah
HEALTH AFFAIRS 33,

From ‘Solution Shop’ Model

NO. 5 (2014): 746–755
©2014 Project HOPE—
The People-to-People Health
Foundation, Inc.

To ‘Focused Factory’ In Hospital

Surgery: Increasing Care Value
And Predictability
David Cook (cook.david@
mayo.edu) is a professor in ABSTRACT The full-service US hospital has been described organizationally
the Department of
Anesthesiology, Division of
as a “solution shop,” in which medical problems are assumed to be
Cardiovascular unstructured and to require expert physicians to determine each course
Anesthesiology, Center for the
Science of Health Care
of care. If universally applied, this model contributes to unwarranted
Delivery, Mayo Clinic College variation in care, which leads to lower quality and higher costs. We
of Medicine, in Rochester,
Minnesota. purposely disrupted the adult cardiac surgical practice that we led at
Mayo Clinic, in Rochester, Minnesota, by creating a “focused factory”
Jeffrey E. Thompson is
director of operations model (characterized by a uniform approach to delivering a limited set of
management, United Surgical high-quality products) within the practice’s solution shop. Key elements
Partners, in Addison, Texas.
of implementing the new model were mapping the care process,
Elizabeth B. Habermann is an segmenting the patient population, using information technology to
associate professor of health
services research, Center for communicate clearly defined expectations, and empowering nonphysician
the Science of Health Care providers at the bedside. Using a set of criteria, we determined that the
Delivery, Mayo Clinic College
of Medicine. focused-factory model was appropriate for 67 percent of cardiac surgical
patients. We found that implementation of the model reduced resource
Sue L. Visscher is an
assistant professor of health use, length-of-stay, and cost. Variation was markedly reduced, and
services research, Center for
the Science of Health Care
outcomes were improved. Assigning patients to different care models
Delivery, Mayo Clinic College increases care value and the predictability of care process, outcomes, and
of Medicine.
costs while preserving (in a lesser clinical footprint) the strengths of the
Joseph A. Dearani is a solution shop. We conclude that creating a focused-factory model within
professor in the Department
of Surgery, Division of
a solution shop, by applying industrial engineering principles and health
Cardiovascular Surgery, Mayo information technology tools and changing the model of work, is very
Clinic College of Medicine.
effective in both improving quality and reducing costs.
Veronique L. Roger is a
professor of epidemiology and
medicine, Center for the
Science of Health Care
Delivery, Mayo Clinic College

of Medicine.
Bijan J. Borah is an assistant
professor of health services
research, Center for the
Science of Health Care
Delivery, Mayo Clinic College
of Medicine.
S
urgical care in a hospital can be char- geons’ specific training, intuition, and experi-
acterized by the term “complexity,” ence to define the course of care.
driven in large part by the fact that Solution-shop thinking is imbedded in US
most full-service hospitals operate as physician culture and education and is a critical
“solution shops.”1,2(p75) These shops component of advanced care delivery. But sys-
are “structured to diagnose and recommend tems engineering, process analysis, quality con-
solutions to unstructured problems.”2(p xxiv) The trol, and manufacturing science3 suggest that
solution-shop concept was originally used to de- the uniform application of what amounts to a
scribe manufacturing. However, it is particularly nineteenth-century craftsman model of medi-
appropriate to hospital-based surgical care, in cine is insufficient to meet twenty-first-century
which decision making usually relies upon sur- health care needs.

74 6 H ea lt h A f fai r s M ay 2 0 1 4 33:5
Downloaded from HealthAffairs.org on September 22, 2020.
Copyright Project HOPE—The People-to-People Health Foundation, Inc.
For personal use only. All rights reserved. Reuse permissions at HealthAffairs.org.
 Some care demands solution-shop thinking.
However, its universal application leads to wide
variations in practice and runs counter to stan-
dardized best-practice models. With such think-
ing, the same problem may be approached in ten
different ways by ten physicians. The resulting
unwarranted variation increases cost; reduces
quality;4–7 and impedes the acquisition of norma-
tive data on practice, health outcomes, and cost.
The conceptual alternative to the solution
shop is the “focused factory,”1 which is charac-
terized by a uniform approach to delivering a
limited set of high-quality products. Clayton
Christensen and coauthors2 provide multiple
examples of this concept in health care, from
so-called minute clinics to specialty surgical
hospitals.
In primary care, there has been a movement
away from the solution-shop model, with stan-
dardized care increasingly being provided by
nonphysicians. However, in the high-acuity,
full-service hospital—and in hospital-based sur-
gery, in particular—the solution-shop model re-
mains strong. Our experience suggests that the
dominance of the model is correlated with both
the acuity of the care provided and the length of
training of the surgical provider. Thus, for a full-
service hospital, the critical questions are which
problems or populations of patients are best
addressed by solution-shop models and which
by focused-factory models, and how those mod-
els should interact.
In 2009 we—the leaders of a clinical practice at
Mayo Clinic, in Rochester, Minnesota—initiated
a practice redesign effort to improve the value (in
terms of outcomes divided by cost) of cardiac
surgical care.8 All clinical divisions in the service
line were represented, and the effort was sup-
ported by staff from finance, practice analysis,
health information technology (IT), and project
management. What resulted at a very large aca-
demic hospital serving both a community and a
complex referral population was the creation of a
focused-factory model that currently manages
more than 60 percent of an annual cardiac sur-
gery population of more than 2,000 patients.
Moving From Solution Shop To
Focused Factory
Our practice redesign began with three parallel
efforts: stakeholder analysis, practice analysis,
and the application of management tools (such
as Lean, Six Sigma, and value-stream mapping)
to the delivery of surgical care.9 We analyzed
resource use in each care environment and each
process step that was common to all adult cardiac
surgery patients. A primary focus was variation.
We made several critical observations: Practice
Copyright Project HOPE—The People-to-People Health Foundation, Inc.
For personal use only. All rights reserved. Reuse permissions at HealthAffairs.org.
variation was high; variation was driven by ex-
pectations that were poorly defined or commu-
nicated; such expectations led to “overcare”—
that is, more care than was needed, and often
care that was provided for too long; the care
process was organized as a series of starts and
stops; data on length-of-stay in the intensive care
unit (ICU) and the hospital indicated that more
than half of patients could be expected to have a
predictable course of care;10 and tools such as
Lean and Six Sigma were poorly suited for use
in changing a practice model based on a culture
of physician-specific decision making.
These observations supported calls by pro-
viders, payers, and health policy experts for stan-
dardized practices to reduce unwarranted varia-
tion, reduce cost, and improve quality.5–7,11
Implementation of the focused-factory model
took place in the following six stages: identifica-
tion and segmentation of the population suited
to the model; creation of a clinical pathway of
linked protocols for the operating room, ICU,
and progressive care unit (PCU) or floor; design,
building, and adoption of health IT systems to
communicate care protocols and the identifica-
tion of the focused-factory population; empow-
erment of bedside providers (nurses, respiratory
therapists, and nurse practitioners) to advance
care—that is, to move the patient through a proc-
ess of de-escalating care—without physician in-
put when appropriate; locating patients with
similar care processes and conditions of similar
clinical complexity near each other, in an at-
tempt to create a “plant within a plant”;12 and
a phased rollout.
Mapping the process of care and its variation
allowed us to estimate the proportion of the pa-
tient population suited to a standardized care
model as well as the process improvement tar-
gets for each major care step. Then, using both a
priori (predesignation) and post hoc (confirma-
tion) methods, we segmented the population
into focused-factory and non-focused-factory
groups for subsequent care. Using predeter-
mined criteria—such as surgical complexity,
the number of major medical morbidities, and
risk—before surgery, we used our health IT sys-
tem to designate patients who were suitable
for the focused-factory group. To allow for po-
tential changes in patients’ clinical status, con-
firmation of suitability by the anesthesiologist
was required at the end of surgery for patients
to remain in that group. If patients were not
identified before surgery as suitable but met
the criteria after surgery, a provider then as-
signed them to the focused-factory group.
Following our analysis of the process of care,
we reviewed best practices and then built proto-
cols that drove the management of all major
May 2 014 33:5 H ea lt h A f fai r s 747
Downloaded from HealthAffairs.org on September 22, 2020.
Hospital Productivity
steps in the process. Individual protocols for the
ICU and PCU were subsequently bundled togeth-
er and put into tiers of meta-orders.13 The indi-
vidual ICU protocols included weaning patients
from mechanical ventilation, weaning patients
from hemodynamic infusions, removing in-
dwelling central lines, and preparing patients
for discharge from the ICU. The individual
PCU protocols were for removing patients’ Foley
catheters, chest tubes, and pacemaker wires; ad-
vancing patients’ diet from liquids to semisolids
and then solids; and improving ambulation—for
example, moving from walking with assistance
to walking independently. All protocols were de-
signed to make care advancement the default
when clinical criteria were met.
We used health IT systems to acquire and
report data on care process events, identify
focused-factory patients, populate pharmacy
orders, support bed planning and staffing, and
confirm patients’ continued suitability for the
care management strategy. This use of health
IT addressed barriers in communicating both
care expectations and responsibility for advanc-
ing the care process.
Identification of the care population and com-
munication of care expectations (by protocol
and health IT systems) empowered bedside
providers to advance care without a physician’s
input when clinical criteria were met. When pa-
tients failed to meet criteria for such advance-
ment, they were managed directly by physicians
(using the solution-shop approach) until their
clinical status allowed them to return to focused-
factory management.
Our stakeholder analysis showed that having
both patients with routine conditions and those
with complex conditions in the same care unit
resulted in complex workflows, competition for
internal resources, inability to acquire and re-
port meaningful unit-specific metrics, and cul-
tural barriers related to care management. Iden-
tifying and confirming patients’ focused-factory
status allowed these patients to be grouped in the
same ICU after surgery, and subsequently in the
same PCU.
The model was implemented between late
2009 and mid-2011. Its rollout occurred in
stages, with operating room practice changes
primarily in 2009, ICU practice changes in
2010, and PCU care model changes in 2011.
The study was approved by the Institutional
Review Board of Mayo Clinic.
Study Data And Methods
Information about all adult patients who under-
went cardiac surgery in 2008 and 2012 were
retrieved from our Society of Thoracic Surgeons
74 8 Health A ffairs May 2 014 33:5
Downloaded from HealthAffairs.org on September 22, 2020.
Copyright Project HOPE—The People-to-People Health Foundation, Inc.
For personal use only. All rights reserved. Reuse permissions at HealthAffairs.org.
In the high-acuity,
full-service hospital—
and in hospital-based
surgery, in
particular—the
solution-shop model
remains strong.
database. The year before the initiation of prac-
tice redesign (2008) served as our baseline peri-
od. Care redesign was complete by mid-2011, so
we used 2012 as our post-intervention period.
The 2012 study group was limited to patients
who were confirmed as suitable for focused-
factory management at the end of their opera-
tion (for details about the study design and
analysis, see Appendix Exhibit A-1).14 For analyt-
ic purposes, those patients remained in that
group regardless of their postoperative course:
No patients were switched out of the focused-
factory group after postoperative confirmation.
We used International Classification of Diseases,
Ninth Revision (ICD-9), codes to group patients
into one of the following surgical procedure cat-
egories for analysis: coronary artery bypass graft
(CABG), valve repair or replacement, CABG and
valve repair or replacement, and other (surgical
procedures not captured by primary codes)
(Exhibit 1). Procedure codes that were not rep-
resented in both 2008 and 2012 were excluded
from the analysis (see online Appendix Exhib-
it A-1).14
Propensity Score Matching To ensure sim-
ilarity between the populations in the pre- and
post-intervention periods, we used propensity
score matching to construct a sample of matched
patients.15 The propensity, or the probability of
being eligible for the intervention (the focused-
factory group), was modeled using logistic re-
gression that adjusted for age, sex, category of
operation, and baseline diagnosis of multiple
comorbid conditions. Then patients from the
2008 and 2012 cohorts were matched on the
basis of nearest-neighbor one-to-one matching
without replacement.16
Targeted Outcomes The targeted outcomes
included measures of clinical process, safety,
and outcomes; resource use; and cost. Outcomes
measures included reoperation during hospital-
 Exhibit 1

Characteristics Of Adult Patients Who Had Cardiac Surgery At Mayo Clinic In 2008 (Baseline Group) Or 2012 (Focused-Factory Group)
Propensity score matching
Before After
All after
2008 2012 2008 2012 matching
Characteristic (n=1,021) (n=866) (n=769) (n=769) (N=1,538)
Age (years)
Mean 63.63 64.84* 65.2 65.7 65.5
Standard deviation 14.43 14.43 13.9 13.7 13.8
Male (%) 66.0 65.7 68.7 65.4 67.0
Condition (%)
Diabetes mellitus 17.4 22.9*** 20.5 23.5 22.0
Hypertension 63.9 67.6* 68.8 69.3 69.1
Congestive heart failure 13.2 14.3 12.6 13.0 12.8
Chronic lung disease stage II–IV 12.0 10.0 7.3 6.5 6.9
Previous myocardial infarction 13.4 11.6 12.9 10.3 11.6
Coronary artery disease 46.3 45.5 48.2 46.7 47.5
Valvular heart disease 79.3 81.9 82.6 83.9 83.2
Category of operation (%)****
CABGa 20.0 21.1 22.8 23.5 23.1
Valve repair or replacementa 51.9 58.9 61.4 61.8 61.6
CABG and valve repair or replacementa 16.1 14.4 15.9 14.3 15.1
Otherb 12.0 5.5 0.0 0.4 0.2

SOURCE Authors’ analysis. NOTES For an explanation of the propensity score matching, see the text. The p values were determined by the rank-sum test for continuous
variables and the chi-square test for categorical variables except the category of operation (for which they were determined by Fisher’s exact test). After matching, there
were no significant differences between groups. aPrimary operation might have had an associated procedure (for example, arrhythmia surgery, patent foramen ovale
closure, or pericardiectomy). bPrimary operation was other than coronary artery bypass graft (CABG) or valve surgery (for example, septal myectomy, aortic
aneurysm, isolated arrhythmia surgery, patent foramen ovale closure, or pericardiectomy). *p < 0:10 ***p < 0:01 ****p < 0:001

ization, thirty-day hospital readmission, and
thirty-day morbidity and mortality. Utilization
measures included hospital length-of-stay (from
the date of the index surgery to discharge) and
time in each care environment.
Standardized costs were calculated and ana-
lyzed for the operating room, ICU, PCU, and
the hospital total lengths-of-stay based on billed
charges. Billed charges for the operating room
consisted of a base amount plus an additional
amount tied to fifteen-minute increments. The
length-of-stay charges were billed in full-day
increments, with each new day beginning at
midnight.
The 2012 charge for each unit of service was
multiplied by the appropriate 2012 Medicare
Cost Report line-level cost-to-charge ratio for
both the 2008 and 2012 patients to create stan-
dardized costs. This method of standardization
is commonly used.17 Standardized costs associat-
ed with professional services or other hospital
services such as pharmacy, supplies, laboratory,
diagnostic imaging, and physical therapy were
not included. This was because determining cost
reduction in major resource categories was suf-
ficient to demonstrate the savings impact of the
focused-factory model and because we antici-
pated that reductions in use of those additional
resources would closely parallel reductions in
major resource categories.
Patient and procedural characteristics were
described and compared between groups using
the rank-sum test for continuous variables and
Fisher’s exact test for categorical variables. Data
analysis then consisted of mean (standard devi-
ation) or median (interquartile range) determi-
nation for continuous variables and percentage
quantification for categorical variables. A two-
tailed p value of less than 0.05 was considered
significant.
Limitations Because of the study’s observa-
tional design, we used propensity score match-
ing to minimize the potential for confounding
bias. Nonetheless, it is possible that concurrent
quality improvement efforts independent of the
focused-factory model could have contributed to
the outcomes we observed.
We considered using a difference-in-differenc-
es specification to control for this. However,
such a specification requires two cohorts in each
of two time periods that are similar.18 Our design
was not suited to difference-in-differences spec-
ification because the nature of the intervention
(cardiac surgery) did not allow us to follow the
same two cohorts in 2008 and 2012 and because
patients not eligible for the focused-factory

M ay 2 0 1 4 33:5 Health Affa irs 74 9

Downloaded from HealthAffairs.org on September 22, 2020.
Copyright Project HOPE—The People-to-People Health Foundation, Inc.
For personal use only. All rights reserved. Reuse permissions at HealthAffairs.org.
 Hospital Productivity

group were not comparable to those who were patients were identified as suitable for the
eligible. The former group was characterized by focused-factory group. However, 266 of them
very high variation, with multiple small groups (20 percent) did not meet inclusion criteria at
of patients of high medical complexity, high sur- the end of surgery. An additional 270 patients
gical complexity, or both. who were not identified as suitable before sur-
The demographic characteristics and surgical gery met the inclusion criteria at the end of the
and medical comorbidities captured in our pro- operation. This resulted in 1,349 patients (67 per-
pensity analysis adjusted the important risk fac- cent of the adult patients) who received focused-
tors for adverse outcomes and resource use. factory care in 2012 (Appendix Exhibit A-1).14
Therefore, we believe that any confounding fac- Before propensity matching, there were differ-
tors that we did not account for could have had ences between the 2008 and 2012 patient co-
only minimal effects on our results. However, we horts. Compared to patients in 2008, those in
acknowledge that our pre-post design and the 2012 were older, had different prevalences of
potential for background effects remain poten- some categories of operation, and had a greater
tial limitations of this study. prevalence of diabetes and hypertension. How-
An additional limitation is that reporting only ever, those differences were eliminated after
major cost categories (and not dependent ser- propensity score matching, which resulted in
vices such as professional fees or fees for labora- 769 matched patients from each year (Exhibit 1).
tory tests or imaging) may represent an under- Resource Use The focused-factory model was
estimation of the total financial benefit of the associated with reduced resource use in all care
care model. environments—the operating room, the ICU,
Finally, for purposes of replication, it would be and the PCU (Exhibit 2 and Appendix Exhib-
desirable to know the relative impact of each of it A-2)14—and the hospital overall (Exhibit 2).
our model’s components. However, the integra- In addition, variation in lengths-of-stay was
tion of components in the care model made this markedly reduced (Exhibit 2 and Appendix Ex-
assessment impossible. hibit A-3).14
Clinical Outcomes Compared to the 2008
baseline care, focused-factory care was not asso-
Study Results ciated with increased in-hospital complications
For 2012 we identified 2,026 unique adult car- or with increased thirty-day morbidity, mortali-
diac surgical patients. Before surgery, 1,345 ty, or hospital readmissions (Appendix Exhib-
it A-3).14 Instead, focused-factory care was asso-
ciated with better outcomes: Sepsis, pneumonia,
Exhibit 2 and renal failure were all reduced (p < 0:05)
Lengths-Of-Stay Of Adult Patients Who Had Cardiac Surgery At Mayo Clinic In 2008 Or (Appendix Exhibit A-4).14
2012, After Propensity Score Matching Cost Outcomes Inflation-adjusted standard-
ized costs for each care environment and the
Length-of-stay
hospital overall were all reduced following the
Location of patient All (N=1,538) 2008 (n=769) 2012 (n=769) implementation of the focused-factory model
Hospital total (days) (Appendix Exhibit A-5).14 Overall, the mean
Mean 5.9 6.3 5.4 per patient cost of care declined 15 percent rela-
Median 5.2 5.9 5.0 tive to 2008, while the median cost decreased by
Range 2.7–46.8 3.0–46.8 2.7–14.1
14 percent (Appendix Exhibit A-5).14 In addition,
Intensive care unit (hours)
implementation of the model was associated
Mean 32.7 37.6 27.8 with decreases in cost variation in each care en-
Median 24.7 26.5 22.7
vironment and in the hospital overall (Appendix
Range 7.5–460.2 9.1–460.2 7.5–165.4
Exhibit A-5).14
Progressive care unit (hours)
Mean 107.3 113.2 101.4
Median 97.1 98.6 95.9
Range 0.0–480.2 0.0–480.2 0.5–291.8 Discussion
Operating room (minutes) Our effort to disrupt a solution-shop model in a
Mean 313.0 322.4 303.5 full-service hospital surgery practice provides
Median 302.5 310.0 295.0 evidence of the power of a standardized care
Range 157.0–801.0 157.0–801.0 165.0–705.0 model to improve care value. Instead of treating
all patients as highly complex and requiring
unique problem solving, we identified a majority
SOURCE Authors’ analysis. NOTES Hospital total length-of-stay is surgery to discharge. Significance
of patients (67 percent) whose care was amena-
was determined by the rank sum test, and all results were significant (p < 0:001). A version of this
exhibit with standard deviation and interquartile range values in addition to mean and median range ble to a care model that achieved a high degree of
values can be found in the online Appendix (see Note 14 in text). predictability.

750 Health A ffairs May 2 014 3 3: 5

Downloaded from HealthAffairs.org on September 22, 2020.
Copyright Project HOPE—The People-to-People Health Foundation, Inc.
For personal use only. All rights reserved. Reuse permissions at HealthAffairs.org.

We implemented
“change management”
strategies, but
persistence,
leadership, and a
staged
implementation were
still required.
The conceptual foundation of our effort was
care population segmentation and allocation of
patients to the care model. For the focused fac-
tory, the application of industrial engineering
approaches and health IT tools created a sup-
porting operational infrastructure that reduced
the complexity and variation of the care process
and supported high-value care delivery.
By transitioning from solution shop to focused
factory for eligible patients, we were able to
streamline the workflow, place decision making
at the bedside, and eliminate impediments that
arise from poorly defined or poorly communi-
cated expectations. The transition was aided by a
phased rollout; reporting to operating room,
ICU, and PCU management groups the results
of previous phases before starting the next one;
and the creation of a plant within a plant.1,12 The
ICU, PCU, and even the operating rooms as-
signed to patients in the focused-factory group
(and their staffing) were structured around the
care model.
Disruptive Innovation And Resistance To
Change The implementation of this new work
model represents a form of disruptive innova-
tion2,19 because nonphysician providers were
supplied with knowledge (protocols) and tech-
nology (health IT systems) that allowed them to
optimize the value-added work that they provide.
The model disrupted the physicians’ role in rou-
tine care but allowed them to concentrate their
efforts on the provision of complex, solution-
shop care (their value-added work).
Implementing change in health care is diffi-
cult. Clinicians may hesitate to adopt new pro-
tocols and even best practices, if decisions are
not made by physicians at the point of care.6 We
implemented “change management” strategies,
but persistence, leadership, and a staged imple-
Copyright Project HOPE—The People-to-People Health Foundation, Inc.
For personal use only. All rights reserved. Reuse permissions at HealthAffairs.org.
mentation were still required.
We divided the project into manageable stages
and used the results and communication strate-
gy from each stage, as well as the health IT infra-
structure, in implementing the next part. For
example, we built each of several ICU protocols
separately and received approval for their imple-
mentation one by one before bundling them, as
explained above. The entire process took several
months. However, our ICU successes enabled us
to build and implement the bundle of protocols
for the PCU in several weeks.
The new process-focused, standardized care
model was not associated with increased morbid-
ity, mortality, or readmissions. Instead, it was
associated with better thirty-day outcomes, in-
cluding reductions in pneumonia, sepsis, and
renal failure. It is notable that other work has
shown these same outcomes to be adversely af-
fected by in-hospital care processes, such as du-
ration of mechanical ventilation; length of time
catheters were indwelling; and management of
diabetes, fluid, and vasoactive drugs.20,21 In our
care model, each process was managed accord-
ing to a protocol, and the process measures were
regularly reported.
In addition to the improved care process13 and
better outcomes, the implementation of the fo-
cused-factory model was associated with reduced
resource use in all care environments—the oper-
ating room, the ICU, and the PCU—and a 15 per-
cent reduction in mean cost of care.
Elements of our practice redesign have re-
ceived considerable attention. New workforce
models,22 stratification of the patient population
in primary care,23 putting similar patients to-
gether in place or time (or co-location),23,24
and the power of health IT tools to support work
models and care delegation25 have been identi-
fied as ways to improve care value. Most notably,
Michael Porter and coauthors proposed a prima-
ry care strategy that emphasized the need to
stratify a heterogeneous population into sub-
groups having different needs,23 with that strat-
ification serving as a foundation for differing
work models and metrics.
Beginning with stratification, we integrated
standard practices, supporting health IT sys-
tems, co-location, and a new work model into
our focused-factory care model. These same ele-
ments are described in a successful model for
emergency department observation units.24
Dedicated units and co-locating patients with
care driven by protocol (instead of “unstructured
care provided at the discretion of the treating
physician”)24(p2150) are associated with shorter
lengths-of-stay, lower costs, and better out-
comes, compared to similar patients not cared
for with this approach. In addition, co-location
May 2 014 3 3: 5 H e a lt h A f fai r s 751
Downloaded from HealthAffairs.org on September 22, 2020.
Hospital Productivity
created a learning environment, increased pro-
vider experience, shifted the culture of process
management, reduced variations in process, in-
creased the ease of using metrics and reporting
results, and significantly altered the workflow.
The Hybrid Model Our hybrid model, com-
bining focused factory and solution shop, also
addressed criticisms that the focused-factory
model as represented in stand-alone specialty
surgery hospitals fragments care;26,27 cherry-
picks low-risk, high-revenue patients,28 putting
full-service hospitals at an economic disadvan-
tage;29–31 is unable to support patients with com-
plications;29,32 and, if incentives are misaligned,
can increase the cost and lower the quality of
care.29,31,32 With our hybrid structure—a focused
factory operating in parallel with a solution
shop—care is comprehensive. Particularly with
an electronic health record system that supports
the longitudinal management of patient data, all
patient needs can be readily supported by having
the solution shop as an available resource, and
potential conflict of interest is avoided.
The advantages of building a hybrid model
are evident, but there are also considerable com-
plexities. Execution is challenging. The adage
that “every system is designed to get exactly
the results it is getting” may not be as true any-
where else as it is in hospital surgical care. The
disruption of the solution-shop model from
within was intrinsically and implicitly made dif-
ficult by the ways care was organized, informa-
tion acquired and managed, decisions made, and
communication structured. To say that cultural
change was required is an understatement.
In addition, the hybrid model includes cost
complexities that are not present in the pure
focused factory. Indirect costs such as those
for administration, research, and education
are higher in the full-service hospital33,34 than
in the specialty surgical hospital. And the deliv-
ery of solution-shop care—typically in the form
of a series of low-volume, high-complexity ser-
vices with low predictability—results in consid-
erable costs for shared resources33,34 that must be
allocated across the service line.13,33,35,36
Thus, a hybrid model has the potential to
decrease the economic competiveness of the
full-service hospital versus a specialty surgery
hospital. Nonetheless, other strengths of the
full-service hospital (such as economies of scale
and scope, better care integration than can be
provided at specialty surgical hospitals, the im-
mediate availability of high-intensity resources,
and advanced information systems) may render
the full-service hospital that has a hybrid struc-
ture more competitive28,35,37,38 than has previous-
ly been assumed.30
Having a focused factory within a solution
752 Health A ffairs May 2 014 3 3: 5
Downloaded from HealthAffairs.org on September 22, 2020.
Copyright Project HOPE—The People-to-People Health Foundation, Inc.
For personal use only. All rights reserved. Reuse permissions at HealthAffairs.org.
The focused-factory
model can exist
alongside the
solution-shop model,
which can continue to
play its critical role of
providing complex
care.
shop may also be beneficial for solution-shop
patients. The University Health Consortium re-
ports a hospital length-of-stay index for partici-
pating hospitals, including Mayo Clinic. The in-
dex is equal to observed length-of-stay divided by
the length-of-stay that was expected, based on
the risk profile of the cardiac surgical population
at the participating hospital.
In 2008 Mayo Clinic’s length-of-stay index
was 1.06 for all CABG and valve surgery patients
(diagnosis-related groups 216–221 and 228–
236). Exhibit 3 shows the length-of-stay indexes
for twenty-one large cardiac surgery hospitals in
2012. At that time, our index had decreased to
0.86 (that is, the average length-of-stay was
86 percent of the predicted length).
The University Health Consortium data de-
scribe all patients in the diagnosis-related
groups, so we cannot determine how much of
the change from 2008 to 2012 is attributable to
the focused-factory population. However, inter-
nal data about care process and hospital length-
of-stay (not reported here) suggest that the
broader application of our care process and work
model is “spilling over” into the solution-shop
population. This will be determined in subse-
quent analyses.
The exercise of creating a hybrid model offered
another valuable observation. The stand-alone
focused factory allows for the isolation of the
care process, avoids the complexities of solu-
tion-shop care, and has a lower burden of indi-
rect and shared-resources costs. However, the
specialty surgery hospital is a static model. In
contrast, the full-service hospital represents a
powerful learning environment.
The tension between solution shop and fo-
cused factory within an institution has value,
particularly at their interface. The range of care
 Exhibit 3

Length-Of-Stay Indexes For Twenty-One Hospitals That Participate In The University Health Consortium

6
Frequency (no. of hospitals)

0.80 0.85 0.90 0.95 1.00 1.05 1.10 1.15 1.20 1.25 1.30 1.35 1.40 1.45 1.50 1.55 1.60 1.65
Length-of-stay index

SOURCE Authors’ analysis of data from the University Health Consortium. NOTES All hospitals have at least 900 cases of cardiac
surgery per year. Data are for all coronary artery bypass graft and valve procedures (diagnosis-related groups 216–221 and 228–
236) at each site in 2012. An index of 1 means that the actual average length-of-stay was equal to the predicted average length-
of-stay based on the hospital’s population risk profile. Mayo Clinic’s index in 2008 was 1.06; after implementing the focused-factory
model, its index fell to 0.86 in 2012.

complexities in the full-service hospital creates
the opportunity, through analyses of practice
and population, to design a host of targeted
health care solutions. Those solutions can be
relatively discrete (in a single practice); be trans-
lated to other specialty practices; or be scaled up
to larger, nonsurgical populations.
Segmentation Of The Patient Population
Our segmentation of the patient population
was imperfect. Our study might have been
strengthened by isolating any effect of including
patients whose clinical status changed after
surgery, so that they were no longer eligible
for focused-factory management. However, we
designed our model according to clinical prac-
tice needs. Like a hybrid organizational model,
this means of distributing patients to the care
model began with an engineering approach and
added clinical expertise as needed. Since clinical
expertise is usually operationally dominant, bet-
ter a priori segmentation of care populations,
together with the application of process design
and management and health IT solutions, repre-
sents a potentially evolutionary model for the
design of hospital (and outpatient) care delivery.
In sum, a pure process-engineering approach is
imperfect, but having it support most of the work
for the appropriate population is a vast improve-
ment over the status quo.
Following population segmentation, the same
process in conjunction with population-analytic
methods might be used to define the care model
and the optimal site for care delivery. This would
require robust risk models that could predict,
with high confidence, which patients would re-
quire solution-shop care and which would have
such predictable care and outcomes that we
could confidently direct them to lower-cost care
models and environments. In theory, we could
build risk and care delivery models in which the
two populations—focused-factory and solution-
shop patients—would very rarely overlap.
Our experience demonstrates how this model
was successfully applied with success in an adult
cardiac surgical care setting. Exhibit 4 depicts
the care complexity of more than 1,900 patients
treated in our adult cardiac surgical care center
in 2012. The flattest part of the curve indicates
patients with low medical or surgical complexity,
who can be successfully treated with a focused-
factory model. The vertical bars indicate subseg-
ments of the patient population with increasing-
ly complex medical or surgical needs. For these
patients, the traditional hospital solution-shop
model is appropriate. As discussed above, there
was very little overlap between these two patient
populations.39
When the complexity of care populations and
the care model required can be defined, out-
comes and costs become predictable, and it be-
comes possible to characterize normative data
for care processes, outcomes, and costs. Exhibit 4

May 2 014 3 3: 5 H e a lt h A f fai r s 753

Downloaded from HealthAffairs.org on September 22, 2020.
Copyright Project HOPE—The People-to-People Health Foundation, Inc.
For personal use only. All rights reserved. Reuse permissions at HealthAffairs.org.
Hospital Productivity

Exhibit 4

Care Complexity And Model Of Care: Focused Factory Versus Solution Shop

Complexity group 1
Complexity group 2
Complexity group 3
Complexity group 4
Complexity group 5
Care complexity

Patients in solution shop

Patients in focused factory

0.00 0.25 0.50 0.75 1.00

Proportion of patients

SOURCE Authors’ analysis of Mayo Clinic Adult Cardiac Surgical Care patient data. NOTES The results shown are for 1,915 patients. At
the request of Mayo Clinic, specific values, data, and subgroup identifiers are not provided, to protect patient privacy and proprietary
business information. “A” designates the seventy-fifth percentile for patient complexity. Most of the patients to the left of “A” are
those whose care is most appropriate to the focused-factory model. Patient complexity group bars to the right of “A” depict the most
complex quartile of the surgical population, whose care is most appropriate to the solution-shop model. For example, “Complexity
group 1” includes patients with both higher surgical complexity and two to three significant medical comorbidities; “Complexity group
5” includes patients with extremely high-risk operations, immediately life-threatening medical or surgical conditions, or surgeries such
as ventricular assist device placement. Fourteen patients with more than ten times the median complexity were not included.

is designed to show clinical complexity, but it can tributes to unwarranted variation in care, which
also represent uncertainty about costs of care leads to lower quality and higher cost. We found
or outcomes. For the patient population in the that creating a focused-factory model within a
focused-factory portion of the care complexity solution shop, by applying industrial engineer-
curve, outcomes and costs are largely predict- ing principles and health IT tools and changing
able, and as a result it should become possible the model of work, was very effective in both
to apply practice and payment models such as improving quality and reducing costs. The
bundling and value-based purchasing. However, focused-factory model can exist alongside the
in the absence of this type of segmentation, nor- solution-shop model, which can continue to play
mative data cannot be characterized, and it be- its critical role of providing complex care—
comes extraordinarily difficult to determine though in a lesser practice footprint. The impli-
which care models, metrics, and payment mod- cations of this hybrid model go beyond hospital
els are appropriate. surgical care. The future of affordable, rational,
and reliable health care lies in the better segmen-
tation of patient populations and, based on that,
Conclusion the careful selection of care models and delivery
In hospital surgical care, the universal applica- sites before the care process is initiated. ▪
tion of the traditional solution-shop model con-

These findings were previously

presented at the National Bureau of
Economic Research Hospital
Organization and Productivity
Conference, Harwich, Massachusetts,
October 4–5, 2013.

754 Health A ffairs May 2 014 33:5

Downloaded from HealthAffairs.org on September 22, 2020.
Copyright Project HOPE—The People-to-People Health Foundation, Inc.
For personal use only. All rights reserved. Reuse permissions at HealthAffairs.org.
NOTES
1 Skinner W. The focused factory.
Harv Bus Rev. 1974;52(3):113–21.
2 Christensen CM, Grossman JH,
Hwang J. The innovator’s prescrip-
tion: a disruptive solution for health
care. New York (NY): McGraw-Hill;
2009.
3 Kopach-Konrad R, Lawley M,
Criswell M, Hasan I, Chakraborty S,
Pekny J, et al. Applying systems en-
gineering principles in improving
health care delivery. J Gen Intern
Med. 2007;22(Suppl 3):431–7.
4 Wennberg JE. Time to tackle un-
warranted variations in practice.
BMJ. 2011;342:d1513.
5 Adamina M, Kehlet H, Tomlinson
GA, Senagore AJ, Delaney CP. En-
hanced recovery pathways optimize
health outcomes and resource utili-
zation: a meta-analysis of random-
ized controlled trials in colorectal
surgery. Surgery. 2011;149(6):
830–40.
6 Bohnen JMA. Why do surgeons not
comply with “best practice”? Can J
Surg. 2003;46(4):251–2.
7 McConnell KJ, Lindrooth RC,
Wholey DR, Maddox TM, Bloom N.
Management practices and the
quality of care in cardiac units.
JAMA Intern Med. 2013;173(8):
684–92.
8 Swensen SJ, Dilling JA, Harper CM
Jr, Noseworthy JH. The Mayo Clinic
Value Creation System. Am J Med
Qual. 2012;27(1):58–65.
9 Cima RR, Brown MJ, Hebl JR, Moore
R, Rogers JC, Kollengode A, et al.
Use of Lean and Six Sigma method-
ology to improve operating room
efficiency in a high-volume tertiary-
care academic medical center. J Am
Coll Surg. 2011;213(1):83–92.
10 Marmor YN, Rohleder TR, Cook DJ,
Huschka TR, Thompson JE. Recov-
ery bed planning in cardiovascular
surgery: a simulation case study.
Health Care Manag Sci. 2013;16(4):
314–27.
11 Berry SA, Doll MC, McKinley KE,
Casale AS, Bothe A Jr. ProvenCare:
quality improvement model for de-
signing highly reliable care in car-
diac surgery. Qual Saf Health Care.
2009;18(5):360–8.
12 Huckman RS. Are you having trouble
keeping your operations focused?
Harv Bus Rev. 2009;87(9):90–5.
13 Cook DJ, Thompson JE, Suri R,
Prinsen SK. Surgical process im-
provement: impact of a standardized
care model with electronic decision
support to improve compliance with
SCIP Inf-9. Am J Med Qual. 2013
Aug 29. [Epub ahead of print].
14 To access the Appendix, click on the
Appendix link in the box to the right
of the article online.
15 Rosenbaum PR, Rubin DB. The
central role of the propensity score
in observational studies for causal
effects. Biometrika. 1983;70(1):
41–55.
16 D’Agostino RB Jr. Propensity score
methods for bias reduction in the
comparison of a treatment to a non-
randomized control group. Stat
Med. 1998;17(19):2265–81.
17 Pfuntner A, Wier LM, Steiner C.
Costs for hospital stays in the United
States, 2010 [Internet]. Rockville
(MD): Agency for Healthcare Re-
search and Quality; 2013 Jan [cited
2014 Mar 27]. (Statistical Brief
No. 146). Available from: http://
www.hcup-us.ahrq.gov/reports/
statbriefs/sb146.jsp
18 Wooldridge J, Imbens G. What’s new
in econometrics? Difference-in-
differences estimation [Internet].
Unpublished lecture notes [cited
2014 Mar 27]. Available from:
http://www.nber.org/WNE/lect_
10_diffindiffs.pdf
19 Christensen CM, Baumann H,
Ruggles R, Sadtler TM. Disruptive
innovation for social change. Harv
Bus Rev. 2006;84(12):94–101, 163.
20 Pronovost P, Needham D,
Berenholtz S, Sinopoli D, Chu H,
Cosgrove S, et al. An intervention to
decrease catheter-related blood-
stream infections in the ICU. N Engl
J Med. 2006;355(26):2725–32.
Erratum in: N Engl J Med. 2007;
356(25):2660.
21 Tejerina E, Frutos-Vivar F, Restrepo
MI, Anzueto A, Abroug F, Palizas F,
et al. Incidence, risk factors, and
outcome of ventilator-associated
pneumonia. J Crit Care. 2006;21(1):
56–65.
22 Auerbach DI, Chen PG, Friedberg
MW, Reid R, Lau C, Buerhaus PI,
et al. Nurse-managed health centers
and patient-centered medical homes
could mitigate expected primary care
physician shortage. Health Aff
(Millwood). 2013;32(11):1906–13.
23 Porter ME, Pabo EA, Lee TH. Rede-
signing primary care: a strategic vi-
sion to improve value by organizing
around patients’ needs. Health Aff
(Millwood). 2013;32(3):516–25.
24 Ross MA, Hockenberry JM, Mutter
R, Barrett M, Wheatley M, Pitts SR.
Protocol-driven emergency depart-
ment observation units offer sav-
ings, shorter stays, and reduced ad-
missions. Health Aff (Millwood).
2013;32(12):2149–56.
25 Weiner JP, Yeh S, Blumenthal D. The
impact of health information tech-
nology and e-health on the future
demand for physician services.
Downloaded from HealthAffairs.org on September 22, 2020.
Copyright Project HOPE—The People-to-People Health Foundation, Inc.
For personal use only. All rights reserved. Reuse permissions at HealthAffairs.org.
Health Aff (Millwood). 2013;32(11):
1998–2004.
26 Hwang J, Christensen CM. Disrup-
tive innovation in health care deliv-
ery: a framework for business-model
innovation. Health Aff (Millwood).
2008;27(5):1329–35.
27 Porter ME, Lee TH. The strategy that
will fix health care. Harv Bus Rev.
2013;91(10):50–70.
28 Barro JR, Huckman RS, Kessler DP.
The effects of cardiac specialty hos-
pitals on the cost and quality of
medical care. J Health Econ.
2006;25(4):702–21.
29 Casalino LP, Devers KJ, Brewster LR.
Focused factories? Physician-owned
specialty facilities. Health Aff (Mill-
wood). 2003;22(6):56–67.
30 Kahn CN 3rd. Intolerable risk, ir-
reparable harm: the legacy of
physician-owned specialty hospitals.
Health Aff (Millwood). 2006;25(1):
130–3.
31 Guterman S. Specialty hospitals: a
problem or a symptom? Health Aff
(Millwood). 2006;25(1):95–105.
32 Greenwald L, Cromwell J, Adamache
W, Bernard S, Drozd E, Root E, et al.
Specialty versus community hospi-
tals: referrals, quality, and commu-
nity benefits. Health Aff (Millwood).
2006;25(1):106–18.
33 Rauh SS, Wadsworth EB, Weeks WB,
Weinstein JN. The savings illusion—
why clinical quality improvement
fails to deliver bottom-line results. N
Engl J Med. 2011;365(26):e48.
34 Porter ME. What is value in health
care? N Engl J Med. 2010;363(26):
2477–81.
35 Schneider JE, Miller TR, Ohsfeldt
RL, Morrisey MA, Zelner BA,
Pengxiang Li. The economics of
specialty hospitals. Med Care Res
Rev. 2008;65(5):531–53; discussion
554–63.
36 Eastaugh SR. Hospital costs and
specialization: benefits of limiting
the number of product lines. J
Health Care Finance. 2009;36(2):
24–34.
37 Carey K, Burgess JF Jr, Young GJ.
Specialty and full-service hospitals: a
comparative cost analysis. Health
Serv Res. 2008;43(5 Pt 2):1869–87.
38 Burns LR, David G, Helmchen LA.
Strategic response by providers to
specialty hospitals, ambulatory sur-
gery centers, and retail clinics. Popul
Health Manag. 2011;14(2):69–77.
39 At the request of Mayo Clinic,
Exhibit 4’s specific values, data, and
subgroup identifiers were not pro-
vided to protect patient privacy and
proprietary business information.
May 2 014 3 3: 5 H e a lt h A f fai r s 755