Brian D Gregory, MD, MBA
In 1985 I finished my anesthesia residency at the Medical University of South Carolina and immediately joined a private anesthesia group in Florida. Three years later I started a full time 2-year MBA at the University of Georgia where I had a triple focus of studies in finance, data management and risk management. In 1989 I was introduced to Eliyahu Goldratts’s Theory of Constraints during a management course and by 1990 was using Constraint Theory (TOC) as an anesthesiologist performing and coordinating cases in and outside the OR.
In 1997, James Womack and I met and talked at his office in Brookline, MA on how to apply Lean to healthcare. His book ‘Lean Thinking: Banish Waste and Create Wealth in Your Corporation‘ mirrored and complemented what I had already implemented in the OR.
The ability to adequately evaluate the profitability and cash-flow effects on techniques such as room-flipping required the use of a suitable accounting model. It wasn’t until 2013 that RCA (Resource Consumption Accounting) was approved by the US and International accounting committees after seven years of development. It was deemed to be the most realistic and helpful system that could only be improved upon by using its data schemata and data collection for simulation by experts with experience and knowledge in the specific process. RCA borrows many of the same concepts as Activity Based Costing (ABC), but has a stronger focus on resources and their capacity utilization analysis. Both approaches are usefulI and can use each other’s data. Lean Accounting is also helpful for many situations with its ability of focus and buy-in for the operators, and can be coordinated with RCA or ABC (TDABC or DRABC).
Constraint Theory and LEAN principles are utilized by RCA. CT and LEAN require detailed knowledge and integration of the minutiae of clinical processes, purposes, risk management, and finances taken in context. Since 1990 I have adapted and modified Constraint Theory and Lean concepts for the hospital setting in and outside the OR to decrease risk and improve throughput and adaptability for highly variable workflow and resource demands. It was obvious that the popularly (standard costing) utilized accounting models were inadequate to properly evaluate and guide operations, and would have a misleading effect on immediate and longer term strategic decision making.