How to Dramatically Improve Health Care; Speed, Quality, Costs

After my recent in-depth experiences with both the Japanese and Canadian Health Care systems, I’ve continued my investigation why the Japanese system has dramatically reduced wait times, better outcomes, and lower costs as compared to the Canadian system.  I have included the US system as well.  It is clear to me that applying systems engineering to health care will both improve the system and lower its costs.  When I experienced the Japanese health care system, I was so shocked at how much better and faster it was than the Canadian system, I wrote a post on it in Sept 2013, and I repeat one of the key tables here:


In Canada, the wait times for critical diagnoses are getting worse (see this recent article in the Globe and Mail).  Cancer diagnosis can take 1 to 6 months (!!!) in BC whereas in Japan it can often be done in one day.

The US is getting serious about applying Systems Engineering to their Health Care System.  The White House’s President’s Council of Advisors on Science and Technology (PCAST) has published an excellent report in May of 2014 called “Report to the President, Better Health Care and Lower Costs: Accelerating Improvement through Systems Engineering”.  The Report is an excellent read and is surprisingly bold in its recommendations.   One of the main recommendations is to transition from a fee-for-service model, which is a disincentive to efficient care, to one that pays for value instead of volume.


Health Care Systems are very complex, with evolving medical science and technology, multiple stakeholders, increased specialization, and rising expectations of what can be done to treat illnesses, and a lot of realpolitik.  Systems engineering has been used successfully and widely in many other complex industries, such as manufacturing or aviation.  Systems engineering has also been used to good effect in health care, but too rarely and not widely, and barely at all on the macro scale.

The need to improve health care is required, with increased population, aging, and budgetary pressures.  The opportunity for improvement is massive.  In the US, approximately 33% of health care costs are wasted, 20-33% of hospitalized patients experience a medical error with about half of them preventable, many quality issues, and caregivers and patients do not have enough necessary information when needed.  In Canada, we see many of the same issues as the US, and while we have Universal coverage, wait times for necessary diagnostics or treatment are unnecessarily and often crazily long.  Even in Japan, with its worldwide overall best outcomes, low costs, and low wait times, significant improvements are possible in overall efficiency, information flow, costs, and caregiver conditions.

Examples of how systems engineering can improve health care include:

  • Denver Health saving $200 million in 2006 by doing a systems redesign of their operations. As an example to reduce waste, one industrial engineer found the trauma surgery resident physicians walk 8.5 miles in a 24 hour shift!
  • Kaiser Permanente identified 3x as many sepsis cases and cut mortality from sepsis by 50%
  • Virginia Mason has the lowest rate of serious medical infections and falls and reduced medical malpractice liability by 40%

 Systems Engineering Processsystengprocess

How impactful could systems engineering be if applied at all levels of Health Care? The promise is outcomes as good as Japan or the top tier American care, Universally applied, and lower costs to Government and Patients, with essentially no wait times.  It won’t happen overnight, but with the right strategy we could get there in 3-5 years. It is very feasible – if others can do it, we can too. That will then allow us to also be prepared for the greying of our populations.  It is good business too, as the improved systems can be exported to other parts of the world.  When you have a good system, look how it can dominate the market – like Amazon with its great portal, logistics, and network; or the Internet, with its scalability and extensibility, or air travel with its convenience, low costs, widespread usage, and high safety.

The best studies on how to improve health care by applying systems engineering tools and principles comes from the US.  An excellent paper and collection of studies was published in 2005 by the combined efforts of the National Academy of Engineering and the Institute of Medicine called “Building a Better Delivery Systems, a New Engineering/Health Care Partnership”.  I highly recommend this paper.  Much of this material formed the basis for the 2014 PCAST report to President Obama.  Yet one of the last papers in this collection highlights the real difficulties with making improvements in the US Health Care system by analyzing and giving painful examples of the political difficulty, especially with so many interests, organizations and the huge amount of money in the Health Care systems.

Other barriers include:

  • Misaligned incentive structure – fee-for-service vs fee-for-outcomes or value
  • Availability for data and relevant analytics
  • Limited technical capabilities, especially in small practices that make up the bulk of health care
  • Workforce competencies – limited knowledge of systems engineering tools and practices
  • Leadership / culture / politics

Yet while difficult, governments, organizations, and people around the world understand the need for change, the urgency for change, and that there will be change in Health Care.  It is hard work, it will take time, and there are many barriers, especially politically.  Slowly and steadily, I expect systems engineering tools, principles, and activities to be applied into the Health Care system.  You can help by reading the PCAST and other reports and supporting the application of Systems Engineering to Health Care.

For me, I am approaching Industry, Government and Academic leaders with this message and analysis, participating in consultations, etc.


Systems Approach to Health Care

Applying a systems approach to health care significantly improves quality, speed, economics, and customer satisfaction.  I have now experienced both the North American and Japanese Health Care Systems, and I can now see the clear benefits of the systems engineering approach applied to technology, activities, and people (i.e. using the Design Structure Matrix approach).

Figure 1 Personal Hospital Pager, Japanese Hospital

Figure 1 Personal Hospital Pager, Japanese Hospital


When you are a patient at a Japanese Hospital, you get a Personal Hospital Pager, so they can immediately notify you of your next diagnostic or consultation appointment and potentially slot you in earlier.  Japanese hospitals operate like a modern manufacturing plant or logistics center with a fully integrated Information Technology System with all scheduling and results and reports in the digital domain.  Japanese hospitals have all the diagnostic procedures in the hospital – MRI, CT, PET, etc., and the waiting times are so short, there isn’t really a wait time.  The doctor is able to order all the necessary diagnostic or treatment procedures from her PC and you basically go from one station to another in the hospital all in one day.


Figure 2 Personal RFID Card and Diagnostic Schedule

Figure 2 Personal RFID Card and Diagnostic Schedule


As a patient, you also get a Personal Card with a RFID chip that stores key data (Fig 2, middle left) and a printout of your daily schedule, in this case seven diagnostic or consultative events.  In Canada, it is often weeks between each event, and sometimes much longer, such as for a MRI or CT scan.

From a patient perspective, the speed and very short delay times is both comforting, and must increase the likelihood of successful treatment for any degenerative disease.  From a macro perspective, a comparison of health care systems bears this out.

Figure 3 Health Care Systems Comparison

Figure 3 Health Care Systems Comparison


What is striking for Japan is the relatively low health care expenditure, good results in life expectancy or infant mortality, the high amount of diagnostic equipment, the number of hospital beds with a typical nurse count, the low amount of “out-of-pocket payments”, and the short wait times.  A MRI here is about $100, vs. $1500 in the US.  For major surgery, in Canada you stay in the hospital for 5-6 days, in Japan, you come in 2-3 days before and you stay 21 days until they are really, really, sure you are ok (with lots of diagnostic tests).  Patients that have experienced both the Canadian and Japanese system very much prefer Japan.

How can the Japanese System be so good and efficient?  While Japanese people may be more fit and have a better diet than North Americans, they are also one of the fastest “greying” populations, and smoking is more prevalent in Japan than in North America.  After experiencing this system first hand, the high level of integration, full information technology system, modern logistics/manufacturing process, competition between hospitals, and overall design of the system to keep results high and costs low, have forced process innovation in the right areas.  Is the Japanese System perfect?  Not by any means, but compared to North America, it is at another level.

There is great benefit to applying the systems approach to any system.  In case of the Japanese Health Care System, it even includes ensuring the political side is appropriately managed.  When the Japanese physicians tried to game the system by ordering more MRI’s, the next year, the Japanese Government lowered the MRI fee by 35%.

Figure 4 Automatic Reentry

Figure 4 Automatic Reentry


While there are many administrators and health care professionals and technicians at a Japanese Hospital, there are also automated kiosks everywhere for many procedures, such as checking-in, paying any out-of-pocket expenses, urine tests, etc. which makes the whole time spent at the hospital very smooth and efficient.  You put your Personal RFID card from Figure 2 into these kiosks, complete your procedure, your card and file is updated, and move onto the next station.

For Health Care, the system design is kind of easy.  We experience full IT tracking systems in our daily lives, like’s reviewing, inventory, purchasing, and packaging tracking systems.  We know that modern manufacturing process logistics systems exist.  We have ways of measuring results, like outcomes, wait times, or customer satisfaction.  Japan has integrated these best practices into a low cost system.  It is just good business, and a good human system.  North America needs to shamelessly borrow this better system from Japan, and tailor and improve where necessary, as was done with the Taguchi Quality method etc.