Study pegs Lean costs as high as $49.6M in two years

An economic analysis shows Saskatchewan spent between $44 million and $49.6 million on Lean implementation in just two years.

The study, led by University of Saskatchewan economics professor Nazmi Sari, looked at not just the cost of the John Black and Associates (JBA) consulting contract, but the staff costs to hold Lean events such as Rapid Improvement Process Workshops.

“You take these people away from their day-to-day activities. That generates an economic cost to the system, to the taxpayer,” Sari said in an interview, noting it either means their regular work doesn’t get done or replacement staff need to be hired. This was the first report to examine Lean implementation on such a large scale, he said.

The original four-year, $40-million JBA contract was cut short for a final cost of $32.6 million; from 2012 to 2014, the province paid the firm $19.56 million, according to the study.

The total cost to hold Lean events during that time was estimated at $16.07 million to $19.5 million, while the cost of new hires was $8.64 million to $10.56 million.

Some Lean activities were redesigned or discontinued after the study period, and those changes would need to be taken into account to estimate the cost of Lean after that time.

While Lean would likely have resulted in both short and long-term efficiency and health outcome benefits, the paper only examined the program’s costs, the authors say. A complete evaluation would include the return on Saskatchewan’s Lean investment, but not enough information was available.

Sari said he doesn’t know if such a database of Lean activities and health outcomes exists or if he will have access to it.

“If we get more out of this, then it’s OK to invest in Lean, if the benefit is more than what we pay for it.”

Health consultant Steven Lewis said in an email said the study’s estimates are credible. The critical question is whether Lean reforms have generated value for money — a tricky one, because some aspects of health care got better before Lean and without Lean, he said.

“All we have now is a better understanding of the true costs in the first two years. Ongoing costs will be less because JBA is done. Was it/is it worth it? Someday we might find out.”