After years of successfully using Lean to improve the quality of their healthcare products, Group Health has taken on the product development process itself.  The Seattle-based integrated health plan and healthcare provider adopted an innovative process that has reduced development time by 1/3, increased stakeholder involvement, and emboldened development teams to broaden their horizons.

Product development in healthcare is a bit of a balancing act – providers and health plans, in addition to being regulated by state governments, are now under increased federal scrutiny under the Affordable Care Act. This means that tolerances for error are small, and all aspects of products have to be precisely defined.

Furthermore, a changing market presents a moving target for product developers.  “We like to say that creating a health plan product at Group Health is harder than building a car,” says Melinda Hews, Executive Director of Product Management at Group Health, “because it’s more complicated in some ways."

Like many other health plans, Group Health had employed a methodology that breaks development into phases, passing the product sequentially from one business group to another. With this approach, deficiencies are often found after the fact, and products frequently have to be sent back for rework. This means delays in development, and an environment that does not lend itself well to innovation.

3P: Production Preparation Process

Thanks to seven years of treading the Lean path, Group Health was ready to take on a fundamentally different approach. Working with Kaizen Institute consultants, Group Health began implementing an advanced Lean method known as 3P, short for “production preparation process” and also “product preparation process”.

The 3P approach brings cross-functional teams together to rapidly brainstorm ideas for improvement. An idea can range from a simple fix to a transformative change; workers are encouraged to think without boundaries. Teams then develop quick and inexpensive prototypes for dealing with a designated problem, the best of which is selected through a testing procedure.

When applied to product development, 3P brings testing earlier into the development process so that ideas can be refined as they develop.  “The first substantial benefit was the simplest one,” says Chris Schrandt, senior consultant with Kaizen Institute. “Just getting everyone together, sitting down and sharing ideas with each other.”

The cross-functional teams represented the entire organization at Group Health, from management, to doctors, to administrative staff. In addition to providing diverse opinions, the process was a great morale booster. “People are thrilled to help,” says Hews. “They’re used to just dealing with the creation of the product, delivering on it, or fixing the problems when they arise rather than collaborating early on. And they have great ideas.”

Cross-functional teams are also highly effective when it comes ironing out product details. "A product management team is usually accountable for that work, but the work is cross-functional in its nature," says Hews. "You need the input from finance, operations, sales, customer service and other staff about all sorts of different things. The 3P process really helped to bring the right people into the process much earlier than we had before."

New Horizons

Armed with their new methodology, Group Health set their sights on a new and challenging  product: value-based insurance.

Value-based insurance involves a paradigm shift  - rather than assigning value to products and services based on their cost, it focuses on overall value to the customer’s health. For instance, MRI scans are often overused, so value-based insurance could charge a customer extra for this service, while also providing a drug that lowers blood pressure for free. This places more emphasis on preventative care, which has been gaining prevalence. A value-based insurance package, for example, may provide discounts on gym memberships, or on ergonomic office supplies in order to support healthy lifestyles and help curb chronic conditions.

Value-based insurance, while simple in concept, adds some complexities to the development process in that measuring value involves including elements that are difficult to quantify.

For instance, an insurance company may opt to include a discount on back rests for employees, which involves variables such as cost, product effectiveness, and market relevance.

Assessing the Results

Group Health’s new 3P-based development process proved an ideal fit for handling the many variables of value-based insurance.  Since implementing 3P Group Health has seen a reduction in product to market time from about 18 months to 12 months.  As well, stakeholders have renewed confidence in the quality of their products. The process is currently being used to drive patient-centric innovation and speed to development of Group Health’s medical centers.

For Group Health, implementing 3P has meant abandoning the traditional silo approach to product development, and adopting a more inclusive vision. Cross-functional teams now work together, rather than passing defects down the line; everybody is in on every aspect of the development process, from conception, to design, to launch. Group Health is now more responsive to change, and most importantly the needs of the customer. "Doing the right thing for the patient is ultimately doing the right thing for the whole healthcare system,” says Schrandt.