Lean Philosophy and Lean Accounting in Health Care
This paper examines the origins, principles, and application of Lean Philosophy and Lean Accounting within the health care industry. Tracing Lean Philosophy from Henry Ford's assembly line through Toyota's waste-elimination innovations and James Womack's codification of five core principles, the paper outlines the Lean Action Plan's four stages—initiation, reorganization, installation, and completion of transformation. It then explains how traditional accounting proved incompatible with Lean methods, prompting the development of Lean Accounting at the 2005 Lean Accounting Summit. The paper concludes by applying all five Lean Accounting principles to a concrete health care example: reducing waste and cost in hospital medical supplies management.
- Introduction: Overview of Lean Philosophy and Lean Accounting in healthcare
- Lean Philosophy: Background and Core Principles: Ford and Toyota origins; five core lean principles
- The Lean Action Plan: Four-stage lean conversion: initiation to transformation
- Benefits of Lean Philosophy: Customer value, employee empowerment, and global spread
- Lean Accounting: Background, Vision, and Principles: 2005 Summit origins, vision statement, and five principles
- Applying Lean Accounting to Health Care: Supplies Management: Five lean accounting principles applied to hospital supplies
- Conclusion: Summary of lean principles and healthcare cost-quality impact
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What makes this paper effective
- The paper follows a clear, logical progression from historical origins to theoretical framework to concrete application, making abstract concepts accessible by grounding them in a specific health care example.
- It consistently mirrors the five Lean Accounting principles across both the general explanation and the applied health care section, reinforcing comprehension through parallel structure.
- Direct quotation of Lean Accounting's official vision statement provides authoritative grounding, while citations from both foundational texts and practitioner sources demonstrate breadth of research.
Key academic technique demonstrated
The paper demonstrates applied conceptual transfer — taking a theoretical framework developed in one domain (manufacturing) and systematically mapping each of its components onto a new domain (health care supplies management). Rather than asserting that Lean Accounting is relevant to health care in general terms, the author works through each of the five Lean Accounting principles individually and shows exactly how each would function in a hospital supplies context, giving the argument analytical rigor.
Structure breakdown
The paper opens with an introduction establishing context and thesis. The body divides into two major parts: first, a thorough explanation of Lean Philosophy (origins, five principles, four-stage action plan, and benefits); second, a detailed treatment of Lean Accounting (background, vision statement, and five principles with their practices and tools). A dedicated application section then maps all five Lean Accounting principles onto hospital medical supplies management. The conclusion synthesizes both threads and restates the core argument.
Introduction
Lean Philosophy, established and refined in the 20th century, revolutionized manufacturing. Focused on customer-oriented value, Lean Philosophy proactively defines and eliminates waste in order to continually deliver higher quality at lower costs. Though Lean Philosophy was initially paired with traditional accounting methods, lean proponents found that traditional accounting is bloated and incompatible with lean principles. Consequently, Lean Accounting was developed to enhance the Lean Philosophy. Due to the success of both Lean Philosophy and Lean Accounting in manufacturing, these concepts have spread globally to government and service industries, including the health care industry.
Lean Philosophy: Background and Core Principles
Historians trace the Lean Philosophy's origins back to Henry Ford's innovative assembly line, invented in 1913 (Lean Enterprise Institute, 2009). Integrating the entire production process with his "flow production" — consisting of interchangeable parts, standard work, and moving conveyances — Ford revolutionized manufacturing. Nevertheless, Ford's flow production had a major drawback in that it did not provide true variety (Lean Enterprise Institute, 2009).
Refining Ford's flow production from the 1930s through the 1940s, Toyota's Japanese management identified seven mudas (sources of waste) in manufacturing: conveyance, motion, waiting, overprocessing, inventory, defects, and overproduction (Jimmerson, 2010, p. 3). Concentrating on eliminating waste, Toyota management placed even greater stress on the concept of flow by tailoring machines for needed volume, using self-monitoring machines, arranging machines in process order, originating rapid set-ups to enable machines to make several parts in low volumes as necessary, and authorizing each step to notify the prior step of needed materials (Lean Enterprise Institute, 2009). These innovations resulted in rapid, low-cost, and high-quality processes, along with simpler and more accurate management (Lean Enterprise Institute, 2009).
Those concepts, which proved highly successful for Toyota, were applauded and further refined in The Machine That Changed the World: The Story of Lean Production (Womack, Jones, Roos, & Carpenter, 1990), and then distilled in Lean Thinking: Banish Waste and Create Wealth in Your Corporation (Womack & Jones, 1996) into fundamental elements. James Womack, a co-author of both books, subsequently established the Lean Enterprise Institute in 1997. Since that time, the Lean Enterprise Institute has flourished as a non-profit organization dedicated to education, publishing, and research in order to advance and deepen understanding of Lean Philosophy (Lean Enterprise Institute, 2009).
Lean Thinking (Womack & Jones, 1996) clarified Lean Philosophy into five basic principles:
(1) defining the value sought by the customer; (2) specifying the value stream of the product satisfying that value while challenging wasted steps; (3) making a continuous flow of product through refined steps; (4) creating "pull" — essentially meaning "customer demand/expectation" — from step to step for continuous flow wherever possible; and (5) continually improving and refining the process to cut the steps, time, and information required in the production process (Lean Enterprise Institute, 2009). In sum, focusing only on steps that create products satisfying a value sought by customers, this philosophy separates the useful from the wasteful, eliminates the wasteful, and wrings the most productivity out of its workforce's time and resources.
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