Uncovering inefficiencies in the workers’ compensation industry using Lean methodology

Purpose: The purpose of this paper is to apply Lean in the workers’ compensation industry. It focuses on identifying patterns of repetitive non-value-added transnational activities for physical-therapy patients and healthcare providers. It addresses the research gap in this field. Design/methodology/approach: In this study, we designed and deployed multiple case studies to better understand the journey of an injured worker within the worker compensation system in the United States of America. We partnered with Concentra Inc., a leading national healthcare provider in the field of workers’ compensation having 520 medical centers in 44 states. Both case studies included conducting direct observations, Gemba walk, in five clinics in two states: Florida and Pennsylvania. We analyzed the data of 263 injured workers with 8 or more physical therapy visits who got admitted to Concentra clinics in both states over the period of 31 days. Findings: The results revealed that the time intervals at which activities associated with physical therapy treatment pre-authorization accounted for 91.59% of the total non-value-added activities and are thus the key administrative factor leading to process inefficiency in the state of Florida. The Process Cycle Efficiency of Pennsylvania was 75.36% compared to 53.16% of Florida. The injured workers in Florida needed 39.58 days on average to complete eight physical therapy visits compared to 27.92 days in Pennsylvania (a median of 34.09 vs 22.15 days). Research limitations/implications: This study is limited as it only focuses on processes on the healthcare provider side. An expanded value stream map that includes the treatment pre-authorization process on the insurance side would be beneficial for generating more potential solutions to streamline the process. Practical implications: This study shows that Lean could play a critical role in identifying and quantifying continuous improvement opportunities that could accelerate patient’s treatment, reduce administrative burden on healthcare providers and improve the overall claim cost of insurance companies. It provides data-driven argument for insurance companies to consider eliminating physical therapy pre-authorization. Originality/value: This is the first study to apply Lean methodology in the workers’ compensation field.