Examining pathways to safety and financial performance in hospitals: A study of lean in professional service operations

Healthcare operates in a complex professional service environment that faces challenges in delivering high quality and affordable care - a set of goals that some healthcare professionals believe are incongruous. To consider opportunities to achieve these important outcomes, this study examines the relationships among comprehensive lean orientation, internal integration, patient safety, and financial performance. This study draws on the professional services operations (PSOs) literature stream to explain and offer a means of addressing the complexity of healthcare delivery. Grounded in dynamic capabilities, this study develops a model for improving financial performance and patient safety in hospitals. Using structural equation modeling, the model is tested with survey data from 211 acute care hospitals in the USA that are matched with data from two other sources - objective patient safety data from the Centers for Medicare and Medicaid Services and objective net income data from the American Hospital Directory. Results indicate that although a comprehensive lean orientation has a direct and positive impact on patient safety, it impacts financial performance indirectly through internal integration. The results have major implications for enhancing patient safety and financial performance in healthcare service organizations, and improving operations in PSOs more broadly.