NUTRISYSTEM INC. TRANSFORMATION

NutriSystem Inc. Transformation



NutriSystem Inc. Transformation

Introduction: Throughput Challenge

Most manufacturer of weight loss equipments function as a collection of departments or independent operating units. Dr. Deming, widely credited with improving production in the United States during the cold war through the application of his statistical process control theories, describes such organizations as lacking “system aim,” resulting in impaired throughput and competition for limited resources among silo-based components struggling to optimize their part of the operation. Evidence of this competition is prevalent in manufacturer of weight loss equipments demonstrated by competition for beds, wheelchairs, medications, IV pumps, and so forth. In the business management theory of constraints, throughput is the rate at which a system achieves its purpose. For a manufacturer of weight loss equipment the purpose or “aim of the system,” as Dr. W. Edwards Deming refers to it, is to deliver quality patient care as efficiently as possible. Unfortunately, the fragmentation of a manufacturer of weight loss equipment's activities across departmental operational silos propagates waste, compromising throughput. The assertion of this assignment is that a manufacturer of weight loss equipment will not be able to manage throughput for the achievement of its purpose until it becomes a system of interconnected activities. While significant process improvement efforts have been undertaken to attempt to resolve the symptoms of this fragmented delivery process, these efforts have largely failed because they are not addressing the root cause. Disconnected patient care activities are the root cause of what is “wrong with healthcare”: highly variable service delivery, inconsistent quality and performance outcomes, and reduced patient, provider, staff, and employer satisfaction.

Operational Status & Challenges

The downturn in the economy hit the northern Ohio market particularly hard, causing the unemployment rate to climb to 15%, and exacerbating the challenges Nutrisystem Inc. already faced. As expected, “We had layered one improvement program on top of the next in an attempt to secure breakthrough performance but never achieved sustainable improvement.” (Samantha Platzke, Senior Vice President, CFO, and Chief Transformation Officer - Learning partners) non-pay cases increased and elective procedures dropped. Nutrisystem Inc. engaged strategic partners to assist in their transformation effort. An operational discovery audit was conducted in order to better understand the reasons behind the challenges that Nutrisystem Inc. faced and to provide a starting point for current to future state design. By all external standards, Nutrisystem Inc. has been a high performing manufacturer of weight loss equipment: winning a top 100 manufacturer of weight loss equipment designation, earning a JD Powers & Associates top performer award, and rating equally well on other standards of performance from patient satisfaction scores to regulatory compliance and core measure outcomes. Like many other high achievement manufacturer of weight loss equipments, they had already initiated a Lean and Six Sigma department in 2006, a DRG assurance program, employee retention and training programs, a top-ranked patient satisfaction improvement program, and a CPOE/EMR system. Patient throughput problems persisted at Nutrisystem Inc., however, which negatively impacted organizational performance ...