Public Services Management: Trading places: David Bowen examines how the relationship between St James's Hospital and Lucas is working

ST JAMES'S Hospital in Leeds, star of the television series Jimmy's and one of the biggest teaching hospitals in Europe, has gained another distinction. It is the only hospital that is trying to model itself on a Japanese car factory.

It has been working with Lucas, the aerospace and automotive group, to borrow some of the techniques that have made motor factories so much more efficient in the last 20 years. Lucas is a leader in such systems; it wanted to test them away from manufacturing which is why, in late 1991, it came together with Jimmy's.

The hospital is a large business in its own right. Income from the internal market totals pounds 113m, it employs 5,000 people and handles 450,000 admissions a year. However, its managers decided the Lucas touch could benefit two areas: non-pharmaceutical supplies and admissions.

Japanese car manufacturers are past masters at streamlining their supply operations by reducing the numbers of suppliers and standardising where possible. St James's purchasing operation was horrendously complex: 1,621 companies supplied 14,700 products a year, even though their total value was only pounds 15m.

Ian Marshall, director of pharmacy and supplies, says that as the organisation of supplies in the NHS was in a state of flux, this was a good time to examine it. 'We were conscious we hadn't spent a lot of time looking at how we did things,' he adds. 'We had an awful lot of non-productive processes.' Lucas felt the reorganisation could save pounds 1.2m over five years.

Two hospital staff were seconded to join two Lucas consultants for three months. Mr Marshall says Lucas brought an analytical approach to the process. 'We're an undisciplined lot in the Health Service: we're not used to standing back.'

The first stage was to cut the supply base. Traditionally the supplies department bought what the doctors asked for. 'It was an expensive and irrational way of buying,' Mr Marshall says. 'We could end up with half a dozen products doing the same job.'

A product supplies group was set up, chaired by a consultant, to choose which products would be used. To smoothe the doctors' ruffled feathers a nurse - one of the two secondees to the team - became the link between the medical and supply sides.

Both suppliers and products were rationalised. The team looked at the 26 types of surgical gloves and concluded that in 95 per cent of cases they could be replaced by cheaper alternatives. Surgeons' gloves costing pounds 1 a pair were being used for menial tasks: they have been replaced by 20p alternatives.

Anaesthetic items used to be bought from six suppliers - now they come from one. Lucas pointed out the advantage of using fewer suppliers: prices could come down because quantities were higher, the organisation was simpler, and the hospital would have a better chance of persuading manufacturers to give it exactly what it wanted.

'We've been driven by suppliers for years,' Peter Beeston, the supplies manager, says. 'They would say you can only have something in thousands, that you have to wait so many weeks and that they will only deliver on Wednesdays.' Japanese car companies believe that supplier-buyer relationships should be long term, rather than based on the lowest price at the time. 'Suppliers now know if they perform, I'm prepared to give them a fairly long term commitment,' Mr Beeston says. 'I would like to buy 80 per cent of our products from 20 to 30 suppliers, rather than from more than 100.'

One of the best known phrases in the Japanese industrial lexicon is 'just-in-time' (JIT), the system that keeps stocks low to save money and simplify an operation.

The St James's team identified pounds 90,000 of excess stocks, and visited Lucas's brake factory at Pontypool to see if a kanban system could be installed. Despite its strange name, this extreme form of JIT could not be simpler: components are stored in boxes by the side of the production line. When there is only one box left, a new one is delivered.

Ward Nine of St James's now has a similar system in its store room. There are two boxes of 10mm syringes on one shelf. When the one at the front is empty, the other one is moved forward, and the ward sister, Dawn Marshall, orders another.

'It's a bit like a housewife ordering washing powder,' she says. 'It also means I know exactly what I am spending.' The next stage will be to fix bar codes to the boxes: when a box is empty, the code will be stuck on the door. Someone from the supplies department will come round, 'read' it with a machine, and thus assemble a list of all the new stock needed.

The change has been broadly welcomed, Mr Beeston says. 'The majority of clinical staff have said 'thank God someone's doing this'. A lot of nursing staff are aware there is so much waste out there.'

While supply techniques could be transferred directly from a factory, the link between manufacturing and the admissions system was more tenuous. It lay in the fact that both relied on streamlining processes - pushing components around a factory and pushing patients in through the hospital door as efficiently as possible.

In the department chosen for attention - urology - there was clearly room for improvement. One-third of patients for non-urgent surgery found their appointments were being cancelled. One of the reasons, the team discovered, was that between a consultant saying they needed an operation, and their arriving at the operating theatre, responsibility changed hands 59 times as it passed through 10 departments.

Japanese factories are usually organised as 'cells' - mini- factories responsible for their own production where everything can be controlled at a simple level. At Lucas's suggestion, a cell of four people was established to control all admissions for urology. It is located next to the ward and is responsible for keeping records, planning operations, making sure the theatre and beds are available, and telling the patient when to come in. The 59 handovers have been reduced to 13.

This system has been more difficult to implement than the supplies reorganisation. Cutting across responsibilities meant that many toes have been trodden on, some of which belonged to powerful people. However Geoff Craven, director of hospital support services, says that the system is achieving its objective and can be transferred to other departments: 'Early results show that numbers cancelled have fallen to a handful.'

(Photograph omitted)