Six Sigma: A Powerful Strategy for Healthcare Providers

Six Sigma is shorthand for a discipline that allows any business to design, improve and manage its processes so that they perform at their highest possible levels. High levels of performance mean high volume, fast turnaround times, very few errors or defects and low cost. Effective and efficient processes also help to reduce staff turnover and increase retention by eliminating one of the main causes of high turnover - cumbersome and complex procedures and routines. And finally, Six Sigma promises to overcome the challenge of all professional disciplines - leveraging effective techniques and methods across the board - and dramatically decreasing medical errors.

Six Sigma is a synonym for a process improvement strategy that focuses on eliminating defects. What is a defect? Everything that does not meet customer requirements - staying in the hospital one day longer than required, a mistake during a surgical procedure, or excess wait time when being admitted to the hospital. A process capable of Six Sigma performance is equivalent to the occurrence of 3.4 defects per million opportunities - a stretch goal for virtually every business process. Airlines are one of the few businesses that have mastered this level of quality when it comes to having an equal number of takeoffs and landings. However, when it comes to on-time departure, their performance is less impressive. By measuring the capability of a process to meet customer needs, Six Sigma provides a framework to identify processes that could benefit from improvements.

But Six Sigma is not only about applying a rigorous measure based on customer needs - it is the application of powerful statistical techniques coupled with a rigorous approach to identify the root cause of the problem that enables teams of subject-matter experts to eliminate defects and achieve breakthrough results. The following case provides an example of how the rigor of Six Sigma can help improve a typical hospital process.

Six Sigma Healthcare Case Study A team of healthcare professionals at one of the leading hospitals in the healthcare industry was chartered by the management team to tackle the problem of excessive cycle times for processing orthopedic disability claims. For 75% of all cases, it took longer than 10 days from the receipt of the request to mail the claim to the insurance company. When the team started the process and defined the problem, orthopedics (ortho) was named as the prime suspect. However, the analysis of actual data revealed that every step in the process - both in ortho and accounts receivable - took an excessive amount of time. In addition, the variation in each step was enormous. For example, it could take anywhere from 1 to 10 days to open and read the mail within accounts receivable. When the team measured the amount of time that added value, they found that less than 0.5% of the time was spent on activities that moved the claim closer to reimbursement. When they started to challenge the current process, the team made startling discoveries: Less than 78% of the cases needed a referral to the MD, however, the existing process required a referral in every single case. They also found that ortho maintained electronic files of patient records, and allowing the accounts receivable department to access this system would eliminate the need to request the patients' files from the department. Using process mapping and advanced statistical tools, the team was able to project the impact of potential improvements, which facilitated getting the buy-in from both departments to implement dramatic process improvements. The results were impressive: total cycle time was reduced from an average of seventeen to less than six days, variation was reduced by 60%, and less than 16% of all cases took longer than ten days - resulting in a dramatic increase in cash flow.

However, the benefits of Six Sigma extend far beyond reducing cost or increasing efficiency:

• By using a common scale that is based on customer needs to measure and evaluate every process in a business, Six Sigma provides senior management with an effective way to manage performance for such distinctly different processes such as transplanting organs, registering patients, filing claims, or purchasing sutures.
  
  
• The focus on reducing variation is particularly important for the healthcare industry, where every physician deploys a different process. The inherent variation in these processes make it difficult to achieve consistent standards of care and oftentimes prevents employing scientific thinking to identify the one best way. The sophisticated statistical techniques in the Six Sigma toolbox can help to identify best practices and, coupled with the ability to manage change, help achieve substantial improvements when it comes to clinical processes.
  
  
• Consolidation in the healthcare industry has led to the formation of large hospital chains. However, few organizations have been able to transcend organizational legacies. As a result, few have gone further than establishing a common accounting system. But what about being able to look at similar processes across different organizational units - such as hip surgery - and being able to replicate the most effective approach across the entire chain? The Six Sigma methodology provides a common language to understand differences in processes and make informed choices about which approach is the best.

About The Authors
Thomas Bertels was a vice president with Rath & Strong with responsibility for the Six Sigma practice in the United States when this article was written. He is now a partner at Valeocon Management Consulting. He has worked with clients such as TRW, Siemens, Vanguard and Johnson & Johnson, and also served as the editor of and main contributor to the Rath & Strong Six Sigma Leadership Handbook. Mr. Bertels started his career at ABB (Asea Brown Boveri), one of the early adopters of Six Sigma. Fluent in German and English, he is based in New York, N.Y., USA, and can be reached at thomas.bertels@valeocon.com.

Mary Williams is a vice president with Rath & Strong. She helps clients enhance profits and revenue through Six Sigma, process improvement and redesign. She has worked extensively with senior-level executives, as well as training teams, facilitators and middle managers. She also has experience in the healthcare and related medical-provider industries. Recent work includes coaching, training and teaching Six Sigma teams at companies in manufacturing and service settings, including Quest Diagnostics and Johnson & Johnson. Ms Williams has helped numerous clients achieve rapid results with her unique approach. She can be reached at mary_williams@aoncons.com.

Harvey Dershin is a senior vice president and managing director of Europe and Asia with Rath & Strong. He has consulted for more than a dozen years, focusing on Six Sigma, business process design, improvement and control. His clients have included companies in financial services, aerospace, pharmaceutical, medical devices, technical instruments, food processing, insurance, educational testing, and direct healthcare. Mr. Dershin has helped organizations redesign supply chain processes, improve internal business processes, develop key performance metrics, design business processes in support of IT solutions, improve manufacturing output, decrease finished goods inventory, and improve corporate security. He can be reached at harvey_dershin@aon.com.