All healthcare stakeholders, from the board on down, want to find ways to make their organizations perform better. Increasingly, healthcare leaders have also realized they must reevaluate their institution’s culture, along with their overall management strategies, to maintain a competitive edge and keep pace with an evolving industry. They’re recognizing that managers must be encouraged to move beyond accountability for simple technical knowledge of specific functions, and seek a results-focused, interdepartmental way to target the root causes of quality and efficiency problems. Having tried and failed to find the holy grail within their own industry, providers are now looking beyond the healthcare field to other industries for best practices in managing both cost and quality. The transportation, retailing, hospitality, and manufacturing industries, among others, offer valuable case studies for change. Arguably among the most successful approaches in any industry has been the General Electric Company’s application of Six Sigma, with its related management methodologies.
Achieving high levels of quality, productivity, and financial resilience has been an evolutionary process at GE. Understanding that yesterday’s top-down management approach would not work in a new, fast-paced environment of technological change and international competition, CEO Jack Welch set out to lead a series of initiatives to make GE a more agile and dynamic organization. For the last five years, GE has led an aggressive campaign to cultivate the use of the Six Sigma quality improvement process throughout the company. The results have been impressive: over $3 billion in savings and a 20 percent gain in productivity. It has been so successful, in fact, that GE’s customers, including healthcare providers, have asked the company to help them adapt Six Sigma to their own organizations.
Translating the Six Sigma method to healthcare has been key to the success of an ongoing quality and culture change at Virtua Health, a four-hospital system in New Jersey. Created in 1998 through the merger of West Jersey Health System and Memorial Health Alliance of Burlington County, Virtua has become the dominant provider in the New Jersey suburbs of Philadelphia, bringing together four hospitals, two ambulatory surgery centers, two long-term care facilities, a health fitness center, and a home health company. And although most indicators showed that the system was performing at an average level, the board and senior executive team decided this was not good enough.
Through Six Sigma, Virtua sought to fundamentally change its management and operating culture and become even more competitive in its market. But could a management approach developed by a large international manufacturing company be applied successfully to an integrated health system? Absolutely. Not only that, but the implementation of Six Sigma also provides a case study in how our health system is leveraging the enthusiasm and commitment of its trustees to obtain system-wide quality improvement. To understand how we used Six Sigma for our purposes though, we first need to explain what it is and how it works.
Sigma is the Greek letter assigned to represent standard deviation; that is, the amount of variation within a given process. The higher the sigma level, the lower the number of defects, and achieving a Six Sigma level of quality equates to a mere 3.4 defects out of one million opportunities, or nearly error-free performance. The chart below illustrates various industries and medical services with their corresponding sigma levels. Clearly, healthcare has ample room for improvement.
As a quality methodology, Six Sigma isn’t complex, and it isn’t a magic elixir. In fact, it shares similarities with other programs familiar to providers such as total quality management and continuous quality improvement but with several key differences.
Six Sigma can blend with or be the next initiative after a hospital’s existing quality program, but it definitely goes beyond either home-grown efforts or external initiatives. It’s a rigorous, statistical approach to problem solving designed to help organizations significantly reduce the defects that drive up costs and diminish quality of care. With Six Sigma, you don’t go on to the next step until you’ve proven empirically that you’re ready. GE’s approach to Six Sigma helps to clearly define, measure, analyze, improve and control (DMAIC) quality in every product, process and transaction. It has essentially changed the company’s DNA, and is now the way it works and designs all products.
About 18 months ago, the senior executive team of Virtua held a retreat to create the long-term vision and goals for the health system and make a single, high-performance, blended “Virtua culture” out of two very different cultures. At that time, the system was about a year old, and the initial integration of West Jersey and Memorial had taken place; the health system had one governing board and a fully integrated management team.
The team identified three measurable goals: to be recognized among the nation’s top health systems; to win the New Jersey Governor’s Award for Performance Excellence; and to be in the 90th percentile or above for overall patient satisfaction in all Virtua’s clinical facilities.
To get there, we developed a cultural transformation program called the STAR Initiative, whose first aim has been to focus all the work of the health system on creating an outstanding patient experience, as measured in five domains:
STAR’s second aim is to transform Virtua into a high-performing organization, which we have defined as an organization that makes quick decisions, removes bureaucratic barriers for employees and physicians in order to create an outstanding patient experience, and is driven by valid measurement and accountability for results.
To quickly implement the STAR Initiative, we realized we needed a process that created a framework for setting goals, defined the work needed to meet those goals, and that established measures of those goals; and we needed a common language – a roadmap and a mirror to hold up to ourselves. Investigation led to a relationship with the Healthcare Solutions Group of GE Medical Systems, based in part on its success in achieving its own goals of growth, quality, and customer satisfaction over the past 15 years.
Virtua’s CEO, Rich Miller, has been the sponsor and champion of the STAR initiative. It is imperative that the change initiative be “owned” by the CEO. This sends a strong message that it cannot be ignored.
My role in STAR and Six Sigma is to oversee their implementation, monitor their progress, and work with the various other leaders in the organization to make sure we are doing what we have committed to do. I am the senior executive who oversees collaboration with GE.
Working with GE gave us the ability to implement proven strategies and tools built around Six Sigma methodology. These tools have allowed Virtua to successfully institute the STAR Initiative. And we also gained some valuable assets never fully realized through previous quality or process improvement efforts. Because Six Sigma has built-in skills and monitoring capabilities, Virtua can now use this approach to achieve balanced results that don’t unravel over time.
The partnership between GE and Virtua began in earnest in September 2000. Several planning meetings were held between representatives of the Healthcare Solutions Group of GE Medical Systems and Virtua senior management, leading to the development of a detailed plan for the partnership, the essence of which was an agreement for GE Medical Systems representatives to teach Virtua the Six Sigma tools, including two key components, the change acceleration process (CAP) and Work-out.
A Work-out does what its name implies – it gets extraneous work out of a process through a session led by those closest to the process or problem at hand. It uses brainstorming and a focus on the overall process of the work to remove barriers between departments and generate action steps, with management approval and a rapid-implementation timeframe.
CAP, which encompasses a range of management tools to help drive strategic change, is based on the understanding that most initiatives (62 percent by some calculations) fail because they are not accepted by key stakeholders. The CAP techniques have all been applied to healthcare and are being used at Virtua. Our Six Sigma team is finding that the process actually helps to break down existing silos and get everyone speaking a common language. We expect Virtua Health to become self-sufficient in using these techniques over the next three years.
Once the initial plan was developed, our leaders designated six full-time Black Belts, chosen from among the organization’s best managers, to learn the Six Sigma tools and lead performance improvement throughout Virtua. Black Belts and coaches run the program internally and are trained by GE. Management identifies a problem or issue, and then Black Belts and clinicians manage the process and involve other stakeholders as needed from nurses to materials managers and finance directors to medical directors. From the identification of a problem or defect to the correction, the process remains consistent. Instead of stakeholders being left to solve problems in their area by themselves, and perhaps not getting the support and resources needed to be successful, they can count on the support of the Black Belts who truly represent the entire organization. This support system draws the entire organization together and Virtua has seen an improved corporate culture as a result.
Black Belts will lead Six Sigma projects and performance improvement for two years, and then will return to their former management jobs in the organization. This process serves two purposes – to provide a critical mass of individuals leading the Six Sigma process, and to train potential leaders of Virtua in advanced management techniques.
Six Sigma projects have been developed to: improve patient satisfaction in the emergency room and medical/surgical units; improve throughput (i.e., the number of cases per day) in two of the systems’ busiest operating rooms; find a way to rapidly hire the best employees; improve employee retention in such critical areas as nursing; improve the revenue cycle; improve the efficiency of home health nurses; reduce errors in the use of high-risk medications; and reduce length of stay for elderly patients with congestive heart failure. In addition, over 30 other Work-out projects have been successfully undertaken throughout the Virtua healthcare system.
Virtua has also trained 60 coaches who are experts in CAP and Work-out techniques. These part-time coaches are taking on at least four Work-out or CAP sessions each year, helping to solve a wide range of problems throughout the organization and leading change. This represents an investment in our employees. Enabling our entire organization through these skills is one of the hallmarks of Six Sigma.
While there is a beginning to the Six Sigma process, there is no end, as we’ve come to expect from other quality assurance approaches. After people are trained internally and management or employees identify a problem or a hospital service that needs to be improved, the Black Belts sit down with the people responsible for those areas and evaluate the problems using the Work-out or CAP methods.
Perhaps the most important result of the STAR and Six Sigma implementation is that it has given our trustees “tangibles” they can get their hands around. Most trustees are business people who understand and are comfortable with income statements and balance sheets. They want clarity, hard facts, and numbers. Other change initiatives are often vague and lack the kind of goal-setting, progress, and tracking measures upon which the Six Sigma process depends.
The Six Sigma methodology provides detailed measures allowing trustees to:
One of the board’s most important roles is to ensure that the health system is serving the community. The evidence generated by Six Sigma gives trustees the ability to show the community an unwavering commitment to both quality and fiduciary responsibility. The process provides them with proof that can be shared with the community and takes trustees out of the boardroom to understand what is happening on the front lines. Without such a program, trustees have a difficult time obtaining the information they need to make good decisions and convey results with confidence.
It is the board’s responsibility to convince the leadership team to try these new methods to achieve proven results. To get the ball rolling toward Six Sigma implementation, the board should proactively encourage the CEO to champion the cause.
At Virtua, trustees quickly recognized that the structure provided by the STAR Initiative and Six Sigma technique would give them a strong framework for understanding the initiative’s goals, process, and evidence. Indeed, Six Sigma’s highly structured approach has given trustees and senior management a common language and focus to help the board evaluate matters linked to their fiduciary responsibility.
The Virtua board has been closely engaged in forming the health system from its two predecessors. They understand what everyone wants to accomplish and exactly how it’s going to be done. Interestingly, as we’ve broken down the STAR Initiative into five points, certain trustees have picked out aspects they’re really interested in clinical quality in particular. Suddenly, we found our trustees telling us that although they understood issues around finance very well because of their own business backgrounds, they wanted help understanding quality, so they could judge whether we were delivering it to our community.
Virtua trustees are not just witnessing cultural change, they are very much a part of it. They’re using STAR and Six Sigma to help create a great health care system for the community.
Several key factors account for the success of the STAR Initiative’s implementation and of the Virtua-GE partnership thus far:
A focus on specific projects that are critical to the organization’s success
Virtua’s experience with GE’s approach to Six Sigma demonstrates that it is quite possible to take the best techniques and strategies from other industries and apply them to health care. It also offers a valuable lesson on how best to leverage the enthusiasm and commitment of a health system’s trustee leaders in helping their organization move toward new levels of accountability for quality of care, service, and stewardship of resources. We are optimistic that use of Six Sigma will continue to reap rewards for the system and that Virtua might offer a model for leadership and process development for other patient care organizations nationwide.