The economics of lean Six Sigma in healthcare
By Brian J. Galli
Executive Summary
Now that the manufacturing industry has accepted lean Six
Sigma methodology to increase efficiency, the healthcare industry is pursuing a similar route. Numerous cases demonstrate where healthcare facilities, instead of turning to automation, have used lean Six Sigma to find similar results by decreasing costs and reducing variation.
People engagement deficiencies
Considering how competitive markets are today, most organizations constantly seek new ways to improve methods and
gain market advantages. With lean and Six Sigma methodology, manufacturing companies have taken a big leap toward
developing cost-saving projects that procure competitive returns. In many cases, organizations have combined the two methodologies for lean Six Sigma programs.
Healthcare is no different in its moves to cut costs while maintaining a competitive edge. Although many hospitals
– and other organizations, to tell the truth – react to financial pressures by reducing staffing levels, service lines or capital investment, these cuts can harm the enterprise. This is particularly true regarding the satisfaction of two major hospital constituencies, patients and employees. The negative reactions this can lead to, combined with the following research results, suggest that healthcare ought to focus on maintaining and exceeding employee and customer satisfaction levels. Just like in manufacturing, lean Six Sigma will give healthcare organizations the opportunity to cut costs, increase efficiency and maintain their competitive advantage without resorting to cutting services or adding automation.
The origins of lean Six Sigma
To understand lean Six Sigma in this context, it is best to analyze its effect and implementation at Motorola, one
of the first organizations to successfully implement Six Sigma.
At Motorola, Six Sigma quality level means 3.4 defects per million opportunities. Furthermore, Motorola assumed
that a process might shift 1.5 sigma from its target. Six Sigma achieves process improvement through DMAIC, which
stands for the five phases of a project cycle: define, measure, analyze, improve and control. This model helps reduce
process variation, improve quality and decrease costs. Motorola followed this model to success.
The define phase is the beginning of any project. During this phase, the problem statement and project goals are
defined and documented. In the measure phase, data is collected to describe the current state. This data is used during the analyze phase, when data evaluation leads to improvement recommendations. The team uses the improve phase to test possible solutions and select the best one. The final phase, control, is to select the best solution. This phase ensures the problem remains fixed. Whereas Motorola takes advantage of Six Sigma, Toyota capitalizes on lean
methodology. Lean, derived from the Toyota Production System, has helped Toyota become a global giant and stay
consistently profitable. The primary objective of lean implementation is to eliminate waste or nonvalue-added activities. Nonvalue-added activities include anything the customer is not willing to pay for or activities that don't
produce final products. Eliminating them helps any organization reduce costs while maintaining a competitive market edge.
As one can see, the primary purpose of lean and Six Sigma is to reduce costs. Because they have the same goal, many
practitioners have decided to use the two in conjunction. Lloyd C. Patterson supports the use of the two together by explaining that "Lean and Six Sigma can exist separately, but the benefits of bringing them together are tremendous,
such as the alignment of an organization's resources and the creation of a single improvement strategy" in his May 2009 article titled "Better Together" in Six Sigma Forum Magazine.
Although both tools began with manufacturing companies, they can be applied to other industries, namely healthcare. Healthcare will undoubtedly benefit directly if the industry can reduce expenses without curtailing competitiveness.
By reducing error and cutting costs, healthcare can focus more on improving patient and employee satisfaction.
Let's examine a few U.S. healthcare facilities that have attempted lean and Six Sigma initiatives, highlighting the importance of these two continuous improvement methodologies.
Alton Memorial, Illinois
Alton Memorial is part of BJC Healthcare, based in St. Louis. In "Hospital reduces medication errors using DMAIC" in the January 2007 issue of Quality Progress>, Yani Benitez and colleagues explained that Alton Memorial set a broad goal in 2005 to reduce all medicinal errors.
Hospital managers believed that reducing medicinal errors would reduce overall costs. After all, according to the
authors, each medicinal event has a mean cost of $4,685. These expenses add up. Alton reduced its medicinal
errors by a considerable amount through Six Sigma initiatives. Alton now maintains a 0.02 percent error
rate, which is lower than other medical facilities and an improvement from its original rate.
With Six Sigma, teams at the medical center investigated the cause for error and found that 43 percent
of all medicinal errors resulted from transcription mistakes, i.e., the process of copying a physician's order.
Transcription errors occurred when necessary information was copied or omitted incorrectly.
After thorough investigation, a black belt facilitated a DMAIC model implementation with a multidisciplinary team.
According to the Benitez article, "Team members included representatives from pharmacy, nursing, clinical information
systems, nursing management, performance improvement and medication safety." During the define phase, the team set goals to improve order entry accuracy by 50 percent to alleviate transcription errors. During the measure phase, the team created a chart documenting the current process. Team members discovered that nurses transcribed information by hand to a chronological sheet, which resulted in 10 percent transcription errors. The team deemed that this sheet didn't add any value and decided to eliminate it, immediately reducing the overall error rate. This action, the authors wrote, translates to "an average seven-minute workload reduction per patient per day," cutting costs, saving time and increasing employee and customer satisfaction.
The team also identified pharmacist interruption during order entry as another cause for error. To mend this, the
team instituted a standardized process and training program. One primary purpose was to ensure that the pharmacy
team only processed one request at a time. In so doing, the team could reduce the possibility of making further
mistakes.
In addition, the process improvement team discovered that physicians' handwriting was sometimes illegible,
causing more confusion and increasing the chances of transferring inaccurate information. The writing was illegible
because the required fields did not offer enough space. The physicians were forced to cram information into small
spaces. As a result, the team decided to add more lines and space to the form.
The team standardized the medication order process for the entire facility, using the QFD tool (quality function
deployment). According to Benitez and his colleagues, the purpose of QFD is "to link the needs of the customers
with the design and development of the process functions." The team developed a QFD matrix that aligned customer
requirements with the facility's process. This could achieve customer requirements while maintaining costs, further
increasing customer satisfaction.
Before the proposed changes could be implemented, the team developed a pilot program. The control plan for the
process was devised to ensure success rates could, and would, be sustained. The team collected data, performed weekly, random audits and developed a secondary plan if the process failed. The data was placed on a control chart to monitor process performance. The control chart demonstrated that the project was a success. The team achieved
more than a 50 percent reduction in all error types. As the Benitez paper reported, "Audits revealed the percentage
of order entry errors consistently improved by 90 percent to less than 0.04 errors per bed every month for four
months after the process changes."
As one can see, the benefits of implementing Six Sigma DMAIC are evident in this case. Alton Memorial didn't need to increase costs or compromise on employee and customer satisfaction to reduce errors. Six Sigma led to benefits across the board, helping the medical center maintain its competitive edge.
Baptist Hospital Inc.
Baptist Hospital Inc. (BHI) is located in Pensacola, Florida, and has 2,270 employees. According to Kristen
Johnson's September 2004 article for Quality Progress, "Two hospitals prescribe performance excellence," the facility's journey began in 1995 after experiencing a drastically negative trend in patient and employee satisfaction.
BHI leadership decided to mend the issues relating to employee satisfaction. Management decided to empower
employees and give them more influence over decision-making. The employees were encouraged to submit new ideas to
management to improve performance and customer service. BHI further implemented a "blank check" policy in
which employees could use BHI money to buy patients' lunches or replace patients' lost items. This feature greatly
enhanced relationships between patients and employees, improving overall satisfaction levels.
BHI also emphasized advancing customer satisfaction. As Johnson wrote, "BHI created a strict listening
and learning system to determine customer requirements, expectations and preferences." Focus groups and telephone surveys were conducted to gauge customer satisfaction. In doing so, BHI determined the gaps in satisfaction
and how to mend them. Finally, as a process improvement, BHI leadership instituted a vehicle to collect and analyze
information more efficiently. This helped discern what improvements were needed.
BHI developed an awards system for its employees. The employees had the option to exchange the awards for gifts
or public recognition. This motivated employees to perform their best. BHI set up employee training based specifically on process improvement and leadership skills. The benefits from instituting
such programs were extraordinary. For example, Johnson documented that one "program on quality process
improvement, for example, yielded nearly $2 million in bright ideas and cost [only] $7,000 to conduct."
Because BHI focused on customer and employee satisfaction, the company provided a new level of care. The medical facility's competitive edge was maintained, exceeding customer and employee satisfaction levels. Johnson
wrote that BHI programs resulted in immediate savings of up to $1.9 million, with expected future savings of roughly $2.3 million. Although BHI didn't formally engage in lean Six Sigma initiatives, the hospital's focus on customer and employee satisfaction yielded significant cost savings.
Thomas Jefferson University Hospital
Thomas Jefferson University Hospital in Philadelphia is a 969-bed facility. It focused its improvement efforts on
the operating room. Dennis Delisle and colleagues explained in their February 2015 study for Six Sigma Forum Magazine ("Let it flow") that "System inefficiencies can lead to suboptimization of [operating room] use, thereby
decreasing revenue generation."
One common issue in operating rooms, especially at Thomas Jefferson, is delays in addressing incoming patients. This results from the large number of surgeries performed per day. If there is a delay with one surgery, then the
following ones can be delayed as well. This hampers customer and employee satisfaction.
Leadership at Thomas Jefferson took initiative to increase satisfaction levels by mending its operating room
situation. As Delisle and colleagues wrote, in 2010 the department underwent a strategic plan overview to identify opportunities to streamline and improve operational processes, bringing in lean practitioners to facilitate process
improvement efforts.
The process improvement team decided to focus on the process from the time of patient admission to arrival at the holding area. To achieve this, the team implemented the Six Sigma DMAIC model. Once the problem
was defined, the team moved to the measure phase and collected data on patient admission. "The patient flow
process in the pre-intervention analysis was 54.073 minutes," according to the article.
The lean practitioners conducted customer interviews. The main interview theme pertained to scheduling, registration delays, patient transportation and coordination gaps. Delisle and colleagues note in their
article: "Within the current state of the process, 43.4 percent of the process time involved the patient waiting for
something to happen. An additional 8 percent of the time was committed to traveling from location to location."
This demonstrates that valuable time was spent waiting or traveling versus receiving care and direct attention.
Knowing the root cause, the team moved to the improve phase with the goal of eliminating waste. The team scheduled a four-day rapid improvement event that prioritized inefficient patient flow logistics and the lack of workflow coordination within the short procedure unit. Solutions were determined via team brainstorming.
In the improve phase, the team came up with several solutions. The first thing was to move patient registration from the admission department to bedside at the short procedure unit. Second, the individual responsible for patient flow (the short procedure unit charge nurse) was relocated and his/her responsibilities were standardized. Finally, the team streamlined the patient interview process.
Before implementation, the team performed a trial to ensure effectiveness. The lean practitioners played the role
of a patient. After the solutions were solidified, the team progressed to the control phase. Implementation of the
plan resulted in savings. According to Delisle's article, the mean processing time decreased from 54.073 minutes
to 46.095 minutes. The percentage of value-added activities increased from 39.9 percent to 49.1 percent and, finally, the on-time first case start percentage increased from 71.9 percent to 75.9 percent.
Although these changes didn't affect the financial bottom line, there was a substantial increase in customer and employee satisfaction – another example where implementation of lean Six Sigma had positive effects on a facility.
Pocono Medical Center
Pocono Medical Center in East Stroudsburg, Pennsylvania, is a 196-bed community hospital that employs more
than 1,400 people. Its main issue corresponded to on-time delivery of patients' blood test results. Pocono Medical
Center used Six Sigma DMAIC methodology to make improvements. The first step was hiring an outside team.
In the define phase, the team identified the issue, which was the inability to forecast the amount of blood
draws per day. According to "Pocono Medical Center: Faster lab results using Six Sigma and lean," written by Walter T.
Hayes and colleagues for the American Society for Quality, "Lab technicians could not forecast how many blood
draws would need to be done the next morning until the middle of the night." This created a delay in getting blood
tests done and sharing the results with patients. Furthermore, the phlebotomist waited until he or she had several
samples in hand before bringing them to the lab. Such issues resulted in bottlenecks at the lab.
In the measure phase, the team and additional consultants traced the test tubes throughout the process, creating
a process map. Using the map, the team identified the nonvalue-added activities (i.e., wait time). Variability of
processing times resulted from front-end processing, patient sample collecting, test tube delivering and test running.
The team them moved to the analyze phase. Reviewing the data, team members found that the major issue
was that the phlebotomist held on to too many samples at a time. This caused serious lab delays. The team proposed
hiring a "runner" to carry test tubes from designated locations to the lab. Immediately after implementation, the
percentage of blood sample analysis that reached the doctor at 7 a.m. skyrocketed from 68 percent to 98 percent. Such a change created efficiency, thus increasing patient satisfaction.
The outside team then realized that to sustain this improvement, other changes were required. According to
Hayes, "A well-respected staff member must be present to manage the process during the crucial hours of 3 a.m. to 7
a.m., enough phlebotomists must be on staff and runners must consistently make their regularly scheduled rounds."
In addition, Pocono Medical Center began using hospitalists to facilitate timely patient discharge.
As part of the control phase, the team collected data about on-time delivery of blood samples, the number of late tests, and the variance of test results versus expected results. The team established a process for corrective action and troubleshooting should the test data for the metrics fall out of scope. Using continuous improvement tools, the lab and hospital saw a 20 percent reduction in late tests, reduced variance in actual test results by 35 percent and improved on-time delivery of samples by 50 percent. Together, this helped improve operations and reduce costs for the
hospital by 32 percent.
Genesis Health System
Genesis Health System (GHS) was formed in 1994 after two large hospitals merged in the Quad Cities (Davenport
and Bettendorf in Iowa, Moline and Rock Island across the Mississippi River in Illinois). It employs 600 physicians
and 5,000 staff members.
GHS went about quality efforts by implementing the Malcolm Baldrige National Quality Award as a framework
for improvements. In Janet Jacobsen's study "Taking process improvement beyond the quality department," also
for the American Society for Quality, she noted that a commitment to following the Malcolm Baldrige National Quality
Award criteria didn't gain traction until 2004.
One takeaway from GHS leaders' training was that the quality effort should go beyond the quality
department. Quality efforts require support from an entire organization. The leaders needed to educate the
entire staff on the use of process improvement tools and make the tools readily available well beyond the quality
department. GHS began offering opportunities to all employees to learn about process improvement tools. In addition,
GHS maintained leadership development institutes dedicated specifically to quality improvement.
In terms of actual implementation, GHS used improvement and kaizen blitz teams. The hospital also used
internal and external specialists for process improvements. The tool most used was the plan-do-check-act (PDCA)
cycle. The next step for GHS is to prepare an application for the national Baldrige award.
Mercy Medical Center
Mercy Medical Center in Cedar Rapids, Iowa, was founded in 1900 and has 445 beds. According to another publication
by Jacobsen for The American Society for Quality, "Emergency department prescribes lean for process improvement," Mercy Medical Center was facing regular and consistent issues in customer satisfaction. At the time, the
hospital scored in the 30th percentile for customer satisfaction, which is very low.
The leadership began learning about lean tools and gained confidence in applying lean to improve the center. However, most employees were skeptical as to whether lean would help. As Jacobsen wrote, "Initially, some
employees thought that lean tools were applicable only in manufacturing environments, not healthcare." To gain
support from the employees, Mercy Medical Center participated in training that was sponsored by the University
of Iowa and the Iowa Business Council. This was the facility's attempt to gain support for taking on a lean initiative.
The first step was selecting team members. The initial skepticism about lean made it difficult to get employees
to join, making team selection a challenging task. To overcome this issue, Mercy Medical Center leaders used stakeholder analysis tools and commitment-build tools from the GE change acceleration process (CAP) model. Mercy Medical Center leaders had to ensure that the team consisted of cross-functional members representing the lab, radiology and other departments that interacted with the emergency department, the focus for improvement.
The team mapped the current state. Team members marked activities that were designed as nonvalue-added in
red. The team came up with ideas and fixes through brainstorming. Team members intended to decrease the
length of patient stay in the emergency department. After success resulted from the project, the team decided to take
on projects based on X-ray turnaround times, fast track service, insurance denials and CT scans.
The process changes were met with resistance. At first, employees did not want to work on days that the changes
would occur. As more lean events took place, the employees felt more comfortable with the improvements.
The changes brought the patient satisfaction score from the 30th to the 95th percentile. The emergency department
was able to take on an additional 6 percent of incoming patients.
Due to its lean activities, Mercy Medical Center achieved numerous benefits. The staff time spent per patient decreased from 2.82 hours to 2.388 hours, total cycle time decreased from 104 minutes to 69 minutes and time
to provide decreased from 61 minutes to 31.25 minutes. Furthermore, the number of people involved in processes
decreased from 12 to 10 people, the number of handoffs decreased from 19 to 14 and the number of nonvalue-added
steps decreased from 38 to 9.
One main lesson that employees at Mercy Medical Center learned is that lean is not merely an initiative; it's also
a journey. The methodology must be supported by top-level management for it to succeed and trickle down to the lower levels. As Jacobsen wrote, "Two vital components of the department's culture change involved restructuring
the [emergency department's] leadership team and implementing a rounding system where department supervisors
check in not only with patients but also with staff."
One can see that there are numerous advantages to implementing lean initiatives, with an emphasis on improving
customer satisfaction. Lean and Six Sigma, which have made a massive difference in manufacturing operations
worldwide, are poised to yield similar results throughout the healthcare industry.
Happier workers mean happier patients
In today's competitive marketplace, organizations are constantly being asked to provide more value without adding cost. Manufacturing organizations have turned to lean and Six Sigma to reduce cost and minimize process variation. Toyota and Motorola are two of the manufacturing companies often mentioned with regards to pioneering effective implementation of these tools.
The healthcare industry is following in the footsteps of such manufacturing companies by using lean and Six
Sigma to improve processes and save costs, all while focusing on customer and employee satisfaction. Officials at
Alton Memorial, Baptist Hospital Inc., Thomas Jefferson University Hospital, Pocono Medical Center, Genesis System and Mercy Medical Center are learning that happy and efficient employees create satisfied patients.
In the future, more organizations will shift their focus to process improvements. Processes cannot be improved
without all employees being actively engaged. Through lean Six Sigma, the healthcare organizations discussed
didn't resort to automation to decrease costs and variation. Instead, they gained efficiency through more effective use of employees, leadership and management, targeting and drastically improving customer satisfaction.