102six sigma demaio

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The Newsletter for Hospital Strategists

Volume 23, Number 12, December 2005

By Mark Hagland

When Jeffrey Burnich, MD, began leading his colleagues at Mount Car-mel Health System in Columbus, OH, down the path of quality improvementbased on Six Sigma principles, he was venturing into virtually unknownterritory.

That was June 2000. Since then, Burnich and his colleagues have docu-mented an addition of more than $62.5 million to the organizations bottomline.

The three-hospital, 9,000-employee integrated health system was the firsthospital-based organization in the country to comprehensively adopt SixSigma strategies and implement them organizationwide. It remains a model

for the dozens of hospital organizations that have since moved to implementthe leading-edge improvement initiative.

The quest for perfection

The Six Sigma qualityimprovement strategy wasborn in the mid-1980s atthe Schaumburg, ILbased Motorola Corpora-tion. The basic idea is tostrive for perfection bymeasuring how many de-

fects exist in a processand then eliminating them.The word sigma is a statistical term measuring how far a given processdeviates from perfection. To achieve Six Sigma quality, a process must pro-duce no more than 3.4 defects per million parts.

The concept took hold in the manufacturing industry and was used by suchleaders as the Ford Motor Corporation, General Electric, Caterpillar, andHoneywell. It spread throughout the service sector and was adopted across arange of industries.

With eye-popping bottom-line results and numerous success stories to its

Market memo

Six Sigma: Its real, itsdata-driven, and its here

Are HSAs a boon or a benefit? p. 4The growing adoption of high-deductibleinsurance policies augmented by healthsavings accounts means that providershave to change some of the ways in whichthey do business. A new survey showsdoctors are beginning or expanding theiracceptance of credit and debit cardsbecause patients have to pay up-front forbasic services.

EDs not prepared for major fluoutbreak, p. 7With the nations emergency departmentsalready overflowing, hospitals arenowhere near ready to cope with a fluoutbreak of other healthcare crisis,according to the physicians who staffthe ERs.

Making the most of marketintelligence, p. 10Market intelligence cant be boughtitrequires internal expertise andcooperation between external vendors.Here are four ways to use marketintelligence to improve your business.

How five-star service can transformyour organization, p. 11Customer service excellence is more thannice to haveits a must for physicianpractices and hospitals that want tocontrol their liability and improve their

bottom line.

3 Research notes

4 Statistical notes

6 Strategic notes

8 Worth reading

www.hcpro.com

Six Sigma is proving itself in

healthcare in a way that total

quality management and

other improvement

strategies never did.

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Health Care Strategic Management, December 2005 13

credit, Six Sigma is now proving itself in healthcare, in a

way that total quality management (TQM), continuousquality improvement (CQI), reengineering, and other im-provement strategies never did.

Those who have successfully implemented the processsay theres simply no better way to improve operationalefficiency, cost-savings, profitability, and care and servicequality.

Mount Carmels success story

At Mount Carmel, Chief Quality Officer Burnich and hiscolleagues have used Six Sigma to complete 555 projects todate, leading to their impressive hard cost savings and

revenue improvements.The $62.5 million figure does not include soft gains, suchas increased clinician and patient satisfaction, or enhanc-ed physician referrals.

Sixty percent of the total comes from top-line revenuegrowth and 40% from cost savings. Further, no one atMount Carmel has lost his or her job since Six Sigmacaught on there.

For Burnich and his colleagues, the point has been tobuild successes and cement buy-in. And successes weredesperately needed. In fact, the impetus for starting downthe Six Sigma path was pure financial urgency.

In the spring of 2000, we found we had made only

$500,000 on $750 million gross margin revenueour mar-gins were extremely low; we were getting close to thewatermark there, Burnich recalls.

It was a difficult time for the entire local market, withthe health systems competitors losing tens of millions ofdollars at the same time because of a worsening reim-bursement environment.

The health system had already eliminated 200 positions,but Burnich and his colleagues in senior managementdidnt expect to achieve sustained long-term gains throughcontinual layoffs.

Burnich discovered Motorolas Six Sigma seminarsthrough professional connections. At that time, most atten-

dees were in manufacturing or similar industries. But aftertalking with Six Sigma experts, Burnich and Mount Car-mels CEO, chief operating officer, and chief financial officerall agreed to try Six Sigma at their organization.

Along the way to implementing the strategy, Burnichand his colleagues have made tremendous improve-ments in cost-effectiveness, productivity, and processimprovement.

Among the highlights of their results are the following:

The 24% annual staff turnover rate was reduced to 10.8% Patient throughput through computed tomography (CT)

scanners improved from 1.8 to 2.7 patients per hour (witha net annual revenue improvement of $2.4 million perscanner in use)

A three-week patient wait time for CT scan access wasreduced to one or two days

What helped make Six Sigma such a success at MountCarmel?

A focus on accountability, and good blocking and tack-ling, says Burnich. I think having a structure that istransparent and across the enterprise means everyone hasto buy in.

In particular, he says, leadership buy-in was key.

The CEO is 10 ft. away from my office, and he walks,talks, and breathes it, and he went through green belttraining himself and leads by example, says Burnich.

In fact, Mount Caramels CEO took a hands-on approachhe performed research and executed a project to attainhis personal green belt (Six Sigma methodology involvesthe training of numerous individuals within an organiza-tion as they achieve different levels of mastery, from greenbelt to black belt to master black belt).

Interest seen growing

Perhaps a couple dozen hospitals and health systems

nationwide have taken a major plunge into Six Sigmawork, among them Bon Secours Health System in Mar-riottsville, MD; Thibodaux (LA) Regional Medical Center;Charleston (WV) Area Medical Center; Virtua Health inMarlton, NJ; Northshore-LIJ Health System in GreatNeck, NY; and St. Joseph Mercy Health System in Ann

Arbor, MI.What is it that is getting hospital and health system

executives to take the plunge? Those in the trenches, andindustry experts, say the following characteristics makeSix Sigma highly appealing:

The focus is on operational improvements that will add to

the bottom line, either in terms of revenue enhancementor cost savings

The methodology used is intensely data-driven, and a coreprinciple is complete objectivity

Six Sigma philosophy emphasizes examining comprehen-sively the processes of an organization and then attackingspecifically its deficits, but in a coordinated fashion.

Education and training are strongly emphasized, with

(continued from p. 1)

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one of the first steps being the training of a core of blackand green belt experts in Six Sigma methodologies.

The enormous gains already made in the manufacturing

sector and other hard industries are now being repli-cated in healthcare, to the encouragement of healthcareexecutives who have tried other improvement initiativesthat have not proven sustainable.

Although Six Sigma began with engineers at the Motor-ola Corporation as an organized method with which toeliminate manufacturing defects, it quickly spread in thelate 1980s and in the 1990s to other industries and ulti-mately out to healthcare, as its data-driven principles andstrong discipline proved themselves in other business

fields. Healthcare, long a laggard among industries interms of standardization of processes, data availability,and information systems, has not surprisingly come rela-tively late to Six Sigma.

David Silverstein, president and CEO of the Break-through Management Group (BMG) in Longmont, CO,sees the healthcare industrys interest in Six Sigmagrowing.

BMG is actively working with 50 hospitals and healthsystems and several large health insurers on Six Sigmadevelopment. And several of BMGs client organizationshave already shown sustained multimillion-dollar revenuenhancement and cost savings achievements, he notes.

What makes Six Sigma different in healthcare is thesame thing that makes it different in all industriesa

The quality improvement strategy known as Six Sigmais a highly structured and disciplined process of under-standing customer requirements and eliminating de-fects, waste, and quality problems, focusing on solutionsto problems with the most return on investment.

Under Six Sigma, quality is rigorously defined interms of the customers specifications. The ultimate goalis to reduce errors and contribute to the financial successof an organization by raising the bottom line.

Six Sigma is, at its heart, a statistical model. The term

Sigma comes from the Greek letter used to represent onestandard deviation on a bell-curve. The hump of the bellcurve represents the average number of defects (66,807per 1 million) that occur in the processes, products, orservices of most organizations. The six sigma point,located three standard deviations away from theaverage, represents 99.99% perfectiononly 3.4 defectsper million opportunities. The goal of the Six Sigmaapproach is to achieve near-perfection.

Six Sigma is highly structured, with teams, commit-tees, and a hierarchy of oversight and support struc-tures. Because the program is expensive, it demands thededication of significant resources.

Adopting the approach involves making a profoundchange in the leadership and culture of an organization.

The traditional Six Sigma model is evolving to adapt tothe unique needs of the healthcare industry. Smaller or-ganizations may need to find a more efficient, less costlystructure, for example. But the following examples oftypical roles within a Six Sigma structure have workedwell in other industries, and makes a good starting pointfor understanding roles that people in the organization

can play: Champions or Sponsors ensure that the project stays on

track. They usually have high-level managerial respon-sibility for the process and success of the project.

Master Black Belts are consultants (internal or extern-al) that serve as coaches and mentors to the BlackBelts. They are true experts in the Six Sigma analyt-ical tools. They also serve as an organizational changeagent by promoting the use of Six Sigma methods andsolutions.

Black Belts are trained to be change agents and are pro-ficient in the use of Six Sigma tools. Their full-timeresponsibility is the education, guidance, and manage-ment of the project teams.

Green Belts assists the Black Belt in larger projects andcan act as team leaders for smaller scale efforts.

White Belts are entry-level Six Sigma facilitators whohave received some training in tools and approaches.

Team Members form the core work group of the projectand typically are employees who participate in theprocess under study daily.

Senior Leaders must be part of the improvement bysharing in the responsibility of the project and the

overall implementation.

Editors note: This sidebar was adapted from the new

HCPro book,Applying Quality Methodologies to Im-prove Healthcare: Six Sigma, Lean Thinking, BalancedScoreboard, and More.For more information or to ordera copy, call our Customer Service Department at 800/

650-6787 or visit our online store at www.hcmarketplace.com.

14 Health Care Strategic Management, December 2005


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A crash course in Six Sigma


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relentless focus on financial results, says Silverstein. Inthe past, healthcare has adopted all the same quality ini-tiatives as every other industry and has had the samestruggle trying to sustain these initiatives, because unless

you can show continuous bottom-line results, its hard tosustain the energy.

Its easy to sustain interest across three months, butnot necessarily across years. And its the financial meas-ures that really bring it home. We work on things to im-prove patient safety and clinical results, but if you cantshow ongoing results, it wont last, he adds.

Indeed, one of the biggest challenges until recently, saysMount Carmels Burnich, is that few measurements areobjective in healthcare.

We dont set spec limits [specifications that encompassupper and lower acceptable limits] around our processes,per se, he says. Were starting to get there. So for in-

stance, theres a Joint Commission indicator called door-to-drug time for antibiotics for someone whos diagnosedwith community-acquired pneumonia. And until a fewyears ago, we didnt have those kinds of measurements.

And in most organizations, that information has to be cap-tured by hand. More institutions are installing informa-tion systems, at a significant expense; and over the nextfew years, youll see a lot more process measures and speclimits.

Surgical services optimized in Michigan

Although some organizations, such as Mount Carmel,

turned to Six Sigma to solve deep underlying process prob-lems, others with a strong record of process improvementover time have also been lured to the methodology becauseof its rigor and promise.

One such organization is St. Joseph Mercy Health Sys-tem, a three-hospital, not-for-profit Catholic health systembased in Ann Arbor, MI.

Six Sigma in many ways was for us the next logicalstep, says Kathleen Rhine, the organizations vice presi-dent of administrative services. We have a long history ofclinical quality improvement focused on clinical indica-tors; we have a quality institute here. Quality improve-ment was in our bones.

With more than 10 years experience in working improve-ment projects through the organizations quality institute,the health systems leaders have been continually lookingfor new tools, new ways to be better, Rhine says.

What made Six Sigma attractive to her and her col-leagues was the systematic way you take into account the

voice of the customer; and the focus on process and processmetricsespecially the opportunity to focus on businessprocesses and patient support processes, whether registra-

tion and billing or housekeeping, food services, laundry.Rhine says she and her colleagues understood that

plunging into Six Sigma would require a considerablecommitment of time, money, and effort. But the idea fit

perfectly with the organizations vision statement, whichincludes the key phrase a remarkable patient experi-ence, she notes.

In any case, adds Mary Lutz, the health systems SixSigma leader, Six Sigma is not really newits the pack-aging, the rigor, the structure, [and] that its data-driven.We had lots of improvement initiatives with decentresults, but not the long-term results.

Rhine, Lutz, and their colleagues first began investi-gating Six Sigma in January 2003 and began training blackbelt and green belt candidates the following summer; thehealth system currently has five full-time black belts and15 green belts, with those individuals initially chosen from

among staff in quality consulting and project leader posi-tions and later augmented by department managers fromthe surgery, pharmacy, and information systems areas.

Given the broad landscape across which projects couldbe initiated, Rhine, Lutz, and their colleagues decided tofocus on six broad themes, all of which relate to goals setout for improved patient care by the federal Institute ofMedicine:

Patient safety Patient centeredness Efficiency Effectiveness Timeliness Equity

Those are organizationwide goals weve adopted andare the lenses through which we look in order to prioritizeimprovements, Rhine says, adding that its important tobalance each goal against the others. You cant maximizeefficiency and hurt patient safety, she explains.

In each area, Lutz says, eliminating defects in process,improving throughput, and reducing resource utilizationhave been process and outcome goals.

One of the areas with the fullest set of results so far has

been in the surgery area, where clinician and administra-tive leaders agreed that there was great potential forimprovement.

Among the improvements are the following:

On-time surgical starts Improved operating room turnover The ability to add urgent cases into the surgery schedule

in a more timely and efficient manner

Health Care Strategic Management, December 2005 15

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The optimization of surgeons supply preference cards(which has led to significant savings through supply

usage reduction) Enhanced surgical volume overall as a result of greaterefficiency

Focus on people and resources

All those interviewed for this article agree on severalkey requirements for success for Six Sigma initiatives.

Among other things, they say

Six Sigma initiatives must absolutely have vocal, firm,and ongoing support both from the CEO of an organiza-tion and its other senior executives to succeed. Unlike

TQM/CQI initiatives, for example, Six Sigma requiressustained, top-level commitment to succeed. Six Sigma goals must be closely aligned with overall

organizational business and strategic goals. information systems must often be enhanced or further

developed over time; although data collection and anal-ysis often begins by hand, all those interviewed agreethat good information systems and data analysis pro-grams will help tremendously in the long run.

Six Sigma success also requires sustained resource in-vestment (though it offers the promise of more than re-couping the resources invested). This includes money foreducation and training, as well as the dedication of full-

time staff members to develop and guide projects. those chosen to help lead the initiative overall and to lead

individual projects must come from the cream of the cropof the organizations administrative and clinical leaders,everyone emphasizes. Six Sigma cannot succeed if it is

delegated to underpowered underlings.From a pragmatic standpoint, says Lutz, full-time

staff really is necessary. Weve heard of some people doing

it with part-time black belts, [but] there is no such thingas a part-time black belt. Its a long-term initiative; com-mitment is required.

Whats more, she says, selecting the right people andprojects is absolutely critical.

They are people who both have the ability to learn thetechnical skillsbecause theres a lot of rigor about tech-nical skills in Six Sigmabut who also have the interper-sonal and team management skills to help people envisionand accomplish changeand people with influence. Some-times its easy to find one or the other, but its important toscreen and get both, she says.

Interestingly, Burnich notes that he has had excellent

experiences in recruiting practicing physicians to learnSix Sigma techniques and get involved in projects becauseof the rigorously data-driven, objective character of SixSigma.

Physicians are scientists; they get it, he says. Thepeople who really need to lead this are the cliniciansthephysicians, nurses, pharmacists.

In the end, says Burnich, This is one of the hardestthings Ive ever done; it took a lot of energy to get thisgoing and keep it going. But we achieved critical massabout two years ago, [whereas] if I left or our CEO left, itwould still go on.

And go on it must, he says. The improvements Six

Sigma has brought to the organization are ones on whichthe organizations future depends.

Mark Hagland is a freelance healthcare journalist basedin Chicago.

16 Health Care Strategic Management, December 2005

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