a 3-tier approach for using dfss to pull and govern six sigma projects in a transactional...

1WCBF Design for Six Sigma Conference June 10, 2005

6666A 3-Tier Approach for Using DFSS to

Pull and Govern Six Sigma Projects in a Transactional Environment

Leslie Behnke

V.P., Six Sigma Business Excellence

CIGNA Corporation

www.CIGNA.com


Agenda

About CIGNA

Integrated Enterprise Excellence and DFSS

CIGNA’s 3-Tier Approach

Enterprise Level DMA

Governance Teams

DMAIC & DMADV Project Teams

Summary and Q&A


CIGNA is a National Insurance Provider

• CIGNA provides employee benefits, including health care products and services, and

group disability, life and accident insurance

• $18B annual revenues, with 28,000 employees, and over 200 years of service

• Service and highly transactional business; no manufacturing aspects


CIGNA’s Six Sigma History is Relatively New

• Selected Six Sigma as Enterprise-wide Quality Framework in

2003

– Previous Quality initiatives were localized and centered around

accreditation criteria and internal audit functions

– Executive recruited from Motorola to lead the new initiative

– Leading Six Sigma supplier selected to provide Six Sigma training and

technical Support

– Comprehensive Quality Framework defined to include statistical methods,

Lean tools, strategic quality management and behavioral performance

– Senior Leadership support coupled with grass-roots pull deployment

strategy. Six Sigma momentum now gaining rapidly


• Increasing Pressures:

– From Clients and their Employees, to reduce medical costs without impacting quality

– From Healthcare Providers, to reduce administrative burdens

– From the Competition, to provide the best products and service, at the lowest costs

– From the Government, to comply with increasingly complex regulations

• Unacceptable Levels of Variability

– History of mergers/acquisitions and decentralization had left CIGNA with a proliferation of processes and systems

• Increasing Need for Break-through Products and Services

– Voice of Customer is demanding altogether new levels of product innovation and service delivery

Why DFSS?


2004 Objective was to Achieve Significant Results, Fast

Use Six Sigma Method to help:– Get 2004 savings from process/productivity improvement– Change culture to have more customer focus and discipline around metrics– Develop future business leaders who understand the end-to-end business processes and have a customer orientation

Six Sigma Strengths:– Metrics and fact based– Customer focus– Cross functional process focus– Financial justification

Potential Target Areas:– Medical Costs– Operational Expenses– Membership– Service– Systems


CIGNA’s Holistic Approach to Implementing Six Sigma

• Enterprise Level Define-Measure-Analyze (DMA) Work

– End-to-End Process View

– Enterprise-Level Metrics

– Provides basis for identifying highest areas of improvement opportunity

– Provides common context to coordinate and integrate projects

• Governance Teams

– Key metrics for selected high potential areas, linked to above

– Common Quality Assurance framework

– Shared, integrated procedures and training

• Project Teams

– DMAIC, DMADV, Kaizen, other

– Specific, strategic projects

High Level Define-Measure- Analyze to select target area

Governance Level: metrics, QA, P&P’s, Change Mgmt

Specific projects: DMAIC, DMADV, Kaizen events

DMA

Governance

DM

AIC

DM

AD

VK

aize

n


It all Begins with Targeting the Right Metrics

30,000-Foot-Level

Satellite-Level

High-level control charts are created

• Satellite-level metrics might be reported monthly

• 30,000-foot-level metrics might be reported daily

High-level control charts are created

• Satellite-level metrics might be reported monthly

• 30,000-foot-level metrics might be reported daily

• Satellite-level® metrics* are high level business metrics

• 30,000-foot-level® metrics* are high level operational or Six Sigma/Lean project metrics

* Terminology from CIGNA’s Six Sigma provider, Smarter Solutions, Inc..


We Start at the Top

Receiving and Processing

Claims

Reconciling and reporting claims

payments

Establishing structure & eligibility

for claims to be processed

The End-to-End Claims Process

The Enterprise DMA begins by defining the end-to-end process and its key output metrics

“30,000 foot” Key Output Metrics:

• Claim payment accuracy

• Claim payment timeliness

• Costs to process claims

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The General Target Area Gets Selected


Claims


payments



Sub-processes:

• Provider contract design

Provider data loading

• Benefits structure design

• Client benefits structure load

• Member eligibility loading

Six Sigma tools are employed as part of Enterprise DMA to then select high potential target areas

Enterprise DMA:

• Key E2E Process Output Metrics• Claim payment accuracy• Claim payment timeliness• Costs to process claims

• Voice of Customer• Quality Function Deployment (QFD)• Enterprise-level Cause & Effect Analysis

Enterprise DMA:

• Key E2E Process Output Metrics• Claim payment accuracy• Claim payment timeliness• Costs to process claims

• Voice of Customer• Quality Function Deployment (QFD)• Enterprise-level Cause & Effect Analysis


Governance Teams Get Established


Claims


payments



Sub - processes:

• Provider contract design


• Benefits structure design

• Client benefits structure load

• Member eligibility loading

Governance Teams are then established to:• Develop lower-level, supporting metrics• Ensure continuous quality improvement structure• Develop policies and a structure for procedures• Facilitate sharing of best practices

Key Output Metrics:

Direct metrics• Data loading accuracy• Data loading timeliness• Costs to load data

Shared Metrics• Provider selection accuracy• Reimbursement accuracy


Finally, Teams are Launched at Specific Targets




Governance Teams then create project teams• By using info from the Enterprise DMA work• By assessing lower level supporting metrics• By doing mid-level analyses

A – (DMAIC) Loading hospital data

B – (DMAIC) Loading practitioner data

C – (DMADV) Provider Contracting Process


Metrics and business needs dictate projects



Provider data loading projects

A – (DMAIC) Loading hospital data

B – (DMAIC) Loading practitioner data

C – (DMADV) Provider Contracting Process

}Process improvement projects will provide acceptable shorter-term results

} Business competition dictates major improvement needed for longer term:

• Compliance to standards, yielding major costs savings• Accuracy levels to be improved dramatically• Cycle time to be reduced significantly

• Significant technology investment may be required.

2010Subgroup 0

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X=74.20

3.0SL=80.23

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2010Subgroup 0

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75

70

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X=74.20

3.0SL=80.23

-3.0SL=68.17

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3.0SL=7.406

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2010Subgroup 0

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3.0SL=7.406

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Key Output Metrics:• Claim accuracy• Claim timeliness• Cost to process


DMADV is Guiding the Development of a New Process

Analyze& Improve

•Audit Contracts•Highlight Risks•Improve Operations•Optimize Contracts

•Audit Contracts•Highlight Risks•Improve Operations•Optimize Contracts

Renew &Capitalize

•Identify Renewals•Initiate Renewals•Author & Close

•Identify Renewals•Initiate Renewals•Author & Close

Administer & Comply

•Manage Payments•Manage Obligations•Ensure Compliance

•Manage Payments•Manage Obligations•Ensure Compliance

•Collaborative Negotiation•Sign & File•Contracts Drive Supply Chain or Fulfillment Systems

•Collaborative Negotiation•Sign & File•Contracts Drive Supply Chain or Fulfillment Systems

Negotiate&Execute

Create&Control

•Easy Authoring•Best Practices and Templates •Business, Language & Terms Controls•Review & Approval

•Easy Authoring•Best Practices and Templates •Business, Language & Terms Controls•Review & Approval

New Healthcare Provider Contracting Process


Internal or external request

1.1 Plan 1.2 Build 1.3 Negotiate 1.4 Execute 1.5 Communicate 1.6 Admin

CMSI – Negotiate and Approve Provider Contract

1.1.1 Workload Planning

1.1.2 Situational

Assessment

1.1.3 Contract Plan

1.2.1 Financial Analysis

1.2.2 Assemble Reimburse

Teams

1.2.3 Assemble Contract

Lanaguage

1.2.4 Review &

Management Approval

1.3.1

Present

1.3.2

Update

1.3.3

Withdraw/ Terminate

1.4.1

Sign

1.4.2

Distribute and Store

1.5. 1 Communicate to apropriate

parties

1.5.2

Communicate to appropiate

users

1.6.1

Administer Templates

1.6.2 Administer

Internal Organization

1.6.3 Administer

External Organization

1.6.4

Administer Reports and

Queries

1.6.5

Manage Contracting

Process

Critical-to-Quality Items are being Built into new Process

1. Capability to support contract negotiation

preparation, planning, and contract maintenance.

2. Faster and more comprehensive access to data and documents that support contract

negotiations.

3. Faster, easier contract creation

and storage.

4. Increase quality of contract content through standards,

compliance, and review.

5. Support higher quality negotiations

with providers.

6. More robust communication and document

routing capability.

7. Ongoing process improvement framework capability.


Increase profitable

growth

Business PrioritiesStrategy High Potential Areas Projects

Best Practice Sharing Process (Govern)

ReduceMedical

CostsScorecard Development Team (Govern)

A Rod

L Javit

Black/Green Belt

Provider Contracting

Process

B Black

R KabooOptimize TPV Networks (DMAIC)

Provider Contracting Process (DMADV) N Kidd

J Q PublicEstablish Provider Data Loading Quality

Assurance Program (Govern)

Provider Site Consolidation (DMAIC) P Luto

Contract Billing Process (DMAIC) M Mouse

Strategic Business Initiative (SBI) Charts* Show Linkages

Laboratory contract loading (DMAIC) G Green

Executive Sponsor:

T SmithK.Jones

J Rogers

Hospital contract loading (DMAIC)

* Terminology from CIGNA’s Six Sigma provider, Smarter Solutions.


Six Sigma is a Catalyst for Delivering Synergy

Cross-functional Six Sigma teams enhance communications across divisions, focused on common goals and metrics.

• Shared metrics

• Common language/approach

• powerful statistical tools


In Summary

• DFSS is more than just DMADV projects– It can be used to help execute business strategy and flow down

metrics– It can be used to help select, categorize and prioritize projects

• CIGNA is using a 3-Tier approach to Six Sigma deployment, based in part on the overall concepts in DFSS– Enterprise-level DMA– Governance Teams for High Potential Areas– Strategic Projects (DMADV, DMAIC, other)

• This is highly applicable in our transactional service business.


What questions do you have?

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