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Dave Wojczynski

Six Sigma

Six Sigma in Health Care

What the doctor didn’t order but should have

Published: Monday, April 19, 2004 - 22:00

The following article, the first of a two-part series, outlines the growing need for Six Sigma initiatives in the outpatient health care market. In part one, we’ll compare a series of health care-specific businesses with parallel enterprises from other industries in order to categorize the means by which all business elements can fit accurately within a Six Sigma framework. Neither article is meant to portray health care providers negatively, but rather to highlight the sector’s skill gaps at various levels of business sophistication.

Multiple skill sets

Most quality pundits agree that successful service-based organizations--whether they’re industrial, manufacturing or financial--are committed to increasing their employees’ knowledge base and core-business skill sets. This increased sophistication is a fundamental and cross-functional element within their respective cultures, and thus spans various business areas such as sales, marketing, communication, finance, accounting, customer service, operations management, process efficiency, credit, risk and collections.

In health care, particularly outpatient ambulatory surgery, physical rehabilitation, imaging and physician practices, providers are constantly challenged to develop similar skill sets within their small staff pools. Although the players in these respective industries are strong in their clinical skill sets and are masters of informed and professional patient treatment, they often struggle with fundamental business skills. Technology and consulting providers to this sector must face this challenge on a daily basis.

Just as physicians study and practice for years in order to master their treatment skills, business professionals also work to increase their knowledge of a particular industry and develop proven leadership and management skills. A lack of such business skills hampers many outpatient facilities from improving profitability--an increasingly critical task for the entire medical industry. As is the case with other industries, exceptions certainly exist in which outpatient providers employ talented individuals who’ve developed these business skills and help drive success. However, the majority of successful cases involve some outside help to achieve this--usually in the form of business consulting firms that complement internal staff by providing advisors with business backgrounds.

Alternatively, health care providers can implement Six Sigma initiatives.

Six Sigma skills are readily transferable across all industries. Although the methodology can’t teach someone the skills of a certified public accountant or the intricate procedures of a clinical or surgical operation, its structure does provide a basic framework for solving business problems and analyzing business processes, no matter what market you’re in or what service you provide.

Many industries, similar issues

Specific problems articulated by health care providers are basically the same issues every business struggles with in some shape or form. Simple economics prevent every industry or business from recruiting the best-educated and most experienced business professionals to address these situations. However, this doesn’t change the fact that either a certain skill or set of experiences is required in order to solve them effectively. So, how are smaller entities supposed to stay competitive? One solution is Six Sigma.

Even the most sophisticated corporations use Six Sigma to provide a foundation and develop a broad base of skills in analytical data decision-making, problem solving, project management, leading change and driving results. That’s precisely what Six Sigma is all about. If taken seriously and approached correctly, these objectives can be accomplished at a fraction of the cost of hiring internal experts to solve business problems. Six Sigma in and of itself shouldn’t be thought of as the solution to these issues but rather as a context and framework from which to manage them in-house.

Six Sigma can help an organization tackle common business challenges. Because the variables, resources, processes and technology differ for each business environment, it’s naive to assume that a standard answer will apply across the board. Although the Six Sigma philosophy and problem-solving structure is unilateral and transferable, the solutions generated from applying the methodology come from analyzing different variables in order to examine a path, culminating in customized solutions that address an organization’s unique problems.

Increasing market share

How can an organization increase market share and patient referral volume? Both market share and referral volume require an understanding of the marketing fundamentals of reach and frequency, as they relate to a target group of patients. That said, why would one expect a clinical office manager or physician to be trained in addressing these issues when a seasoned marketing expert could handle it much more effectively? Small outpatient health care organizations can’t afford such an expert but can afford to develop strategic business thinking within their existing employees.

Many Six Sigma case studies analyze market share trends, develop targeting strategies, and analyze sales plans, territories and quota systems as they follow the methodology’s structured problem-solving approach. For example, by segmenting patient volume by referral volume by physician, and cross analyzing this data with financial information pertaining to both the quantity and quality of patients, one can determine where the most profitable referrals originate and thus begin to develop ideas focused on increasing volume by specifically targeting some lower-volume referral sources.

Patient loyalty

What’s the best way to ensure that patients will return and remain loyal? This question simply refers to repeat sales problems and customer satisfaction issues, each of which can be readily addressed by a sophisticated and experienced marketing research person or a market research and survey company. Once again, however, the Six Sigma approach can work to define the core customer base, analyze and separate patient "must have" vs. "nice to have" critical-to-quality elements, conduct voice-of-the-customer surveys and pinpoint the root causes of what drives behavior and ultimately leads to satisfied customers. In short, executing the methodology will lead an organization to draw the right conclusion and then help the organization develop a targeted blueprint from which to act.

For example, most surveys in this sector are distributed at the end of a patient visit, while individuals are checking out with the cashier to make their co-payment. Patients want nothing more than to get out of the office, not complete a survey. Therefore, the response rate is usually poor, and the time spent answering questions is often short. So why not conduct the survey throughout the treatment process while patients have the time and are often waiting to be seen? If conducted in this manner, they might also take the time to explain what’s most important to them prior, during and after visits. If you can take advantage of their focused attention, this valuable information will be at the forefront of patients’ minds. Once the data are gathered, the process of segmenting and quantifying the responses--and ultimately turning them into an operational action plan--requires effective process reengineering, training and communication skills that Six Sigma methodology offers.

Minimizing customer waiting time

How does an organization streamline its processes in order to minimize patient waiting time and provide the best patient experience possible? How does an organization minimize fixedcost waste and address capacity and use issues of resources and equipment?

These questions are often a result of a queuing problem coupled with a process-and-flow optimization issue. Certainly an experienced operator who has built internal infrastructures to address these issues could effectively handle this problem. Again, however, a Six Sigma consultant or internal Black Belt could conduct a time-and-activity study, determine bottlenecks, isolate flow drivers, conduct detailed process mapping and collect process data to arrive at the same conclusions. Also, determining which resources and equipment are utilized in terms of producing revenue, or up-time, is readily solved with proper data and process analysis.

Examining a surgical scheduling process for a medium-sized acute care facility reveals several eye-opening findings. First, most individuals involved in the patient waiting time process had little understanding of the other areas of the process or how all the pieces fit together. From a knowledgebase perspective, simple process mapping and cross-functional team dynamics had amazing benefits. Second, the disjointed process of scheduling blocked rooms and miscommunication among the physician, scheduling department, patient and operating rooms, revealed wasted capacity, unhappy patients, underutilized operating room setup costs, and more potential for clinical errors to occur.

A Six Sigma case study measured and analyzed this disjointed flow to illustrate the critical bottlenecks. Segmenting and isolating the key factors to specific physicians, completing advanced diagnostic testing prior to surgery and reducing same-day no-appointment arrivals due to ineffective scheduling resulted in monumental capacity gains and fixed-cost reductions. These produced an annual financial savings of more $1.5 million.

Improving scheduling and registration

What’s the optimal way to schedule and register patients? This issue can be analyzed within the context of process analysis, data segmentation across several factors, cycle-time studies and some basic hypothesis testing. Particularly for facilities with centralized scheduling functions, Six Sigma is ideal for determining call-volume trends, resource use and scheduling, data entry accuracy, and performance-related issues.

For example, by measuring call volume, abandonment rates and hold times, an organization is able to improve resource scheduling to match volumes as they fluctuate throughout the course of the workday. This also helps to improve availability and response times, improve satisfaction by accommodating additional scheduling volume from referring physicians, and isolate data-entry causes to focus management on either training or performance-related problems. Confirming evidence is determined by conducting simple hypothesis tests to gain statistical conclusions. Without a project management vehicle or data-analysis framework to address these issues involving multiple variables, it’s difficult to organize and structure business improvement. It’s always difficult to measure results without first understanding where to begin.

Decreasing unbilled claims

How can an organization focus on unbilled claims and claim denials? These issues strike at the very core of outpatient health care facilities because they directly translate into real cash-flow issues. Some organizations spend extraordinary amounts of money on billing consultants or outsourcing to a third-party billing entity. Thus, when problems arise, the organization is limited in its ability to correct the issues and is dependent upon the third parties to solve the problems. Because the root cause of the issues is usually a direct result of an operational or process issue occurring within the organization’s data-entry process, technology alone can rarely solve these problems. (This topic will be covered in greater detail in part two of this series.)

Keeping up with regulations

How does an organization manage to keep up with regulatory requirements? An HIPAA consultant could readily manage these constantly changing requirements, but an alternative approach might first involve appointing an overall owner and privacy/security officer within your organization. This individual can be charged with developing a compliance plan to ensure that the business is taking the appropriate steps and safety precautions.

For example, by following the define, measure, analyze, improve and control project-management process, this individual can quickly determine what the "voice of the customer" regulation required by the Centers of Medicare and Medicaid Services oversight agency involves. In this case, the focus will be primarily on legal requirements vs. "nice to have" suggestions. Once translated into business requirements, a measurement plan can easily be built to track milestones and progress. Next, a detailed implementation and improvement plan can be developed to execute against these requirements, and finally, a control plan to periodically conduct compliance and adherence audits can be administered.

Although a consultant can advise an organization on an improvement plan, the effort will fall short during the execution phase because no one will have been assigned ownership to the project or contributed along the way. Conversely, a Six Sigma Black Belt trained in cross-functional project management can serve in this role for an organization that readily understands the importance of driving ownership and accountability.

Improving information technology

An organization continues to struggle with IT hardware, network and software issues. How can it change this situation? Unfortunately, there’s an overall lack of IT knowledge in the outpatient health care sector. Simultaneously, health care professionals are attempting to improve operating efficiency by introducing desperately needed hardware and software improvements. The basic problem is that this drive to improve seldom accounts for a significant technical knowledge gap, and thus avoids addressing process issues altogether. Introducing technology to a bad process will only increase the rate at which defects and inefficiencies occur. A conscious effort must be made to focus on fundamental process improvement. Too often, the technology itself is relied upon as a cure-all for problems, and too much reliance is placed on the IT vendor to drive these systems successfully. Rather, ownership must be taken internally. (Part two of this series will focus primarily on this issue.)

Six Sigma’s versatility

The above questions illustrate some high-level examples of how an organization can translate common business practices into ideal Six Sigma projects. Each represents a complex business issue, and a Six Sigma project alone won’t produce a "magic bullet theory" and solution. However, implementing Six Sigma methodology creates an extremely effective framework for analyzing and solving business problems. The tools will lead you down the right path, and by complementing this approach with industry expertise and experience, an organization will be well on its way to building a world-class competitive organization. Employees will gain new skills and develop into better leaders, and the organization will become strategically focused on the areas that most affect business.

Most importantly, Six Sigma provides a vehicle for businesses to organize complex issues and take internal ownership for solving and addressing central challenges. Although the training and recruiting process requires some investment up front, remember that this capital would otherwise be spent on external help to tackle these same issues in the future. The difference is that internal Six Sigma training is a long-term and strategic investment in which the payoff is a permanent and ongoing process improvement for your organization.

Part two of this series will explore Six Sigma’s best potential in the outpatient health care market, examine why the structure works and reference several case studies of organizations in which the methodology has led to significant improvement.

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About The Author

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Dave Wojczynski

Dave Wojczynski is Group Vice President of Six Sigma and client services for Source Medical, a leading provider of outpatient information solutions with products installed in more than 3,500 facilities nationwide. Prior to joining Source Medical, Wojczynski developed and implemented Six Sigma programs for GE and NBC. Wojczynski earned an MBA from Northwestern University and is a certified Master Black Belt in Six Sigma methodology.