In October 2001, an article appearing in Managed Healthcare Executive announced the arrival of Six Sigma methodologies in the healthcare sector.[1] While manufacturing industries had verified significant gains from Six Sigma, service industries like healthcare were only beginning to understand what Six Sigma was all about. Moreover, the healthcare industry had grown weary from a series of performance improvement methods that were tantamount to the flavor of the month. And when a mysterious term like "Six Sigma" appeared on the scene, it might not be uncommon to hear in the halls of a typical healthcare organization, "What is sigma, and why is it sick?"
As they say, "that was then; this is now." Both Six Sigma and its close cousin, Lean, are not only commonly practiced in both provider and payor organizations — they have entered the mainstream of the healthcare industry. Indeed, two separate studies, one conducted by the American College of Healthcare Executives and the other by the American Society for Quality both point to the fact that 40–50 percent of healthcare organizations have employed Lean or Six Sigma as a strategy to cut costs, increase capacity and improve quality.
Ten years on, are we at the halfway point in understanding the true potential from these methods, and what of the organizations that took a deep dive by implementing robust programs? Exactly how much of the promise has been realized?
"There is no doubt that these methods offer us greater potential to cut costs and increase quality," notes Ken Davis, MD, who employed Six Sigma while at North Mississippi Health Services and later helped earn that organization the prestigious National Malcolm Baldrige Award. "But this is clearly a case of 'buyer beware.' Like any change management initiative, implementation of these methods takes a certain amount of perseverance." Dr. Davis is now at Methodist Health System in San Antonio and involved in deploying Six Sigma there as well.
Dr. Davis' acknowledgement of Six Sigma as both a performance improvement method and change management initiative points to the complexity and commitment necessary for effective implementation. Because Six Sigma demands much of an organization, management must remain visibly supportive as staff come to learn about how it will raise the bar on performance expectations. And at the slightest sign that management is ambivalent or inconsistent in their support, employees may similarly withdraw.
Battle of Champions in Performance Improvement: Six Sigma vs. Lean
While both Six Sigma and Lean focus on waste reduction as a key aim (recognizing waste comes in many forms), this is the end of any common ground between the methods. Still, most organizations find that in any project, a mix of approaches is necessary for true, breakthrough improvement:
Organizations may also choke on the number of Six Sigma projects undertaken at one time, leaving them overextended and exhausted at the close of their first round of projects. "There is a lot to be said for picking projects that will yield quick wins, and to ensure adequate celebration and recognition for those that deliver improvements in the early stages of deployment," advises Dr. Mathews.
Checklist: Prescription for a Robust Lean/Six Sigma Program
But how do you monetize the impact of waste reduction if there is no direct link to savings? This challenge has frustrated any business analyst attempting to quantify the impact of a performance improvement initiative, and Lean/Six Sigma programs are no different. Mature programs often set an ROI target for the project portfolio as a whole; this allows management to sponsor certain initiatives that have no clear ROI attached to them but stand on other merits, such as improving the member experience.
At Magellan Health Services, project portfolio ROI is tracked on a yearly basis, with each new project requiring an estimate of impact prior to approval. The national director maintains the data for the enterprise and reports findings to executive management per project and in the aggregate. "As with any approach or set of tools, one must be cautious about setting unrealistic expectations of what can be achieved and during what time period," cautions Joann Albright, PhD, senior vice president of quality outcomes and research at Magellan.
What is 5S?
Despite these challenges, reports of savings from Lean and Six Sigma initiatives have been steadily adding to the credibility and potential of the methods:
♦ 2003: The Murphy Leadership Institute, a Washington DC think-tank, published research that demonstrated a direct link between waste reductions and operating margin, suggesting that for every 4 percent reduction in waste an organization enjoyed a 1 percent boost in operating income.
♦ 2006: isixsigma.com, an online resource for the Six Sigma community, reported on research findings that revealed a 6:1 return from properly funded Six Sigma programs.
♦ 2012: Creative Healthcare, with grant funding from the American College of Healthcare Executives, studied 150 projects across 10 healthcare organizations and validated a 7:1 return on investment from Lean and Six Sigma projects.
Today, such fears are in the past. Indeed, examples of successful Six Sigma projects abound in today’s environment, and the reader need only visit Google for scores of published case studies. The healthcare section of the ASQ website alone boasts over 15 project reviews submitted by various project leads in the health and managed care space.
John Desmarias, CEO of Commonwealth Health Corporation in Bowling Green Ky., once warned, "When you implement a Six Sigma program you are going to learn some things about your organization that you did not necessarily want to know." For organizations still on the sidelines, it's time to get in the game.
Ian R. Lazarus, FACHE, is founder and principal at Creative Healthcare (www.creative-healthcare.com), a supplier of training, consulting and certification in Lean and Six Sigma.
Footnote:
[1]"The Promise of Six Sigma," by Ian R. Lazarus and Keith Butler, MD; Managed Healthcare Executive; October 2001; Pp. 22 – 28.\
Make a Hospital Faster in 5 Days
As they say, "that was then; this is now." Both Six Sigma and its close cousin, Lean, are not only commonly practiced in both provider and payor organizations — they have entered the mainstream of the healthcare industry. Indeed, two separate studies, one conducted by the American College of Healthcare Executives and the other by the American Society for Quality both point to the fact that 40–50 percent of healthcare organizations have employed Lean or Six Sigma as a strategy to cut costs, increase capacity and improve quality.
Ten years on, are we at the halfway point in understanding the true potential from these methods, and what of the organizations that took a deep dive by implementing robust programs? Exactly how much of the promise has been realized?
"There is no doubt that these methods offer us greater potential to cut costs and increase quality," notes Ken Davis, MD, who employed Six Sigma while at North Mississippi Health Services and later helped earn that organization the prestigious National Malcolm Baldrige Award. "But this is clearly a case of 'buyer beware.' Like any change management initiative, implementation of these methods takes a certain amount of perseverance." Dr. Davis is now at Methodist Health System in San Antonio and involved in deploying Six Sigma there as well.
Dr. Davis' acknowledgement of Six Sigma as both a performance improvement method and change management initiative points to the complexity and commitment necessary for effective implementation. Because Six Sigma demands much of an organization, management must remain visibly supportive as staff come to learn about how it will raise the bar on performance expectations. And at the slightest sign that management is ambivalent or inconsistent in their support, employees may similarly withdraw.
Leaning to lean
Over the past ten years, challenges with the implementation of Six Sigma caused many healthcare organizations to take pause. For many, this delay paid off as they discovered quicker gains by implementing waste-reduction strategies inspired by Lean manufacturing. "We found it more productive to lean out our processes and then to call the question about whether a Six Sigma initiative was necessary,” notes Rick Rawson, corporate vice president for the Central California region of Adventist Health System. "We found many performance improvement opportunities did not demand the rigor of a Six Sigma project."Battle of Champions in Performance Improvement: Six Sigma vs. Lean
While both Six Sigma and Lean focus on waste reduction as a key aim (recognizing waste comes in many forms), this is the end of any common ground between the methods. Still, most organizations find that in any project, a mix of approaches is necessary for true, breakthrough improvement:
| Attributes of Six Sigma |
Attributes of Lean |
| Strong, data-driven orientation |
Data not always necessary |
| Strong project management framework, "DMAIC" = Define, Measure, Analyze, Improve & Control | More intuitive, loose framework based on "Current State" vs. "Future State" |
| Focus on variation in process |
Focus on value stream analysis |
| Aim is to eliminate defects |
Aim is to eliminate waste |
| Goal is improved quality at lower cost |
Goal is increased speed and efficiency |
Failure to launch
As with any change management initiative, the industry is replete with examples of failed attempts to gain traction in these methods. What do they have in common? "Six Sigma demands reliable data but also the ability to step back from that data and to avoid shooting first, asking questions later," cautions Mark Mathews, MD, managing partner at Creative Healthcare, a firm that offers training and certification in Lean and Six Sigma. "A little data can be intoxicating to managers, and it's important to stay focused on finding only those variables in a process that are truly driving performance. It many cases, it will be variables that managers never expected." Dr. Mathews points to many cases in which an organization was too quick to blame staff for suboptimal performance, when it was actually the process itself that was poorly designed. "It's critical that practitioners of Lean and Six Sigma begin with the premise that it's not about the people, it's about the process."Organizations may also choke on the number of Six Sigma projects undertaken at one time, leaving them overextended and exhausted at the close of their first round of projects. "There is a lot to be said for picking projects that will yield quick wins, and to ensure adequate celebration and recognition for those that deliver improvements in the early stages of deployment," advises Dr. Mathews.
Checklist: Prescription for a Robust Lean/Six Sigma Program
| ∆ Staff trained in both Lean and Six Sigma methods ∆ Establish ROI expectations from portfolio of projects ∆ Sponsor training for senior management ∆ Visibility across enterprise for program and its achievements ∆ Celebration and recognition for completed projects and project leaders ∆ Implement formal handoff from project leader to process owner ∆ Continue running control charts on all completed projects ∆ Implement specification limits that identify if performance has regressed ∆ Create governance for program to approve new projects ∆ Communicate expectations for staff to complete at least one project annually (more if the staff are dedicated to performance improvement) |
Rework, reduction, returns
One of the quickest ways to demonstrate the return on investment from Lean or Six Sigma is to focus on the elimination of waste from operations. It has been said that if Six Sigma is about those "critical few" variables that drive process performance, then Lean is about the "trivial many." Targeted initiatives such as the popular "5S" method have been credited with making significant improvements in the efficiency of the workplace (see inset) by attacking the low hanging fruit — or the trivial many — in waste reduction.But how do you monetize the impact of waste reduction if there is no direct link to savings? This challenge has frustrated any business analyst attempting to quantify the impact of a performance improvement initiative, and Lean/Six Sigma programs are no different. Mature programs often set an ROI target for the project portfolio as a whole; this allows management to sponsor certain initiatives that have no clear ROI attached to them but stand on other merits, such as improving the member experience.
At Magellan Health Services, project portfolio ROI is tracked on a yearly basis, with each new project requiring an estimate of impact prior to approval. The national director maintains the data for the enterprise and reports findings to executive management per project and in the aggregate. "As with any approach or set of tools, one must be cautious about setting unrealistic expectations of what can be achieved and during what time period," cautions Joann Albright, PhD, senior vice president of quality outcomes and research at Magellan.
What is 5S?
| 5S is a method for organizing a workplace to maximize efficiency. 5 steps, undertaken in order, include: Sort: Set aside all work-related tools for categorization and possible relocation Set in Order: Decide which tools are needed daily, weekly, monthly or less often. Organize the proximity of tools based on frequency of use Shine: Ensure workplace is sterile with adequate visual controls to support rapid identification of where resources are and how they are to be used Standardize: Leverage this work across the entire workspace. Use one workstation as a prototype, replicate, expand. Use this as an opportunity to standardize all supplies and tools. Sustain: Delegate ongoing responsibility for maintaining order. Post pictures to support rapid identification if any aspect of the organization effort has been compromised. * Many healthcare organizations have added a 6th "S" for member "Safety." |
Despite these challenges, reports of savings from Lean and Six Sigma initiatives have been steadily adding to the credibility and potential of the methods:
♦ 2003: The Murphy Leadership Institute, a Washington DC think-tank, published research that demonstrated a direct link between waste reductions and operating margin, suggesting that for every 4 percent reduction in waste an organization enjoyed a 1 percent boost in operating income.
♦ 2006: isixsigma.com, an online resource for the Six Sigma community, reported on research findings that revealed a 6:1 return from properly funded Six Sigma programs.
♦ 2012: Creative Healthcare, with grant funding from the American College of Healthcare Executives, studied 150 projects across 10 healthcare organizations and validated a 7:1 return on investment from Lean and Six Sigma projects.
No shame
There was a time many healthcare executives were downright fearful to introduce the concept of Six Sigma in their organizations, unsure of how staff would respond to the mystery behind the method, or possible accusations it will not succeed. "Call it 'Fred' if you need to," was the advice of one veteran consultant, while making the point that the name of the program is less important than the tools and adherence to the method.Today, such fears are in the past. Indeed, examples of successful Six Sigma projects abound in today’s environment, and the reader need only visit Google for scores of published case studies. The healthcare section of the ASQ website alone boasts over 15 project reviews submitted by various project leads in the health and managed care space.
First and ten
While Lean and Six Sigma have driven significant improvements for organizations adopting them, it's fair to say the industry as a whole has merely scored a series of "first downs." In many organizations, a few scattered "black belts" bemoan the fact the organization's commitment remains tentative. In others, you can literally witness the DNA of the corporation transforming, as staff grow restless with the status quo because they realize they are capable of breakthrough improvement. To be sure, the next ten years will be interesting to watch as the arrival of healthcare reform demands even higher levels of performance, quality and affordability.John Desmarias, CEO of Commonwealth Health Corporation in Bowling Green Ky., once warned, "When you implement a Six Sigma program you are going to learn some things about your organization that you did not necessarily want to know." For organizations still on the sidelines, it's time to get in the game.
Ian R. Lazarus, FACHE, is founder and principal at Creative Healthcare (www.creative-healthcare.com), a supplier of training, consulting and certification in Lean and Six Sigma.
Footnote:
[1]"The Promise of Six Sigma," by Ian R. Lazarus and Keith Butler, MD; Managed Healthcare Executive; October 2001; Pp. 22 – 28.\
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