Six Sigma in Health Care: We’re Leaving Money On the Table

An interview with Ron Wince, CEO of Guidon Performance Solutions

Published: Thursday, October 1, 2009 - 05:30

All the talk of health care reform has resulted in many hospitals turning to lean Six Sigma to help improve efficiency and aid in cost cutting. However, health care efficiency expert Ron Wince contends that many of these facilities are not applying the tools properly and therefore will not reap the ultimate benefits. Wince is the CEO of Guidon Performance Solutions and works with hospitals across the country helping them to improve efficiency and quality while reducing costs.

In this interview with Wince we explore the growth of the lean, Six Sigma, and similar programs in the health care industry, and how well those programs have been implemented.
  

Quality Digest: We have seen a lot of interest in hospitals and other health care facilities in implementing lean, Six Sigma, and the like. Do you see this trend continuing at the same rate, increasing, decreasing?

Ron Wince: I expect the trend to continue because results in this sector have been dramatic. We are now seeing more interest in areas outside of clinical operations. With the increasing focus on reducing costs, improving outcomes and adoption of information technology—all areas where lean Six Sigma can provide a significant benefit—most providers, including physician groups, will continue to look toward these methods.

QD: What has driven the health care industry to look at lean, Six Sigma, and other, traditionally manufacturing-oriented methodologies?

RW: These systems provide significant impact on quality and cost. The pressure on hospitals and clinics to find solutions that can mitigate the need for capital and also streamline processes are the highest priorities. We have also seen focus on business process management, workflow, and other tools to help change variables that can be controlled in an unpredictable environment.

QD: You have said that although the industry has adopted these methodologies, many organizations are not applying them properly. What do you mean?

RW: Most organizations are adopting the tools in a tactical fashion without an appreciation of the cultural and strategic implications. Very few completely understand how to fully capture the transformational benefits from lean Six Sigma.

Often the leadership tries to delegate lean Six Sigma efforts (and all change management or major initiative projects) and those charged with execution feel like they are pushing a rope. Leadership must be engaged in making continuous improvement in health care a way of life.

For example, one well-known hospital system is using the tools in an a la carte fashion and only when a tactical problem arises. This is a useful approach to capture immediate benefits but leaves a lot of money on the table.

Another problem is that most organizations are trying to get “done” with lean Six Sigma. They see it as a closed-end project when many can capture benefits from revisiting value streams and processes again and again to drive further improvement and culture adoption.

We have seen fragmented approaches in multiple cases where areas were avoided simply due to the pain of dealing with physician adoption or other change management issues.

QD: Has this improper use hurt the bottom line more than if they had done nothing? In other words, is badly implemented Six Sigma still better than no Six Sigma at all?

RW: I can’t say they are doing it badly. They are just leaving a lot of opportunity left untouched. I have not seen a complete failure or any damage caused—the point is not what have they gotten but what they could get.

QD: What kind of results have you seen from hospitals that have properly implemented these techniques?

RW: In one case, where a client applied lean Six Sigma to processes as a part of building a replacement hospital, they actually exceeded their own business case by three times. The physician, staff, and patient satisfaction scores have gone through the roof, and their patient volume is already 14 months ahead of plan.

In another case, a large hospital system was recently highlighted for their application of lean Six Sigma and their ability to reduce cost of care by an average of 25 percent.

A top-five hospital system used lean Six Sigma to redesign their transplant unit and as a result improved patient satisfaction by 50 percent within three months, and they reduced their cost of care by 15 percent.

QD: Do any of the proposed health care reform scenarios take into account, support, or even mention quality methodologies?

RW: I have not seen specific methods named but in this case it is the “what” versus the “how.” The legislation is outlining what needs to be accomplished and leaving it up to the various groups to determine how they will achieve it.

However, I think a gap in the current reform discussion is how to enable those organizations that do not have the capability to help them meet those requirements and standards. This will be critical, especially for smaller and mid-sized providers who tend to have a significant impact in the aggregate but little attention in the mainstream discussions.

QD: A recent article in USA Today (http://www.usatoday.com/news/health/2009-09-09-saving-money-hospitals_N.htm) stated that “Each of the nation’s 5,700 hospitals must cut $2.6 million a year on average in costs in the next 10 years to meet the demands of President Obama’s proposed health care reform.” The article went on to say that hospital CEO’s see the proposed savings in health care as completely doable. Would you agree?

RW: I agree but would say that they are being conservative on the potential results which can be achieved. They are speaking to what can be done in hospitals but there are ample opportunities for much more across the entire system of care.

To achieve this result will take more than reengineering. There will need to be a fundamental rethinking of the system itself to align the various players. This will be the limiting factor on how much can be done in reducing costs in health care.

QD: At least in the manufacturing arena, Six Sigma is expensive to implement and only the largest companies do it, or do it well. It requires a lot of money and time to train employees, Black Belts, and so forth. How are financially strapped hospitals, and overworked hospital staff, going to find the resources to get going on this?

RW: This is an issue for any organization in any industry. Reducing waste does not need to cost money and can be done in bite-sized chunks for smaller organizations. I always recommend that any organization adopt more lean philosophies first as it is comprised of common sense tools, is very agile, and scalable, and leads to quick improvements. The benefits here can then be redirected toward expansion of the program to incorporate more of the Six Sigma tools. Most important is for organizations not to over think it. Sometimes simple is harder to adopt than complex and the health care culture is one area where this is the case.

I also suggest that the size of the company is not a predictor of success with lean Six Sigma. More often than not, it is leadership first and resources second. Companies find ways every day to develop innovative products and services, train their staff, and so forth, with minimal cost. Process improvement can be done as well if you engage those who do the work and know it best. Spending large amounts of money on process improvement goes against the entire idea of process improvement and if a company is doing this they need to reexamine their strategy for improvement. We’ve helped organizations as small as $5 million in revenue and 14 employees adopt lean for process improvement and realize 20-percent improvement in productivity in as little as two days. The linchpin to success is always the leadership commitment and engagement of the people—not the size of the company.

About The Author

Dirk Dusharme @ Quality Digest

Dirk Dusharme is Quality Digest’s editor in chief.