December 3, 2003
An increasing number of healthcare finance professionals are exploring "Six Sigma" as a strategy for improving competitive efficiency. The methodology ties quality to customer satisfaction and peak performance. Originally developed to promote quality in manufacturing, Six Sigma has proven readily adaptable to health care, as HFMA's Managing the Margin newsletter explained in a May 2003 article.
What Is Six Sigma?
Statisticians use sigma to represent standard deviation, or the amount of variation in a process. Six sigma refers to the number of results expected to fall outside of six standard deviations of normally distributed data. At six sigma, accuracy would be 99.9997 percent.
The term "Six Sigma" refers to a management philosophy designed to achieve this level of high performance. Six Sigma acknowledges that costs are tied to poor quality and that by defining poor quality, an organization can best recover these costs. Therefore, managers are trained to become process experts and base their decisions on hard data and the needs of customers such as patients or physicians.
Six Sigma uses sophisticated data analysis tools to identify and achieve accuracy, eliminate waste, improve quality, and improve service. Areas in which this project-management style is most effective are those in which improvement of cycle time, capacity optimization, and/or process bottlenecks would result in improved satisfaction and cost recovery.
How Does It Work?
Under Six Sigma, a project team finds key points in the targeted process and collects data from these points. The team then breaks down the data using statistical tools to portray how the targeted process works.
When analyzing data, the project team defines quality according to the requirements of the customer receiving the result of the process studied. Poor quality is defined through the collected data. The team identifies a point in the data where quality becomes poor -- the customer "repel" point at which customer aggravation soars and costs rise exponentially.
Using tools such as root cause analysis, process mapping, and failure modes effects analysis, the team then determines what causes the process to produce results that exceed this performance limit and strives for a resolution.
Example 1: Emergency Department Length of Stay
Consider length of stay in an emergency department. By identifying "the voice of the customer," the team sees when the organization is not meeting customer expectations. Note in the chart below that the goal is not to achieve some average, but rather that the average should achieve six sigma, or 99.9997 percent quality, at 115 minutes.
Example 2: The Operating Room
Six Sigma can prove valuable when prioritizing areas for improvement. During a recent Six Sigma project, a team examined delays in an operating room. At the start of the project, the team believed delays due to surgeons were the most critical to fix. However, after collecting data and formatting the data to show which delays were both numerous and lengthy, the team quickly adjusted its priorities for improvement.
As the data shows, although delays due to surgeons were the most frequent, they did not cause lengthy delays. Instead, not having consent forms available to staff became the target of the team. Although this delay was less common, it was considerably longer when it did occur.
Successful Six Sigma Requires Strong Commitment
Organizations that adopt Six Sigma allocate some of their best and brightest full-time managers to run the quality-improvement projects. Without strong organizational commitment, projects easily go awry. When done appropriately, however, the return on investment of allocating full-time staff to run a Six Sigma project can be as high as 15:1.
SOURCE:
"Managing for High Efficiency with Six Sigma," by Kevin Cook, assistant administrator, River Region Health System, Vicksburg, Miss., and an adjunct faculty member, Chip Caldwell & Associates, Charlotte, N.C. Published in Managing the Margin, May 2003.
Additional Resources
- Black Ink Archive: Six Sigma articles
- Six Sigma Can Meet Your Revenue-Cycle Needs, hfm, November 2003. (Online access available to HFMA members only. Nonmembers, see information on how to retrieve HFMA articles.)
If you have questions or comments about HFMA Wants You to Know, contact editor Laura Noble.
HFMA Wants You to Know ISSN: 1540-0697. Volume II, Issue 25. Copyright 2003, Healthcare Financial Management Association. All rights reserved.