The Troubled Healthcare Industry and Six Sigma

The healthcare industry is currently facing challenges on many fronts. Escalating costs for rapidly advancing technology and pressure to deliver quality care to more people (baby boomers, uninsured, under insured) at lower costs have created the perfect storm. Not a single day passes without dire predictions about baby boomers and their healthcare.

Further making things complex for healthcare delivery are challenges such as regulatory issues, staff shortages, lack of reliable performance data, slow adoption of tools in healthcare for quality and error reduction (compared to industries such as aviation and manufacturing)...the list goes on.

In Juran’s Quality Handbook (McGraw-Hill, 1998), J.M. Juran wrote, "In the United States, close to a third of the work consisted of redoing what had been done before. The cost of poor quality is 20-40 percent of the total effort." This is the situation for healthcare today.

To find a discipline solution that will lead to sustainable improvements in quality while driving down costs, the healthcare industry has turned to Six Sigma and other methodologies.

An Introduction to Six Sigma

The Six Sigma process is a powerful quality improvement program. It consists of both qualitative and quantitative tools and uses a fact-based, data-driven approach to drive process improvement. Six Sigma focuses on a customer-centric approach to reduce variation.

Six Sigma’s goal is to eliminate defects and variation from a process. Process improvement achieves the Six Sigma level when there are 3.4 or less defects per million opportunities (DPMO). The higher the number the DPMO is, the lower the sigma value. Six Sigma can be viewed as a structured methodology or means to achieve customer satisfaction, improved processes, reduced variation, better outcomes and superior financial results.

Using the DMAIC Model

Six Sigma processes rely heavily on use of data both qualitatively and quantitatively as well as statistical analysis using a DMAIC model (Define, Measure, Analyze, Improve, Control). In each of these five phases a variety of tools are used.

In the Define phase, the problem statement, goal statement, key stakeholders analysis, voice of the customers, high-level project plan and project scope are some of the elements addressed, usually in the project charter. In the Define phase the scope, goals and outcomes that will be impacted by the project are agreed by the team and its sponsors.

In the Measure phase, baseline data is collected to understand of the current process state, develop operational definitions, validate the measurement systems and identify critical inputs and outputs for the process. The goal is to identify waste, inefficiencies, variation, imbalance and cost drivers in a process.

In the Analyze phase, tools such as the cause and effect (C and E) diagram, failure modes and affects analysis (FMEA) and regression analysis are used to verify and narrow key input and output variables that impact the project. The analysis should help the team identify potential solutions to solve the underlying problems that adversely affect the outcomes of a project.

What has been called the "fun phase," the Improve phase of DMAIC framework is the point where selected and prioritized solutions are tested to verify the hypothesis and validate the relationship between suspected key inputs and outputs of the project. This is the point where a future state vision is developed if current changes are sustained.

The Control phase is critical. It ensures gains are sustained. A monitoring and reaction plan is developed for the "in-control" revised process. A transition occurs to the new operational owner and closes out the project with the project sponsor.

Hope for the Healthcare Industry

Implemented in the manufacturing industry since the mid 1980s, companies that have implemented the Six Sigma DMAIC model have reported significant savings. For example, Motorola reported about $1 billion in manufacturing savings during the first five years of implementing Six Sigma. The company also credited Six Sigma with improved processes, reduced waste, improved quality and increased customer satisfaction.

Six Sigma could help the healthcare industry overcome many of its challenges. Unfortunately, however, healthcare has been slow to adopt this methodology.

In the next edition, we will review some of the unique challenges in healthcare and some key success factors to ensure that Six Sigma does not become another flavor of the month program, but ingrained as a way of doing business.