Operational Efficiencies in Healthcare Organizations

The cost of providing high quality services within the healthcare organization has increased significantly over the past one or two decades, primarily due to decreased payments and the increased cost of doing business. This has led many organizations to seek outside help in order to find and develop additional methods of reducing costs and increasing revenues. In addition, customer satisfaction has remained, appropriately so, as a non-negotiable component of providing care. This article will describe in very general terms one extremely successful method utilized to achieve reduction of cost, increased revenues and heightened customer satisfaction while maintaining high levels of quality. Over the past decade, the need and desire for healthcare institutions to operate more efficiently has been driven largely by financial concerns. With decreasing reimbursements and the rising cost of labor and supplies, healthcare organizations have been driven to look within to find savings. Generally, the accepted rule has been that there are two primary areas to find savings, either through reductions in labor costs or by reducing the high cost of supplies. With the continuing shortage of qualified healthcare professionals, registered nurses, registered radiologic technologists, etc., the opportunities to reduce expenses by reducing labor costs are neither advisable nor generally accepted as the answer to cost reduction initiatives. Morale and productivity potentially fall victim to this tactic. Additionally, pursuing all revenue growth opportunities can serve to offset many of the factors associated with increased costs. As one CEO said, revenue growth cures many sins associated with cost. Revenue growth aside, cost reduction measures associated with inventories are seemingly the only opportunity left to find much-needed dollars. Liquidity of monies associated with inventory has improved over the last decade; however, so has the increased cost of those supplies. A perfect example of this may be found in the cost of stents for coronary and peripheral use and now drug-eluting stents. As better management of inventories has occurred, the associated savings have been negated by the increased cost of technologies, i.e., stents. This may make it seem like a catch-22 for a healthcare organization. However, with good management, improved physician cooperation in the purchasing process and enhanced relationships with the suppliers, many institutions have kept slightly ahead of the curve in cost containment. These measures have harvested what many refer to as the low-hanging fruit of cost containment. Seasoned managers and administrators, through experience, logic and intuition, have harvested the low-hanging fruit of cost efficiency and productivity. The demand for more efficient use of capital dollars as well as labor has driven many organizations to ask whether they can continue to provide these potentially life-saving procedures. This obviously has a negative impact on public perception of the healthcare organization. How do we continue to provide these services, remain competitive and at the same time not lose dollars on the service in question? The answer may lie in Six Sigma. First, what Six Sigma is not. It is not a secret society, a slogan or a cliché. Six Sigma is a highly disciplined process that helps an organization focus on developing and delivering near-perfect products and services. Why Sigma (s)? It s a statistical term that measures how far a given process deviates from perfection. The central idea behind Six Sigma is that if you can measure how many defects you have in a process, you can systematically figure out how to eliminate them and get as close to zero defects as possible. More about that later. For many years, healthcare consultants have been perceived as a four-letter word, yet a necessary evil in the operations of the modern healthcare organizations. Up until the middle of the 1990s, many healthcare-consulting firms relied on recruiting the best of the best with healthcare backgrounds. Their process for providing recommendations regarding improvement came from personal experiences and some limited benchmark data. However talented these consultants, to a great degree even today, they still rely on personal experience to make recommendations and drive change. Although there is much to be said for personal experience, it is still relatively subjective in nature. This is where Six Sigma began to make an impact on healthcare organizations. To achieve Six Sigma quality, a process must produce no more than 3.4 defects per million opportunities. An "opportunity" is defined as a chance for nonconformance, or not meeting the required specifications. This means we need to be nearly flawless in executing our key processes. Often, our inside-out view of healthcare is based on average or mean-based measures of our recent past. Healthcare organizations and patients don t feel averages; they feel the variance in each transaction or procedure. Six Sigma focuses first on reducing the variation in a process and then on improving the process capability. Organizations value consistent, predictable business processes that deliver world-class levels of quality. This is what Six Sigma strives to produce. Six Sigma was born to answer the question of how to improve efficiencies in manufacturing processes. General Electric, under the leadership of Jack Welch and others, implemented this process across all GE businesses, achieving impressive results in cost and quality improvement. Over a short period of time, the Six Sigma methodology has also migrated to the healthcare environment. In the current climate at GE, Six Sigma is no longer simply a process, but has become ingrained as part of the company culture. For a short primer on Six Sigma, refer to Illustration A. The sigma level is captured in the left column and the Defects Per Million Opportunities, or DPMO, in the right. Here is a simple illustration of this concept. Let s assume your company is manufacturing styrofoam cups. Each cup costs $1.00 to produce, which is inclusive of all costs, including equipment, supplies, and labor. At the 2 Sigma (2s) level, your firm would discard 308,537 of the one million cups manufactured due to defects. The higher the sigma level, the better the performance. If your company were moved to the 6s level, you would only discard 3.4 defective cups per million. It is easy to see what that would mean to your profit margin. Let s move this scenario into the healthcare environment. It is relatively easy to see what transforming an operational department (like a cardiac catheterization lab) operating at a low sigma level up to a higher sigma level would mean to the overall organization. Patient satisfaction, physician satisfaction, reduced overtime, reduced patient wait times, increased revenues and an enhanced quality of life for staff are some of the outcomes of moving to the higher sigma level. The goal is to move from the current state to a future, more productive state. Integrating the Six Sigma culture into entire organizations can multiply the positive effects and make a significant impact at all levels. The primary methodology of Six Sigma functions in what is referred to as the DMAIC (pronounced da-may-ick) Define/Measure/ Analyze/Improve & Control process. Illustration B identifies this process and the functions that occur in each phase. DMAIC, or Define, Measure, Analyze, Improve & Control are the five phases that must be rigorously and systematically scrutinized in order to provide answers to the big Y question. Determining what the customer CTQ (Critical To Quality) issues are is accomplished in the Define stage. That is referred to as the big Y. The big Y in our example is patient throughput. In Measure, the x s are identified. X s in our example are identified as exams per room per day, procedure times, time between patients, etc. In the Analyze, we identify the key relationships to throughput. In the Improve phase, action plans and standard operating procedures (SOPs) are identified. In the Control phase, the implemented changes based upon the Six Sigma methodology are continued and monitored. This is a significant phase of the DMAIC process, as the sustainability of the changes from the current state to the future improved state is important to the long-term success of the project and thus the financial health of the organization. Merely changing is not enough. Changes, no matter how significant, tend to drift back to the prior state after time. With Six Sigma and utilizing DMAIC, the change is moved from that current state to the improved future state along with mechanisms to sustain those changes. To better understand this process at a very simple level, the below example demonstrates how using the Six Sigma methodology in healthcare would move certain metrics to enhance the productivity and efficiency of a cardiac catheterization lab. Our example department has a single cath suite that operates routinely on a twelve- (12) hour day with a single shift of staff. Physicians often cite their top concern as getting patients into the lab. That makes throughput the big Y. One of the important areas of this process is gaining the insights of the customers, in this case, the physicians. This is called the Voice of the Customer, or VOC. In our scenario, the VOC indicates the physicians are very happy with the dedication and experience of the staff. Their primary concern is access. So the big Y, or throughput, is the product the team focuses on. Increased throughput equals enhanced access. After data gathering on the operations of the department, a significant volume of data is provided to the organization as well as the physicians who practice in the catheterization lab. In Illustration C, the data depicts the cycle time of procedures in the cath lab, defined as the time the patient enters the lab to the time they exit the lab, plus the time between patients. The cycle time is divided into essentially four segments: Pre-procedure time Procedure time Post-procedure time, which equals… Total room time and time between patients. By scrutinizing the times as well as the standard deviations, the team will begin determining where improvement might be achieved. Let s briefly review what generally occurs in each phase. In the first segment, pre-procedure time, the patient is brought into the cath suite, and moved from the cart to the cath table. ECG, blood pressure, and Sp02 monitors are all applied. Sterile drapes are applied and the appropriate equipment for the procedure is prepared. In this example, at some point the physician performing the procedure is notified. When he or she arrives, they will generally review the patient s chart for pertinent information, labs, etc. and speak to the patient. They will then scrub and gown for the procedure. When the physician begins the procedure, the pre-procedure clock stops and the procedure clock begins. Now we are in the procedure phase. The procedure is performed per protocol. When the procedure ends, the post procedure time begins. The post procedure phase is usually when the patient is discontinued from monitoring, drapes are removed, etc. Depending on the findings of the cath procedure, family members may, on occasion, be brought into the suite to discuss these findings with the physician. The patient is then removed from the suite and the post procedure clock stops. In the example above, these three times are 21.3, 30.6, and 14.6 minutes, respectively. The total case time or cycle is the sum of the segments: 66.5 minutes. The fourth segment is the time between patients or the time the patient leaves the room until the time the next patient enters the room. Utilizing the Six Sigma methodology, the team will break down each segment to look for opportunities for time savings. There are many opportunities or x s in each segment that may provide time savings. These savings per procedure multiplied by the number of procedures accomplished per day will undoubtedly provide enhanced throughput. It is important to remember that the data provided is an aggregate of all the procedures performed in the lab, so averages are used. Departments not performing interventions or pacemakers might see their procedure times lower on average then other facilities performing those procedures. It is possible, using the Six Sigma methodology, to identify areas of opportunity by comparing how an institution varies from a benchmark value. It may be that routine diagnostic procedures are, on average, meeting benchmark numbers whereas the interventions are far exceeding those benchmarks. This type of information might provide the team their first evidence on where change can be initiated. Utilizing the DMAIC format, the organized scrutiny of each equation segment can lead to several action plans that will help the team find additional time per procedure. In operations that have a backlog of scheduled non-emergent patients, the opportunity exists to reduce backlog and increase patient and physician satisfaction. Additionally, the potential reduction in overtime will enhance the quality of life issues for staff, providing more time away from a high stress environment. From an administrative perspective, implementing Six Sigma-derived plans can lead to increased revenues through added capacity and reduced costs through the reduction of overtime. In Illustration D, we see the impact the Six Sigma methodology has had on throughput in our example department. Pre-procedure time went from 21.3 minutes with a standard deviation of 17.4, to the improved state of 16.7 minutes with a standard deviation of 6.9. Simply put, throughput is increased, thus increasing capacity. If the example scenario were to yield capacity for two additional patients per day at the average reimbursement, one can see how revenue would be enhanced, as well as customer satisfaction. One other significant area relating to enhanced catheterization lab operational efficiency that the process of Six Sigma focuses on is the role the cardiologist and how his/her practice patterns impact operations. This is a very complex issue in the department. Due to that complexity and the potential sensitivity of this issue, we will discuss that portion in greater detail in a future article. However, there is significant evidence that the Six Sigma process lends itself very well to identifying methods that improve this process as well. In healthcare consulting, the more measurable and objective the data provided, the more receptive the customer will be in accepting the variance from where they want to be and in considering alternative strategies. Change is difficult for us all. Utilizing the Six Sigma methodology, however, and understanding where this process comes from and where it will take us, makes it easier to accept. This article has been reprinted with permission from Cath Lab Digest 2003:5;1-20