Floyd Medical Center’s Lean Six Sigma Journey January 21, 2010.

Floyd Medical Center’s Lean Six Sigma Journey

January 21, 2010

Today’s Objective

• Gain an understanding of the concepts of Lean Six Sigma and how applying Lean Six Sigma principles will generate improvement to any process resulting in increased customer satisfaction and better financial performance

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1. Current state of affairs2. What is Lean Six Sigma?

3. How to jump start any improvement process using a 100 day work out

4. Project Examples

5. What about me?

Road Map

Current State

• Emphasis on cost containment

• Emphasis on measuring performance based on industry benchmarks

• Reactive vs. Proactive mentality

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1. Current state of affairs2. What is Lean Six Sigma?


4. Project Examples

5. What about me?

Road Map

Lean and Six Sigma

• Lean is a tool used in manufacturing or processing industry that helps eliminate waste. Waste is defined as anything that does not add any value to the process, also known as muda.

• Six Sigma is a quality control tool that reduces variability in production. Six sigma does not allow more than 3.4 defects per million opportunities. Opportunity is defined as what the customer wants, their expectations.

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• Lean and Six Sigma can be used together.

• Use Lean to eliminate waste and then apply six sigma to reduce variability and sustain the production to be near perfect.

• The goal of Six Sigma is to increase profits by eliminating variability, defects, and waste that undermine customer loyalty.

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Lean and Six Sigma

What is Waste?

Quality Waste Recovery

Goals:

• Continue the pursuit of world class quality.

• Cost recovery will result from the reduction in waste.

“All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing the time line by reducing the non-value adding wastes.” - Taiichi Ohno

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Definition of Quality Waste:

The intended or unintended activities consuming time and resources which:

• Do not contribute to the quality of care• Do not improve or cause a decrease in patient or

medical staff satisfaction• Detract from the organization’s performance in

accomplishing its mission• Are not a legal or regulatory requirement that must be

satisfied• Are not mission centric to the organization

What is Waste?

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Quality Waste Recovery

Every process has an element of inefficiency which results in waste. This includes the Cost of Quality (COQ) which are those activities conducted to ensure that quality goals are met and Cost of Poor Quality (COPQ) which are the activities that ensue when a process fails. On average each of these steps represent:– 67% of resources are consumed in the Delivery of Care– 13% of resources are consumed in the Cost of Quality– 20% of resources are consumed in the Cost of Poor Quality

“Costs do not exist to be calculated. Costs exist to be reduced.” - Taiichi Ohno

What is Waste?

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What is Waste?

7 Types of Waste

• In quality staffing (over capacity)

• Over correction (defects)

• Over processing

• Excess inventory

• Waiting and delays

• Motion/transport

• Movement of materials/information

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18 Change Concepts

• eliminate things that are not used

• standardize processes where possible

• consolidate functions and job classifications

• eliminate multiple entries

• reduce or eliminate overkill

• recycle or reuse

• use substitution

• use constraints and forcing functions

• use reminder systems

• reduce classifications

• apply a default mode

• minimize hand-offs

• adjust to peak and trough demands

• reduce setup or start up times

• move steps in the process close together

• find and remove bottlenecks

• match staffing to demand

• shape demand.

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Historical Quality Initiatives

Malcolm Baldrige Malcolm Baldrige AwardAward

ISO 9000ISO 9000Lean Lean

ManufacturingManufacturing

Total Quality Total Quality ManagementManagement

KaizenKaizenSix SigmaSix Sigma

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What is Six Sigma?

Six Sigma Origins:

Phillip Cosby – zero defects and quality free approach

Joseph Juran- trilogy quality improvement and quality control

W.Edwards Deming – 14 points

Taguchi- Japanese style –TQM, Quality Circles, Kaizen. Lean

ISO 9000 Standards

Six Sigma (MAIC) was introduced by:

Motorola in 1987 by Dr. Mikel Harry

Texas Instrument – 1988

IBM – 1990

Allied Signal and Kodak – 1994

GE (DMAIC), Jack Welch - 1995

Various Healthcare Entities - 1996

Floyd Medical Center - 2006

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• “The roots of Six Sigma as a measurement standard can be traced back to Carl Frederick Gauss (1777-1885) who introduced the concept of the normal curve. – Six Sigma as a measurement standard in product variation

can be traced back to the 1920's when Walter Shewhart showed that three sigma from the mean is the point where a process requires correction.” (The History of Six Sigma, 11/2002)

• Hundreds of companies around the world have adopted Six Sigma as a way of doing business

© Chip Caldwell & Assoc., LLC. 2007. All Rights Reserved

What is Six Sigma ?

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• A vision

• A belief system and philosophy

• A measurement system

• A methodology

• A strategy deployment approach

What is Six Sigma?


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The “Six Sigma” term refers to a Management Philosophy

• Executive Leadership Driven• Strategic Alignment with Operations and

People• Impact of the Voice of the Customer• Established Customer/Supplier Partnerships• Focused and Dedicated Resources • Employee Accountability• Competitive Business Results• Open Communications


What is Six Sigma?

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The “Six Sigma” term refers to a Metric

• Drive out waste, and improve quality, cost, time and the performance of any business

• Sigma, , is a letter in the Greek alphabet– Used as a symbol to denote the standard deviation of a

process (standard deviation is a measure of variation).

– A process with “six sigma” capability means having six standard deviations between the process mean and either specification limit.

– Process variation is reduced so that no more than 3.4 parts per million fall outside the specification limits. The higher the sigma value, the fewer the defects.


What is Six Sigma?

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Process Sigma CP PPM/DPMOQuality

Yield

Cost of

Quality

2 308,537 69.0% Not competitive

3 1.00 66,807 93.3%25% - 40% of Gross

Sales

Below Industry Avg

3.5 22,700 97.7%

4 1.33 6,210 99.4%15% - 25% of Gross

Sales

Industry Avg

4.5 1.5 1,350 99.87%

5 1.67 233 99.98%5% - 15% of Gross

Sales

Best in Industry

5.6 1.83 32 99.9979%

6 2 3.4 99.9997 World Class

Measure of Quality


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• 5000 incorrect surgeries per week

• 200,000 wrong prescriptions per year

• No electricity for 7 hours per month

• 20,000 lost articles in mail per hour

• Two short or long landings at Chicago O’Hare per day

• Unsafe drinking water for 15 minutes per day

• 1.7 incorrect surgeries per week

• 68 wrong prescriptions per year

• No electricity for 1 hour out of 34 years

• Seven lost articles in mail per hour

• One short or long landing in five years

• Unsafe drinking water for one minutes every seven months

93% Quality (2.8 ) 99.9996% Quality (6)


Measure of Quality

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Methods

Xs

ProcessProcess

Materials Machines

Environment Measurement People

Xs

Why Variation?

“Y”

Why Variation?

“Y”

Six Sigma Measurements


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• Six Sigma focuses first on reducing variation and then on improving process capability– A defect is failing to deliver what the customer wants– Process Capability is what your process can deliver– Variation is what the customer sees and feels– Stable Operations is ensuring consistent and predictable processes to

improve what the customer sees and feels • A Six Sigma program is to minimize variation within all critical

processes • Reducing Variation

– Greater predictability in the process– Less waste and rework– Lower costs– High performing products and services– Delighted customers



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“Variation is evil in any customer-touching process.”

— Jack Welch, Chairman & CEO

Customers don’t judge us on averages or defect reduction alone.They feel and experience the variation of each transaction and our performance across the end-to-end customer experience.



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Sigma is standard deviation..an expression of variation

•Reducing variation is the key

Patient Wait Times (mins)Starting Point After Project

28 29

16 6

7 10

25 11

6 4

9 10

16 13

18 6

33 21

12 17

Avg. 17 13

13 17

What we see

What patients feel

Mean = Big Change: 25% improvement

Variability = No Significant Change!

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The “Six Sigma” term refers to Methodology (DMAIC)

D - Define in numerical terms problems or opportunities

M - Measure the current levels of performance

A - Analyze and determine the root cause of the problem

I - Improve the situation

C - Control the new process to ensure continued better

performance


What is Six Sigma?

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The “Six Sigma” term refers to a Company-wide Deployment Strategy

• Formulate and Deploy a Business Strategy and Initiate Transformational Change Through a Six Sigma Initiative– Gain customer loyalty and bottom line profitability– Focus on critical business processes impacting customers by reducing

process defects which affects critical customer-based services– Develop a data-driven, performance-based culture by using statistical

analysis tools that capture and observe process variables (or at least stop reporting averages by themselves)

– Respond to the need for dramatically shorter cycle times, reduction in costs, first-pass yields, increases in productivity and higher performance levels

– Develop human capabilities


What is Six Sigma?

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• A Six Sigma Program first and foremost…– Intensively assigns and trains improvement experts to

support and accelerate progress in every project

– Tackles only those projects that have a significant impact on the financials of the organization

– Selects projects based upon their direct connection and contribution to the strategic plan of the organization


What is Six Sigma?

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• Six Sigma is proven, prescriptive and powerful

– Six Sigma seems to work best when it’s mandated from the senior-leadership team and implemented aggressively


What is Six Sigma?

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• Executive Management

• Sponsor/Champion

• Master Black Belt

• Black Belt

• Green Belt/Team Member

• Process Owner

Six Sigma Roles


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• Proactive Management

• Boundary less (no borders) Collaboration

• Strive for Perfection, Tolerate Failure

• Focus on the Customer – first and foremost

• Fact-Driven Management, not estimating

• Focus on Process

Themes of Six Sigma


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Financial Impact on a Six Sigma Organization– During 1996 and 1997 Allied Signal recorded savings of $3.2

billion through their Premier Performance initiative.

– In 1999, Honeywell realized more than $600 million in Six Sigma Plus-related savings.

– J&J reported that Six Sigma saved $200 million in 1999, $350 million in 2000 and $500 million in 2001

– Ford Motor Corporation reported $52 million in 2000, $200 million in 2002

– Honeywell states $500 million in 1998, $500 in 1999 and $700 million in 2000

– A financial services company saved the addition of 24 full time positions in one call center alone


Financial Benefits

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O.K. but what about Floyd…?

Decrease ECC Door to Provider TimeGoal: decrease < 30 minutes

Business Case: all ECC throughput net revenue loss (LWBS) $247,226, gross $1,052,513

ECC Last test to MD Disposition DecisionGoal: < 15 minutesBusiness Case: all ECC throughput net revenue loss (LWBS) $247,226, gross $1,052,513

ECC MD Disposition Decision to FloorGoal: < 30 minutesBusiness Case: all ECC throughput net revenue loss (LWBS) $247,226, gross $1,052,513

CAU UtilizationGoal: Convert CAU to roving unit when not operating as overflow, decrease utilization to < 20%Business Case: $757,205

Increase % Discharges before 2 PMGoal: 80% of discharges before 2PMBusiness Case: $318,106

Decrease % Incomplete ECC RegistrationsGoal: 0% of patients leave without a completed registration Business Case: $440,000

Past Floyd Projects

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Floyd Healthcare Management Postage Standardization ProjectGoal: Maximize use of discounted rates

Business Case:$30,000

Decreasing defects in collections of patient financial responsibilitiesGoal: Decrease defect rate by 1%Business Case: $77,000 annualized

Floyd Respiratory Therapy Cost Reduction Strategy Goal: Decrease allowable time for aerosol treatmentBusiness Case: $44,713

Past Department Level Floyd Projects

O.K. but what about Floyd…?

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1. Current state of affairs

2. What is Lean Six Sigma?


4. Project Examples

5. What about me?

Road Map

Getting Started

• Our initiative began in the summer of 2006 with a management retreat with Chip Caldwell and Associates, who were engaged to assist the initiative and remain for a year of training.

• Managers were given a copy of What is Lean Six Sigma by Mike George, Dave Rowlands, and Bill Kastle

• 100-day Work out (check ins at 30, 60, 90, and 100 days)

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Deliverable

• Staff were assigned to come up with two changes every 30 days.

• We had a check in at 30, 60 and 90 days for leaders to report on their changes.

• Changes and financial impacts were entered into an access data base provided by Chip Caldwell and Associates.

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First Work Out Results

270 validated changes & savings of $2,458,208

Highlights and awards:• “The Most Creative” award – Materials Management

for a new process designed to eliminate storage of unneeded item. Yielded a savings of $63, 522 in storage.

• “The Greatest Financial Impact” - Pharmacy for switch Zofran to a generic drug yielded a savings of $223, 802.

• “Greatest Laugh Factor” – Dietary phone extension change from 7063.

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Second Work Out

• Focus was on In Quality staffing

• Deliverable was four changes

• Rapid Cycle Test concept was introduced– A test of new assumptions in a short time period.

– By testing assumptions first, changes can be tried before full-scale implementation, and if successful, change is then accelerated because there is a greater trust and confidence.

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Highlights:

• GI staff cross train to fill needed position in another department yielded as savings of $22,000

Results – reduction in overtime, decreased utilization of agency staff, and decrease in number of positions through attrition. – 131 validated changes for a savings of $1,543,581

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Second Work Out

Results

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Workout Start Date

Deliverable ActivityValidated Planned Savings

9/1/2006 8 changes 270 $2,458,2081/15/2007 4 changes (2 Inquality) 131 $1,543,5814/25/2007 4 changes (2 SIPOC) 55 $635,8958/31/2007 2 waste 55 $1,030,581

12/19/2007 1 SIPOC, 1 Inquality staffing 40 $329,0054/23/2008 4 waste changes 107 $1,602,238

658 $7,599,508

Savings are removed from department’s operating budget

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Fall 2008 Results:

• Teams:– Ortho/Neuro Services Line

– ECC Throughput

– 2 PM Discharge

– Patient Satisfaction – Informed about delays, Responsiveness

– HRS Solutions Survey

– Discharge Not Final Billed/ Discharged Not Final Coded

– Antibiotic Stewardship

– SCIP

– Time Management

• Savings and Revenue enhancement = $668,222

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Spring 08-09 Results:

• Teams:– Ortho/Neuro Services Line

– ECC Throughput

– 2 PM Discharge

– Patient Satisfaction – Staff cared about me as a person, ECC return rate

– Discharge Not Final Billed/ Discharged Not Final Coded

– Self Pay Collections

– Antibiotic Stewardship

– HRS result action plan

– Red Rules – Isolation/transmission based precautions

– SCIP

• Savings and Revenue enhancement = $1,721,046

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Summer 2009 Results:

• Teams:– Cerner

– RAC Preparedness

– ECC Operational Performance

– 2 PM Discharge

– Pneumonia Antibiotic Selection

– Red Rules – Barrier Precautions, Time Out

– Patient Satisfaction – Noise level, Informed about delays

– Best Places to Work

• Savings and Revenue enhancement = $77,000

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New for Fall 2009

• Quality Waste Workout:– The “Biggest Loser” theme– Teams are aligned by VP– Competitive spirit– % “waste” lose/total operating budget

• Bottom Line Impact– Not purist– Quantifiable revenue counts equally with cost

savings45

Kurt Stuenkel

Difference

Previous Weight

Current Weight

$3,234,852

($320,650)

$3,120,963$3,201,963$3,140,702

$3,461,3529.264%

Fall 2009 Results:

• Teams:– Cerner

– RAC Preparedness

– ECC Operational Performance

– 2 PM Discharge

– Corporate Culture

– Patient Satisfaction

– Quality Waste

• Annualized Savings and Revenue enhancement to date = $3,500,000

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4. Project Examples

5. What about me?

Road Map

D M A I C

FLOYD_ECC_042607 © 2006 Chip Caldwell & Associates, LLC. All Rights Reserved.

Lab Test to Disposition

After all changes we had a decrease in variation and reduced the mean from 131 minutes to 5.1 minutes not only meeting our goal but exceeding it. The process went from being out of statistical control to being in statistical control throughout

the 90 day process. We feel that our project showed tremendous success!

D M A I C

211190169148127106856443221

600

500

400

300

200

100

0

-100

-200

Observation J anuary - April 2007

Length

in M

inute

s

_X=5.1

UCL=58.0

LCL=-47.9

Baseline 30 Day 60 Day 90 Day Summation

GOAL=15

111

Overall Data Comparison for Last Test - Disposition Decision

P-Value <0.014

WOW!

Mean = 131Mean = 29.3 Mean = 24.2 Mean = 23.7 Mean = 5.1

D M A I C

FLOYD_ECC_042607 © 2006 Chip Caldwell & Associates, LLC. All Rights Reserved.

Changes ImplementedD M A I C

30 Day Changes: Mean 29.3

• ECC Charge Nurse to standardized process of getting completed test results to MD.

• MDs asked not to batch.


• Activated a “Chart Complete” column on the tracking board that flashes green.

• Charge Nurse will utilize this column and have Clinician watch so they know when test are complete and chart is ready.

• Radiology results will be sent to one fax machine instead of two different ones.


• Mental Health Assessment will be computerized and sent to facility via Right Fax in order to free up ECC fax machine to allow for Radiology use. Update: Computerized forms are complete and the laptops were ordered (takes 3 weeks for delivery). They should be ready to utilize by late April.

• In order to improve communication between the Lab and the ECC when instruments are down the Lab staff are now completing an instrument downtime form for tracking purposes. They have also been reminded to notify the ECC immediately when instruments are down.

Summation: Mean 5.1

• Automatic Radiology “Complete Message” has been implemented. (When x-ray is complete the interface sends an automatic message to the tracking board that it is complete.)

D M A I C

51Floyd ECC 042607 © 2007 Chip Caldwell & Associates, LLC. All Rights Reserved.

EVS to Clean Time

16314512710991735537191

250

200

150

100

50

0

-50

-100

discharges

tim

e in

min

ute

s

_Mean = 46.2

UCL=96.3

LCL=-3.9

baseline post work out

Goal < 45

EVS Request to Clean Time

Mean was 74.4

P-value = 0.000

D M A I C

52Floyd ECC 042607 © 2007 Chip Caldwell & Associates, LLC. All Rights Reserved.

D M A I C

Changes Hardwired

Unit secretary or nurse will enter discharge into STAR at the time the patient leaves the room

Transporter will enter discharge into HRS from patient’s room

Shifting of EVS staff to meet demand

Set cleaning goal of 25 minutes

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Nebulizer Changes

Patient issue

46141536932327723118513993471

1100

1000

900

800

700

600

500

400

300

200

Indiv

idual V

alu

e

_X=506.7

UCL=743.7

LCL=269.8

Baseline Time Flow BAN Trial Supplies Gas Source

540

1

1

1

11

1

Treatment Time Progression

Goal <

Mean = 703 Mean = 658P = 0.001

Mean = 533P = 0.000

Mean = 503 Mean = 506P = 0.040 P = 0.142

Patient became ill

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Process Change• We tried to increase the flow and thereby decrease the

time to complete the treatment.• Then changed brand of nebulizer that is designed for more

efficiency and better particle deposition. Less time more drug!

• Stocked portable cart with needed Respiratory supplies to ensure anything that may be needed when arriving to the patients room was available.

• Make available compressed gas source so Therapist do not have to spend time manipulating patients oxygen set up.

Decreasing defects in collections of patient financial responsibilities

Chris Butler GBT

P-Chart

918273645546372819101

1.0

0.8

0.6

0.4

0.2

0.0

days

% o

f Defe

cts

_P=0.912UCL=0.938

LCL=0.886

Baseline (Random Sample of CY 2008) Current State (April-May 2009)1111

1

111

11

111

1

1

1

11

111

11

111

1

111

1

11

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1111

1

1

1

11

1

1

111

1

1

111

1111

1

1

11

1

1

1

1

1

11111111

1

1

1

1

1111

1

1

1

Tests performed with unequal sample sizes

Baseline vs. Current State

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P-value=.0000

P=.95

Goal was .94

Hardwired

• Point of Service collection was hardwired on April 10, 2009

• Blue Card and asking for lower amount if patient can not afford the deposit amount on April 23,2009

• Job-Matching the registration staff was hardwired June 10,2009

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1611451291139781654933171

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0.0

Days: May - July 2008 vs. May 20 - July, 2009

% D

efe

ctiv

e

_P=0.0021

UCL=0.0480

LCL=0

2008 2009

0

1

1

1

Control Chart of NBI Denied Accounts

Tests performed with unequal sample sizes

Newborn Denial Reduction

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– Customer Focused (What customers expect)– Process Focused (Our capability to deliver)– Causal Thinking (What makes this happen)– Accountability Driven (Ownership)– Fact-Based Statistical Thinking (Data Driven)– Stretch Goals (More than continuous improvement)– Standardized Approach to Improvement– Partnership (Employees working together)– Open Communications


Benefits of our Lean Six Sigma Journey

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4. Project Examples

5. What about me?

Road Map

What about me?

• Focus on waste elimination - most important single concept of Lean

– “When you buy bananas all you want is the fruit not the skin, but you have to pay for the skin also. It is a waste. And you the customer should not have to pay for the waste.” - Shigeo Shingo

• Learn to identify waste through the eyes of the customer– Ask “Would the patient want to pay for this”?– “Does it change the form, fit, or function of the

process”?– Review 7 categories of waste & 18 change concepts

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• Emphasize “Mistake Proofing”– Mistake-proofing your processes

• Improves quality and productivity• Eliminates re-work

– Performing significant root cause analysis is vital

– Prevent the customer from finding a defect

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What about me?

• Encourage staff buy-in– 100,000 ideas annually at Toyota

• “Why not make the work easier and more interesting so that people do not have to sweat? The Toyota style is not to create results by working hard. It is a system that says there is no limit to people’s creativity. People don’t go to Toyota to ‘work’ they go there to ‘think’” - Taiichi Ohno

– Take notes of opportunities for improvement– Don’t just report to management – work to find a

solution and fix it

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What about me?

• Measure before implementing changes

• Utilize the “Rapid Cycle Test”

• Don’t be satisfied with reporting averages – always include the standard deviation as a measurement of variation in a process

• Focus on improving your process capability over the long term – not simply hitting a target as a result of one time focused efforts

• Make performance results visible

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What about me?

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Resources

• Chip Caldwell and Associate

• Six Sigma Green Belt Training – Overview slides, Lynne Sisak, Chip Caldwell and Associates

• Process Improvement: “Structured Problem Solving” for Centura Health Leaders – 2008, Deborah Smith

• The Six Sigma Memory Jogger II

Questions?

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Floyd Medical Center’s Lean Six Sigma Journey January 21, 2010.

Documents

sigma slide

sigma lean

definition of quality

quality waste recovery

types of waste

quality goals

quality of care

quality staffing