Process Excellence in Healthcare “Measuring Outcomes” November 3, 2005 Hung Le, Ph.D. Six Sigma Master Black Belt Northrop Grumman Mission Systems
Process Excellence in Healthcare
“Measuring Outcomes” November 3, 2005
Hung Le, Ph.D. Six Sigma Master Black Belt Northrop Grumman Mission Systems
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What is Six Sigma?
• Six Sigma is a management philosophy based on meeting business
objectives by reducing variation
– A disciplined, data-driven methodology for decision making and process improvement
• To increase process performance, you have to decrease variation
Defects Defects
Too early Too late
Delivery Time
Reduce variation
Delivery Time
Too early Too late
Spread of variation
too wide compared to
specifications
Spread of variation
narrow compared to
specifications
• Greater predictability
in the process
• Less waste and
rework, which lowers
costs
• Products and
services that perform
better and last longer
• Happier customers
Six Sigma is about satisfying
customer needs economically
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What is Six Sigma?
A disciplined, data-driven methodology, which links process
improvement to organizational strategic objectives, for
improving program and business performance
Focuses on process performance by eliminating defects and reducing
variation
• Reduces waste and rework, which lowers costs
• Creates value though better products and services
Establishes a common language and set of tools
Identifies what is critical to quality in the eyes of the customer
Uses metrics to measure process capability
Six Sigma is about satisfying
customer needs economically
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Process Improvement Model
Y = f ( Xi )
“The outcome Y is a function of inputs Xi”
Implications Y varies; reducing defects means controlling the variance Changes in the X’s should produce changes in Y
Extensions: If we can’t express Y in terms of numbers , we don’t know enough
about it If we don’t see a change in Y (and ideally a change in the
variance of Y), we have not created an improvement
Process Variables or Process Variables or
Internal Knobs (Xs) Internal Knobs (Xs)
Input Input
Variables Variables
(Xs) (Xs)
Outputs Outputs
(Ys) (Ys)
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Concept of defects at the core of six sigma
Critical to Quality Customer Performance
Characteristics (CTQ) Requirements of a Product
or Service – Big “Y”
y Measurable Y
X Input that affects y
Defect Any Event That Does Not
Meet the Specifications
of a CTQ
The Language of Six Sigma
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The Six Sigma Challenge Is 1% Acceptable?
20,000 articles of lost mail per hour
Unsafe drinking water for almost 15 minutes
each day
Two short or long landings at most airport daily
No electricity for almost seven hours each month
200,000 wrong drug prescriptions per year
5,000 incorrect surgical operations per week
Source: Failure Mode & Effects Analysis, by D.H. Stamatis, 1995 ASQC Press
Even 99% good is not good enough
Seven articles lost per hour
One unsafe minute every seven months
One long or short landing every five years
One hour without electricity every 34 years
68 wrong prescriptions per year
1.7 incorrect operations per week
99% Good (3.8 Sigma) 99.99966% Good (6 Sigma)
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The average U.S. company is in the 3-4 sigma range
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Sigma Scale of Measure
1,000,000
100,000
10,000
1,000
100
10
1
PPM
Domestic Airline Flight
Fatality Rate (0.43 PPM)
3 4 5 6 2 1
IRS - Tax Advice
(phone-in)
Source: GE Medical Systems
Antibiotic Overuse
Inpatient Medication
Inaccuracy
44,000-98,000 Preventable
Hospital Deaths (IOM Report)
Benchmarking Process Capability
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Dealing With Problems
Using Six Sigma Methodology: Define, Measure, Analyze, Improve, Control (DMAIC)
Effective in some cases, but can result in perceptions of fire
fighting and in recurring problems
Define Measure
Analyze Improve
Control
STATISTICAL PROBLEM
STATISTICAL SOLUTION
PRACTICAL PROBLEM
PRACTICAL SOLUTION
Six Sigma Way Traditional Way
NEXT PROBLEM NEXT PROBLEM
PRACTICAL
PROBLEM
PRACTICAL
SOLUTION
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Benefits
• Six Sigma produces superior financial results and dramatically
improves a company’s bottom-line profitability
– Northrop Grumman Mission Systems achieved a benefit of $160 million in the
first year
– GE Capitol over $1 billion in value since 1995
– JP Morgan created $510 Million in value in year one
– AIG found $38 million in revenue from one of its first nine projects
– Johnson and Johnson over $400 million in two years
– Savings in excess of $2 billion in direct costs since 1994 at Allied Signal
General Electric’s Jack Welch, a self-proclaimed cynic when it comes to quality programs, describes Six Sigma as “the most important initiative GE has ever undertaken...”
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A Logical Evolution
Six Sigma builds on preceding quality initiatives
Continuous Process Improvement
Total Quality Management
ISO 9001 Standards/Malcolm Baldridge Quality Award/CMM
These initiatives were often characterized by
Focus on detection and correction of defects
Internal focus on the company
Limited implementation within an organization
Minimal supporting infrastructure development
Focus on improving individual operations with unrelated processes
Six Sigma takes the next logical steps
Create processes so defects/errors don’t arise at all
External focus on the Voice of the Customer
Implement corporation-wide/change corporate culture
Create well-defined roles and supporting infrastructure
Focus on making improvements in all operations within a process
Drive statistical/data-based decision-making using a disciplined methodology
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Leader Role: Make sure the gains stick. Ensure someone is held accountable for ongoing defect reduction.
• QC Chart • Documentation • Monitoring
CONTROL
Leader Role: Push for innovative, breakthrough thinking supported by cost/benefit and risk analysis
Leader Role: Don’t allow a single project to proceed without a Business Case and a Sponsor who is willing to commit to the results
Leader Role: Ensure that true “root causes” of process performance are identified - not just symptoms
Leader Role: Insist that data, metrics, are collected
IMPROVE
• Select Solutions • Risk Analysis • Piloting • Planning
• DOE • Regression • ANOVA • t-tests • Process Analysis
ANALYZE
MEASURE
• Data Collection Plan • Gage R&R • Control Chart • Capability Analysis
The synergy happens when everyone follows the same path!
DEFINE
• Charter • VOC • SIPOC • CE Matrix
Six Sigma DMAIC Roadmap
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The Industry’s Governance Model
Governs the Six Sigma Initiative
Six Sigma Champion Team Six Sigma PO Leader
Business Area Champions Process Owners
Finance Money Belt
Master Black Belt
Black Belt
GREEN BELTS
Manage processes to meet strategic and tactical goals
• Mentors Black Belts and Green Belts • Plans Next Projects Black Belt
• Project Leader • 2-Year Assignment
Everyone is Involved
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Successfully Implementing Six Sigma
• Six Sigma must be a strategic imperative and tied to strategic goals
- It’s Our Business
– Relentless leadership commitment and intensive communication are
necessities
– Business and project goals should be anchored in customer satisfaction -
Completely Satisfy Customer Needs Profitability
– Decisions must be driven by data - measurement is not an option - it must be
pervasive and it must have teeth
– The best talent has to be put on the case (Green & Black Belts)
– Rewards, Recognition, and Incentives must be explicitly linked to Six Sigma
training, action leadership, and results
Six Sigma is about satisfying customer needs economically!
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Summary
• Six Sigma is a data-driven methodology for linking process
improvement to organizational strategic objectives
• Six Sigma is focused on customer requirements and metrics that
will impact the bottom line
• Six Sigma builds on other Quality Management approaches
• The concept of defect is at the core of Six Sigma
• Reduction of variation is key to process improvement
• To be successful, Six Sigma must be a strategic imperative and tied
to strategic goals
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General References
• The Six Sigma Way: How GE, Motorola, and Other Top Companies Are Honing their Performance by Peter S. Pande, Robert P. Neuman, Roland R.Cavanagh
• Six Sigma: The Breakthrough Management Strategy Revolutionizing the World’s Top
Corporations by Mikel J. Harry, Richard Schroeder • The Power of Six Sigma: An Inspiring Tale of How Six Sigma Is Transforming the
Way We Work by Subir Chowdhury • The Six Sigma Revolution: How General Electric and Others Turned Process Into
Profits by George Eckes • Implementing Six Sigma: Smarter Solutions Using Statistical Methods by Forrest W.
Breyfogle
• Making Six Sigma Last: Managing the Balance Between Cultural and Technical Change by George Eckes
• Six Sigma Memory Jogger II, by Oriel Inc.
• Managing Six Sigma: A Practical Guide to Understanding, Assessing, and
Implementing the Strategy that Yields Bottom Line Success by Forrest W. Breyfogle, James M. Cupello, Becki Meadows
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General References
• The Six Sigma Handbook: Complete Guide for Greenbelts, Blackbelts, and
Managers at All Levels by Thomas Pyzdek • Understanding the Essentials of the Six Sigma Quality Initiatives by Harold
Star, Stephen J. Snyder
• Six Sigma Producibility Analysis and Process Characterization by Mikel J.
Harry, Ronald Lawson • Six Sigma for Leadership: Seven Principles of Problem Solving Technology
to Achieve Significant Financial Results by Greg Brue • Customer Centered Six Sigma: Linking Customers, Process Improvement
and Financial Results by Earl Naumann, Steven H. Hoisington • The Complete Guide to Six Sigma by Thomas Pyzdek