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    The Power of Six Sigma and Lean forHospitals and Healthcare Management

    Dr. Ali Lakhani

    10/23/2008

    Copyright 2007 Dr. Ali Lakhani. All rights reserved. CONFIDENTIAL. Any Reproduction or Dissemination Strictly Prohibited. Unpublished proprietary

    work available only under license from Magna Leadership Solutions LLC.

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    Objectives

    To understand how to advance to the nextlevel of sophistication by using Six Sigma andLean in hospitals and healthcare management

    and improve patient care, quality of service,and bottom line results.

    2

    Copyright 2007 Dr. Ali Lakhani. All rights reserved. CONFIDENTIAL. Any Reproduction or Dissemination Strictly Prohibited. Unpublished proprietary

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    Agenda

    Part I Essence of Six Sigma and Lean Quality in Healthcare Management Six Sigma and Lean Definition The Six Sigma and Lean Approach

    Q&A / Discussion

    Part II Six Sigma and Lean Methodology DMAIC/DMADV/Lean Framework

    o

    sp a an ea care anagemen Six Sigma Toolkit Q&A / Discussion

    Part III Implementing Six Sigma and Lean

    Success Stories Six Sigma Training and Certification Summary / Six Takeaways Q&A / Discussion

    Copyright 2007 Dr. Ali Lakhani. All rights reserved. CONFIDENTIAL. Any Reproduction or Dissemination Strictly Prohibited. Unpublished proprietary

    work available only under license from Magna Leadership Solutions LLC.

    3

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    Part I Essence of Six Sigma and Lean

    Quality in Healthcare Management

    The Six Sigma and Lean Approach Q&A / Discussion

    4

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    Science

    American healthcare systemis remarkable for its scientific,technological achievements.

    Yet, it is considered potentiallydangerouseven lethalin itsexecution.

    Quality in Healthcare

    5

    Human Touch 24 x 7 Care

    Between 44,000 and 98,000 Americans die annually as a result of medicalerrors. Systemic issues key contributors to patient care, quality of service,and bottom line results.

    Case of good people working

    in bad systems.

    Copyright 2007 Dr. Ali Lakhani. All rights reserved. CONFIDENTIAL. Any Reproduction or Dissemination Strictly Prohibited. Unpublished proprietary

    work available only under license from Magna Leadership Solutions LLC.

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    Healthcare Business Challenges

    1. Ever-increasing costs shrinking hospital profits Despite growth in number of patient visits.

    2. Limited number of special skilled resources Physicians, nurses, radiologists, etc.

    3. As such, hospital processes include number of handoffs process delays, lower patient cycle time, increasing

    length of stay, etc.

    4. 30%-80% of activities are non-value add (NVA) Waiting in queue, updating charts, etc.

    6

    Copyright 2007 Dr. Ali Lakhani. All rights reserved. CONFIDENTIAL. Any Reproduction or Dissemination Strictly Prohibited. Unpublished proprietary

    work available only under license from Magna Leadership Solutions LLC.

    Traditional response: Build larger hospitalsSix Sigma response: Increase patient capacity with faster throughput

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    Quality

    Possible qualityPossible quality Actual quality = Waste (Actual quality = Waste (MudaMuda))

    7

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    History of Quality

    1313thth Century Leagues of Medieval EuropeCentury Leagues of Medieval Europe

    The Industrial RevolutionThe Industrial Revolution

    The Early 20The Early 20thth CenturyCentury

    World War IIWorld War II

    Total Quality ManagementTotal Quality Management

    Beyond Total Quality ManagementBeyond Total Quality Management-- Six SigmaSix Sigma and Leanand Lean

    8

    Copyright 2007 Dr. Ali Lakhani. All rights reserved. CONFIDENTIAL. Any Reproduction or Dissemination Strictly Prohibited. Unpublished proprietary

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    Total Quality Management

    Total quality management (TQM) is defined as managingthe complete organization so that it does extremely well onall dimensions of products and services that are important

    to the customer.

    TQM Pitfalls:1. Lack of Assimilation

    .

    3. A Nebulous Concept4. An Unclear Target5. Classicist Attitude and Procedural Zealotry6. Failure to Break Down Internal Fences7. Incremental vs. Exponential Progress

    8. Unproductive Training9. Focus on Quality of Manufactured Goods

    9

    Copyright 2007 Dr. Ali Lakhani. All rights reserved. CONFIDENTIAL. Any Reproduction or Dissemination Strictly Prohibited. Unpublished proprietary

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    Six Sigma Strategy

    increase customer satisfaction,shareholder value, and employeefulfillment

    More than 75% of theFortune 500 companies use Six Sigma

    improve the quality of processes,products and services by reducingthe variability in every aspect ofbusiness

    10

    Copyright 2007 Dr. Ali Lakhani. All rights reserved. CONFIDENTIAL. Any Reproduction or Dissemination Strictly Prohibited. Unpublished proprietary

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    Six Sigma Defined

    rigorous, focused, and highly effectiveimplementation of proven quality tools,principles, and techniques

    Every dollar spent on Six Sigma addsfour dollars to the bottom line

    a oon or serv ce processes, whichare slow and expensive and have too muchwork-in-process. 80% of service delays arecaused by 20% of activities

    11

    Copyright 2007 Dr. Ali Lakhani. All rights reserved. CONFIDENTIAL. Any Reproduction or Dissemination Strictly Prohibited. Unpublished proprietary

    work available only under license from Magna Leadership Solutions LLC.

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    Six Sigma Benchmark

    THREE SIGMA (historical standard)

    93.31928% Perfection

    FOUR SIGMA (average standard)

    SIX SIGMA (best-in-class standard)

    99.99966% Perfection

    SIX SIGMA means 3.4 defects or errorsper one million opportunities

    12

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    Six Sigma Approach

    measure what you value and valuewhat you measure

    o var a y are ce ergsthat sink organizational ships

    companies need Six Sigma certifiedemployees to attack variability

    13

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    Six Sigma Belts

    Certified Master Black BeltCertified Master Black Belt- are the technical leaders of the Six Sigma program- have deep understanding of statistical theories, gift for

    project management, coaching, and consulting

    Certified Black BeltCertified Black Belt- are leaders of the Six Sigma projects- need not be trained statisticians or engineers

    - have mastery of the Six Sigma tools and concepts

    Certified Green BeltCertified Green Belt- are Six Sigma team leaders- are capable of forming and facilitating Six Sigma teams

    Certified Yellow BeltCertified Yellow Belt- are trained to help the data gathering and analysis role- help the Green and Black Belts with problem solving

    and solution implementation

    14

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    Six Sigma Quality

    The scientific goal of SixSigma methodology is toreduce process variationsuch that the quantity of

    undesirable output is nomore than 3.4 defects permillion opportunities.

    15

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    Why Not Eight Sigma or Ten Sigma?

    Poor quality

    Total Cost of Quality

    Costs in dollars of

    raising quality level Low defects -> High process precision ->Higher cost

    costs

    Precision Cost

    Six Sigma* Number of defects

    16

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    Six Sigma

    How Six Sigma Addresses the Drawbacks in TQM:1. Links to the Business and Personal End Results

    2. Leadership at the Forefront3. A Consistently Repeated, Uncomplicated Message4. Setting a Straightforward, Striving Goal5. Adapting Tools and Degree of Thoroughness

    6. Priority on Cross Functional Method Management7. Incremental and Exponential Transformation8. Training: Belts, Certification Standard9. Concentration on All Business Processes

    17

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    Lean Strategy

    Minimize waste in the value streamsystematically. CLOSEDMITTS.

    Lean and Six Sigma are being adopted bybusiness all over the world as a way to improve

    efficiency and to serve customers better.

    Focus on time, motion, materials,and output that meets customer needs

    18

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    Case for Six Sigma and Lean

    Six Sigma and Lean Recognize opportunities and eliminates defects Remove the variation hindering high quality services

    Maximize process velocity Quantify and eliminate cost of complexity

    As a result Product/service quality improves and costs go down Customer satisfaction rises and bottom line results improve Your ability to compete and lead increases

    One who locates and appropriates the knowledge one needs becomesthe hammer rather than the anvil.

    Goethe

    19

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    End of Part I of III

    Q&A /Discussion

    20

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    Part II Six Sigma and Lean Methodology

    DMAIC DMADV Lean Framewor Hospital and Healthcare Management Six Sigma Toolkit Q&A / Discussion

    21

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    Six Sigma DMAIC Model

    DMAIC is a systematic methodology

    DMAICDefine, Measure, Analyze,Improve, Control--is the improvementframework deployed by Six Sigma

    customer expectations at Six Sigmaquality levels.

    Define the goals of the improvement activity

    Measure the existing systemAnalyze ways to eliminate the gap between current and desiredImprove the system using statistical modeling and validationControl the new system by institutionalizing the improvements.

    22

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    Six Sigma DMAIC Cycle

    Recognize

    Business-

    related CTs

    Define

    Business

    Problem

    Fine-tune

    ProjectFMEA Execute DOE

    Optimize and

    Refine Solution

    Understand

    Solution

    Brainstorm

    Possible

    Projects

    Scope Problem

    into a Project

    Process

    Mapping

    Graphical

    AnalysisDefine y = f(x)

    Control Xs and

    Monitor Yx

    Track Project

    Gains

    Recognize Identify-

    Diagnose Define Measure Analyze Improve Control Fulfill

    23

    Project-related

    CTs

    Metrics and

    Goals

    Reduction

    Analysis

    Changes

    -

    Project

    Projects

    Rank-order

    Project Ideas

    Quantity

    Business

    Impact

    Capability

    MeasurementKick-off DOE

    Form Team

    and Kick-Off

    Project

    Collect Data

    Measure

    Process

    Capability

    Copyright 2007 Dr. Ali Lakhani. All rights reserved. CONFIDENTIAL. Any Reproduction or Dissemination Strictly Prohibited. Unpublished proprietarywork available only under license from Magna Leadership Solutions LLC.

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    Design for Six Sigma (DFSS)

    DFSS is a systematic methodologyfor designing products and processesthat meet customer expectations atSix Sigma quality levels.

    DMADVDefine, Measure, Analyze,Design, Verify--is the frameworkdeployed by DFSS

    Define the goals of the design activity

    Measure customer inputs to determine what is critical to qualityAnalyze innovative concepts for products to create valueDesign new processes, products, and services to deliver valueVerify that new systems perform as expected sustainably.

    24

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    Six Sigma DMADV Cycle

    Define Measure Analyze Design Verify

    25

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    Define

    STEPS

    Make business case for the project Identify the customer Current state map Future state map Layout the scope of the project Deliverables Due date

    TOOLS

    Project Charter

    VOC Tools (surveys, focus groups, etc.) Process map Quality Function Deployment (QFD) SIPOC Benchmarking

    26

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    Measure

    STEPS

    Identify the key metrics for the process Ensure metrics are reliable and valid

    Collect data on the process Create metrics for measuring success

    TOOLS

    Measurement systems analysis

    Exploratory data analysis Descriptive statistics Data mining Run charts Pareto analysis

    27

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    Analyze

    STEPS

    Perform analysis of current state Explore the optimal state possible

    Identify resource requirements Comprehend obstacles and risks

    Cause-and-effect diagrams Tree diagrams Brainstorming Process behavior charts (SPC)

    Process maps Design of experiments (DOE) Inferential statistics FMEA Simulation

    28

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    Improve/Design

    STEPS

    Identify the work breakdown structure List specific activities needed to meet goals

    Comprehend integration of subprojects

    TOOLS

    Force field diagrams 7M tools

    Project planning and management tools Prototype and pilot studies

    29

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    Control/Verify

    STEPS

    Control risk, quality, cost, schedule Institute monitors

    Ensure that gains are sustained

    TOOLS

    Statistical process control (SPC) Failure Mode Effects Analysis (FMEA)

    ISO 900x Reporting system

    30

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    End of Part II/IIIEnd of Part II/IIIEnd of Part II/IIIEnd of Part II/III

    Q&A /Q&A /Q&A /Q&A /DiscussionDiscussionDiscussionDiscussion

    31

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    Part III Implementing Six Sigma and Lean

    Success Stories

    Six Sigma Training and Certification Summary / Six Takeaways Q&A / Discussion

    32

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    Success Story #1: Baptist Hospital Inc.

    Problem: Low satisfaction marks from patients, staff, anddoctors.

    Solution: Implementation of a Six Sigma-based CARE program(Clinical Accountability Report of Excellence) thatcaptures and monitors clinical quality data resultsand trends throughout the facility.

    Results:

    33

    Copyright 2007 Dr. Ali Lakhani. All rights reserved. CONFIDENTIAL. Any Reproduction or Dissemination Strictly Prohibited. Unpublished proprietarywork available only under license from Magna Leadership Solutions LLC.

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    Success Story #2: Pocono Medical Center

    Problem: Delays in lab results causing treatment delays.

    Solution: Implementation of a Six Sigma-based process flowchange going from batch-flow to one-piece flow ofspecimens.

    Results:

    34

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    Success Story #3: Mercy Medical Center

    Problem: Patient satisfaction scores slides into the 30th

    percentile.

    Solution: Implementation of a Lean-based process flowresulting in a remapping of the patient flow andrevenue cycle stages.

    35

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    Success Story #4: Nebraska Medical Center

    Problem: 29% of orders werent available prior to patientsarrivals. 59% of the time orders were incomplete,illegible, or incorrect.

    Solution: Implementation of a Six Sigma-based process flowresulting in a redesign of Order Central (no catch-allbin, call balancing, monitors for incomplete data, etc.)

    Results:

    36

    Copyright 2007 Dr. Ali Lakhani. All rights reserved. CONFIDENTIAL. Any Reproduction or Dissemination Strictly Prohibited. Unpublished proprietarywork available only under license from Magna Leadership Solutions LLC.

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    Success Story #5: St. Lukes Hospital

    Problem: In-patient satisfaction measure dipped to the64th percentile level when compared to otherhospitals in the country.

    Solution: Implementation of a Six Sigma-based process flowresulting in a redesign of all major processes andinstitution of a follow-up process to check up on

    .

    Results:

    37

    Copyright 2007 Dr. Ali Lakhani. All rights reserved. CONFIDENTIAL. Any Reproduction or Dissemination Strictly Prohibited. Unpublished proprietarywork available only under license from Magna Leadership Solutions LLC.

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    Six Sigma Training and Certification

    Six Sigma Master Black Belt Certification (12 Weeks Online / 6 Days On-Ground)November 10 .......OnlineNovember 8.....Sacramento

    Six Sigma Black Belt Certification (8 Weeks Online / 4 Days On-Ground)

    November 10 .......OnlineNovember 8 ....Sacramento

    Six Sigma Green Belt Certification (4 Weeks Online / 2 Days On-Ground)November 10 .......Online

    Click for Pricing and Registration:http://www.magnaleadership.com/product_offerings/certifications/SixSigma/sixsigma_details.htm

    ....

    Six Sigma Yellow Belt Certification (2 Weeks Online / 1 Day On-Ground)November 10 .......OnlineNovember 8 ....Sacramento

    For more information, contact [email protected].

    38

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    You are halfway there!

    Earn your Six Sigma Yellow Belt in Healthcare Management by

    1. Attending a two-hour conference call on 10/29/082. Reviewing Yellow Belt slide set provided by Dr. Ali Lakhani3. Reading six chapters from a prescribed book

    4. Passing a one-hour open book, multiple choice test on concepts covered

    Click for Pricing and Registration:http://www.magnaleadership.com/product_offerings/certifications/SixSigma/sixsigma_details.htm

    For more information, contact [email protected].

    39

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    S / Si T k

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    Summary / Six Takeaways1. Huge opportunities for improvement (to the tune of $1 trillion

    per year) exist in the healthcare industry.

    2. Six Sigma and Lean are increasingly being adopted by thehealthcare businesses all over the world.

    3. Six Sigma and Lean are high-ROI ways of delivering betterpatient care, improving efficiencies, and optimizing profits.

    4. Healthcare professionals with certifications in Six Sigma andLean are highly prized employees who are readily recruitedto key management positions.

    5. Six Sigma certified employees earn up to 50% more than

    their uncertified counterparts.

    6. Remember, businesses dont exist because of the productsand services they deliver. They exist because of customers.

    40

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    End of Part III/IIIEnd of Part III/IIIEnd of Part III/IIIEnd of Part III/III

    Q&A /Q&A /Q&A /Q&A /DiscussionDiscussionDiscussionDiscussion

    41

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    More questions?

    [email protected]

    42

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    References and Additional Resources

    American Society for Quality (2008). Retrieved from http://www.asq.org June 2008.

    Aveta Solutions, Six Sigma Online SSC Certified Training, 2007,

    Benbow, Donald W., and T.M. Kubiak, Certified Six Sigma Black Belt Handbook, Milwaukee, WI: ASQ Quality Press, 2005.

    Breakthrough Management Group, Six Sigma eCourses, 2007.

    Breyfogle, Forrest, Implementing Six Sigma: Smarter Solutions Using Statistical Methods, 2nd ed., Hoboken, N.J.: Wiley, 2003.

    Chase, Jacobs & Aquilano. (2005). Operations management for competitive advantage, 11th ed. New York: McGraw-Hill.

    Cavanagh, Roland R., Robert P. Neuman, and Peter S. Pande, The Six Sigma Way: How GE, Motorola, and Other TopCompanies are Honin Their Performance, New York: McGraw-Hill, 2000.

    George, Michael L., Lean Six Sigma for Service: How to Use Lean Speed and Six Sigma Quality to Improve Services andTransactions, New York: McGraw-Hill, 2003.

    George, Michael L., John Maxey, David T. Rowlands, and Mark Price, The Lean Six Sigma Pocket Toolbook: A Quick ReferenceGuide to nearly 100 Tools for Improving Quality, Speed, and Complexity, New York: McGraw-Hill, 2005. ISBN 0071441190

    I Six Sigma (2008). Retrieved from http://isixsigma.com/June 2008.

    Juran, J.M., and A. Blanton Godfrey, Jurans Quality Handbook, 5th ed., New York, McGraw-Hill, 1999.

    Lind. (2005). Statistical techniques in business and economics(12th ed.). New York: McGraw-Hill.

    Lowenthal, Jeffrey N., Six Sigma Project Management, Milwaukee, WI: ASQ Quality Press, 2002.

    Montgomery, Douglas C., Design & Analysis of Experiments, 6th ed., New York: John Wiley and Sons, 2004.

    43Copyright 2007 Dr. Ali Lakhani. All rights reserved. CONFIDENTIAL. Any Reproduction or Dissemination Strictly Prohibited. Unpublished proprietarywork available only under license from Magna Leadership Solutions LLC.

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    References and Additional Resources

    Pyzdek, Thomas., The Six Sigma Handbook. New York, McGraw-Hill, 2006.

    Naumann, Earl, and Steven Hoisington, Customer Centered Six Sigma: Linking Customers, Process Improvement, andFinancial Results, Milwaukee, WI: ASQ Quality Press, 2001.

    Rath and Strong, Six Sigma Pocket Guide, Lexington, MA: Rath and Strong, 2000. ISBN 0970507909

    Womack, James, and Daniel T Jones, Lean Thinking: Banish Waste and Create Wealth in Your Corporation, Revised and

    Updated, New York: Free Press, 2003. ISBN 0743249275

    Yang, Kai, Design for Six Sigma for Service, New York: McGraw-Hill, 2005.

    44

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    work available only under license from Magna Leadership Solutions LLC.