A Better Hospital in Five Days

A Better Hospital
In Five Days
Jay Arthur (888) 468-1537

Webinar:
www.qimacros.com/training/qi-macros-webinar/#healthcare

Lean Six Sigma for Hospitals!
© MMIX KnowWare www.qimacros.com 1

A Better Hospital in Five Days

2 Sigma 30% defects 300,000PPM
You Are
Here 3-4 Sigma 3% defects 30,000 PPM
5 Sigma .03 defects 300 PPM
6 Sigma .00003 defects 3 PPM

© MMIX KnowWarewww.qimacros.com 2

Preventable Deaths per Week
1 in 6 Patients suffers a
complication from their treatment
-Don Berwick
1 in 100 die from it.

Surgical Medication Errors Infections

Your Hospital Factory

Marketing and Sales

Your “Factory”

Orders, Invoicing, Purchasing and Payments


The Fix-It Factory

Your Hospital Your Patients & Payors

The Fix-It Factory

$ $ $ $ $ $ $ $ $ $


Defects - The 4-50 Rule
Myth: The wider you spread it, the greater the returns
To increase returns, narrow your focus
4-50 rule - (20/80)2
4% of business causes over 50% of waste and rework

Rule #3:
To increase returns,
narrow your focus.

Power Distribution

The Long Tail of LSS Tools
Hospitals do not need every tool
in the Six Sigma toolbox,
only the Magnificent Seven!

Master the Top 4%

Six Sigma Process
Defects Deviation

Count Measure
(time)
Control Chart Control Chart
LSL USL

Categorize

Pareto Histogram

Correct

Fishbone Fishbone

Focus (Define and Measure)
Focus your efforts in ways that achieve
breakthrough improvements in speed,
quality and cost.

Control Chart Pareto


Improve (Analyze and Improve)
Use data to identify and eliminate root causes
of problems involving time, defects and cost.
4% of your business causes 50% of the waste,
rework and lost profit.

Tools – Why? Why? Why? Why? Why?

Action

Countermeasures
Fishbone Matrix


Focus on Performance
Start with a control chart of defects, mistakes, errors or cost:

In 2005, the Mayo
Clinic Rochester
averaged one RFO
every 16 days.


Use Paretos to Find What to Fix

Sponges accounted for
67.6% of RFOs


Initiate Root Cause Teams
Identify subject experts to analyze the problem
Schedule half or one day root cause analysis
sessions for each “big bar” of the pareto chart.
Analyze the root causes, validate they really are
the root causes, and identify solutions.
Develop action plan to implement the solutions
Measure and validate the results as you
implement solutions
Rule #4:
Use SWAT teams of experts.

Root Cause Analysis (RCA)
Materials Process
Sponges
Counting Supplies Problem
In/Out Statement
Sponges
accounted
for 67.6%
of RFOs

People Machines


Verify Results (Before vs After)
Changed
process for
counting and
tracking
surgical
supplies and
instruments.
Extended
time between
RFOs to 69
days.


Eliminating Never Events
Track each Never Event with g chart
Use Pareto Charts to analyze most
common contributor to Never Event
Analyze root causes of “big bar” of Never
Event.
Implement countermeasures and verify
results.
Monitor improvement forever.

A Better OR in Two Minutes

WHO Surgical Checklist: www.who.int/patientsafety/safesurgery/en/

OR Checklist Results
Reduced major complications by 36%,
Reduced deaths by 47%
Reduced patients returning to the OR by
25%.
OR nurse turnover, dropped from 23
percent to 7 percent
Employee satisfaction rose 19%


A Cheaper (More Profitable)
Hospital in Five Days
Sales $$
$$

Delay 33%
Defects $
25%
$
People Deviation
60%
67%
$
Expenses


Focus on Performance
Start with a control chart of defects, mistakes, errors or costs:
Charges Coded as Denials

$3,000,000

UCL $2,552,122
$2,500,000

$2,000,000

$1,500,000 Denials (E)
UCL
CL $1,071,509 +2 Sigma
Charges

+1 Sigma
$1,000,000
Average
-1 Sigma
-2 Sigma
$500,000 LCL

$-

LCL $(409,103)
$(500,000)10/02 11/02 12/02 01/03 02/03 03/03 04/03 05/03 06/03 07/03 08/03 09/03

$(1,000,000)
2002-2003


Go Deeper – Apply the 4-50 Rule

4% of the Process Results in over 50% of the Errors


Denial-No Appeal Charges
n=12858108.93
$12,858,109 99% 100% 100%
97%
91% 90%
$11,250,845
81% 80%
$9,643,582
70%
$7,849,569
$8,036,318 61% 60%
61% of Denied Claims
Amount

$6,429,054 50%
Due to Untimely Filing
40%
$4,821,791

30%
$3,214,527 $2,516,508
20%

$1,607,264 $1,295,032
$750,766 10%
$336,270 $109,813 $150
$- 0%
Timely Filing Medical No Auth Partial Auth Invalid Auth ET ES
Necessity
Memo Code


Denials for Timely Filing by Insurer
n=778
778 99% 99% 100% 100% 100% 100%
96% 98%
94%
93%
90% 90%
680.75 87%
84%
81% 80%
583.5 75%
70%
501
64%
486.25
Number of Denials

60%
64% of Denied Due to
389 50%
Timely Filing Claims Due
40%
291.75
to one Insurer
30%
194.5
20%

97.25 81
45 10%
27 24 24 18 15 14 11 7 4 4 1 1 1
0 0%
Ins 1 Ins 2 Ins 3 Ins 4 Ins 5 Ins 6 Ins 7 Ins 8 Ins 9 Ins 10 Ins 11 Ins 12 Ins 13 Ins 14 Ins 15 Ins 16
Payer


Identify Root Causes
Use the fishbone diagram to perform root cause analysis:
Medical Necessity ER
In Patient Problem
Statement
No Auth Timely
Filing
64% of
One Payor accounted for 64% Reauthorization Denials

Payor Psych


Countermeasures
(Mistake Proofing)

Countermeasure
 Work with insurance company to resolve
excessive denials

Reduce delays that contribute to timely filling
denials


Verify Results

Reduced denials by 35% starting the
following Monday ($380,000/month)

Tips for a Good Improvement Story

Control Chart Paretos

Action

Countermeasures
Control Chart with
Root Cause Analysis Matrix
Process Change

Make Sure Your Story Contains all of the Critical Elements

Sustain (Control)
Statistical Process Control (SPC)
Tools
 Control Charts –
Analyze your data to determine process stability. Is your
X a C a t T le
B r h r it

0 6
.8

U L 0 1
C = .8 9

process consistent and predictable? Identify and research
0 1
.8

X v g
A era e

u br
U L
C

Nme
0 6
.7
A
B
A rag
ve e
C = .7 6
L 0 1

unstable points and conditions.
B
0 1
.7 A
L L
C

0 6
.6

L L 0 1
C = .6 3

Histograms–

6 08 m

6 18 m

6 28 m

6 58 m

6 68 m
6 8m

6 8m
0 1
.6

0m

0m

12 m

0m

1 m

1 pm
2 m

0m

0m

2 m

0m

2 m
m

pm
2 m

2 m

2 m

2 m
/1 a

/1 a

/1 a

/1 a

/1 a
/8 a

/9 a

p

2p
1 a

1 a

1 a

1 a

1 a

1 a
1 p

1 p

1 p
2p
p

p

p

p
2

2
 D te i e Pe i d u b r
a /Tm / r o /N m e

Determine the distribution of measurable data and the Histogram

capability of your process to meet customer requirements. n= 4 8
25 LSL= - 2 4

M e dia n = 0
USL= 2 4
Cp( sigm a ) = 1 .0
Cpk ( sigm a ) = 1 .0
Cp( Rd 2 ) = 1 .2

Flowcharts –
Cpk ( Rd2 ) = 1 .2
20

 Pp= 1 .0
Ppk = 1 .0
Sigm a= 8 .0
15

Show the improved process including all activities, decisions

Number
Mean= 0
10

and measurement points. 5

0
-24 to -18 -18 to -12 -12 to -6 -6 to 0 0 to 6 6 to 12 12 to 18 18 to 24 24 to 30

Values


Secret to Faster, Better,
Cheaper Healthcare
Focus on “mission and profit critical” problems
Set BHAGs -Big Hairy Audacious Goals to reduce
defects, delay, deviation or cost by 50% or more
in six months or less.
Simplify and Streamline:
Focus on removing NVA—Non-value added
Optimize—Eliminate Defects and Deviation
Implement solutions and verify results


Implementing Faster, Better, Cheaper
Crawl-Walk-Run to Success

• Start small for big results
• Engage informal leaders
• Use the 3-57 and 4-50 rules

Power Laws (4-50 rule)


Patient Satisfaction = Profits

To accelerate your speed…
 Eliminate unnecessary delay and movement
(3-57 Rule)
To increase your returns…
 Narrow your focus (4-50 rule)
To engage your people..

Reduce the number of people involved
 Engage informal not formal network


Resources for Faster, Better,
Cheaper Healthcare
QI Macros Software for Excel
Control Charts, Paretos, Fishbones and more

Project and Data Analysis
Team Facilitation
Lean Six Sigma Training

Lean Six Sigma Systems
for Faster, Better,
Cheaper Healthcare


Free Resources and Contact Info
Lean Six Sigma Money Belt Training: www.lssmb.com
Lean Six Sigma for Hospitals Linkedin Group
30 Day Eval Copy of the QI Macros –qimacros.com/freestuff.html
Action Plan: qimacros.com/pdf/six-sigma-action-plan.pdf
Lean Six Sigma Reference Card: qimacros.com/JobAid.pdf
Dirty 30 Process for Six Sigma Software: qimacros.com/pdf/dirty30.pdf
Handout: qimacros.com/pdf/faster-better-cheaper-healthcare.pdf

Jay Arthur
KnowWare® International
2253 S. Oneida St. Ste 3D
Denver, CO 80224
(888) 468-1537
jay@qimacros.com
www.qimacros.com


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