Scott Hencshel Process Improvement the Engine that Drives Strategy

Copyright (C) POTENTIA LLC 2012. All Rights Reserved
Process Improvement: The
Engine That Drives Strategy
David “Scott” Hencshel
President, Potentia, LLC

Pearls
• To Stop
• Lean Six Sigma project? Really?
• Six Sigma as a verb
• Automation = wrong things faster
• Lead vs. manage change

The “Evolution” of Quality and
Continuous Improvement
W. Edwards Deming
Statistical Process Control
Frederick Taylor Henry Ford
Lean
Six Sigma
TQM
Eli Whitney
Shingo

What is Lean Six Sigma
• Lean Methods:
– Remove non-value added waste
– Improved speed or process lead time
• Six Sigma Methods:
– Grounded in the DMAIC methodology
– Attacks variation
– Improved quality
• Combined, Lean and Six Sigma
– Faster cycle times, decreased costs, and improved
quality
– More satisfied customers

We Know That . . . .
• Lean Six Sigma is a compilation of useful
tools to gather, measure and analyze data.
• Not all tools need to be used for all
projects.
• While Lean Six Sigma provides a very
specific roadmap for process improvement
it also allows flexibility based on the needs
of the organization.

100% of all changes evaluated as
“Successful” had a good technical
solution or approach
Over 98% of all changes evaluated
as “Unsuccessful” also had a good
technical solution or approach
What is the differentiating factor
between success and failure?
Change

E = Q x A2
Effectiveness Quality (Accountability x Acceptance)
Lean and
Six Sigma
Balanced
Scorecard
Change
Effective
Results
People
Change Equation

Case Study
• Medical practice in San Antonio, Texas.
• One Doctor, One Nurse Practitioner, and 8 support
staff.
• Two major problems
– Patient complaints
– Hemorrhaging money

What We Found
• Physical disorder and clutter
• Poor medical record accountability and storage
• Sub-optimal layout
• Little or no understanding of processes
• Absence of metrics
• Poisoned work environment
– Lack of standards
– Favoritism
– Gossip
• No shared Vision

Our mandate…
• Improve the patient experience
• Stop the bleeding ($ and time)
• Increase revenue
• Get better organized
• Better understand how we conduct business
• Measure our work
• Make the clinic a sought after place to work

It Starts with Culture Change
• What makes Lean Six Sigma truly different from
other process improvement methodologies is
that it is not just a series of tools; it is a
mindset, a way of viewing and understanding
your business and your work.
• We must train our employees to not look at their
work the same way ever again.
– Return better equipped to identify problems
– Be able to map and analyze their work
– Be able to identify and eliminate non-value
added process steps and activities
– Be able to measure their work and results
– Be more efficient and effective in everything they
do

“Imaginnovation” Training

What We Found
• Physical disorder and clutter
• Poor medical record accountability and storage
• Sub-optimal layout
• Little or no understanding of processes
• Absences of metrics
• Poisoned work environment
– Lack of standards
– Favoritism
– Gossip
• No shared Vision

What is 5S?
 A Lean Tool developed by the Japanese
 Foundation for continuous improvement
 5S Process creates an organized, clean and safe workplace
 Anyone can distinguish between normal and abnormal
conditions at a glance
 5S involves employee participation

The 5S’s
Sort
Set in Order
Shine
Standardize
Sustain

5S Benefits
• Creates organized workplaces
• Improve retrieval time of documents
• Reduce turnaround time to patients/customers
• Identifies waste so it can be eliminated
• Employee productivity and efficiency enhanced
• Provides ever ready patient/customer showcase
• Produces fewer defects and lost Information

5S Underway

Before

After

Current Layout and Traffic Flow

Front DeskResearch Office /
Exam
Codie | Matt
Lab
Records Room (with
desk area if needed)
Dr. T Office
Lab and
Research
Storage
Bathroom
Dr. T Exam
Room
Dr. T Exam
Room
CEO / Kim
Quotient Room
David Office
David Exam
Room
Conference Room
Waiting Room
Foyer
Foyer
Indicates that it probably ain’t moving
Supply / IT
Research Office /
Exam
Research Office /
Exam
Linda
Shavon | Nich
Jorge
Proposed Layout and Traffic Flow

To know thy work and to know
thy processes you must map!

A “team”
sport
Visualize the
work
Process
Mapping
Identify
improvement
opportunities
Eliminate the waste and
make improvements

Receive
Friend
Request
Do I know
this
Person?
Add to
Friends
list
Ignore
Request
Do I like
this
Person?
START
END
END
No No
Yes Yes

Superbill created
Procedures codes have to
be written in (they are not
listed on the Superbill)
Completed by the
Quotient Tech
Procedure codes used (one
for the test and one for the
interpretation:
96118
96120
Dr. T. enteres the diagnosis
codes:
Existing patients must use
code from last visit
New patients will be
assigned diagnosis code
after seeing Dr. T.
Superbills are included in
the packet of Superbills
that are sent from TAPN to
CPS (billing contractor)
Will the insurance
pay?
Balance transferred to the
patient (CPS bills the
patient
Yes
No
Quotient Billing Process (Draft)Basic Process Map

PROCESS XYZ
PatientExperienceTeamPatientQuotientTechProvider
· Provider requests
Quotient Testing
· Fills out Quotient Test
Order Sheet with
diagnosis codes
· Diagnosis Codes are:
314.00
314.01
348.3
388.40
· Schedules
patient
· Provide
“Benefits
Advisory
Notice” to
patient
Patient reads and
signs “Benefits
Advisory Notice”.
· Takes patient
height and
weight.
· Set up
Quotient
Machine
· Input patient
data
Takes practice
test on Quotient
Machine (with
parent present,
30 sec test)
Is observer
needed for
actual test?
Takes actual test on
Quotient Machine
(15-25 min depending
on age)
Observe
patient take
test
Print
results
Diagnosis
codes by
provider.
Test performed
immediately?
Prepares
Super bill
Prepares Super bill
No
Yes
Collect Flat Rate
Fee ($75)
Yes
No
Annotate
Procedure
Code on Super
bill
· Schedule follow-up
appointment with NP within
one week.
· Verify Super bill is
complete.
· Make copy of original order
and Super bill and place in
auditing folder.
· Place original Super bill and
order in Billing File.
· Place test results in Patient
Folder for follow-up
appointment
Collecting
fee upfront
ensures no
loss.
Swim Lane Map

Focus on Billing
• The Superbill is how we get paid
• Team identified 7 Superbill defects.
– Insurance verification not accomplished
– CPT Code missing
– Diagnosis Code missing
– No Referral attached
– Balance owed but not collected
– Co-Pay not collected
– New patient with demographics and copy of front
and back of insurance card missing

A Measure of Process
Capability Is Sigma Quality
Level (SQL)
Sigma is the Greek letter and a statistical unit of
measurement that describes the variability or
spread of data (the standard deviation of a
population).
Six Sigma refers to a methodology of continuous
improvement where the goal is to improve
process performance to meet customers’
requirements. This is what you are learning
about today.
Sigma Quality Level is a measure of process
performance with respect to customer
requirements.

The Goal of Six Sigma is ...
 Are your processes at
six sigma?
 How about pharmacy
transactions?
 How about the
operating room?
 Airline processes?
s DPMO* Yield
6 3.4 99.9997%
5 233 99.977%
4 6,210 99.379%
3 66,807 93.32%
2 308,537 69.2%
1 690,000 31%
* Defects Per Million Opportunities
Not every process needs to be at a Six Sigma Quality Level!

How to Calculate Sigma
Quality Level

SQL Calculator
Number of defect opportunites (O) per
Superbill. This is a fixed number.
O = 7
Total number (N) of Superbills
processed.
N = 446
Total number of Superbill defects (D). D = 48
This is the calculated number of
Defects per Opportunity
DPO = D/(NxO) 0.01537476
Calculated number of Superbill Defects
Per Million Opportunities (DPMO).
DPMO = DPO x 1,000,000 15374.75977
This is your Sigma Quality Level. Process Sigma = 3.66
Superbill Sigma Quality Level (SQL) Calculator

Sigma Quality Level
Conversion Table
Yield DPMO Sigma
6.6% 934,000 0
8.0% 920,000 0.1
10.0% 900,000 0.2
12.0% 880,000 0.3
14.0% 860,000 0.4
16.0% 840,000 0.5
19.0% 810,000 0.6
22.0% 780,000 0.7
25.0% 750,000 0.8
28.0% 720,000 0.9
31.0% 690,000 1
35.0% 650,000 1.1
39.0% 610,000 1.2
43.0% 570,000 1.3
46.0% 540,000 1.4
50.0% 500,000 1.5
54.0% 460,000 1.6
58.0% 420,000 1.7
61.8% 382,000 1.8
65.6% 344,000 1.9
Yield DPMO Sigma Yield DPMO Sigma
69.2% 308,000 2
72.6% 274,000 2.1
75.8% 242,000 2.2
78.8% 212,000 2.3
81.6% 184,000 2.4
84.2% 158,000 2.5
86.5% 135,000 2.6
88.5% 115,000 2.7
90.3% 96,800 2.8
91.9% 80,800 2.9
93.3% 66,800 3
94.5% 54,800 3.1
95.5% 44,600 3.2
96.4% 35,900 3.3
97.1% 28,700 3.4
97.7% 22,700 3.5
98.2% 17,800 3.6
98.6% 13,900 3.7
98.9% 10,700 3.8
99.2% 8,190 3.9
Yield DPMO Sigma Yield DPMO Sigma
99.4% 6,210 4
99.5% 4,660 4.1
99.7% 3,460 4.2
99.75% 2,550 4.3
99.81% 1,860 4.4
99.87% 1,350 4.5
99.90% 960 4.6
99.93% 680 4.7
99.95% 480 4.8
99.97% 330 4.9
99.977% 230 5
99.985% 150 5.1
99.990% 100 5.2
99.993% 70 5.3
99.996% 40 5.4
99.997% 30 5.5
99.9980% 20 5.6
99.9990% 10 5.7
99.9992% 8 5.8
99.9995% 5 5.9
99.99966% 3.4 6
Yield DPMO Sigma

Count 19 14 5 5 3 2
Percent 39.6 29.2 10.4 10.4 6.3 4.2
Cum % 39.6 68.8 79.2 89.6 95.8 100.0
Count
Percent
Type of Defect
O
ther
Balance
Collected
Diagnosis
Code
Co-pay
Referral
No
insurance
verif
50
40
30
20
10
0
100
80
60
40
20
0
Pareto Chart of Superbill Defect Types
Pareto Chart

Five Months Later . . . . .

Month
AmountinDollars($)
OctoberSeptemberAugustJulyJuneMayAprilMarchFebruaryJanuary
17500
15000
12500
10000
7500
5000
16377.17
10253.68
15584.94
11836.51
10740.36
9996.85
5765.97
5993.295995.28
7324.37
Time Series Plot of TAPN Front Desk Collections (2012)
Our improvement efforts began here
Wow!

The Way Ahead
• Implement improved clinic layout
– Relocate Records Room to current Storage Room
– Storage Room becomes Supply Room
– Exam Rooms move to current Research area
– Research area moves to current Exam Rooms
– Establish a dedicated Employee Break Room (in progress)
• Reassign/refresh employee duties and responsibilities
– Create “Patient Experience Team”
– Create Office Administrator
– Institute a time card system
– Create job descriptions (metrics to follow)
– Re-sign the Employee Manual (all employees)
• Improve/increase Quotient Machine utilization (Kaizen)

Front Desk
Research Office /
Exam
Codie | Matt
Lab
Records Room (with
desk area if needed)
Dr. T Office
Lab and
Research
Storage
Bathroom
Dr. T Exam
Room
Dr. T Exam
Room
CEO / Kim
Quotient Room
David Office
David Exam
Room
Conference Room
Waiting Room
Foyer
Foyer
Indicates that it probably ain’t moving
Supply / IT
Research Office /
Exam
Research Office /
Exam
Linda
Shavon | Nich
Jorge
Patient Experience Team

Objective: Increase Profitability
Definition: Be profitable

TAPN Executive Council
Comments/Decision Required
Measure Performance History
Initiative/s
Objective:
Measure:
Data Dictionary
Increase Profitability
Defects---% insurance verification prior to appointment (5 days)
Item $ Time
%
complete
Overall
Status
Create documentation for insurance
verification. Train PET.
0
Period Covered Target Actual Difference
1 Jul – 31 Jul 2012 0% 39.6% 39.6%
Count 19 14 5 5 3 2
Percent 39.6 29.2 10.4 10.4 6.3 4.2
Cum % 39.6 68.8 79.2 89.6 95.8 100.0
Count
Percent
Type of Defect
O
ther
Balance
Collected
Diagnosis Code
Co-pay
Referral
No insurance
verif
50
40
30
20
10
0
100
80
60
40
20
0
446 Superbills processed during this period and
there were 48 defects.
19 of the 48 defects were insurance verification.
Insurance verification accounts for 39.6% of all
defects.

Initiative/s
Objective:
Measure:
Data Dictionary
Increase Profitability
Defects---% of referrals validated prior to appointment
Item $ Time
%
complete
Overall
Status
Scan referrals into Centricity 0
Develop Centricity referral expiration
system
0
Period Covered Target Actual Difference
1 Jul – 31 Jul 2012 0% 29.2% 29.2%
Count 19 14 5 5 3 2
Percent 39.6 29.2 10.4 10.4 6.3 4.2
Cum % 39.6 68.8 79.2 89.6 95.8 100.0
Count
Percent
Type of Defect
O
ther
Balance
Collected
Diagnosis Code
Co-pay
Referral
No insurance
verif
50
40
30
20
10
0
100
80
60
40
20
0
446 Superbills processed during this period and
there were 48 defects.
14 of the 48 defects were non-validated referrals.
Non-validated referrals account for 29.2% of all
defects.

Objective: Increase Organizational
Efficiency and
Standardization
Definition:
Identify, create, or modify and
institutionalize processes that
increase our efficiency and
effectiveness.

Initiative/s
Objective:
Measure:
Data Dictionary
Increase Organizational Efficiency and Standardization
Overall Superbill Sigma Quality Level and Pareto of Defects
Item $ Time
%
complete
Overall
Status
Create Superbill SQL Calculator 100
Baseline Sigma Quality Level (SQL) 100
Period Covered
Target
SQL
Actual
SQL
Difference
30 Jul – 28 Aug 2012 4.0 3.66 .4
• 446 Superbills were measured during this period.
• There are 7 Superbill defects per Superbill:
• Insurance verification
• CPT Code
• Diagnosis Code
• Referral attached
• Balance collected
• Co-Pay collected
• New patient with demographics and front and back of insurance
card
• Recommend SQL target of 4.0. Remember that 6 Sigma SQL is
only 3.4 Defects Per Million Opportunities (DPMO). We are at
15,374 DPMO.

Lessons Learned
• Must have a Strategy and Vision (shared) or
you will just have a bunch of people at work.
• Must create a culture of continuous process
improvement.
• Lean Six Sigma (methodology) serves as the
both the methodology and engine that drives
clarity around the strategy and the metrics
that most reflect success with that strategy.

Vision: An new clinic layout that enhances the patient
experience and optimizes staff performance.
• Staff interaction
• Staff communication
• Communication
• Staff help (each other)
• Efficient work processes
• Better office flow
• Positive flow
• Patient centered focus
• Oversight of Dr. NPA clinic status (whereabouts)
• Efficient records retrieval
• Records retrieved in a more timely fashion
• Increased “shoe life”
• More privacy (HIPPA)
• Boost in staff morale
• Patient “happiness”
• Research will have more space
• Friction from staff as things move
• Research has dedicated fax machine
• Transportation
• Record retrieval time
• Excess motion
• Transporting
• Running around
• Wear and tear on the shoes
• Wasted time
• Searching
• Wait times
• Delays
• Patient complaining
• Complaints from patients
• Patient complaints
• Complaints from Dr. and NPA
• Frustration from the staff
• Duplication (multiple people looking for the same thing)
• Lost charts
• Scattering of records throughout the clinic
• Room to operate (smaller than current situation)
If we do this we can expect . . . . .
More of . . . Less of . . .

Questions

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