When you consider that 30-40 cents of every dollar spent on healthcare, or more than a half-trillion dollars annually, is spent on costs associated with unnecessary, inefficient and even unsafe care, it should come as no surprise that healthcare leaders are looking for fresh solutions.
In this continuation of our look at process improvement, we see how baby steps taken with small initiatives can lead to giant strides when Six Sigma or Toyota Lean Process Improvement principles are implemented.
Many healthcare leaders are onboard with process improvement at their facilities. Where they are lagging is in the full execution of these initiatives. The American Society for Quality conducted a study of 77 hospitals and found that 53% of hospitals have some type of Lean initiative while 42% are using Six Sigma. Interestingly, the same American Society for Quality study reported that only 4% of hospitals have full deployment of these process improvement initiatives.
The study concludes that in order for Lean management to truly be effective it has to be driven by a unified team mindset—everyone has to believe in and act Lean. Unfortunately the study found that 30% of hospitals are still lacking leadership buy-in while 59% are lacking resources. Two healthcare systems—Virtua and Virginia Mason Medical Center—exemplify the accuracy of that conclusion. Both providers have full management buy-in for their process improvement programs and they are staying ahead of the cost curve.
Consisting of four hospitals, Virtua has been using Six Sigma to improve its business operations since 2000, when leaders created a strategic partnership with General Electric.
Rich Miller, CEO and president of Virtua has seen how using this methodology has shaped everything it does.
Virtua, which earns net revenue of $1 billion annually, started the process by talking to managers and looking at their patient and employee satisfaction scores as well as quality scores and operating income.
"When we looked at the results they were all very middle of the pack, and that wasn't good enough," Miller explains. "I wanted to change us to a culture of excellence."
So in 2001, Miller took a bold step, and after doing a year of Six Sigma targeted pilots, he rolled management philosophy out system-wide. They invested just $1 million, which went toward training managers to be "black belts" in process improvement parlance. Once trained, the managers began to look for inefficiencies and ways to streamline the system.
They looked at all processes in all four hospitals—concentrating on areas of quality and safety. "Now we use this tool relentlessly. But it's really important that people understand that this tool isn't a short-term measure you turn to in tough economic times," he says. "You need the consistency to see the full results."
And they did see results, to the tune of $28 million overall since implementation as well as quality and patient safety improvements. For example, since applying theSix Sigma Toolbox the system has seen their core measures improve in areas such as dysphagia screening for patients being assessed for a stroke.
Virtua's clinical assessment rate is 90%, which exceeds the American Heart Association's "Get with the Guidelines" benchmark of 85%. Virtua was also part of the Joint Commission's Center for Transforming Health Inaugural Six Sigma Project for adherence to the World Health Organization's guidelines for hand hygiene—improving their hand hygiene by 118%.
"It's really a misnomer in healthcare that if we take the money out of the system that you reduce quality. Every other industry has shown that they improve quality when they reduce costs. You have to take the variation out of the process and reduce fragmentation, and then you'll reduce your costs," says Miller.
Healthcare IT implementation is a good example, Miller says, "We spend a lot of money on IT and use 20% of it. It's because we are implementing this technology into an already fragmented process. You need to correct your processes before you add the technology so you don't repeat the same mistakes."
Those who healthcare leaders look to roll out this type of process improvement initiative may want to start by analyzing their infection rates, medication errors rates, and readmission rates, according to Miller.
"Those are the areas that offer a broad brush for cost savings," he says.
"[Six Sigma] is so relevant today because we have to reduce variations and costs. Healthcare leaders have to think about tools that can change the paradigm. If you're not thinking about the different tool kits you need to move forward, that survival will be difficult," says Miller.
Virginia Mason Medical Center, Seattle, WA
Virginia Mason Medical Center has literally written a book—Transforming Health Care—on how to apply process improvement in a healthcare setting. Virginia Mason operates a system of integrated health services including a large, multi-specialty group practice of more than 480 physicians, a network of neighborhood clinics, an acute care hospital; and a research institute.
Having started the transformational journey in 2002, it began using Toyota's Lean Process improvement approach and then eventually created its own specialized process improvement model, dubbed the Virginia Mason Program System (VMPS). Virginia Mason was the first to integrate the Toyota philosophy throughout its entire system, and a few years after working through many of its own process flaws found VMMC had become an industry model for how to apply this system.
Virginia Mason's CEO Dr. Gary Kaplan and his senior management team moved its facility from a Lean approach into VPMS, a system-wide program that changes the way it delivers healthcare by improving processes as well as patient safety and quality.
"It's important to differentiate that this is a way to manage and lead—it's a management system—not a program," says Kaplan.
It's a key distinction, he notes, because Virginia Mason found that many in healthcare are keen to use Lean or Six Sigma tenets to target areas of the business for process improvement with some limited success, but often fail to roll it out on a broader scale to reap the full reward.
"Healthcare is known for following the fad of the month or year to save money … but we look at this as comprehensive management system that's also about quality, safety and patient and staff satisfaction," he says.
"In the early years [of adopting this program] we said we can't be successful unless we change the mind of senior leadership, so they were the first people we trained … it's really a critical piece of the process," he says.
The return on investment for this type of system-wide process improvement, Kaplan says, extends beyond revenue enhancement. VMMC has also seen its professional liability expenses decrease to the tune of millions of dollars for several years now and its self-insured retention requirement dramatically decrease from the previous year. Plus with healthcare reform taking hold and the decreased reimbursements hitting everyone's bottom line, Kaplan believes that this approach is even more relevant today than ever.
The quick fixes are few and far between these days for health systems and process improvement programs—though they can work on a small scale—have an even greater potential when they are rolled out on a larger one. As healthcare leaders look for strategies to help them generate more revenue, process improvement methodologies can cut out system waste while improving the overall quality of the care that is delivered. Ultimately that will generate even greater returns.
Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
