According to the American Hospital Association’s Trendwatch, hospitals in America averaged operating margins between 2 and 7 percent between 1993 and 2015. Total margins for the same time period were between 4 and 8 percent(1). With fairly small profit margins, hospitals and healthcare organizations have to keep tight reins on processes and costs. But costs can’t be cut at the expense of patient care or compliance, which means strategic improvements are a must within healthcare environments.
Becker’s Hospital Review notes that hospitals compete heavily in multiple areas, including quality of care service and the cost of – and they aren’t just competing for end-users such as patients (2). Hospitals, and all healthcare providers, compete for referrals, industry partnerships, accreditations and contracts with insurance companies and payers. Because processes in healthcare organizations have so many customers, it can be difficult to make improvements that enhance services for one customer without negatively impacting outcomes for another. A change that makes a service faster for a patient might make it more expensive; a change that reduces costs could be noncompliant with one or more regulations. The DMAIC methodology helps teams consider all customers and outcomes to avoid such issues.
At the heart of most healthcare organizations – even those that serve in auxiliary capacities – is service to the patient. This is particularly true in clinical circles, where errors can lead to negative patient outcomes, including longer treatments, healthcare-related illness and injuries, and even death. Not only do these outcomes create a negative impact to the organization’s brand and open possibilities for expensive malpractice suits, but they are also undesirable because healthcare employees are in the business of saving lives and improving living, not in making things worse. Six Sigma can be used in clinical settings to improve processes and make positive outcomes more likely.
Six Sigma can be used to reduce errors throughout the healthcare service chain. Errors in administrative tasks, such as patient enrollment or claims billing, lead to delayed care or payment. Errors in inventory ordering lead to shortages that impact the ability to serve patients’ immediate needs. Six Sigma has been used in healthcare to reduce physician error, reduce patient wait times, decrease supply chain steps and costs, create stronger reimbursement flows, and decrease the time it takes labs to return results. Those are just a few uses of Six Sigma in healthcare.
Challenges of Implementing Six Sigma in Healthcare Industry
While Six Sigma can be extremely valuable in a healthcare setting, the methodology does face some challenges specific to the industry. One of the first, and arguably one of the largest, unique challenges Six Sigma experts face in a healthcare setting is compliance. Yes, almost every industry these days has a compliance or regulatory requirement somewhere – and you’ll see that throughout these last units. However, the compliance element for healthcare can be constraining in ways that require creative and strategic thinking on the part of Six Sigma experts.
Six Sigma experts should never try to work around or over compliance requirements. First, the regulations of the industry are automatically part of the critical-to-quality characteristics a Six Sigma team should consider. If something is truly a regulatory requirement, then Six Sigma teams must honor it and treat it as a quality requirement. Working over that requirement means you are producing a process or product that is not within quality standards.
That being said, this can be frustrating for Six Sigma experts, particularly if they are used to working in other industries. Healthcare quality requirements, which include clinical requirements, Malaysia Clinical Practise Guidelines requirements, and dozens of other requirements from insurances companies and Ministry and federal agencies, can force muda (Waste) into a process. Regulations often require duplication, intense quality reviews, or overproduction. In such cases, Six Sigma teams must “make the best” of these situations by finding other areas to work with.
It’s important to note, however, that some muda that healthcare organizations associate with compliance is unnecessary. One job of the Six Sigma team is to identify unnecessary compliance work and replace it with processes that ensure quality without waste. Here, you find a second big challenge Six Sigma experts are likely to find in healthcare settings – a challenge that is found in most industries and which was covered in the beginning of this book. When people are used to doing something a certain way, they come to believe they have to do it that way. In healthcare, this often takes the form of the statement, “We have to do it that way because of the regulation/law/government/accrediting organization.” Six Sigma teams must work hand-in-hand with compliance to understand when this is true and when a more efficient quality process can be put in place.
(1) http://www.aha.org/research/reports/tw/chartbook/2015/chart4-2.pdf9
(2) http://www.beckershospitalreview.com/lists/200-hospital-benchmarks-2015.html