Lean Transformation in Healthcare

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The Value of Lean Six Sigma in Healthcare Delivery

Lean Six Sigma Excellence in healthcare delivery means helping improve patient outcomes while driving down the cost of patient care!

Doing so empowers healthcare providers to become more productive.  Now, more than ever, the healthcare industry needs to embrace the economic value proposition of improving productivity.  For the past 20 years, the industry has experienced negative productivity growth.  The economic consequences of this type of industry performance are stunning.  U.S. health care costs currently exceed 17% of GDP and continue to rise. A PricewaterhouseCoopers report projects that health care costs will increase 7.5 percent in 2013. That is more than three times the rate of inflation and the forecasted rate of US economic growth. That same report also notes that health insurance premiums are expected to rise 5.5 percent, in large part because employers are shifting costs to their employees.  Medicare’s Office of the Actuary forecasts that health care spending will jump to more than 7 percent in 2014.  At the same time, healthcare providers will face unprecedented cuts in reimbursement rates from Medicare and other third party payors.  The bottom line is that until true health care cost reform becomes a reality, these pressures will continue to cause problems for providers, for people’s health care and for the nation’s economy.  Healthcare organizations should use these pressures as motivation to embark upon a relentless pursuit of ever-increasing productivity.

What is the Value Proposition of Lean Six Sigma to the Healthcare Industry?

Lean six sigma is a quality improvement methodology that encourages perfection in the delivery of healthcare services.  From an operational perspective, lean six sigma’s value proposition is to improve productivity.

Value Proposition Operational 1.0

Improving quality creates a “chain reaction”.  When a provider organization improves quality, their costs go down.  Their costs go down to the tune of 20 – 40% of total operating expenses.  The decrease occurs because the costs of wasted effort reworking problems, correcting medical errors, reassuring dissatisfied patients, and reconciling invoices are eliminated.  As these costs go down, productivity naturally improves.  Productivity improves because of the increased use of human capital, technology and working capital in producing favorable patient outcomes.  Better patient outcomes and the termination of the hidden factory leads to greater profit margins and enhanced economic value.  The additional economic value funds growth and innovation, which lead to improved healthcare quality and high value jobs.

Simply put, the drive for better quality of  health outcomes and the drive for increased productivity are not mutually exclusive.  In fact, poor quality is not only poor for healthcare outcomes but also creates a drag on productivity.  As the chart below indicates, as quality improves healthcare cost per capita declines.  This correlation provides ample hope for the drive for improved productivity in the US. Healthcare system.

Cost vs Quality

Lean six sigma is a quality improvement methodology that also improves patient and stakeholder satisfaction.

Value Propositon Patient Satisfaction

From a patient and stakeholder perspective, implementing lean six sigma also creates a “chain reaction.”  When a provider organization implements lean six sigma, they continuously adapt their services to exceed patient needs, attitudes and perceptions.  They accomplish this by translating the voice of the patient into operational requirements.   Over time, they capture the market with greater patient satisfaction and a larger loyal customer base.  Consequently, they are able to make greater contributions to profits or surpluses.  The additional economic value funds growth and innovation, which lead to improved healthcare quality and more high value jobs.

What kind of results have healthcare providers experienced with lean six sigma?

  1. Mount Carmel Hospital Medicare+ Choice Plan reimbursement project reduced coding of working-aged Medicare recipients and resulted in $857k gain in net income.
  2. Commonwealth Health Corporation’s radiology project decreased the time between dictation and signature, reduced patient visit times, and improved staff scheduling.  The project saved $800,000, increased through put by 25% and freed up an additional 14 positions to fill open job requisitions.
  3. Wellmark Inc., (BC&BS Medical Plans)  physician addition to managed care networks project reduced the amount of time for adding a physician to the BC&BS medical plans.  The new process produced $3M per year in savings.
  4. Charlston Area Medical Center’s supply chain management project for surgical supplies reduced inventory levels and improved supplier relationships.  The project garnered an immediate savings of $163,410 and saved an additional $841,540 over the projects lifecycle.

Lean Methods at Miami Children’s Hospital

Why is TPMG’s Lean Six Sigma Excellence in Healthcare Delivery™ a superior program?

The focus of the program is on applying the concepts of performance management and continuous improvement to create and sustain a more productive, efficient and cost effective healthcare delivery organization.   Professionals learn to:

  • Execute the standard process improvement methodology which reduces healthcare delivery costs by 20% – 30%.
  • Use continuous improvement methods to improve patient outcomes and sustain patient satisfaction.
  • Apply lean methodology and proven six sigma practices, in healthcare facilities, that improve operational efficiency and service excellence.
  • Lead hospital executives and performance improvement staff in identifying lean opportunities across the enterprise.
  • Oversee development and execution of lean project plans to support process improvement initiatives.
  • Use Lean 5S, Value Stream Mapping, and other lean process activities in support of performance improvement initiatives.

The value is affordable for any budget.

For one affordable price a practice, hospital or system can take advantage of:

  1. Excellence in Healthcare Delivery Training
    • Executive Champions – up to 25 candidates
    • Lean Healthcare Basic Training for Managers and Individual Contributors – up to 25 candidates
    • Lean Healthcare Black Belt Certification Training – up to 25 candidates
    • Lean Healthcare Green Belt Certification Training – up to 25 candidates
  2. 120 hours of Lean Six Sigma Healthcare Master Black Belt coaching and mentoring.
  3. Free licenses to TPMG’s Lean Six Sigma Excellence in Healthcare Delivery™ training materials.

Experience and expertise counts.

  1. Benefit from a curriculum and best practices built by practitioners from the nation’s finest healthcare systems.
  2. Realize the benefits of greater productivity and cost improvements.  Improvement projects deliver an average of $256,000.00 in hard dollar cost savings per project.  TPMG certified lean six sigma black belts can deliver 4 to 6 projects per year.
  3. Receive mentoring and best practices from certified Lean Six Sigma Master Black Belts with more than 20,000 hours of experience from a cross section of industries like:  healthcare, insurance, shared services, financial services, logistics, call centers, and telecommunications.

To learn more about High Quality, Affordable Lean Six Sigma Training for Healthcare contact TPMG directly by CLICKING HERE!

®All rights reserved 2012
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