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Lean 6 Sigma: The Ultimate Cure For Healthcare?

By: Oscar L. Orias
One of the newest concepts being thrown around in the Texas Medical Center seems to be 6 Sigma and lean management. With many hospitals facing smaller payments and tighter quality controls by CMS (Centers of Medicare/Medicaid Services), clinicians and administrators are thinking of ways saving money while maintaining a good service level. They have turned to 6 Sigma, a methodology that has seen successes in industries like cell phones, computers, and cars. Of course with this methodology, there have been failures in the past. In a study more than 60% of corporations that implemented Lean 6 Sigma have failed to yield the target results. Will this result reoccur within healthcare?

How Quality Variation is Killing Healthcare
One of the biggest threats, according to many experts is the variation of quality within the healthcare system. Wide variations in quality lead to reduction of the overall quality of service and increased cost, two very noticeable patterns seen today in healthcare and two things that Lean 6 Sigma focuses on. These quality issues come in the forms of variation like utilization, charging insurances, quality due to geography, quality of care due to socio-economic status, and services provided. There is also a quality issue when it comes to paying insurances and the government. This particular quality issue increases administrative costs of the hospital (a major cost in healthcare). The same pattern is seen with material and logistics management and utilization. For example, many healthcare systems don’t know the average amount of resources used most procedures. Many times they order materials based on past usage or other less accurate measuring techniques.

How does increase variation cause drops in service and increase costs? For starters, trying to determine how to utilize resources with such a wide range of variations becomes complicated and costly. This also leads to an increase of errors, since variations leads to disorganization. Errors in healthcare can become a costly marketing, financial, and even legal ordeal. For one patient it might cost a health care system $5000 per yr but for another similar patient due to differences in variation, it might cost $4000. With the government and private insurance reducing reimbursements, traditional methods of tackling expenditures like cost shifting are no longer viable options. Another way how variations make service worse by sending mix signal and expectations for patients. Patients retail customers expect a consistent level of service. With variations, trying to create steady level of service become very difficult. By delivering consistent levels of service, the organization can create sustainable patient satisfaction. Sustainable patient satisfaction is much easier and cheaper to manage than prospecting for new patients.

Why Lean 6 Sigma?
One of Lean 6 Sigma’s main goals in increasing quality is reducing such variations and reducing waste and non-value added activities. Lean 6 Sigma says that by reducing variations you improve service, which leads to real permanent cost savings for the company. Lean 6 Sigma can give you that consistency that patients want out of an experience in healthcare. Consistency also makes utilization, financial and human resource management much easier to measure and handle. Reducing variation in quality also make coordination operations and business strategy between different geography location smoother.

Another huge reason for Lean 6 Sigma comes in the form of creation of ACOs and CMS 33 points of quality. Now hospitals that service Medicaid and Medicare patients are heavily monitored for quality assure of the patient. ACOs under CMS reward healthcare systems that reduce cost and improve quality; something that lean 6 sigma excels in. Lean 6 Sigma traditionally tackles this issue directly by using several of this concepts, basic tenants, and methodologies such as:

1. Clear and measurable goals from 6 Sigma projects. Ex.: Healthcare systems can use this in reducing hospital staph infection.
2. Healthcare systems and institutes have to be deeply committed to continuous and quality improvements.
3. Engaging in Continuous Improvement using the DMAIC methodology. This stands for define, measure, analyze, improve, and control. These steps are utilized by black belt professionals and used in all stages of Lean 6 Sigma.
4. Using statistical tools like standard deviation in the bell curve to measure the variations between standard deviation. The farther the standard deviation is away from the curve, the higher the likelihood that errors and variations of quality will occur. The ideal goal is 1 sigma.
5. Empowering all employees. Bridge the gap between administrators and clinicians would be a good start to empowering employees. Make sure as an administrator that doctors have the ultimate input.
6. Reducing waste.
7. Reducing non-value added business procedures and units
8. Standardizing organizational and procedural issues.
9. The use of visuals signs or aids to help workers

Is Lean 6 Sigma Merely False Hope and a Fad?
With reductions in quality of service and an increase of cost, you would think that Lean 6 Sigma is a slam dunk for healthcare, but many administrators and experts are saying not so fast. More than 60% of Lean 6 Sigma projects fail to yield the desirable goals. Much of it is due to the complexity of healthcare, the discipline needed for real Lean 6 Sigma, and the changing nature of healthcare legislation.

Lean 6 Sigma faces many challenges due to the nature of health care. For far too long the culture of healthcare has been to consume and use the latest innovation and instruments without taking to account the cost and resources consumed. Part of the reason is that hospitals have been traditionally not-for-profit research institutes that are more concerned with using new technology; not reducing costs. Lean 6 Sigma would make these institutes do a complete transformation and many feel that Lean 6 Sigma is way too unproven to make such a large investment in money, time and energy. Another reason is that becoming a Lean 6 Sigma champion is difficult in a healthcare setting because many physician feel that power of treating patient or micromanaging them is too great.

Another problem with Lean 6 Sigma is that many companies simply don’t have the time, discipline, company wide support, and resource to sustain 6 Sigma as a long run methodology. For example, hospitals today are concerned with filling as many beds as possible with as many patients as possible. According to 6 Sigma, the quality of care of a patient is more important than the quantity of bed filled. For many healthcare systems the fill rate is very important to generating revenue to keep costs down. Many managers might not have the discipline or have the company wide support to put quality always over volume. Of course this discipline problem is made worse by the uncertainty of healthcare and its future.

Healthcare legislation also plays a huge role into the uncertainty of Lean 6 Sigma in healthcare. Lawmakers and health leaders agree that a change is need but what kind of change is still up for debate even after the passing of the new healthcare legislation. For example CMS reduced the quality measure from 65 points to 33. Heck Republicans in many states are trying to remove the law altogether. This unstable nature makes the jobs of healthcare administrators harder, especially when they are trying to implement and sustain a complex program such as Lean 6 Sigma.

Fundamental or Fad?
Lean 6 Sigma creates some interesting solutions as well as challenges in healthcare. For the most part, it brings the important focus of reducing quality variations as a way to reduce cost while improving the patient experience. In this blogger opinion I think Lean 6 Sigma will fall short of goals set by many healthcare systems but it will bring concepts like waste reduction, creating quality by reducing variations in care, reverse logistics, lean management, and DMAIC to the culture of healthcare. These concepts, ideas, and methodologies are sure to make a positive impact in the future. At the end Lean 6 Sigma will leave a positive legacy for the health industry as a whole.

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Becoming an Agents of Adjustment vs. Agents of Change

By: Oscar L. Orias
One of the constant things in life is change. People claim to love change and improvement, but in reality change is a very difficult pill to shallow and most of them hate real change with a passion. For businesses trying to stay competitive in this globalized world change is inevitable and very difficult. Any business manager, consultant, or employee can tell you how they have at one time or another failed at a cause they champion at their company. Even when introducing well-planned and thought out change. In politics you see this all the time, politicians rallying on the moniker of change and improvement but when he or she tries to implement such changes they are met with great resistance and are vilified. For businesses and nations stability is key but adapting to change is crucial for success.

Some of the Reasons Why Hate Change
Change is like the economy, some will gain and some will lose. For many they fear that gains and losses can come in the form of losing a job or having instability in the workplace No one likes having instability in the workplace and environment. It leaves an air of uncertainty, animosity, discontent, and disconnect. A great example of this changes is the evolution in technology and automation, which resulted in comfort for consumers and increased in productivity but at the expense of jobs. Much of the unrest today you see in U.S., Middle East, and Europe is a result of loses of jobs due to the evolution of technology and automation. Most of those job will never comeback or be available ever again. In fact in the U.S., companies have gone back to near pre-recession productivity levels with a smaller workforce. Advancements in technology and business engineering have made this possible. Understanding this concept of gains and losses is important for trying to convince people of change and improvement.

Another reason why people hate change is that it implies that the job and how they did the job was wrong. Most people take pride in what they do and how they do it. One of the worse thing you can do to a person is to wound their pride or belittle their lively hood. Sometimes agents of change end up doing both at the same time. In the medical industry, administrators and clinical managers have had issue in trying to modify or make suggestions on reducing cost and improving patient care. For hospital staff and clinicians trying to adjust to new ways of purchasing and protecting resources is seen as difficult and an extra chore to their already busy lives. Many feel that their way of live and lively hood are being changed with little input from them. No one ever likes having to do more than they have to without proper additional compensation and without being properly consulted. As an agent of adjustment you have to keep these things in mind when trying to teach new and champion programs that result in deep changes in the organization.

Some Things You Can Do To Become an Agent of Adjustment

The reason I use the term Agent of Adjustment over Agent of Change is that Agent of Adjustment implies that you are merely trying to improve on an already great system with great employees. Like I stated before change is difficult and painful because it requires heavy readjusting, work, and fear of instability. Adjustment implies you are merely making suggestion to make life easier for the employee, customer, and company. This doesn’t mean you aim for a lower goal, what an Agent of Adjustment means is that you aim for that same high goal but you address everyone’s point of view. This doesn’t mean every employee or organization will get on board with you but it does make it easier to impliment real change. Like the old adage goes “If you shoot for the moon even if you miss your will amoungst the stars.”

In order to live up to the title and name Agents of Adjustment must be able to have high goals and expectations, a well thought out plan of attack, execution, and a high level of persistance in getting what you want. Here are a few pointers that will help you become a better “Agent of Adjustment”:

1. Look at things for the perspective of the employees or managers you are making suggestions to. Like professional selling you need to know the wants and needs of the people you are targeting and use it to sell your idea. People are much more inclined to listen to someone that make suggestion on improving their lives than imposing new alterations (this comes back to the adjustment vs. change argument). Always make sure that the change benefits them much more than it would benefit you.

2. Make sure the lines of communication are open between you and the people you are consulting or managing. When making adjustments make sure that you get the views and concerns of all the parties involved. One of the most common errors in implementing new ideas and programs are ignoring the needs of the people who are directly impacted by it. Don’t be afraid to get suggestions and criticism from them, they may end up saving you or the company from a flawed plan. The only thing people hate more than change is change that is ill-planned and poorly executed.

3. Identify and work with key figures and people that are resistant to change. Sometimes it takes one person to shut you down completely. When you sit down and address the person’s concerns you can get sense of why they feel that way and convince them why the change would benefit them. Most of the time the motives are reasonable and understandable.

4. Never criticize. We as human beings have a tendency to pick out people’s faults first before making suggestion. By doing that their defenses go up and they will refuse to listen to us. Criticism causes any message no matter how good it is to fall on deaf ears. As an agent of adjustment you always make suggestion with making the lives of who will be influence easier. This is why it is important to know the needs and wants of the organization and employees. Adjust your ideas to fit what are their needs and concerns.

5. Adjustments and long lasting improvements are a team effort from all levels of the organization. In order to make adjustments last, you must have a total team effort and commitment from all people in the organization and all people being directly affect by the change. This where the use of cross-functional teams come into play. You are as strong as your weakest link.

6. You should replace words like “must” to “suggestion” and “selling” to “educate” in most cases. This doesn’t mean you shouldn’t be persistent and direct but remember to keep the point of view and needs of your target in mind.

Final Notes
This blog is just an overall guideline to a difficult and challenging issue of addressing and implementing change. Becoming an agent of adjustment in another country and culture requires adaptability and openness. You must familiarize yourself greatly with the culture, values, and languages of that country. What works in America won’t work in Japan, Italy, or Brazil. The most important thing I want the readers to get out of this blog is that an agent of adjustment always looks at things from the point of view of the employee and to never criticize others. Always make sure that what you are trying to educate them benefit them much more than it benefits you.