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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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Work Cited

http://www.qualitydigest.com/may00/html/sixsigmapro.html
http://www.improvementandinnovation.com/features/article/why-six-sigma-works-service-environments/
http://online.wsj.com/article/SB10001424052748703298004574457471313938130.html
http://www.sixsigmaonline.org/six-sigma-training-certification-information/articles/six-sigma-and-health-care.html
http://www.ahrq.gov/news/qualfact.htm
http://www.sixsigmaonline.org/six-sigma-training-certification-information/articles/six-sigma-what-is-the-dmaic-.html
http://www.thefreelibrary.com/Understanding+the+impact+of+variation+in+the+delivery+of+healthcare…-a099697143

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The Latin Shift Series: How Latinos Are Changing Health Care Pt. 1

The Potential Hispanic-American Public Health Crisis

By: Oscar L. Orias

The United States government has released the new census report and Latinos have surpassed all predictions by reaching 50 million people. Latinos now make up more than 16% of the population and there are no signs of slowing down. In Houston, Latinos make up more than 40% of the population and contribute hundreds of millions of dollars to our economy Their number in Houston the rest of the country keep growing at an exponential rate (43% increase since 2000). With this rapid shift in population come shifts in customs, culture, lifestyle, and health to this nation. For Latinos health and wellness is becoming a concerning and dangerous issue. 1 in 2 Latino children will develop type-2 Diabetes and 1 in 4 Latinos are obese. The numbers are similar to other minorities groups, especially if they are below the poverty line. This is due to factors such as low socio-economical status, income levels, and the change in diet and lifestyle from Latin America. Since Latinos children are the fastest segment group in the U.S., their well-being is crucial to health of the country. Unfortunately, the government has done little in the way recognizing and dealing with the problem from a public health aspect. This is still seen by many as a Latino problem not an American problem. With such exponential growth, the nation can’t afford to ignore Hispanic concerns. This series raises awareness of the different health aspects and problems that Latinos face. Latinos are changes how health care is viewed, implemented, consumed, financed, and delivered.

Diabetes and Obesity: The Latino Killers?

Latinos came to this country to achieve and share the American dream with their family. That American Dream has come at a high price to the fitness and well-being of the Latino family, especially children. More than 1 in 2 Latino children will develop diabetes in their lifetime and Mexican-Americans are more lightly to become obese. These statistics become bleaker when you look at the fact that Hispanics are 1.6 times more likely to die from diabetes than their White counter parts. For Mexican-Americans, they have 56% higher chance of dying from diabetes than Whites.

Diabetes and obesity are catalyst to health problems down the road. They can cause other concerns such as heart failure, cancer, renal disease and failure, pregnancy complications, and premature death. It can even damage and disrupt bone development in teens. Obesity has been linked to psychological and social problems in children, especially young adults. It can even lead to diabetes down the road.

The direct economic toll to treat these arrays of diseases reaches in the tens of billions. In 2007 the economic cost of treating diabetes was $127 billion. According to the American Diabetes Association this was a $42 billion dollar increase in spending from 2002. For obesity the toll is as high as $147 billion annually (2006 figures). The indirect economic toll such as lost productivity and quality of life are also very high. For diabetes the indirect cost is over $58 billion with a loss in national productivity of $26 billion.

The Burden of Diabetes and Obesity to the Households

It is estimated that diabetes cost on average $11, 744 per person per year. For obesity, patients spent an average of $1,429 more on health care than did people within the normal weight range. Even with adequate insurance coverage and government assistance many Latino families, especially ones below the poverty line have a difficult time paying for treatments. Families sacrifice basic and essential needs like heating and food in order to pay for treatment and prescription medication. Many of these impoverished patients end up accumulating huge credit card debts in order to pay for these large expenses. Paying these credit card debts and their high interest rates can cause long-term and even generational economic problems. These families focus most of their resources in combating diseases and debt at the expense of important long-term financial investments like college education (Latinos rank near the bottom in college attendance). This isn’t strictly a Latino issue, these diseases effect all races and ethnicities from the lower socio-economic standings.

Diabetes and obesity create loses in financial production for families and the community. These loses in productivity are devastating for families living on the fiscal edge. Treating diabetes and obesity related disease drains a family’s time, energy, and emotions. That same time and energy could utilized in becoming more financially and socially productive. These poor families end up making hard decisions and creating bad habit just to pay for treatment. Many of them end up consuming inferior foods and goods that are low in nutrients and high in fats, calories, and sugar. These foods are usually inexpensive juices and soft drinks with high amount of fructose corn syrup and fast food burgers laden with saturated fat and calories. For these families eating from the dollar menu at McDonald’s cheaper than buying leafy greens and fruits. In many Latino neighborhoods junk and fast food is more accessible than a grocery store. This ends up being a vicious cycle of disease that never gets properly treated and managed.

Part 2: Inadequate Care for Latinos

These grave health care issues are compounded by the inadequate access to care for Hispanics. This lack of care stems from several factors such as socio-economical standing, government policy, underinsurance, lack of income to treat these diseases, and how Latinos culturally view medicine and certain treatments. The next blog we will explore and go in-depth into these factors, especially into the socio-economic conditions that affect all races and ethnicities.

Stay tuned and please comment on my blog! All comments are welcomed and appreciated!

Citation:
Wolfe , Lahle A. “1 in 2 Hispanic Children May Develop Diabetes.” World Diabetes Day USA. 1 Oct. 2009. Web. 08 Apr. 2011. .

Pallarito, Karen. “How the Costs of Type 2 Diabetes Add Up – Type 2 Diabetes – Health.com.” Health.com: Health News, Wellness, and Medical Information. 6 May 2008. Web. 08 Apr. 2011. .

Holden, By Diana. “Fact Check: The Cost of Obesity – CNN.com.” CNN.com – Breaking News, U.S., World, Weather, Entertainment & Video News. 9 Feb. 2009. Web. 08 Apr. 2011. .

“Direct & Indirect Costs of Diabetes in the United States – American Diabetes Association.” American Diabetes Association Home Page. Web. 08 Apr. 2011. .

Henneberg, Molly. “Hispanic Boom Brings Big Changes for Nation and Its Politics – FoxNews.com.” FoxNews.com – Breaking News | Latest News | Current News. 24 Mar. 2010. Web. 08 Apr. 2011. .