Process Excellence in Healthcare

“Measuring Outcomes” November 3, 2005

Hung Le, Ph.D. Six Sigma Master Black Belt Northrop Grumman Mission Systems

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What is Six Sigma?

• Six Sigma is a management philosophy based on meeting business

objectives by reducing variation

– A disciplined, data-driven methodology for decision making and process improvement

• To increase process performance, you have to decrease variation

Defects Defects

Too early Too late

Delivery Time

Reduce variation

Delivery Time

Too early Too late

Spread of variation

too wide compared to

specifications

Spread of variation

narrow compared to

specifications

• Greater predictability

in the process

• Less waste and

rework, which lowers

costs

• Products and

services that perform

better and last longer

• Happier customers

Six Sigma is about satisfying

customer needs economically

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What is Six Sigma?

A disciplined, data-driven methodology, which links process

improvement to organizational strategic objectives, for

improving program and business performance

Focuses on process performance by eliminating defects and reducing

variation

• Reduces waste and rework, which lowers costs

• Creates value though better products and services

Establishes a common language and set of tools

Identifies what is critical to quality in the eyes of the customer

Uses metrics to measure process capability

Six Sigma is about satisfying

customer needs economically

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Process Improvement Model

Y = f ( Xi )

“The outcome Y is a function of inputs Xi”

Implications Y varies; reducing defects means controlling the variance Changes in the X’s should produce changes in Y

Extensions: If we can’t express Y in terms of numbers , we don’t know enough

about it If we don’t see a change in Y (and ideally a change in the

variance of Y), we have not created an improvement

Process Variables or Process Variables or

Internal Knobs (Xs) Internal Knobs (Xs)

Input Input

Variables Variables

(Xs) (Xs)

Outputs Outputs

(Ys) (Ys)

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Concept of defects at the core of six sigma

Critical to Quality Customer Performance

Characteristics (CTQ) Requirements of a Product

or Service – Big “Y”

y Measurable Y

X Input that affects y

Defect Any Event That Does Not

Meet the Specifications

of a CTQ

The Language of Six Sigma

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The Six Sigma Challenge Is 1% Acceptable?

20,000 articles of lost mail per hour

Unsafe drinking water for almost 15 minutes

each day

Two short or long landings at most airport daily

No electricity for almost seven hours each month

200,000 wrong drug prescriptions per year

5,000 incorrect surgical operations per week

Source: Failure Mode & Effects Analysis, by D.H. Stamatis, 1995 ASQC Press

Even 99% good is not good enough

Seven articles lost per hour

One unsafe minute every seven months

One long or short landing every five years

One hour without electricity every 34 years

68 wrong prescriptions per year

1.7 incorrect operations per week

99% Good (3.8 Sigma) 99.99966% Good (6 Sigma)

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The average U.S. company is in the 3-4 sigma range

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Sigma Scale of Measure

1,000,000

100,000

10,000

1,000

100

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1

PPM

Domestic Airline Flight

Fatality Rate (0.43 PPM)

3 4 5 6 2 1

IRS - Tax Advice

(phone-in)

Source: GE Medical Systems

Antibiotic Overuse

Inpatient Medication

Inaccuracy

44,000-98,000 Preventable

Hospital Deaths (IOM Report)

Benchmarking Process Capability

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Dealing With Problems

Using Six Sigma Methodology: Define, Measure, Analyze, Improve, Control (DMAIC)

Effective in some cases, but can result in perceptions of fire

fighting and in recurring problems

Define Measure

Analyze Improve

Control

STATISTICAL PROBLEM

STATISTICAL SOLUTION

PRACTICAL PROBLEM

PRACTICAL SOLUTION

Six Sigma Way Traditional Way

NEXT PROBLEM NEXT PROBLEM

PRACTICAL

PROBLEM

PRACTICAL

SOLUTION

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Benefits

• Six Sigma produces superior financial results and dramatically

improves a company’s bottom-line profitability

– Northrop Grumman Mission Systems achieved a benefit of $160 million in the

first year

– GE Capitol over $1 billion in value since 1995

– JP Morgan created $510 Million in value in year one

– AIG found $38 million in revenue from one of its first nine projects

– Johnson and Johnson over $400 million in two years

– Savings in excess of $2 billion in direct costs since 1994 at Allied Signal

General Electric’s Jack Welch, a self-proclaimed cynic when it comes to quality programs, describes Six Sigma as “the most important initiative GE has ever undertaken...”

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A Logical Evolution

Six Sigma builds on preceding quality initiatives

Continuous Process Improvement

Total Quality Management

ISO 9001 Standards/Malcolm Baldridge Quality Award/CMM

These initiatives were often characterized by

Focus on detection and correction of defects

Internal focus on the company

Limited implementation within an organization

Minimal supporting infrastructure development

Focus on improving individual operations with unrelated processes

Six Sigma takes the next logical steps

Create processes so defects/errors don’t arise at all

External focus on the Voice of the Customer

Implement corporation-wide/change corporate culture

Create well-defined roles and supporting infrastructure

Focus on making improvements in all operations within a process

Drive statistical/data-based decision-making using a disciplined methodology

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Leader Role: Make sure the gains stick. Ensure someone is held accountable for ongoing defect reduction.

• QC Chart • Documentation • Monitoring

CONTROL

Leader Role: Push for innovative, breakthrough thinking supported by cost/benefit and risk analysis

Leader Role: Don’t allow a single project to proceed without a Business Case and a Sponsor who is willing to commit to the results

Leader Role: Ensure that true “root causes” of process performance are identified - not just symptoms

Leader Role: Insist that data, metrics, are collected

IMPROVE

• Select Solutions • Risk Analysis • Piloting • Planning

• DOE • Regression • ANOVA • t-tests • Process Analysis

ANALYZE

MEASURE

• Data Collection Plan • Gage R&R • Control Chart • Capability Analysis

The synergy happens when everyone follows the same path!

DEFINE

• Charter • VOC • SIPOC • CE Matrix

Six Sigma DMAIC Roadmap

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The Industry’s Governance Model

Governs the Six Sigma Initiative

Six Sigma Champion Team Six Sigma PO Leader

Business Area Champions Process Owners

Finance Money Belt

Master Black Belt

Black Belt

GREEN BELTS

Manage processes to meet strategic and tactical goals

• Mentors Black Belts and Green Belts • Plans Next Projects Black Belt

• Project Leader • 2-Year Assignment

Everyone is Involved

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Successfully Implementing Six Sigma

• Six Sigma must be a strategic imperative and tied to strategic goals

- It’s Our Business

– Relentless leadership commitment and intensive communication are

necessities

– Business and project goals should be anchored in customer satisfaction -

Completely Satisfy Customer Needs Profitability

– Decisions must be driven by data - measurement is not an option - it must be

pervasive and it must have teeth

– The best talent has to be put on the case (Green & Black Belts)

– Rewards, Recognition, and Incentives must be explicitly linked to Six Sigma

training, action leadership, and results

Six Sigma is about satisfying customer needs economically!

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Summary

• Six Sigma is a data-driven methodology for linking process

improvement to organizational strategic objectives

• Six Sigma is focused on customer requirements and metrics that

will impact the bottom line

• Six Sigma builds on other Quality Management approaches

• The concept of defect is at the core of Six Sigma

• Reduction of variation is key to process improvement

• To be successful, Six Sigma must be a strategic imperative and tied

to strategic goals

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General References

• The Six Sigma Way: How GE, Motorola, and Other Top Companies Are Honing their Performance by Peter S. Pande, Robert P. Neuman, Roland R.Cavanagh

• Six Sigma: The Breakthrough Management Strategy Revolutionizing the World’s Top

Corporations by Mikel J. Harry, Richard Schroeder • The Power of Six Sigma: An Inspiring Tale of How Six Sigma Is Transforming the

Way We Work by Subir Chowdhury • The Six Sigma Revolution: How General Electric and Others Turned Process Into

Profits by George Eckes • Implementing Six Sigma: Smarter Solutions Using Statistical Methods by Forrest W.

Breyfogle

• Making Six Sigma Last: Managing the Balance Between Cultural and Technical Change by George Eckes

• Six Sigma Memory Jogger II, by Oriel Inc.

• Managing Six Sigma: A Practical Guide to Understanding, Assessing, and

Implementing the Strategy that Yields Bottom Line Success by Forrest W. Breyfogle, James M. Cupello, Becki Meadows

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General References

• The Six Sigma Handbook: Complete Guide for Greenbelts, Blackbelts, and

Managers at All Levels by Thomas Pyzdek • Understanding the Essentials of the Six Sigma Quality Initiatives by Harold

Star, Stephen J. Snyder

• Six Sigma Producibility Analysis and Process Characterization by Mikel J.

Harry, Ronald Lawson • Six Sigma for Leadership: Seven Principles of Problem Solving Technology

to Achieve Significant Financial Results by Greg Brue • Customer Centered Six Sigma: Linking Customers, Process Improvement

and Financial Results by Earl Naumann, Steven H. Hoisington • The Complete Guide to Six Sigma by Thomas Pyzdek