2.1 Mt. Carmel Health System and Six Sigma
Mt. Carmel Health System (MCHS), one of the largest health care providers in central Ohio, comprises four hospitals and numerous surgery centers, outpatient facilities, physicians’ offices, and community outreach sites. The health system has more than 8,500 employees, 1,500 physicians, and 1,300 volunteers serving more than half a million patients each year. Beginning in 2000, MCHS began implementing Six Sigma, a data-driven, measurement-based methodology for process improvement. The core of Six Sigma includes 4 weeks of intense training and focuses on organizational improvement processes. Mt. Carmel’s “Soulful” Six Sigma initiative carefully considers the impact of changing processes on patients, employees, and physicians. By fiscal year 2004, the organization had accumulated more than $40 million in savings from the program. To date, MCHS has completed more than 600 Six Sigma projects and has trained 5 master guides, 44 guides, and 125 assistant guides.
The Balanced Budget Act of 1997 began to have a sizable impact on MCHS by 2000. Although revenues were still relatively healthy at that time, margins were shrinking, and the organization had just instituted its second layoff in 2 years. Moreover, during that year, MCHS made only $500,000 net revenue out of an estimated $750 million in revenue. Key leaders in the organization knew that a dramatic change was needed to increase efficiency and improve its financial standing.
A former mentor introduced the chief medical officer (CMO) to Six Sigma and its effects on the manufacturing industry. To conduct further research on the methodology, the chief executive officer (CEO), chief operating officer, chief financial officer, and CMO embarked on a visit to the Six Sigma Training Academy in Phoenix, AZ. Although the leaders were informed that no health care organization to date had deployed Six Sigma at an enterprisewide level, their interest in the use of the process improvement method within their health system continued to grow. They realized that they had a choice between either forging ahead with Six Sigma despite its uncertain results in the health care arena or continuing with the existing Continuous Quality Improvement (CQI) strategies they had been using. As one informant noted,
“I’d say what we had in our hip pocket as the alternative to Six Sigma was CQI at best, but it had poor statistical analysis tools and, at best, was fair when it came to the implementation stage.”
Another informant stated,
“We had been doing a lot of performance improvement with the usual CQI tools everyone else was using. But the problem with it is that CQI, Just-in-Time, TQM [total quality management] are usually on the corner of someone’s desk and drag on for months and months. This was about working smarter for less, and much faster. This [Six Sigma] was a set of more sophisticated tools.”
The majority of informants felt that MCHS used the same types of performance improvement tools that most other organizations used (e.g., CQI and TQM) prior to their adoption and implementation of Six Sigma. However, the institutionalization of Six Sigma brought the health system to a new level of innovativeness; it was one of the first systems in the nation to use Six Sigma in a large health care setting. When asked what accounted for this paradigm shift, one informant replied,
“I think we had a few folks that really wanted to do something different and make a difference. They had a passion for really turning the organization around.”
“To make this case, it was if not this, then what? Here’s something we really believe that we think can help peel the onion and identify where our inefficiencies are and will help us get some return on the investment.”
Once the decision to adopt Six Sigma was made, the CMO and vice president of organizational effectiveness gathered to brainstorm the characteristics of an ideal deployment leader to guide MCHS through the implementation process. They desired a consulting firm that understood health care, Mt. Carmel’s organizational culture, and the leaders’ desire to refrain from additional layoffs. The CMO and vice president issued a request for proposals to external organizations and subsequently engaged in an interview process to identify a suitable consulting firm to partner with MCHS. The selected firm not only demonstrated a clear understanding of the infrastructure needed to implement Six Sigma enterprisewide but also showed a willingness to put itself at risk for the return, by accepting payment in installments over a 5-year period. Payments were made at the time of contract, after completion of senior executive training, after completion of the first wave of Guide training, after the second wave of Guide training, and after 12 projects were implemented and demonstrated acceptable returns. Another distinguishing quality of the selected firm was its ability to quickly transfer requisite skills through the train-the-trainer method. Upon completion of a few waves of training, MCHS was able to conduct its own training independent of the consulting firm.
The MCHS leadership team knew that the adoption and implementation of Six Sigma would be expensive and realized that it was a potentially deleterious risk, especially in light of the fact that the organization spent $650,000 on consulting fees after generating a net revenue of $500,000 during the previous fiscal year. However, the CEO’s tremendous belief in Six Sigma’s potential in the organization and unwavering commitment to seeing it through proved to be inspirational to his staff. The dedication and positive attitude of the management team, as well as the “burning platform” sense of urgency to improve the organization’s financial position, were also key drivers of the successful implementation effort.
Recruitment efforts for the first wave of Guide training targeted the organization’s “best and brightest” employees. Although many of the organization’s most outstanding employees participated in the early rounds of training, the use of this description caused some dissension among staff members. Some managers were reluctant to release their talented and valued employees to participate in training. Moreover, those who were not selected to participate in the early rounds of training took offense to the phrase “best and brightest” and perceived that they were viewed as less valuable than staff who were selected to participate in the training.
Adoption of Six Sigma as an innovation includes a series of decisions aimed at performance and process improvement. During the first 2 years, MCHS’s Six Sigma projects focused primarily on efficiency, revenue, and cost reduction. By the end of the second year, however, the leadership recognized that it would be helpful to organize projects under larger themes, such as throughput. Consequently, greater emphasis was placed on efficiency and throughput in the emergency and operating rooms. “When we first started doing projects,” explained one participant, “we asked key stakeholders to look at bottom lines and processes and to come up with processes that they needed to work at to increase the bottom line, increase throughput, and look at key drivers for their service lines.” Forging ahead required scoping the project to (1) find a measurable defect and (2) determine the amount of money that would be generated/saved. However, obtaining the correct data to conduct such an analysis was not always a simple task, as one informant noted:
“We are automated and data-rich in so many ways and data-poor in so many ways. We had tons of data, but did we have the right data? How do we actually capture the right data? Sometimes we’d be stalled for 3 months because we didn’t have the right baseline data.”
Occasionally, staff would anecdotally note that certain departments had issues that needed to be resolved. However, once the project was reviewed and data were obtained, the data revealed either that there was no quantifiable defect or that initiating the project would yield little, if any, financial return on investment. Cost and revenue were the primary business metrics used to assess projects (i.e., most projects had to meet a $100,000 minimum potential cost savings standard). Having the correct data available when scoping projects, and correlating the data to the staff conducting the processes, was also essential to project adoption and implementation decisions.
Although decisions about project selection were often based on financial reasons, in other instances projects were prioritized based on their potential impact on patient safety, patient satisfaction, staff’s personal interests, or new project ideas that arose while front-line staff worked on other projects. In many cases, projects did not have quantifiable returns and were designated as projects with “soft returns” (i.e., projects not associated with a quantifiable return on investment). Such projects were often pursued as a prerequisite to obtaining a greater return in subsequent projects pertaining to larger themes, such as patient satisfaction or length of stay. “Only 50 percent of our projects had dollars associated with them at all in the first year,” explained one informant. ”It was imperative to do these soft projects before moving on to another project that would connect dollars.” Projects examining lab result throughput are one example. The management team eventually limited soft projects to approximately 25 percent of the portfolio to ensure balance in the number and type of projects without a quantifiable return.
Although Six Sigma generated a lot of positive buzz throughout the organization, there were also naysayers along the way. However, as process improvements were made and results became more visible, the management team acquired greater aptitude and the initiative correspondingly gained greater traction. Informants noted that MCHS “reinvented” itself periodically as time progressed. Whereas project selection was somewhat arbitrary in the beginning, the deployment team eventually developed project selection grids that facilitated a more systematic approach to selection of projects. By the second or third year, a master guide and set of guides were assigned to each member of the senior management team. Given that each hospital had different strategic areas of concern, these new teams had the flexibility to select projects and begin focusing on their chosen individual themes and goals. They were given specific financial targets for the year and senior executives held them accountable for reaching the targets.
When asked about a project that was considered but not adopted (or adopted but not fully implemented), informants noted that the reasons for the failed adoption or implementation effort could often be traced back to (1) improper scoping of the project (e.g., the project did not meet the desired financial return standards, or a metric could not be defined because of the large scope of the project); (2) the project did not involve a true “process” problem with a measurable defect rate that could actually be resolved through management decisions; (3) the project was perceived as “threatening” to some degree; or (4) the project lacked a champion or did not have the right stakeholders behind it.
In the case of a system that would increase the efficiency of communication attempts to contact the proper care provider, the idea had the support of the medical staff, appeared to be compatible with the current environment, and was expected to have visibility of benefits, yet it was not associated with a quantifiable financial return and was therefore not adopted. As one informant noted:
“Yeah, it had all the right reasons, but when I watch how hard it is for health care delivery systems that are hospital-based to make money, so much of what’s driving decisionmaking is financial. You go back to 2000 and while we spent more on a consultant than we made, when someone asks, ‘But you can’t spend a hundredth of what you made?’ and I have to say ‘no.’ So sometimes the fuzzy logic doesn’t always work. I’ll be honest with you, if I said ‘Six Sigma is going to be good for patients and nurses and quality is going to get better,’ I betcha I couldn’t have sold it. You’ve got to prove that it will make money; otherwise it’s got a snowball’s chance.”
The MCHS informants offered several insightful lessons learned from the Six Sigma adoption experience:
- Keep people engaged; keep the momentum going in order to see a significant change in operations. “There’s a good chance that you wouldn’t be talking with us today if we lost the drive to execute.”
- Bring to the table all those who will be affected by the project to provide a clear understanding of the roles of each person and which staff the project will affect.
Failure to do so may result in project delays and increased dissension.
- It can be helpful to have a decision tree for the decisionmaking process. A risk assessment would be incorporated as part of the decision tree.
- Among the key attributes to success are having good infrastructure and support, not only from top management but also from effective project managers and leaders. “One of the things that we learned is that Six Sigma is more about succession planning and leadership. Once you have turnover, they become your leaders. We’ve had several go from manager level to director level and they have process lenses now, not just management lenses.” Another respondent stated,“You have to make sure there’s buy-in or support, not just financial support or support that says ‘you can do it.’ You want to have the interest of these folks in doing it so that they’re not just doing it so that they can stop talking about it.”
When informants were asked about aspects of the innovation that they wished they had considered ahead of time, responses included:
- Rephrasing the description “best and brightest” during the initial Guide training phases.
- Conducting a more thorough assessment of organizational readiness for change.
- Allotting more training and resources to change leadership. As one informant explained, “Our initial training was all stats and there just wasn’t enough on change leadership and how to deal with conflicts, change, facilitate communication, etc.”
MCHS is currently undergoing another organizationwide change with the adoption of Crew Resource Management (CRM), a management tool that uses the crew aviation approach to safety and focuses on developing cognitive and behavioral skills related to situational awareness, problem solving, decisionmaking, and teamwork. The organization experienced an increase in the number of wrong-site surgeries and other unfavorable outcomes in the past 2 years. The incidents resulted from poor handoffs that could have been prevented. The MCHS leadership knew that they needed to make changes but did not know how to fix the problem. This was the second time that they turned to strategies adopted by other industries to address problems faced in the health care setting. However, unlike the motivation for adopting Six Sigma (i.e., steady decline in the organization’s financial standing), the motivation for adopting CRM was derived solely from a focus on patient safety, not an expected dollar amount return. Financial incentives factored into the adoption decision (MCHS would receive a rather substantial risk credit on medical malpractice insurance for instituting a program like CRM that focuses on patient safety), but they were not the primary catalyst. The risk credit for implementing a program like CRM was approximately equivalent to the cost of hiring a consultant, which allowed the CMO to present the innovation to senior leadership as a budget-neutral initiative. The relatively low financial risk, coupled with the potential use of train-the-trainer techniques and the ability to conduct a small-scale pilot test of the tool, were qualities that resonated with the health system’s leadership team.
The initiative has received enthusiastic support from the medical staff, and informants believe that CRM’s emphasis on behavioral skills will address areas that are not focused on by Six Sigma. Sample metrics for success with this initiative include the rate of wrong-site surgeries, surgical prophylaxis, and measuring nurse-physician communication and behavior change, both pre- and postimplementation.