What a Waste!
Posted by Kurt Stuenkel, President and CEO
December 23, 2016
Lean and Six Sigma have been around in health care now for several years. Floyd is celebrating 10 years of utilizing these quality and improvement methodologies as 2016 draws to a close. In addition, Floyd has adapted the GE (General Electric Corporation) workout methodology. With these sophisticated techniques and lean concepts, we have implemented over 5,900 documented changes since 2006 with over $95 million in validated financial improvements. Below, I will describe each of these, give you some Floyd results, and explain why these methodologies are important to Floyd.
Many industries utilize Lean concepts, which focus on waste. In Lean terms, waste is defined as anything that does not add value for the customer. At Floyd on a regular basis we do “waste walks,” employing the seven categories of waste: transport, inventory, motion, waiting, over-processing, overproduction and defects. Managers and supervisors are encouraged to observe and think about their departmental operations to see if any waste occurs in these seven categories. Invariably, we identify numerous opportunities to eliminate duplicative and wasteful processes, adding value and enhancing efficiency. We measure and catalog those changes, validate them through our accounting department and record the impact in dollars saved. The next budget year we factor those changes into the budget.
We also use Six Sigma techniques, and in 10 years Floyd has trained 36 individuals, including three master black belts, the highest level of Six Sigma training and achievement, 4 black belts and 29 green belts. These individuals are trained in advanced statistical techniques to measure operations and to test potential solutions for impact. Six Sigma focuses on variation and seeks to find it and minimize it. For example, an average length of stay in the emergency department of 3 hours may be a good average, but not if there is considerable variation and large numbers of folks stay longer. Six Sigma provides techniques to measure and evaluate changes as they are tested to reduce variation.
How have we made all these changes, averaging over $9 million in improvement each year? The answer to this is our adaptation of the GE workout methodology. We don’t pick a project, start it, completed it, evaluate, and then move on to the next one. We have a larger number of projects going on simultaneously, all the time. We have evolved an accountability model for all leaders into a 120-day time period, during which we meet each month at a predesignated time to review progress. We have a kick-off, a 30-day check-in meeting, a 60-day meeting, a 90-day meeting and a final meeting that also kicks off of the next 120-day period. In the 120 days, each department or work unit is expected to implement or test at least 2 changes each month. So, for each 120-day period a manager is responsible for eight changes. Since 2006 we have implemented over 5,900 documented changes in 31 workouts. That equates to about 190 changes per workout for all of our managers every 120 days. The 5,900 changes over 31 workouts also show $95 million in improvements, an average of a little over $3 million per workout, or $16,000 per change 5,900 improvements at an average $16,000 per improvement pace equals $95 million over 10 years. How do you get the dramatic improvement again? Slow and steady. Now, some changes are large, and some are small. We applaud both. It adds up. It is the workout rhythm, each and every month, and emphasizing over and over again, two changes per manager per month that brings this level of success.
Why have we done this at Floyd? I will say that we are unique. There are hospitals that use Lean and Six Sigma, but there are not many that have been doing it 10 years, and fewer still that have our workout methodology so completely ingrained into our organization. The financial results are obvious. Lean Six Sigma and the workout methodology are key reasons that Floyd has performed so well in recent years. What may be less obvious are the changes that this 10 year journey have created. 5,900 changes to be sure, but changes also in our culture:
- Trained black belts and green belts who get better at what they do every day.
- Managers who understand and strive to drive out waste and variation.
- A culture that is predisposed to a rapid pace of change and to testing change.
- Meetings every 30 days for the last 10 years to measure and monitor how we are doing.
- An insistence that 2 changes per manager per month is required.
A mantra that I cite frequently is, “quality is the goal, and financial performance is the result.” We don’t desire any reduction in quality. Quite the opposite. We want the correct number of staff to do a quality job: not too few, not to many, just the right amount. Waste and variation are enemies of quality. We strive for the highest quality we can achieve. We measure it regularly, and we put together teams to work on improvements. It works.
In today’s ever changing health care environment, Floyd’s transformational change culture positions us well to respond. We never know what the future holds. Just little while ago the so-called experts called the presidential election for the Democrat candidate and for health care, more of the same, and perhaps slightly tweaked Obamacare. Now we have all this potentially turned on its head. Floyd’s ability to change is one of our great assets. In 10 years we have learned so much. I look forward to the next 10.