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The U.S. Healthcare System Wastes Billions Annually, But the Solution May Be Found With A Six Sigma Approach

Published In: Six Sigma Case Study Hits: 4711

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The U.S. Healthcare System Wastes Billions Annually, But the Solution May Be Found With A Six Sigma Approach

According to the Institute of Medicine (IOM), the American healthcare system wastes $750 billion annually. A lot of the waste comes from inefficiency in healthcare delivery, pinpointing of preventative service needs, pricing, and administrative organization.

Many think that Six Sigma is only applied on the manufacturing floor, but the application of Six Sigma has become growingly popular in healthcare. But where what areas in healthcare can are need to be made more efficient the most? Often streamlining processes in healthcare with Six Sigma means looking for ways to consolidate and provide consistency and continuity.

In one specific case study, the management team at a leading hospital within the healthcare industry decided to try to decrease the processing time for orthopedic disability claims. The majority of all claims made within the department took longer than 10 days to from “receipt of the request” to submit a claim to the insurance companies.

After analysis of data and workflow, the culprit of the this time discrepancy was discovered to be the fact that the different types of lack of authorization and red tape were responsible for increased wait times. For one, even though only ¾ of cases needed a referral to an MD, the current process required one in every single case. Second, they also found that the orthopedic department maintained electronic files for their patient’s records, but accounts receivable had to request the information.

Developing a process that opened up more coordination between the two departments, the team projected that they can have a great impact on processing time. This would mean taking many steps, including eliminating unnecessary referrals and allowing the accounts receivable department access to the electronic record system for orthopedic patients.

The final results were even better than the projected. Total processing time was reduced from a mean of seventeen to less than six days. Variation was reduced by 60%, with less than 16% of all cases took longer than ten days. Also, the hospital was able to process reimbursement for disability claims faster.

There are some lessons not only healthcare professionals, but anyone looking to make office processes more efficient can learn from this particular study and apply various Six Sigma theories and tools:

  • Continuity: If you have different departments or roles in your office, there should be a consistent standard that everyone follows. If one office, you have patient records or forms that include a certain data set of information, that should be consistent across departments. Using a common scale based on customer needs will always lead to better efficiency in the long run.
  • Consistency: Because physicians all have their own way of treating patients, reducing variation in whatever ways possible is especially important in the healthcare industry. Best practices can be identified and agreed upon as standard using Six Sigma approaches and techniques. This, along with the management of change can help achieve improvement in healthcare processes.
  • Consolidation: Whenever possible, especially within large health networks or hospital chains, it is important to consolidate information and resources interdepartmentally or across organizational units. This may mean giving access to all departments that may need to utilize information in a patient database or using a central office for the same task in multiple departments. Ultimately this will lead to less approvals, referrals and requests needed to complete processing, scheduling, or other health administrative tasks.

If you think that your healthcare management team could provide more efficient service to patients, then providing them with Six Sigma training may be the solution for your healthcare organization. Find out more here.