In my last post, I discussed the challenge of living with Medicare payment rates. One hospital that is meeting this goal is Floyd Medical Center, a 304-bed stand alone safety net hospital in northwest Georgia.
Floyd had struggled in prior years and in 1996 they embarked on a journey to improve their financial position and be the provider and employer of choice in their regions.
Initially, the hospital began benchmarking other similar institutions to find areas for improvement and then make needed changes. However, the leadership did not feel this approach alone would achieve their long term goals and instead undertook an extensive Lean Six Sigma program.
They initially focused on improving five key processes:
- Ensure staffing matches demand (“in quality staffing”)
- Discharge inpatients by 2 p.m. or earlier 80 percent of the time
- Emergency care center length of stay for “seen and dismissed” patients less than 3 hours and less than 4 hours for patients who were admitted
- Match staffing level in the operating room to the length of the surgical procedures
- Use revenue cycle metrics to meet management’s goals.
To achieve these and additional improvement goals, the executive team used a “100-day workout” project management approach. The process proceeded in 30 day increments, with each leadership team staff member assigned to come up with at least two improvement projects every 30 days. At the end of each 30 day period, the project improvements were evaluated and their financial impact was scored. At the end of the first 100 day workout, the hospital had achieved validated annual savings of $2,458,208, with 270 improvements, by using the tools of Lean and Six Sigma.
An important aspect of each workout was to make the process enjoyable with a theme throughout and a celebration at the end of the 100 days. Some themes included: “The Rapids of Change,” “Hawaiian Blowout,” and “The Biggest Loser.”
Through the fall of 2009, Floyd Medical Center had 10 cycles of 100 day workouts and 15 major Six Sigma (DMAIC style) projects. The total validated savings/revenue growth was $16,976,201. This savings translates into a 5.6 percent improvement in profitability.
A key element in this success is the obvious leadership shown by the management team and the integration of Lean Six Sigma into their daily work. Although many health systems today have Lean Six Sigma departments, the use of these tools is not widely deployed with other strategies or projects that have a higher priority (e.g. installing EHR, acquiring physician practices, etc.).
What will it take for hospital leaders to realize that success in the new reimbursement environment is dependent on the ongoing and pervasive deployment of these tools?
Caldwell, Chip, Faulkner, Tauyna, Stuenkel, Kurt M. Aggressive Cost Reduction: Taking Lean to the Next Level, ACHE Congress on Healthcare Leadership, 2010.