embracing math, statistics, lean, and six sigma methods to ... · 1931: walter shewhart spc 1945 -...
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© 2013 Healthcare Excellence Institute, LLC
Embracing Math, Statistics, Lean, and Six Sigma Methods to Improve Financial Performance and
Decision Making in the Revenue Cycle
Presented By: Marj Green & Mischa Dick, President and Vice President, Healthcare Excellence Institute
© 2013 Healthcare Excellence Institute, LLC
Agenda
• Overview of Lean & Six Sigma
• Examples of Lean Six Sigma Application in a Revenue Cycle
• People & Organizational Design
• Process - Principles and Methods to Improve Process Outcomes
• Technology - Enabling the Process
• Performance Management – Delivering Continuous Improvement
• Questions
© 2013 Healthcare Excellence Institute, LLC
Lean Six Sigma Introduction
© 2013 Healthcare Excellence Institute, LLC
1500
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1930
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1950
1960
1970
1980
1913: Henry Ford’s Moving Production Line
1850: “American System of Manufacturing”
1914-1918: World War I
American Civil War
1939-1945: World War II
Craftsmen Era
1793: Eli Whitney Interchangeable Parts
1807: First Assembly Line
1911: Frederick Taylor Scientific Management
1935 - - Sir Ronald Fischer DOE
1931: Walter Shewhart SPC
1945 - - Shingo
1950 - -Deming, Juran, Ishakawa,
Toyoda, Ohno
1980: If Japan Can, Why Can’t
We? Important Moments in The History of
the Practical Use of Math and Statistics
© 2013 Healthcare Excellence Institute, LLC
Basic Premise of Lean
Business Customer
Product Goods & Services
Money
Value > Price > Cost
Product Service
Bundle of
Resources
Value Added
Non Value Added
Value > Price > Cost
The customer defines “value”
© 2013 Healthcare Excellence Institute, LLC
Areas of Waste (Non Value Added Activity)
Organizational Design &
Performance Management
Flow
Error Reduction
© 2013 Healthcare Excellence Institute, LLC
Flow-Lean Process
• Relentless focus on reduction of non value added activity or waste
• Pioneered and perfected by Toyota Motor Company
• Achieved by eliminating the 7 types of waste (ROTWIMP)
• Most successfully done via ‘Extreme Makeover Events’ or ‘Kaizen’ Events
Make Value Flow Lean Process
• 7 Types of Waste • Value Stream Mapping • Spaghetti Charts • Video Process Analysis • Visual Workplace • Setup Reduction • Poka Yoke • Capacity Analysis • Standard Work Processes • Work Management Models • 5S • Inter & Intra Work Area Layout • Predictive Maintenance • PSND
Make Value Flow
© 2013 Healthcare Excellence Institute, LLC
Error Reduction- Six Sigma
Process Maps FMEA Basic Statistics Design of Experiments Measurement System Assessment Components of Variance Blocking Least Squares Statistical Tolerancing Statistical Inv. Modeling Conjoint Analysis Cluster Analysis
Y = f(x) • Reduce variation • Cost reduce inputs Eliminate hidden business
• Relentless focus on eliminating errors and defects in the process
• Achieved by applying tools and statistical methods to eliminate errors
• Defects: Any deviation of process outcomes from a desired target
• Extensively used in the manufacturing industries
• Rapidly expanding into business processes
Eliminate Errors Six Sigma
© 2013 Healthcare Excellence Institute, LLC
Organizational Design & Performance Management
• Focus on aligning the organization with the process
• Use of High Performance
Work Teams • Creating Organizational Units
to allow unit of work flow without crossing of organizational boundaries
• Create Metrics / Scorecards /
Corrective Action Systems
Align Organization Organizational
Design & Performance Management
• Financial Basics • Failure Maps • Metrics Design • Metrics Alignment • Organizational Alignment Design • High Performance Work Teams • Hand-off Analysis • Goal and Boundary Design • Motivation • Communication Boards • MBF
Accountability & Responsibility
Design Performance Assessment
© 2013 Healthcare Excellence Institute, LLC
Case Study – CHRISTUS Health
© 2013 Healthcare Excellence Institute, LLC
Typical Revenue Cycle Opportunities
The typical, traditional revenue cycle could realize an additional 4% to 12% of insured net revenue as cash. Your Insured Net Revenue * 4-12% = _____________________
60.00%
65.00%
70.00%
75.00%
80.00%
85.00%
90.00%
95.00%
100.00%
NTC 30/30 NTC 60/60 NTC 90/90 NTC120/120
NTC150/120
NTC180/120
NTC210/120
NTC240/120
Cas
h R
eal
izat
ion
Cash Realization Profiles
HEI Sample Cust 1
HEI Sample Cust 2
Provider C
Provider D
© 2013 Healthcare Excellence Institute, LLC
Financial Results
Pmts120 2009
Est. Pmts @
AvgNTC120
2004
Variance with
Pmts120 2009
January'2009 17,701,361$ 16,161,629$ 1,539,732$
February'2009 16,580,166$ 15,317,944$ 1,262,222$
March'2009 18,178,300$ 16,289,630$ 1,888,670$
April'2009 18,282,348$ 16,306,203$ 1,976,145$
May'2009 18,161,497$ 16,206,396$ 1,955,101$
June'2009 19,173,940$ 17,113,487$ 2,060,453$
July'2009 17,009,926$ 15,068,234$ 1,941,692$
August'2009 17,742,497$ 15,883,893$ 1,858,604$
September'2009 17,942,657$ 15,949,211$ 1,993,446$
October'2009 17,675,808$ 15,703,922$ 1,971,886$
November'2009 16,701,948$ 14,880,351$ 1,821,597$
Total 195,150,448$ 174,880,900$ 20,269,549$
9.3 % Operating Margin Increase by Implementing World Class Revenue Cycle
MAP Award Winning Organization Metrics •Days in AR: 36 •Point of Service Collections: 65.78% •Cash Collected as % Adjusted NPR: 104.55% •Bad Debt: 1.08%
© 2013 Healthcare Excellence Institute, LLC
Lean Based Revenue Cycle Model
Capture and use the hearts, hands and minds of all associates
Model Based on Toyota Principles & Methods
• Make Work Flow
• Eliminate Errors (Don’t Take, Don’t Make, Don’t Pass)
• Measure for Improvement vs. to look good
• Put Everyone to Work on Improvement, Every Day
• Portable
• Sustainable
© 2013 Healthcare Excellence Institute, LLC
Comprehensive Scorecard
14
© 2013 Healthcare Excellence Institute, LLC
Sustainable Change and Continuous Improvement Cash Leakage and Time of Service Collections
15
75%
80%
85%
90%
95%
100%
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'04
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Ap
r '0
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20
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Ne
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to
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h %
Net Conversion
System Conversion
0%
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70%
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100%
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
TOSC AND TOSC AS PERCENTAGE OF POTENTIAL BY DISCHARGE MONTH
TOSC $
© 2013 Healthcare Excellence Institute, LLC
Awards
16
Best Innovation
2007 North American Six Sigma Excellence Awards
CHRISTUS Schumpert
Best Lean Six Sigma Implementation Best Lean Six Financial Services Project
HFMA
Patient Friendly Billing
Project
CHRISTUS St. John’s
2006 Global Six Sigma Awards
CHRISTUS Schumpert
HFMA MAP Award
High Performance in
Revenue Cycle
CHRISTUS Schumpert
2011
HFMA MAP Award
High Performance in
Revenue Cycle
CHRISTUS St. Catherine’s
2010
2009
© 2013 Healthcare Excellence Institute, LLC
17
Questions? Contact:
Marj Green, President, [email protected]