Six Sigma

Six Sigma has received an enormous amount of attention over the last decade since General Electric adapted it as the central component of its Quality Initiative in 1996.

Six Sigma is the statistical measure that expresses how close a product, process, or service comes to its quality goal. As such, it becomes the yardstick to determine whether or not acceptable quality goals have been achieved.

The Six Sigma Statistical Measure is as follows:
Sigma Level	Defects per Million Opportunities	Yield
Six Sigma	3.4	99.9997%
Five Sigma	233	99.977%
Four Sigma	6,210	99.379%
Three Sigma	66,807	93.32%
Two Sigma	308,537	69.2%
One Sigma	690,000	31%

Six Sigma means there are only 3.4 defects per million opportunities.

The following three observations, adapted from "The Six Sigma Way" by Pande, Neuman, and Cavanagh paint a disturbing picture of the opportunities confronting Health Care Administrators responsible for the "service" side of the Health Care System:

Research has shown that the costs of poor quality (rework, mistakes, abandoning projects, etc.) in service-based businesses and processes typically run as high as 50 percent of total budget.
This cost data matches our experience and that of many others who've found that administrative and service processes, prior to improvement, perform in the range of 1.5 to 3 sigma (yields of 50 to 90 percent)
Analyses of Service processes often reveal that less than 10 percent of total process "cycle time" is devoted to real work on tasks that are important to paying customers. The remainder of the effort and time is used up in waiting, rework, moving things around, inspecting to catch defects, and other non-essential activities.

In Health Care, basic recurrent processes such as billing and collection point toward astounding opportunities for savings if Six Sigma is achieved. Payment Errors are routine. Each bill paid incorrectly costs the health plan an average of $14 and the Physician’s Office $28 to get fixed. This amount, taken together, approaches the amount of money paid in total for the typical office visit. It is not surprising that the Non-Physician expenses have grown from 40% to nearly 70% of total Physician Reimbursement during the last decade.

Savings levels and Improvement opportunities grow significantly when the concept of Six Sigma is applied to Disease Management, Complex Case Management, and Preventive Care Services. It should come as no surprise that at PIC we are passionate about perfection when we look at HbA1c testing for Diabetics, Mammography testing for Women over 40, Pap Smears for Women over 18, and Endoscopies for everyone over 50.

At PIC, our Clinical and Administrative leadership has adopted the stance that nothing less than Six Sigma performance is acceptable throughout all of the processes and services we encounter. This was an easy leap for Physicians, whose standard for clinical services is perfection anyway. It is a much bigger challenge for Administrative components of the Health Care Delivery System to achieve.

PIC is not prescriptive about how we internally or externally achieve these goals, but its not unusual to hear a PIC staff member utter the phrase: "That performance is just unacceptable".

This focus on Six Sigma Quality has led the leadership to embrace the philosophy that the Electronic Medical Record and other Electronic Control, Measurement, and Reporting Systems can't be implemented quickly enough.

There are Six Key Themes for a Six Sigma Program:

Theme One: Genuine Focus on the Customer
Theme Two: Data and Fact Driven Management
Theme Three: Processes are where the action is
Theme Four: Proactive Management
Theme Five: Boundaryless Collaboration
Theme Six: Drive for Perfection but Tolerate Failure

PIC Management and Leadership subscribe to these six themes in all of our business processes and seek to embed them in everything that we do.

The Six Sigma Problem-Solving Process is known as DMAIC based upon the Japanese Quality Improvement Concept of Kaizen:

Step One: Define the Problem
Step Two: Measure
Step Three: Analyze
Step Four: Improve
Step Five: Control

As we continue to mine the transactions of healthcare with a 360 degree Six Sigma Focus, PIC staff continue to reaffirm that Employers in Central New Jersey continue to spend minimally 40% more than they have to spend for health care benefits compared to a scenario where Physicians, Patients, Hospitals, Other Providers, Employees, Employers, Broker/Consultants, Administrators, Health Plans, and Reinsurers come together through Boundaryless Collaboration to achieve system wide clinical and administrative Six Sigma Performance.

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