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Six Sigma MEPRS Management Metrics

Deirdre Baker SRA International, Inc.

TMA MEPRS Program OfficeManagement Control and Financial Studies Division

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By the end of this presentation, you will be able to:

Describe the origin and goals of Six Sigma Identify how Six Sigma is used in healthcare

and other industries Define the DMAIC process and use the steps

in your day-to-day operation Understand and correctly interpret the S2M3

tool Locate tools to help you begin exploring data

quality opportunities

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Six Sigma• Six Sigma is a statistics

based business improvement process that continually strives for perfection.

• It employs a disciplined methodology created from the manufacturing industry for eliminating the wastes of defects or variance to lower costs and improve customer satisfaction.

Six Sigma Methodology forImproving Existing Processes

DMAIC

• Define Opportunities

• Measure Performance

• Analyze Opportunity

• Improve Performance

• Control Performance

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Six Sigma in Healthcare: DSI, a medical reference and toxicology laboratory improved

turnaround time by 54% and cut costs by $250,000 per year.

Avera McKennan Hospital Emergency Department cut patient turnaround time by 29% and saved $1.25 million in avoided construction costs.

Six Sigma in Other Industries: Bank of America has used Six Sigma for credit risk assessment

reduction, fraud prevention, and customer satisfaction improvement.

In Engineering and Construction, on the Channel Tunnel Rail Linkproject in the UK, Bechtel’s project team uncovered a way to

save hundreds of job hours on one of the tunneling jobs.

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Six Sigma Methodology for Improving Existing Processes

Define Opportunities

Measure Performance

Analyze Opportunity

Improve Performance

Control Performance

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DMAIC – Define Opportunities

A defect is a) anything out of the scope of customer specificationsb) decreases customer satisfactionc) does not fulfill functional/technical requirements

A unit is something that is measurable or observable whether it is a physical product or some process with specific start and stop times.

An opportunity is a measurable or observable chance of not meeting the required specification or having a defect. A defect can have more than one opportunity to occur but each opportunity for that defect is independent of the other opportunities.

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DMAIC – Define Opportunities

A helpdesk example:

Problem: “Too many EAS IV Tier 3 helpdesk tickets.”

The defect is a help desk ticket that is not resolved at the Tier 1 level.

The unit is a helpdesk call.

The opportunity is one per helpdesk call.

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DMAIC – Define Opportunities

A helpdesk example:

Problem: “Too many EAS IV Tier 3 helpdesk tickets.”

In Jun 2007,

Opportunities: 133 calls

Defects: 102 Tier 3 tickets

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DMIS ID MTF NameRx Dispensing

Costs

Available FTE per Daily Occupied

Bed

Ratio of Support Personnel to

Provider FTEs

Rx Workload per Rx FTE

Lab Workload per Lab FTE

Rad Workload per Lab FTE

Inpatient Costs per RWP

Ambulatory Costs per APG

Medical Centers

0108 WILLIAM BEAUMONT AMC-FT. BLISS 1.14 0.50 0.46 1.22 1.54 0.34 1.15 -0.050124 NMC PORTSMOUTH 0.73 0.46 1.26 0.66 -0.32 -0.43 1.01 1.420029 NMC SAN DIEGO 0.04 0.78 0.08 1.29 1.19 -0.33 1.32 0.410125 MADIGAN AMC-FT. LEWIS -0.10 0.57 -0.30 0.71 0.63 0.60 1.13 0.920089 WOMACK AMC-FT. BRAGG 1.10 0.39 -2.31 1.64 0.07 0.90 1.11 1.100109 BROOKE AMC-FT. SAM HOUSTON -0.38 0.88 0.12 -0.05 1.57 0.74 0.22 -0.270067 NNMC BETHESDA 1.21 0.69 0.92 -1.35 0.64 1.52 -1.18 0.080052 TRIPLER AMC-FT SHAFTER 0.80 0.03 -0.04 0.13 -0.22 0.38 -0.83 1.130037 WALTER REED AMC-WASHINGTON DC -0.32 0.35 0.32 -1.60 0.09 1.31 -1.27 -0.840117 59th MED WING-LACKLAND -1.38 -0.11 0.86 -0.83 -0.83 -0.06 0.00 -0.170047 EISENHOWER AMC-FT. GORDON -0.05 0.43 -1.97 -0.71 -1.18 -0.81 -0.11 0.230095 74th MED GRP-WRIGHT-PATTERSON 0.48 -0.93 0.25 -0.46 -1.13 -1.11 -1.02 -1.350073 81st MED GRP-KEESLER -1.38 -1.38 0.29 -0.01 -0.62 -1.84 -0.31 -2.120014 60th MED GRP-TRAVIS -1.88 -2.67 0.07 -0.64 -1.43 -1.20 -1.22 -0.52

Standardized Executive Summary by Peer Group*FY05/FY06 S2M3

Six Sigma MEPRS Management and Control Metrics

*Note:The S2M3 Executive Summary has been standardized to reflect uniform positive/negative Z-score values across all metrics, thus positive Z-scores indicate more desirable values and negative Z-scores are less desirable values. For example, in the Pharmacy Dispensing Cost metric a negative Z-score denotes a dispensing cost that falls below the peer group average. Since in that case a negative Z-score is more desirable than a positive value, the Z-score sign reflected in the S2M3 Executive Summary has been changed to positive. The Z-score signs have been reversed for the following metrics in this Executive Summary:

• Rx Dispensing Costs• Available FTE per Daily Occupied Day• Ratio of Support Personnel to Provider FTEs• Inpatient Costs per RWP• Ambulatory Costs per APG

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FY05/FY06 Cost of Pharmacy Dispensing: Large Hospitals

Parent DMIS ID

DMIS ID Name Raw WorkRx $ Less

Supply CostDisp Cost per

ScriptZ Score Statistic Raw Work

Rx $ Less Supply Cost

Dispensing Cost per Script

0105 MONCRIEF ACH-FT. JACKSON 522,989 1,410,264$ 2.70$ -1.29 Better Mean: 443,938 3,045,057$ 7.48$ 0110 DARNALL AMC-FT. HOOD 749,096 2,864,131$ 3.82$ -0.99 Median: 423,971 3,047,598$ 6.68$ 0048 MARTIN ACH-FT. BENNING 390,732 1,956,877$ 5.01$ -0.67 St. Dev: 168,646 1,127,306$ 3.71$ 0075 L. WOOD ACH-FT. LEONARD WOOD 425,684 2,137,175$ 5.02$ -0.660098 REYNOLDS ACH-FT. SILL 347,389 1,909,893$ 5.50$ -0.54 Value nearest peer group mean0060 BLANCHFIELD ACH-FT. CAMPBELL 589,339 3,468,140$ 5.88$ -0.43 MTFs within 1 Std. Deviation from the peer group mean0057 IRWIN ACH-FT. RILEY 221,580 1,356,951$ 6.12$ -0.37 2 Std. Deviations above/below the peer group mean0038 NH PENSACOLA 499,764 3,231,376$ 6.47$ -0.27 3 Std. Deviations above/below the peer group mean0091 NH CAMP LEJEUNE 441,320 2,856,169$ 6.47$ -0.270123 DEWITT ACH-FT. BELVOIR 831,565 5,552,140$ 6.68$ -0.220039 NH JACKSONVILLE 636,049 4,462,258$ 7.02$ -0.130032 EVANS ACH-FT. CARSON 384,222 3,047,598$ 7.93$ 0.120049 WINN ACH-FT. STEWART 423,971 3,366,589$ 7.94$ 0.120079 99th MED GRP-O'CALLAGHAN HOSP 342,748 2,770,497$ 8.08$ 0.160024 NH CAMP PENDLETON 491,284 4,231,870$ 8.61$ 0.300120 1st MED GRP-LANGLEY 208,939 1,850,998$ 8.86$ 0.370042 96th MED GRP-EGLIN 350,040 3,217,324$ 9.19$ 0.460126 NH BREMERTON 362,399 3,707,132$ 10.23$ 0.740066 89th MED GRP-ANDREWS 215,719 4,458,691$ 20.67$ 3.55 Worse

FY05/FY06 Cost of Pharmacy Dispensing Summary Statistics

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The Bell Curve

Mean/Avg

Mean minus 1 St Dev

Mean plus 1 St Dev

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DMAIC – Define Opportunities

Defect: Andrews Dispensing Cost per Script falls outside of the 3 standard deviation range for large hospitals

Unit: Raw scripts (decrease in script count from FY05 to FY06) or costs (no decrease in cost from FY05 to FY06)

Opportunity:

1. Prescription

2. FTE

3. Cost

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Sum of Raw Statistical AmountParent DMIS IDFiscal Year 00662001 354,9792002 317,8382003 339,8562004 356,7292005 268,2812006 217,279

23.5% decrease

in workload

23.2% decrease

in expenses

Sum of Net Month Expense Fiscal YearDMIS ID 2001 2002 2003 2004 2005 20060066 15,743,038$ 3,519,520$ 4,143,540$ 6,588,090$ 4,857,778$ 3,942,773$

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FY Cost Scripts Cost per Script Cost % Script % Cost per %

2002 $3,519,520 317,838 11.07$ 2003 $4,143,540 339,856 12.19$ 17.7% 6.9% 10.1%2004 $6,588,090 356,729 18.47$ 59.0% 5.0% 51.5%2005 4,857,778$ 268,281 18.11$ -26.3% -24.8% -2.0%2006 3,942,773$ 217,279 18.15$ -18.8% -19.0% 0.2%

Dispensing Cost per Script

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DMAIC – Analyze Opportunity

Opportunity: PrescriptionPharmacy Procedures Weighting Factor

– Prescription 1.00– Clinic Issue 0.60– Sterile Product 2.00– Unit Dose 0.15– Bulk Issue 2.00

Fiscal Year DMIS ID Raw Statistical Amount Weighted Statistical Amount

2005 0066 268,281.00 275,444.00

2006 0066 217,283.00 221,923.60

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DMAIC – Analyze Opportunity

Opportunity: FTEs

Skill Type Code Skill Type Description 2005 2006

2 Direct Care Professional 6.77 5.66

4 Direct Care Para- Professional 22.92 21.83

Grand Total 29.69 27.50

Fiscal YearSum of Available FTE

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DMAIC – Analyze Opportunity

Opportunity: CostSum of Net Month Expense Fiscal YearDoD SEEC Description 2005 2006 Diff11.10 CIVILIAN PERSONNEL COMP 242,948$ 268,543$ (25,596)$ 11.72 MILITARY PERSONNEL COMPENSATION 2,365,962$ 2,262,934$ 103,028$ 11.74 BORROWED MIL LABOR 3,417$ 12,194$ (8,777)$ 21.00 TRAVEL & TRANSPORT OF PERSONS 13,856$ 8,590$ 5,266$ 22.00 TRANSPORTATION OF THINGS 8,688$ 5,507$ 3,181$ 23.10 COMMUNICATION 9,750$ 4,452$ 5,298$ 23.15 PURCHASED UTILITIES 165,138$ 172,096$ (6,958)$ 24.00 PRINTING & REPRODUCTION 4,331$ 1,268$ 3,063$ 25.15 PURCHASE MAINT EQUIPMENT 8,599$ 3,011$ 5,588$ 25.25 CUSTODIAL SERVICES 4,072$ (4,072)$ 25.30 EDUCATION & TRAINING 3,401$ 1,625$ 1,776$ 25.40 RECURRING REAL PROPERTY MAINT 332,527$ 138,038$ 194,489$ 25.45 DESIGN ARCHTCTRL & ENG SER 237,526$ (237,526)$ 25.50 CONTRACT HEALTH CARE 23,529$ 53,612$ (30,083)$ 25.55 COOPERATIVE AND SUPPLEMENTAL CARE 9$ 588$ (579)$ 25.65 OTHER MIS CONT 648,431$ 414,084$ 234,347$ 26.10 FUELS 343$ 49$ 294$ 26.15 MED/DENT SUPPLIES 15,552,349$ 8,529,087$ 7,023,262$ 26.20 OTHER SUPPLIES 25,749$ 11,553$ 14,197$ 31.10 INFO PROCESSING EQUIP 2,477$ 4,945$ (2,468)$ 31.15 MED/DENT EQUIP 370,315$ 111,677$ 258,638$ 31.20 OTHER EQUIPMENT 135$ 83$ 51$ 32.10 CONSTRUCTION/REPAIR PROJECTS 475,080$ 89,350$ 385,730$ 41.10 FREE RECEIPTS/UNFUNDED/NON REIMBURSABLE 96,000$ 68,576$ 27,423$ Grand Total 20,353,031$ 12,403,458$ 7,949,573$

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DMAIC – Analyze Opportunity

Opportunity: CostSum of Net Month Expense Fiscal YearDoD SEEC Description 2005 2006 Diff11.10 CIVILIAN PERSONNEL COMP 242,948$ 268,543$ (25,596)$ 11.72 MILITARY PERSONNEL COMPENSATION 2,365,962$ 2,262,934$ 103,028$ 11.74 BORROWED MIL LABOR 3,417$ 12,194$ (8,777)$ 21.00 TRAVEL & TRANSPORT OF PERSONS 13,856$ 8,590$ 5,266$ 22.00 TRANSPORTATION OF THINGS 8,688$ 5,507$ 3,181$ 23.10 COMMUNICATION 9,750$ 4,452$ 5,298$ 23.15 PURCHASED UTILITIES 165,138$ 172,096$ (6,958)$ 24.00 PRINTING & REPRODUCTION 4,331$ 1,268$ 3,063$ 25.15 PURCHASE MAINT EQUIPMENT 8,599$ 3,011$ 5,588$ 25.25 CUSTODIAL SERVICES 4,072$ (4,072)$ 25.30 EDUCATION & TRAINING 3,401$ 1,625$ 1,776$ 25.40 RECURRING REAL PROPERTY MAINT 332,527$ 138,038$ 194,489$ 25.45 DESIGN ARCHTCTRL & ENG SER 237,526$ (237,526)$ 25.50 CONTRACT HEALTH CARE 23,529$ 53,612$ (30,083)$ 25.55 COOPERATIVE AND SUPPLEMENTAL CARE 9$ 588$ (579)$ 25.65 OTHER MIS CONT 648,431$ 414,084$ 234,347$ 26.10 FUELS 343$ 49$ 294$ 26.15 MED/DENT SUPPLIES 117,605$ 68,402$ 49,204$ 26.20 OTHER SUPPLIES 25,749$ 11,553$ 14,197$ 31.10 INFO PROCESSING EQUIP 2,477$ 4,945$ (2,468)$ 31.15 MED/DENT EQUIP 309,805$ 111,677$ 198,127$ 31.20 OTHER EQUIPMENT 135$ 83$ 51$ 32.10 CONSTRUCTION/REPAIR PROJECTS 475,080$ 89,350$ 385,730$ 41.10 FREE RECEIPTS/UNFUNDED/NON REIMBURSABLE 96,000$ 68,576$ 27,423$ Grand Total 4,857,778$ 3,942,773$ 915,005$

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DMAIC – Analyze OpportunityOpportunity: CostSum of Net Month Expense3rd Level Functional Cost Code 2005 2006 Diff %BGA 1,351,813$ 1,137,471$ 214,342$ 23.4%BAA 1,133,103$ 931,327$ 201,776$ 22.1%BIA 280,464$ 164,515$ 115,950$ 12.7%BHA 664,062$ 567,543$ 96,519$ 10.5%BDA 295,908$ 214,480$ 81,429$ 8.9%BAM 113,082$ 60,125$ 52,958$ 5.8%BAF 65,490$ 27,315$ 38,175$ 4.2%BBI 55,464$ 31,682$ 23,781$ 2.6%BAP 72,050$ 49,727$ 22,323$ 2.4%BFA 44,305$ 26,853$ 17,452$ 1.9%BBF 92,431$ 76,820$ 15,611$ 1.7%BJA 120,001$ 107,563$ 12,439$ 1.4%BBA 51,506$ 42,073$ 9,433$ 1.0%BEF 21,274$ 12,102$ 9,172$ 1.0%BCC 48,195$ 40,059$ 8,136$ 0.9%BBK 9,116$ 2,023$ 7,093$ 0.8%BAN 26,191$ 20,766$ 5,426$ 0.6%BAB 22,801$ 17,706$ 5,095$ 0.6%BAH 8,454$ 3,807$ 4,647$ 0.5%BAK 35,848$ 31,625$ 4,223$ 0.5%BHC 8,239$ 4,913$ 3,326$ 0.4%BAE 4,129$ 1,439$ 2,690$ 0.3%BCB 90,398$ 88,047$ 2,351$ 0.3%BAQ 4,575$ 2,549$ 2,025$ 0.2%BBG 8,152$ 6,485$ 1,667$ 0.2%BBB 1,321$ 1,321$ 0.1%BLA 1,871$ 731$ 1,140$ 0.1%BAO 908$ 327$ 581$ 0.1%BBH 8,067$ 7,579$ 488$ 0.1%BBL 847$ 422$ 426$ 0.0%BAL 395$ 13$ 382$ 0.0%BFF 2,273$ 2,118$ 154$ 0.0%BLB 179$ 69$ 111$ 0.0%BEZ 93$ 93$ 0.0%BFB 199$ 143$ 56$ 0.0%BFE 15$ (15)$ 0.0%BAC 67,293$ 71,705$ (4,412)$ -0.5%BAG 26,757$ 37,166$ (10,409)$ -1.1%BBD 74,094$ 85,232$ (11,138)$ -1.2%BEA 46,429$ 68,240$ (21,811)$ -2.4%

Grand Total 4,857,777$ 3,942,773$ 915,005$ 100.0%

Fiscal Year

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DMAIC – Improve Performance

• Prescriptions– All scripts reported?

• FTEs– Military Deployed?– Robotics?

• Cost– Change to program or policy?– Costs reported/allocated to correct FCC?

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DMAIC – Control Performance

Monitoring Plan Control plan in place for sustaining improvements (short and long-term).

Process Standardization New process steps, standards, and documentation are ingrained into normal

operations.

Documented Procedures Operating procedures are consistent. Knowledge gained on process is shared and institutionalized.

Response Plan Response plans established, understood, and deployed. Transfer of Ownership (Project Closure) Transfer ownership and knowledge to process owner and process team

tasked with the responsibilities.

Six Sigma DMAIC Quick Reference - Control PhaseBy Patrick Waddickhttp://www.isixsigma.com/library/content/six_sigma_dmaic_quickref_control.asp

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You can now: Describe the origin and goals of Six Sigma Identify how Six Sigma is used in healthcare

and other industries Define the DMAIC process and use the steps

in your day-to-day operation Understand and correctly interpret the S2M3

tool Locate tools to help you begin exploring data

quality opportunities

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Six Sigma MEPRS Management Metrics

Deirdre Baker SRA International, Inc.

TMA MEPRS Program OfficeManagement Control and Financial Studies Division

Questions?