Case Model Illustration of a Six Sigma Healthcare Pioneer

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The Mount Carmel Health System

By Mark Matthews MD

A “Scrubbed” True Illustration

One of the earliest healthcare adopters of Six Sigma was the Mount Carmel Health System in Columbus, Ohio.

The organization was barely breaking even in the summer of 2000 when competition from surrounding providers made things worse. Employee layoffs added fuel to an already all-time low employee morale.

The CEO

Chief Executive Officer Joe Calvaruso was determined to stem the bleeding, break the cycle of poor financial performance and return the hospital system to profitability.  He sought the potential benefits of Six Sigma and began a full deployment of its methodology. The plan was a bold move, as the organization ensured that no one would be terminated as a result of a Six Sigma project having eliminated his or her previous duties. These employees would be offered an alternative position in a different department. Moreover, top personnel were asked to leave their current positions to be trained and work full time as Six Sigma expert practitioners who would oversee project deployment while their positions were backfilled.

Assessment

The Six Sigma deployment was the right decision. More than 50 projects were initiated with significant success. An example of an early Mount Carmel success story is the dramatic improvement in their Medicare + Choice product reimbursements, previously written off as uncollectible accounts. These accounts were often denied by HCFA due to coding of those patients as “working aged.”

Since the treatment process status often changed in these patients, HCFA often rejected claims or lessened reimbursement amounts, effectively making coding a difficult and elusive problem. The employment of the Six Sigma process fixed the problem, resulting in a real gain of $857,000 to the organization. The spillover of this methodology to other coding parameters also has dramatically boosted revenue collection.

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One Response

  1. The Next “Top 5%:” Identifying patients for additional care through micro-segmentation

    Current healthcare cost prevention efforts focus on the top 1% of highest risk patients. As care coordination efforts expand to a larger set of the patient population, the critical question is: If you’re a care manager, which patients should you offer additional care to at any given point in time?

    Our research shows that focusing on patients with the highest risk scores or highest current costs create suboptimal roadmaps. In this article we share an approach to predict patients whose costs are about to skyrocket, using a hypothesis-free micro-segmentation analysis.

    http://strataconf.com/rx2013/public/schedule/detail/29706

    From there, working with physicians and care managers, we can formulate appropriate interventions.

    Tim Darling
    [Objective Health's Director of Product Development]
    McKinsey Solution for Healthcare Providers

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