Hospitals See Benefits of Lean and Six Sigma

Targeted News Service

March 20, 2009

Hospitals across the United States are beginning to embrace lean and Six Sigma business management strategies in attempts to reduce costs and improve productivity, according to a new national benchmarking study by ASQ.

The ASQ Hospital Study, to which 77 hospitals responded, is the first study to investigate the implementation of lean and Six Sigma in U.S. hospitals. While applied in manufacturing extensively—and applicable to all industries—these management methods have moved into healthcare recently, but with little substantive data available for hospitals to assess the worth of the methods.

Lean emphasizes removing waste from organizations and processes while focusing on and delivering more value to customers. Six Sigma focuses on variation reduction in processes, products and services.

According to the ASQ study, 53% of hospitals report some level (“minor,” “moderate” or “full”) of lean deployment, and 42% of hospitals report some level of Six Sigma deployment. Few hospitals participating in the study report “full deployment” of either lean (4% of hospitals) or Six Sigma (8%).

The reasons that neither method has been deployed in hospitals include: the need for resources (59% of hospitals), lack of information (41%) and leadership buy-in (30%). Eleven percent of hospitals surveyed were not familiar with either method.

“During these turbulent economic times when healthcare costs continue to rise, it is crucial that U.S. hospitals look to methods like lean and Six Sigma to become more efficient,” said Dr. James Levett, chair of ASQ’s Healthcare Division and chief medical officer for the Physicians’ Clinic of Iowa. “This study indicates that many healthcare systems are still in the ‘infancy stage’ when it comes to using these vital cost-cutting tools.”

Reasons hospitals use lean or Six Sigma

Primary factors that hospitals deploy lean are: improving hospital throughput (73%), business/cost need (68%) and quality need (56%). Primary factors that hospitals deploy Six Sigma are: business/cost need (69%), quality need (62%) and improving hospital throughput (41%).

Hospitals report that the biggest challenges in implementing lean or Six Sigma include sustaining improvements, competition from other initiatives, leadership commitment and availability of resources. Hospitals surveyed report a median investment of $25,000 for their 2007 lean initiatives and a median investment of $96,485 for their 2007 Six Sigma initiatives.

Top areas for lean or Six Sigma, and success of efforts

Hospitals were asked to identify the departments in which lean or Six Sigma have been deployed, as well as the general rate of success for those efforts. While the data returned is for a small sample of hospitals that have actually deployed Six Sigma and lean (and, thus, statistically has a wide margin of error), it nonetheless provides a starting benchmark for the industry for location of efforts and potential for returns.

The locations most likely to have lean or Six Sigma in place are: clinical deployment, which has lean in surgery/operating room (61%) and emergency (60%) and Six Sigma in emergency (72%) and surgery/operating room (66%); ancillary/support services deployment, which has lean in admissions/discharge (43%) and radiology/imaging (43%) and Six Sigma in admissions/discharge (56%) and radiology/imaging (53%); and non-clinical/support deployment, which has lean in purchasing/supply (36%), information systems (24%) and administration (24%) and Six Sigma in purchasing/supply (53%), information systems (24%) and maintenance (22%)

Hospitals deploying in the following areas report the following success rates:

Clinical success (“somewhat” or “highly” successful)—lean: operating rooms (95%) and emergency rooms (86%); Six Sigma: operating room (95%) and in-patient areas not including mental health, rehab or ICU (95%)

Ancillary/support services success (“somewhat” or “highly” successful)—lean: admissions and discharge (94%), sterilizing/reprocessing (89%) and radiology/imaging (87%); Six Sigma: admissions and discharge (90%), radiology/imaging (89%) and pharmacy/pharmaceutical services (88%)

Non-clinical/support success (“somewhat” or “highly” successful)—lean: information systems (89%) and administration (87%); Six Sigma: administration (100%) and information systems (91%)

Seventy-seven hospitals across the United States responded to the ASQ Hospital Study via an online questionnaire, with results received and compiled by a partnership of two independent research organizations, the MPI Group and Industry Insights.

Note: Overall study responses provide a confidence interval of approximately 11 at a 95 percent confidence level; subquestions for only lean and/or Six Sigma deployers are less statistically significant, but all study analysis provides a range of benchmarks for hospitals considering lean and/or Six Sigma.