Lean, Six Sigma supplanting CQI,
TQM in efficiency, quality arsenal

Back in the 1980s and 1990s, continuous quality improvement (CQI) and total quality management (TQM) ruled the acronym list and dominated discussions about organizational change. For the last decade, however, lean manufacturing and Six Sigma emerged as popular processes to drive clinical and operational change within healthcare facilities.

But how do you delineate between these concepts, determine what they can contribute to efficient and effective supply chain management and how to incorporate them into day-to-day operations? Healthcare Purchasing News reached out to a passel of experts from hospitals, group purchasing organizations and consulting firms, all with considerable experience in performance improvement initiatives. HPN also posed the seminal question of why more hospitals aren’t pursuing and implementing these performance improvement initiatives if they’re so important. Each offered an array of hurdles – both existing and perceived – blocking the strategies that can lead to cost-efficient tactics.

At core, the quartet of performance improvement programs revolves around identifying and rooting out wasteful quality-draining practices, including data-driven variability. (See sidebar)

Molly Ehrlich

"Lean and Six Sigma use CQI and TQM principles, and all of these programs intend to make businesses more effective and efficient," said Molly Ehrlich, CMRP, SSGB, implementation manager, VHA Performance Services, VHA Inc., Irving, TX. "But I see the main differences being that Six Sigma is more rigorous than these others because it requires involvement from administration, and it employs a disciplined approach of management with facts and data."

Robert T. Yokl, president and Chief Value Strategist, Strategic Value Analysis In Healthcare, Skippack, PA, classified CQI and TQM as umbrella terms representing more of a philosophy than a methodology, which he felt are their key weaknesses.

"Lean Management – a waste eliminator – and Six Sigma – to reduce variation – have defined processes that must be followed exactly to obtain the desired quality outcomes," Yokl noted. "This is why Lean Management and Six Sigma vs. CQI or TQM are ideal methodologies for supply chain managers since they will enable supply chain managers to eliminate all waste and inefficiencies in their supply chain. I don’t believe CQI or TQM proponents can make this same claim, because Lean Management and Six Sigma bring a highly organized approach to quality improvement – not theory."

But James Smoker, MPA, CMRP, who retired two months ago as director, materiel resource services, WellSpan Health, York, PA, said he views them as part of a process/performance continuum. "The whole [performance improvement/quality management] focus has to be generated from the top of the organization chart down. [W. Edwards] Deming cites constancy of purpose – not what’s expected but what’s inspected. What are the vital few that are really important and generate results? There’s an expectation from the top that every operating entity – clinical or support service – is demonstrating efforts and activity, streamlining business processes, reducing waste and medical errors. Inspections and rewards are key so that people will pay attention," Smoker said.

James Smoker

"Lean engages the use of process flowcharting to determine the bottlenecks in processes and the wastes in the process. Lean makes significant use of the content experts, the process ‘doers’ to assist in defining the current state and the desired state. Lean may also engage the process upstream and downstream customers to assist in defining the bottlenecks and the desired state," he indicated.

"Historically, CQI and TQM by the very nature
of their name are viewed as quality initiatives," said Laura Archer, senior vice president, The Preference Group, Broadlane Inc., Dallas. "Throughout many organizations ‘quality’ is often thought of as someone else’s job or the job of the ‘inspector.’ Quality is often achieved through inspection and control instead of data-driven process improvement. Lean Six Sigma methodologies are delivered across the entire organization as a set of tools and methods to improve the overall performance of an organization.

"CQI and TQM focus not on the kinds of waste, but rather on non-value added activities," Archer continued. "In healthcare when non-value added activities are addressed, regulatory or patient safety issues frequently arise. Ultimately, the non-value added activities become much more difficult to remove because they are usually tied to a practice designed to keep people safe or to ensure that regulatory requirements are met. The visual tools and disciplined approaches associated with lean management are proving to be a little more effective in implementation than CQI and TQM, which are usually harder to sustain in an organization."

Jeremy Belinski

Jeremy Belinski, vice president, strategic development, Aspen Healthcare Metrics, a MedAssets company, signaled his preference for supply chain managers to work with Lean Six Sigma. "In healthcare, [Lean Six Sigma] is uniquely suited to the needs of supply chain managers," he said. "Many of the principles are identical and the foundation of LSS is rooted in TQM/CQI. The reason LSS would be best is because it allows an organization to change component parts of the supply chain while still moving forward with the greater change management efforts associated with LSS. The second reason LSS would be preferred is the sophistication of the tools used to deliver results."

David Reiter, M.D., MBA, FACS, associate Chief Medical Officer, Thomas Jefferson University Hospital, and professor of otolaryngology-head & neck surgery (facial plastic & reconstructive surgery), Jefferson Medical College, Philadelphia, concurred.

"Lean is the only one of the four that focuses primarily on efficiency and reduction of waste," Reiter noted. "Six Sigma is highly programmatic, provides a framework in which to evaluate and manage large-scale process problems using proven repetitive methodology, and includes tools for ongoing monitoring and maintenance of process control. TQM and CQI are less rigorous and, therefore, provide a looser environment in which to effect positive change. Application of Lean and Six Sigma methodology is easier to teach and more consistent in achievement of goals."

Terry Murphy

Terry Murphy, director, supply chain management, Lee Memorial Health System, Fort Myers, FL, summed it up this way: "The goal of Lean is to accelerate the velocity of any process by reducing waste in all of its forms, such as shorten the cycle time. Six Sigma is about removing the variability in a process or operation." As a result, his organization established Supply Management Action Teams as an alternative to value analysis teams to set up a process "that sped up the decision-making process and created a process that enabled more consistency – less variation – across the system." (See October 2009 HPN, "Redefining value analysis practices for a healthcare reform-minded industry, p. 8.) In fact, through August of the current fiscal year, the SMATs generated more than $1 million in savings with an average monthly savings of $110,000, he added.

All four not only have their differences in theory and practice but also may have their differences in settings, according to Pat Klancer, senior director, Supply Chain Diagnostix Services, Amerinet Inc., St. Louis.

In fact, all focus on engaging organizational involvement to improve quality and operational and financial performance through implementing stable processes and all are based to some degree on data, standardization and reducing process variance, Klancer said.

Pat Klancer

"But Six Sigma is much more grounded in this theory than the other methods," she continued. "It is very scientific and numbers-based, focusing on using verifiable data as the basis for decision-making. Six Sigma can be very helpful in a complex healthcare setting where there are a high number of transactions, or mistakes can be very expensive. These principles are very well matched because of the renewed focus on ‘never events’ and potential for reducing medical errors. [Examples] can include improving enhanced claims reimbursement and reducing the inventory of surgical equipment and related costs.

"In smaller settings, or where processes are very simple, Six Sigma may be overkill, and not as effective or necessary as Lean or TQM," she added. "Six Sigma also differs, especially from TQM and CQI, in that it employs a top-down approach and is led by well-trained and accredited champions and senior management, who then involve other facets of the organization. TQM and CQI focus on teams and place less of a premium on management involvement in actual activities."

Putting any Lean or Six Sigma project into practice calls for multiple players spanning the organizational chart and carefully chosen launch points, according to experts.

In short, it’s all about "changing culture, existing mindsets and behaviors," Klancer said.

Lisa Dietz

"A system-wide implementation requires more than one person driving the project," contended Lisa Dietz, director and Six Sigma Black Belt, Aspen Healthcare Metrics. "The C-suite and even the board must be sold on the benefits and costs.

If a facility only wants to adopt a few principles, Dietz recommended a few good places to start. "At least half of the Six Sigma projects in healthcare I completed had similar conclusions and process improvements," she noted. "Significant time and energy was expended gathering data and completing sophisticated statistical analysis with the same result: The team was unable to identify a specific process driver because there was no process per se. When there isn’t a well defined process that everyone follows, as is often the case in healthcare, the result will be significant process variation.

"Therefore, the two recommendations I would make to anyone trying to implement these principles would be to first implement some basic standard operating procedures and process controls," she continued. "Then implement a measurement system to help identify the subsequent drivers of process variation. Once the process is in better control, measurement will be crucial to monitor and continuously improve. Where to focus? The specific area, inventory management, for example, is less important. What is more important is that one focuses where the change management hurdles will not be so great, where one can get an ‘easy’ win to demonstrate successes."

Belinski agreed with the "easy win" strategy. In fact, he argued that "for a system-wide implementation, [Lean Six Sigma] is best implemented in a phased approach simply due to the incredible task of system-wide change management." He urged facilities "to start on projects that create immediate value, use these results to garner C-suite champions who will then push the implementation at all levels of the organization. Begin with department level implementations. Starting with the supply chain is appropriate. Then managers can focus on the obvious customers of the supply chain, such as the [emergency department]."

David Reiter

Implementing Lean or Six Sigma methodology in supply chain management requires vision and commitment, as well as a detailed process plan, according to Reiter.

"[Supply chain management] should start by defining those processes on which it is based, such as value analysis, contract management and inventory control, and mapping each process in detail," he said. "Then each step is evaluated for the value it adds to the process. Waste is identified in the form of steps that add no value, and the process is redesigned to achieve the same goals without the steps that added no value. 

"Six Sigma methodology requires a commitment among the workforce to abandon assumption in favor of data as the basis for making decisions," Reiter continued. "This is the major cultural constraint to be overcome once leadership is on board. Next, [supply chain management] needs to identify the processes appropriate for application of Six Sigma methodology. Amenable processes have sufficient transaction volume to lend themselves to statistical analysis, with clearly defined and measurable inputs, outputs and milestones, such as the proportion of item master list purchased under contract, time from initial vendor contact to signed contract, number of match audits triggered, proportion of new product requests lacking documentation of need/efficacy. Prioritization is required next, to start with projects of the highest urgency."

Ron Geguzys

Ron Geguzys, senior vice president and Six Sigma Black Belt, operations, Broadlane Inc., Dallas, emphasized truly understanding Six Sigma to make it work as well as eliminating variation along with its sources. "This is not simply providing a process map and making sure that everyone has been trained and holding people accountable," he said. "Six Sigma defines process understanding in terms of data, capability and sources of variation. If you can’t illustrate a process using numbers that represent the process and are statistically relevant, then you can’t control it. If you can’t control the process, then you are at the mercy of chance. Six Sigma programs enable practitioners to break down a complex problem into a simple, fact-based, project that is achievable, manageable, and that stakeholders can understand and support."

Supply chain managers can apply and generate benefits from a number of techniques, including establishing dashboard metrics, conducting periodic Kaizen events, implementing Kanbans events or establishing a Gemba walk, according to Geguzys.

For Ehrlich, the Gemba walk and 5S are her two favorite Lean methodologies. "During a Gemba walk, one simply walks the area – the area might be the warehouse, the nursing unit storage area, the receiving dock, the OR suite – the locations are nearly endless – and makes observations about what they see," she noted. "Employees are asked questions about processes they follow, how they know what to do, tools they use, what works well, what could be improved. Observations about cleanliness and safety are made.

"I will sometimes repeat a Gemba walk the following day to see what’s changed or what’s remained the same," she continued. "For example, there was a Receiving group that, on day 1, talked to me about their practice of same-day delivery of incoming packages. On day 2, I walked through the same Receiving area. I knew how to read their labels from what I learned the previous day, and found that some packages that were received the previous day were still in the staging area, mixed with newly received packages. When I asked the employees about this, I learned the packages had been overlooked because the protocol was to place received packages scattered on the floor in random fashion with no real organization and no consequences if the packages weren’t delivered – as long as the ordering department didn’t call. A quick discussion with the manager resulted in the clearing of a rack near the Receiving and staging area, labeled by hospital floor. Received packages were placed in the corresponding floor location on the rack, and were added to picklist orders for delivery to the hospital. If the rack wasn’t empty at the end of the day, an additional run was made to the hospital with the remaining packages."

Laura Archer

Lean 5S is the process of creating workplace cleanliness and organization, including visual signals, according to Ehrlich. Roughly translated from Japanese, the 5 S’ stand for "sort," "straighten," "shine," "standardize" and "sustain." She indicated that during a 5S initiative, storage spaces are used more efficiently, workflow is improved, excess inventory may be removed, shelving type is optimized to the product, labels are added, all of which are designed to make the location much more efficient.

Ehrlich recalled a recent 5S initiative performed in an OR suite. "The PAR value of the supplies that were on the restocking list was $500. After eight hours of counting and identifying product, we found $4,000 in supplies in the cabinet – and of the $4,000, $1,500 was expired suture. This exercise led the hospital to create an item list for each OR suite. The item list includes the [materials management information system] item number and description, as well as the PAR quantity and storage location. Rooms are only restocked to these specifications, and excess product is removed and placed back in its proper storage location once a week."

If performance improvement programs, such as Lean and Six Sigma are so important and valuable to healthcare supply chain managers and organizational expense reduction, why aren’t more facilities adopting and implementing the principles?

"Too many departmental silos create many barriers to getting things done," Murphy said. "It’s real easy for people to want to work within their silos. People will migrate to their comfort zone. We have begun to overcome these hurdles by creating SMAT process teams who are all aligned to ensure that the right decisions are being made in a timely manner and rules have been set and are followed up on and enforced."

Terry Cox

Terry Cox, MA, MS, FAHRMM, CMRP, director, supply chain services, Texas Children’s Hospital, Houston, attributed any reticence to the economy and inherent financial constraints. "The economy has shrunk over the last two years and has had a significant impact on hospital budgets and revenues," he said. "Because supply chain is an expense department, justification may be difficult. People are doing more with less. Our supply chain team recently had a Lean/Six Sigma-certified consulting firm come into our organization to review our product selection process. Fortunately for us, this service was provided at no charge. We immediately saw the benefits of Lean/Six Sigma and were able to implement some of their recommendations.

"However, when budgets are tight, value analysis is even more important, but the expense of a Lean/Six Sigma program or department may be challenging," Cox added. "To overcome such hurdles, having success stories on the clinical side may eventually move this program toward supply chain efficiencies. You have to prime the pump to make it work and the priming of the pump costs money."

Time is the real culprit, according to Dietz. "The typical response I hear from hospital supply chain managers is, ‘I’m slammed as it is. How the heck do I find the time to work on this?’ I explain the truth that Lean and Six Sigma actually will make you and your team more efficient and effective, freeing up more time. I know one value analysis professional who decided to devote one hour a week at the end of every week to reviewing his process and working on improvements. This took significant discipline, but in the end paid off tremendously in workflow efficiencies."

Belinski acknowledged that the skill set for Lean/Six Sigma "is not entirely intuitive," so the supply chain manager must hire someone with those skills, and that can be challenging in tight financial times. But he contended that Lean/Six Sigma methodologies will reduce the cost pressure on executives. "Healthcare tends to be a bit conservative in implementing latest methods and technologies," he observed. "The adoption curve is much like the federal government where resources are thin, demands are high and philosophical constraints mitigate aggressive pursuit of new ideas."

Robert T. Yokl

The hard part is achieving buy-in and commitment to such change where there is little desire for it among the stakeholders, Reiter noted. "CAP or Change Acceleration Process tools help to paint the right pictures, creating a realistic vision and motivating the reluctant to embrace the process. Those who can’t jump the hurdles can often be led around them by the hand," he said.