Six Sigma arises from the ashes of
TQM with a twist
Ken Black and Lee Revere
School of Business and Public Administration,
University of Houston – Clear Lake, Houston, Texas, USA
AbstractPurpose– This paper sets out to analyse the use of the Six Sigma methodology to improve quality in healthcare. It looks at how Six Sigma grew out of the concept of Total Quality Management (TQM). Design/methodology/approach– Six Sigma is a quality improvement methodology that has been widely adopted by companies since the early 1990s and has grown exponentially in the healthcare industry during the past five years. Some of the main tenets of Six Sigma have emerged from the principles of TQM, including the notion that the entire organization must support the quality effort; that there should be a vigorous education effort; and that a quality improvement process should emphasize root cause analysis.
Findings– In spite of its early success, TQM “crashed and burned” for several reasons including the fact that financial benefits were difficult to assign to TQM efforts, root cause was not always determined resulting in recurring errors, there was no common metric to measure the level of quality attained, and quality efforts were sometimes aimed at processes or operations that were not critical to the customer. Six Sigma filled the vacuums created by these TQM failures in several ways. Under the Six Sigma methodology, quality improvement projects are carefully defined so that they can be successfully completed within a relatively short time frame. Financials are applied to each completed project so that management knows how much the project saves the institution.
Originality/value– On each project, intense study is used to determine root cause analysis; and in the end, a metric known as “sigma level” can be assigned to signify the level of quality. Six Sigma has a “critical to quality” dimension that keeps the quality effort focused on improving only those things that really matter to the customer.
KeywordsSix Sigma, Total quality management, Manufacturing industries Paper typeViewpoint
Introduction
Continuously improving quality is a core goal of most healthcare organizations. Engaging in quality signifies that the organization is concerned about the value it brings to its patients, its providers, its employees, and its stakeholders. Over the years, healthcare companies have adopted and implemented various quality methodologies and philosophies with some companies even developing their own quality-based initiatives. At this time, the leading quality movement in the USA and many other countries is Six Sigma. “The Six Sigma improvement initiative has become extremely popular in the last several years. In addition to generating a great deal of discussion within statistical and quality circles, it has been one of the few technically oriented initiatives to generate significant interest from business leaders, the financial community, and the popular media.” (Hoerl, 2001).
Six Sigma is a quality movement, a methodology, and a measurement. As a quality movement, Six Sigma is a major player in both manufacturing and service industries throughout the world. As a methodology, it is used to evaluate the capability of a process to perform defect-free, where a defect is defined as anything that results in customer
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dissatisfaction. Six Sigma’s breakthrough strategy combines improved metrics and a new management philosophy to significantly reduce defects thereby strengthening a firm’s market position and improving the profit line (Harry and Schroeder, 2000). It involves designing, improving, and monitoring business activities to minimize or eliminate waste while optimizing customer satisfaction and increasing financial stability
(Pande et al., 2000). Six Sigma is customer focused and has the potential to achieve
exponential quality improvement through the reduction of variation in system processes. The notion of Six Sigma is derived from previous quality schemes in which a process was considered to produce quality results if 99.74 percent of the product,
service, or attributes were within specification (mþ3s). Six Sigma adherents seek
exponentially higher quality results having as an ultimate goal of virtually all
products, attributes, or services being with specification (mþ6s) thus producing
fewer than 3.4 defects per million.
The Six Sigma approach to quality is said to have begun with Bill Smith, a reliability engineer at Motorola, in 1987 (Evans and Lindsay, 2005). However, Six Sigma took off as a significant quality movement in the mid 1990s when Jack Welch, CEO of General Electric, “. . .went nuts about Six Sigma and launched it,” calling it the most ambitious task the company had ever taken on. (Welch, 2001). “Six Sigma has taken the corporate world by storm and represents the thrusts of numerous efforts in manufacturing and service organizations to improve products, services, and processes.” (Evans and Lindsay, 2005). “Evidence of the power of the Six Sigma Way is already visible in the huge gains tallied by some very high-profile companies and some not-so-high profile ones,. . .” (Pandeet al., 2000). Six Sigma has been around for almost twenty years and has shown a sustained impact in a variety of companies, including healthcare organizations, during the last few years.
Six Sigma made a beachhead in healthcare around the year 2000; and for a couple of years, its growth was slow but steady. However, by the year 2002, a number of healthcare institutions had adopted Six Sigma as their major quality program. Included in this group was the Charleston Area Medical Center in Charleston, West Virginia, which by the year 2002 had two master black belts, five black belts, twenty green belts, and two hundred managers trained in Six Sigma. Thirty projects had been undertaken and $3.2 million was added to the bottom line (Lazarus and Stamps, 2002). About the same time, the Valley Baptist Health System in south Texas began to develop a Six Sigma culture that resulted in over one hundred projects completed in areas such as admissions, laboratory, emergency department, and operating room.
During the past five years many other healthcare organizations have adopted Six Sigma with good results (Lazarus and Stamps, 2002). Mount Carmel Health in Ohio used Six Sigma techniques to improve their Medicare Choice Plus Plan resulting in increased profits of over $850,000. Scottsdale Healthcare (Arizona) implemented Six Sigma to reduce transfer time from the emergency department to an inpatient hospital bed. This effort is estimated to have increased profits by $600,000. Virtua Health (New Jersey) used Six Sigma to improve outcomes for congestive heart failure.
In the past year, Six Sigma programs have been implemented in several of the leading healthcare institutions in Houston’s medical center. One of these is Memorial Hermann Southwest which has a team of over fifty black belts, green belts, and change agents working on a number of projects including patient registration accuracy, ER cycle time, bed availability, OR turnover time, timely completion of medical records,
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and others (Flowers, 2005). Six Sigma is currently growing rapidly in the United States
as the prominent quality improvement program in healthcare. What
circumstances/opportunities existed at the time of its inception that facilitated Six Sigma’s rapid rise to its present level as a popular healthcare quality movement?
TQM lays the groundwork for Six Sigma
It can be argued that Six Sigma emerged from the fertile environment created by the Total Quality Management (TQM) (often called continuous quality improvement or CQI) movement in US healthcare organizations in which there was great demand for significant, continuous improvement in the quality of patient care outcomes, processes, and services. Some quality researchers suggest that the origins of many Six Sigma principles and tools are found in the teachings of “quality” thinkers like W. Edwards Deming (Pandeet al., 2000), often called the “father” of TQM. Evans and Lindsay (2005) point out that “although the term TQM is not used much anymore, the principles are still alive in many organizations and underlie the Six Sigma philosophy”. What were the principles of TQM/ CQI that laid the groundwork for the emergence of Six Sigma in today’s healthcare companies?
TQM, an umbrella term for company-wide quality improvement efforts, came from the work of W. Edwards Deming and his direction in the rebuilding of Japanese production beginning in 1950 and lasting for three decades. Deming brought his quality approach to the United States in 1980. TQM became a successful quality movement in the US during the 1980s, providing a foundation upon which virtually all healthcare quality movements have emerged. Its philosophies were built around the view that businesses are composed of processes that start with customer needs and end with highly satisfied customers (The W. Edwards Deming Institute, 2004). In healthcare there are a multitude of customers including patients, providers, and payers. While Joseph Juran and other quality “gurus” have been associated with the TQM movement, it is W. Edwards Deming, his philosophies, and particularly his famous 14 points that under gird healthcare TQM. (Deming, 1986). Embedded in the 14 points are the roots of several of the main tenets of Six Sigma. In one of Deming’s 14 points, “adopt the new philosophy”, Deming meant that if a healthcare organization does not completely change its culture to total and continuous quality improvement, then the quality effort is doomed to failure. Both TQM and Six Sigma expect no less than total organization-wide involvement. In another related point, “institute leadership” (Walton, 1986), Deming reveals his belief that if top management is not totally committed to continuous quality improvement in every way, it is a waste of time to adopt and practice TQM. Legend has it that Deming walked out of a high level meeting with Ford executives because the CEO did not attend, and Deming felt that by not attending, the CEO was demonstrating that he had not truly adopted the new philosophy nor had he instituted leadership (Deming, 1986). The Six Sigma movement, as demonstrated by its required heavy financial and time investment, expects no less from a healthcare organization. That is, with Six Sigma, as with Deming, there is an expectation that the organization will make whatever efforts are necessary to successfully implement continuous quality improvement. Such a total organization effort permeates the organization’s culture from the CEO to the patient care and ancillary staff.
One of Deming’s 14 points was “Institute training” and another was “Institute a vigorous program of education and retraining”. Deming believed that healthcare staff
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needed to know, understand, and be able to implement continuous quality improvement ideas and tools (Deming, 1986). In addition, he felt that many errors (defects) occurred because staff did not fully understand how to do their job correctly. Thus, a vigorous program of training and education would provide the healthcare staff with better skills and knowledge to treat patients efficiently and effectively and with a better understanding of how to implement and use total quality tools in daily patient care processes.
With Six Sigma there is also a very significant requirement that Six Sigma training be taken by a high proportion of a healthcare organization’s employees as demonstrated by the “belt” system. Some employees spend weeks learning Six Sigma techniques/philosophies becoming designated as “black belts” who then assume responsibility for leading Six Sigma projects in the healthcare organization. Most other employees in a Six Sigma organization attend at least minimal training and are designated as “yellow” or “green belts”. This intensive and differentiated training is an
integral part of Six Sigma approach (Linderman et al., 2003). Six Sigma’s heavy
reliance on training employees in continuous quality improvement techniques stems from its roots in TQM and Deming’s 14 points; and in some ways, is not a new concept but rather an expansion of the initial TQM training that was widely implemented in most US healthcare organizations.
Deming’s last point of his 14 points was “take action to accomplish the transformation”. Integral parts of the TQM process were error or abnormal outcome (special cause variation) investigation and root cause analysis which included considerable emphasis on statistics, quality tools, and data analysis. The “measure” and “analyze” phases of the Six Sigma DMAIC process (Define, Measure, Analyze, Improve, Control) place a strong emphasis on gathering data and determining root cause. It has been said that Six Sigma is “data driven”. As with TQM, in Six Sigma there is a determined effort to find causes of variation.
TQM crashes and burns
TQM, as it was typically implemented in many healthcare organizations, had a number of significant shortfalls. First, although TQM provided excellent quality tools and an organization-wide mindset to improve quality, it didn’t have quantifiable dollar benefits that could be tied to the bottom-line. Without financial gains, the cost-benefit of implementing and/or expanding TQM could not be justified (Folaron, 2003). In addition, along with not seeing measurable returns, the board of directors and/or top management often did not understand TQM nor did they view it strategically (Evans and Lindsay, 2005). Lazarus and Novicoff (2004) suggested TQM did not always remove the root cause of the errors; and thus, many improvement gains were lost over time as the process returns to its original baseline performance. Benedetto (2003) agrees with these authors and suggests TQM did not work well for processes that required major changes. In healthcare, the complicated and interdisciplinary approach of providing patient care often requires numerous changes across multiple departments before improvement in patient outcomes or satisfaction are attained. Similarly, the complex nature of third-party billing accounts receivable contribute to the slow achievement of financial quality improvement gains. As a result, the name TQM became associated with quality tools rather than as a continuous quality improvement strategy with substantiated results. The failure of TQM to provide evidence of better patient outcomes, increased satisfaction, or improved financials,
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coupled with its inability to remove identified root causes and demonstrate a strategic importance led to its eventual demise.
Six Sigma rises from the ashes of TQM with new features
Six Sigma, in part, developed in response to TQM inadequacies; and at the same time, Six Sigma introduced substantial new concepts and approaches (Ettinger, 2001). Some of these include: Time and Money Deliverables, the Six Sigma Metric, and a Critical to Quality Customer Focus.
Time and money deliverables
One of the “failures” of TQM was that CEOs, whose compensation was largely being driven by the bottom line, often could not identify measurable quality improvements in patient care processes or company financials over a given period of time other than the company was doing better with quality. Such healthcare leaders wanted a clinical, satisfaction, or financial return for their dollar and time investment in continuous quality improvement programs and often could not find it. It seemed that with TQM, quality improvement was open-ended and open-financed and was a never-ending effort with few identifiable results. In Six Sigma, doable quality improvement projects are identified based on critical to quality parameters and goals are established based on customer requirements, not internal considerations (Lindermanet al., 2003; Samuels and Adomitis, 2003). A timetable for deliverable improvement is set-up. Six Sigma projects run for only four to six months and are usually overseen by a full-time dedicated employee trained as a “black belt” along with a team of cross-functional employees. Quite often, the resulting quality improvement impact on the healthcare organization is assigned a dollar figure with many Six Sigma projects claiming to save the organization a half million dollars or more annually. While TQM created “constancy of purpose” and promoted “improving constantly and forever” the product or service, Six Sigma establishes deliverable quality improvement in a specific time frame (Simmons, 2002).
The Six Sigma metric
The ability of a process to perform error-free is an underlying philosophy of Six Sigma. Six Sigma seeks to identify, in a studied process, variation that createsallerrors or poor outcomes. In order to find measurements that are meaningful in discovering variability, Six Sigma team members apply root-cause techniques – purposefully digging deeper than other quality improvement efforts that have gone on before. Because it is “data-driven”, a Six Sigma team uses measurements to analyze problems and thereby improve the patient care process or outcome. Such activities and actions are more focused and more specific than were most TQM efforts.
In addition, the Six Sigma movement has introduced a metric that can be used to locate where a process, outcome, or organization is in its quality improvement effort as compared to others. This metric is the sigma level under which a healthcare organization or its processes are currently operating. Many companies have been operating at a sigma level of between 2.0 and 3.0 and want to improve (Breyfogle and
Cupello, 2001; Revere et al., 2004). The sigma metric provides a starting place for
improvement and affords the development of a process to evaluate errors and
outcomes and make systematic changes to increase reliability (Johnstoneet al., 2003).
Healthcare organizations operating at sigma levels of 4.0 and higher have greatly
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reduced the number of errors and/ or poor outcomes to quite low levels. Operating at a six sigma level for any company or process means that the company or process produces no more than 3.4 defects/million opportunities. The TQM movement had no way to quantify the level of quality that a healthcare organization had attained. With Six Sigma, the sigma level can be used as a benchmark against which a company can compare its improvement.
Critical to quality customer focus
The overall purpose of TQM in healthcare organizations was to improve a process, outcome, or service so that the consumer (patient, provider, and payer) would perceive it as having quality thereby resulting in loyal customers and increased market share. However, this was mainly measured through patient, provider, and payer satisfaction questionnaires; and monitored through control charts. Six Sigma places a much stronger emphasis on the customers; and at every stage of a Six Sigma project, there is a focus on the customers. So as to underscore this, Six Sigma introduces a concept called “Critical to Quality” (CTQ) in which only process, outcome, or service characteristics vital to customer satisfaction are investigated for improvement. There are both internal and external customers in a healthcare organization, and some things are not important to the customers. Six Sigma teams work only on things that are important to the customers.
Two challenges to Six Sigma
Where will the Six Sigma movement go from here? Obviously, Six Sigma has an important place in the field of healthcare quality improvement, but it is not exclusive and it is not the end all for continuous improvement (Folaron, 2003). Because of Six Sigma limitations, there are at least two relatively new quality movements, Design for Six Sigma (DFSS) and Lean Manufacturing, that may challenge Six Sigma’s position as the current preeminent quality improvement approach for US healthcare organizations.
Design for Six Sigma
Companies using Six Sigma discovered that many process, outcomes, and services, often designed before the Six Sigma era, contained so many flaws and problems that even the deep-root analysis of Six Sigma could not solve quality issues; thus, a complete redesign was necessary. “While recognizing that efforts can and should be made at the design stage, there is no escaping the fact that inadvertent variations in various process parameters, raw materials and parts will continue to lead to products (outcomes and services) that fail to meet quality requirements (Goh and Xie, 1994). This has opened the door for a new movement called Design for Six Sigma.
Design for Six Sigma (DFSS) is a relatively new quality scheme that seeks to take effective Six Sigma organizations to an even higher sigma level (Chowdhury, 2002). History has shown that most organizations can only achieve 5.0 sigma status with process improvement. In order to truly achieve 6.0 sigma status, most organizations need to design for 6.0 sigma. That is, you can only improve a process, an outcome, an operation so much until you run into the constraints or limitations based on the design of it. By designing it right the first time, much time and energy is saved from having to improve an inferior and limiting design.
The DFSS quality scheme is an off-shoot from Six Sigma (Lazarus and Novicoff, 2004). It does not add depth to Six Sigma, nor does it alter Six Sigma’s underlying
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principles. It is a value-added quality approach that can assist healthcare organizations that are already at their peak using Six Sigma. DFSS allows successful six sigma healthcare organizations to perform at an even higher quality level. DFSS would not exist without Six Sigma.
Lean manufacturing
Lean manufacturing comes from the Toyota Production System which requires a disciplined attitude to seek out and eliminate all waste in every area of a process including customer relations, supplier networks and organization management. The ultimate goal of lean manufacturing is to produce quality outcomes by instilling the discipline to reduce cost, to generate capital, to make the money, to bring in more customers, and to remain competitive in a growing global market. Proponents of lean manufacturing claim it evaluates the entire organization and restructures the processes to reduce wasteful activities. “It co-locates the processes in sequential order and, in so
doing, reduces variation. . .” (Breyfogle and Cupello, 2001). Some advocates of lean
manufacturing claim that even if a process or service is operating as a Six Sigma level, it does not necessarily follow that the process or service has gotten lean. At this point, lean manufacturing is viewed as a necessary co-product of Six Sigma, with Six Sigma investigating and resolving variation from lean manufacturing’s efficient processes (Breyfogle and Cupello, 2001). In fact, because some companies combine the two methodologies, there is a new movement being touted as “Lean Six Sigma”.
Summary
Six Sigma is a very popular and widely-used methodology for quality improvement in healthcare organizations today. Six Sigma is a powerful expansion of TQM because it repackages some of the stronger TQM principles while adding its own distinct concepts and methodologies. Six Sigma engages senior healthcare leaders and leverages dedicated resources against the quality improvement projects with the biggest patient care and financial impact. It achieves its results by expanding the original tools of TQM to refocus on statistical analyses and by providing a metric by which quality improvement can be gauged.
Six Sigma is beginning to see successor methods and movements come alive, such as Design for Six Sigma and Lean Manufacturing, which may prove to be beneficial for today’s healthcare organizations that are focused on quality. The plethora of methodologies and measurement tools affords healthcare organizations a unique opportunity to create their own brand of quality: one that is synergistic with their management style, industry demands and process capabilities.
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Ken Black can be contacted at: [email protected]
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