Lean Management in Hospitals: Principles and Key Factors for Successful Implementation

Table of Content

1. Introduction

2. Process Optimisation – Principles & Tools
2.1 Lean Methodology
2.1.1 Cycle Muda
2.1.2 Kanban
2.1.3 Kaizen
2.1.4 Value Stream Mapping
2.2 Lean Sigma
2.2.1 Poka Yoke – Error Proofing in Hospitals
2.2.2 Defining Six Sigma
2.2.3 DMAIC Methodology
2.2.4 Performance Measurements
2.3 Telemedicine & E-Health
2.3.1 Defining Telemedicine & E-Health
2.3.2 Types of Telemedicine
2.3.3 Benefits & Limitations of Telemedicine

3. Patient-Oriented Management
3.1 Patient Satisfaction & Loyalty
3.1.1 Patient Satisfaction – Distinctive Features and Drivers
3.1.2 Patient Loyalty – How Patients Differ from Common Customers
3.1.3 Shouldice Hospital – One Pioneer Example of Patient Orientation
3.1.4 Improvement of Patient Satisfaction
3.2 Strategic Alliances in the Healthcare Environment
3.2.1 Relevance of Strategic Alliances for Hospitals
3.2.2 Advantages, Risks and Challenges of Strategic Alliances in Hospitals
3.2.3 Types of Strategic Alliances in the Healthcare Environment
3.3 Hospital Marketing
3.3.1 The Market
3.3.2 Marketing Plan
3.3.3 Marketing Mix
3.3.4 Control & Evaluation Plans

4. Engaging & Leading Employees
4.1 Employee Satisfaction & Motivation
4.1.1 Role of Employee Satisfaction & Motivation
4.1.2 Requirements for Managers
4.1.3 Motivation Methods
4.1.4 Conflict Resolution
4.2 Employee Attitude Surveys
4.2.1 Setting the Right Target
4.2.2 Designing the Questionnaire
4.2.3 Communicating Objectives
4.3 Auditing
4.3.1 Hospital Environment
4.3.2 The 6-Level-Model

5. Conclusion

6. Appendices

7. Bibliography

List of Abbreviations

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1. Introduction

“…I will follow that system of regimen which, according to my ability and judgement, I consider for the benefit of my patients, and abstain from whatever is deleterious and mischievous…” 1

Whether this oath is sworn by future physicians or considered a moral guideline by nurses and other hospital staff: it contains the message that medicine and medical ethics follow economical principles (Schönermark, 2007). At least, they should. Astonishingly, waste is a common phenomenon in hospitals. Furthermore, the European healthcare sector cannot be regarded a cost-plus business anymore since hospitals nowadays have to cope with cutbacks in capital spending, financial pressure and reduction of staff. By way of example, the German health insurance contribution rate for public insured persons increased up to 15.5 % in 2009, tantamount to the rise of healthcare costs by 10 billion euros (Laschet, 2008).

In contrast, hospital leaders surely wish to design and maintain an ethical and economically justifiable system that leads to a win-win-situation for both the institution and the end-user: the patient. Accordingly, a more sophisticated approach that helps hospitals to work efficiently and effectively is needed. Among quality management tools, Lean is one suitable methodology that can help hospitals out of the dilemma.

Originally, Lean is a management methodology that goes back to production processes with the main aim to increase output by reducing input. The lean philosophy has its origin in the Japanese manufacturing industry and is strongly bound to the Toyota Production System (TPS). Toyota introduced this system in the 1990s with the intention to become one of the largest car manufacturers. Toyota’s success is self-explanatory.

The following book introduces main principles of Lean and deals with the questions: what are the principles and key factors for successful implementation of lean management in hospitals?

1 Abstract from the Hippocratic Oath, traditionally taken by physicians upon graduation, pertaining to ethical practice of medicine (Edelstein, 1943).

How does the lean methodology apply to the German healthcare sector and what are the main aspects to be considered to make Lean work in hospitals?

However, this book will concentrate on fundamental principles of Lean whereas general analysis concepts will be mentioned roughly but not introduced in detail.

Ideally, Lean is based on three main pillars: process optimisation, patient-oriented management and engaging and leading employees. Thus, each of the tree aspects will be centred.

First, key principles and tools of Lean will be elaborated whereas the importance of defining waste and value will be pointed out. Furthermore, new terms and trends such as Lean Sigma and Telemedicine will be of interest to show necessity and additional surplus to traditional lean concepts.

The second chapter is addressed to patient orientation. Hence, patients as customers are defined with regard to loyalty, whilst satisfaction and improvement measurements thereof are introduced. In this context, strategic alliances and hospital marketing are focused to show advantageous aspects that contribute to the improvement process.

Following, the third chapter deals with personnel policy to show interconnection between employee satisfaction and the profitability of a hospital. Thus, tools and methods to analyse and improve the satisfaction and motivation rate, such as surveys and auditing, are introduced. Most importantly, the role of employees for successful implementation of Lean will be elaborated.

Concluding, main thoughts and findings will be summed up.

2. Process Optimisation – Principles & Tools

Process optimisation is the first central concept of lean management to be examined in this book. This chapter deals with the main principles and tools of Lean to give readers an overview about the basic ideas of this management philosophy. So, the understanding for waste and wasteful activities will be enhanced and tools such as Kanban, Kaizen and Value Stream Mapping, that are helpful for identification and elimination of waste, will be introduced. Since Lean is a continuous improvement process, it is only natural that new terms and concepts arise. One serious new methodology is Lean Sigma – the synthesis of the two concepts Lean and Six Sigma – because it complementarily supports Lean by concentrating on error proofing and elimination. Lastly, the reader’s attention is directed to telemedicine and e-health as these terms increasingly gain importance for the up-to-datedness in the healthcare environment of the 21st century. Eventually, new technologies can be implemented supporting hospitals to further streamline activities and to reduce costs.

2.1 Lean Methodology

Above all, lean management concentrates on waste and value. Therefore, managers must primarily be able to identify and understand the different natures of waste that appear in hospitals. Only this proper knowledge provides the basis for successful implementation of lean tools. Actually, there are two main tools of managing waste: Kanban and Kaizen. Both concepts have their roots in the Japanese approach of continuous improvement. Though, Kanban is about managing objects and production units whereas Kaizen concentrates more on streamlining processes and business activities. Whilst Kanban and Kaizen merely concentrate on waste identification and improvement, Value Stream Mapping additionally focuses the value aspect and the quality of outputs.

2.1.1 Cycle Muda

Muda is the general Japanese term for waste. It describes any type of activity that is wasteful or unproductive. In Lean, one furthermore distinguishes pure waste from non-value adding activities. As one of the core principles in Lean management waste must be identified, analysed and consequently eliminated. But what does waste mean in the healthcare environment?

According to Graban (2008) the following types of waste can be found in hospitals:

- defects,
- overproduction,
- transportation,
- motion,
- waiting,
- inventory,
- overprocessing, and
- human potential.

In general, defects are errors, mistakes or time spent doing something incorrectly. In hospitals, errors and mistakes might be wrong medication, wrong use of technical equipment or even a sponge left in a patient’s stomach after surgery.

Overproduction describes any activity or process that is carried out without actual need. This includes extra capacity, service or time. Unnecessary diagnostic procedures with patients such as double examinations are just one example for overproduction in the healthcare environment.

Waste in transportation refers both to products and patients. Each time a product is unnecessarily moved the risk of damage, loss or delay increases. With regard to patients, transportation means the time a patient needs to get from one place to another. Among other things, this includes long distances between departments or even the way from the parking area to the hospital facility.

In contrast to transport, waste of motion means unnecessary movement of employees. Oftentimes, physicians and nurses have to walk miles due to poor or unfavourable facility layout and structure.

One of the biggest cost drivers in hospitals is the waste connected with waiting. This includes patients waiting for examinations or treatments as well as employees waiting because of workflow is not streamlined (e. g. physicians waiting for lab results).

Of course, waste can also appear in inventory. Excess storage and supply increase costs for handling goods or goods might get useless because of the expiry date.

Overprocessing refers to any task or extra feature that is designed to add value to customers but is actually not aligned to customer needs. One example is scheduling too many tests that lead to unnecessary waiting time.

Last but not least, one must also consider waste of human potential. This includes mistakes such as the failure of leadership not enhancing employees’ participation in the improvement process. Further mistakes might be: not listening to ideas, not engaging creativity and respect nor recognising individual talents of staff members.

No matter what type or combination of waste might occur, in any case waste destroys value because resources are not allocated adequately. Lean managers must be able to identify any kind of waste or non-value adding activity because eliminating waste leads to cost reduction, better service, improved quality and improved employee and patient satisfaction (Graban, 2008). Only that knowledge background prepares leaders to concentrate on lean tools, such as Kanban, Kaizen and Value Stream Mapping, which will be examined in the following.

2.1.2 Kanban

Kanban again is a Japanese term and means card or sign. The main purpose of Kanbans is to show which work has to be done at what time to ensure optimal flow. Due to their physical presence these signs are somewhat self-evident or self-explanatory and belong to the pull concept. Thus, they are strongly related to just-in-time production (JIT). In hospitals, Kanbans are mainly used for ideal managing of materials (supplies and inventory) to avoid stagnation in delivery or wasted storeroom. Classical Kanban consists of three main concepts: visual management, 5S principle, and standardised work (Liker, 2003).

The goal of visual management is to sensitise employees and managers to identify waste, problems and abnormal conditions and to reduce information deficits. Especially in a hospital environment with cross-functional work teams the use of signal signs or cards is estimated an effective tool to create awareness and to prevent problems. In the 21st century, many Western European hospitals already use electronic Kanban systems (e-Kanban) to reduce problems such as lost cards or errors due to handwriting. E-Kanban systems can be integrated into the IT-system of a hospital and allow for real-time demand signalling across the supply chain. The importance of e-health for lean management in today’s healthcare environment will be further examined in chapter 2.3 Telemedicine and E-Health.

The second concept of Kanban is the 5S-principle. The 5S’s derive from the first letters of the Japanese terms: Seiri (to sort), Seiton (to store), Seisō (to shine), Seiketsu (to standardise) and Shitsuke (to sustain). First, unneeded items are sorted out and useful items are kept according to their frequency of use. Second, items are stored according to the same principle. Items that are used very frequently (hourly use) shall be stored at a higher storage proximity than items that are used less frequently (monthly use) (Graban, 2008). The third S shine refers to keeping the workplace clean once chaos is abandoned. An organised workplace is then the basis to start with standardising procedures and conditions. In Kanban, Seiketsu plays a special role because standardisation helps to reduce variation in the system and increases patient safety. Furthermore, total inventory costs are minimised since trade-offs between high availability of materials and increased stocking costs are reduced (Liker, 2003). On the one hand, high availability ensures patient care or even lifesaving. On the other hand, obsolete or expired material such as disposables or drugs is unacceptable in a hospital for the sake of the patients’ safety. After successful completion of the first 4S’s it is important to sustain the reached level by frequent control and further supervision of the new situation to avoid falling back to old pattern.

Actually, Kanban is a simple method to maintain desired inventory of supplies while consisting of a visual and physical inventory management (Trusko, Pexton, Harrington & Gupta, 2007). As a result, waste is eliminated and avoided, patient care is enhanced and employees are engaged to participate in the improvement process.

2.1.3 Kaizen

Kaizen describes the Japanese philosophy of continuous improvement. With Kaizen, all functions of a business are analysed and all participants involved in the business process are focused. Historically, the methodology goes back to the Toyota Production System (TPS) and was introduced by Toyota after World War II with the main aim to increase productivity in the US car market. With TPS, all activities of the production/ process flow are analysed to find abnormalities and to eliminate errors by standardisation. But Kaizen methods are not restricted to productivity because it involves all members participating at all business functions within that production line. Thus, the method is contrary to the thitherto known command-and-control management methodology. Kaizen is especially suitable in hospitals because with that tool cross-functional teams can be delegated by vertical and horizontal management. Nevertheless, it is advisable to start with Kaizen merely in one department due to control and measurement aspects. The typical Kaizen cycle consists of steps known as PDCA: plan, do, act, check (Trusko et al., 2007). First of all, the current situation is analysed and problems are defined. Second, the whole process is displayed to everyone engaged in the examined process. Third, acknowledgement about waste and inefficiency is followed by action of improvement. Last, experimented improvement steps are controlled and measured.

In general, there are three types of Kaizen (Graban, 2008):

- point Kaizen,
- Kaizen events, and
- system Kaizen.

The determination of the three types complies with the scope of problems. At first view, point Kaizen seems contradictory to its core principle because continuous improvement is associated with long-time periods aiming at long-lasting results. Thus, point Kaizen refers rather to inventory and administration work than to complex and long operation processes. Actually, it does not take longer than some hours or one day. In hospitals, point Kaizen is therefore suitable for standardisation of administration processes.

In comparison, Kaizen events are used with a medium scope of problems and take some days or one week and longer. In fact, Kaizen events equal to the Japanese word Kaikaku, which describes the radical change or redesign of complete production units, chains or systems (Liker, 2003). This type of Kaizen is implemented in improvement workshops or events where people come together for a restricted period of time to find medium-term strategies or solutions. One example for Kaizen events in a hospital environment is the team creation within a single department or shift. In the past, cases of medicide hit the headlines in Germany, such as at the Cardiology Department of the Charité Hospital in Berlin (Reimann, 2007). Beside the implementation of anonymous letterboxes, a Kaizen event possibly would have been helpful to clarify abnormal high mortality rates in certain intervals and especially at night. Consequently, a trustworthy environment would have prepared the basis for nurses or attendants to commit assumptions and apprehensions in a subsequent and intimate interview with the ward physician or nurse. Thus, a Kaizen event might have provided a solution statement for or even prevention of the high number of medicide cases.

Eventually, system Kaizen – that usually lasts various weeks or months – refers to more complex problem solving and describes the classical lean transformation process (Graban, 2008). Ideally, it is combined with Value Stream Mapping to compare current and future state processes which implicates the focus on sustained success and continuous improvement.

2.1.4 Value Stream Mapping

One excellent tool to identify and visualise waste and to subsequently streamline activities and operations is a method called Value Stream Mapping (VSM). Additionally, VSM is a technique to analyse and measure the flow of material and information and to value how much each activity or operation, that is part of the value stream, contributes to outcome and total quality. In hospitals, VSMs are used to identify how long each step in a process chain typically takes and, most importantly under lean consideration, it measures the waiting time between each process step in the chain (Graban, 2008).

The typical Value Stream Map consists of the following steps (Trusko et al., 2007: 378):

1. Map the current state.
2. Identify process waste.
3. Map future state.
3.1 Identify new requirements.
3.2 Remove process wasters.
4. Implement future state.
5. Validate improvements.

Let’s assume a hospital is facing problems with patient flow in the haematology department. In the course of lean implementation, the hospital management decides to create a Value Stream Map with the main purpose to find out the reason for daily bottle-neck capacity problems. First of all, the patient journey is followed from the beginning to the end and a visual representation of physical and informational flow is drawn. The physical flow represents every step a patient takes and the informational flow shows if everybody in the chain knows what to do next. The second step is to identify the process waste, which in this case is time waste. It is very important that all members of the chain are involved in the examination process and contribute with their knowledge and information about their routine functions and procedures (Liker, 2003). For better visualisation please see appendix 1 (page 67), in which a possible patient flow in the haematology department is presented. Third, a future map is drawn stating now the ideal value stream. Mapping the future state involves the identification of new requirements and the need to remove process wasters. For that, icons can be used that visualise which process steps are valuable, not valuable but necessary and which processes are pure waste and ought to be eliminated. Thus, the main objective of the future map is to create value by minimising waste (Trusko et al., 2007). With regard to the patient flow example, this means that process improvements are identified that lead to shorter waiting times between the single process steps. Once these improvement steps have been identified they can be turned into action. But, “it is important to recognise that some value stream problems cannot be fixed in the short term, due to cost, timing, or technology constraints” (Graban, 2008: 60). Although, Value Stream Mapping is an excellent tool that leads to immediate results it should not be qualified merely a quick-fix solution technique. Instead, it is important to continuously validate the improvements and to check whether the upgraded value mapping will be successful in the long run.

Value Stream Mapping is a core principle of lean management because it differentiates value adding activities from non-value adding activities and waste. Furthermore, VSM provides excellent information for improvement opportunities in hospitals either for rapid solution fixing or complex long-term operations.

2.2 Lean Sigma

As we have seen, Lean is an improvement strategy that concentrates on waste-free production and process optimisation. However, certain problems may remain unresolved or difficult systems and structures are too complex to be streamlined with lean principles only. This is the moment, when Lean Sigma comes into play. The concept combines Lean and Six Sigma methodologies. While Lean typically concentrates on eliminating waste and non-value adding activities Six Sigma is used to reduce the error rate and process variability (Trusko et al., 2007). With the combination of the two concepts considerable synergy effects can be set free leading to greater improvement that would not have been reached by implementing each of the methodologies separately. Following, typical errors that occur in hospitals will be examined to show the necessity for error reduction. Furthermore, Six Sigma will be defined and one of its core implementation methods will be introduced. Last but not least, the chapter is concluded by analysing performance measurements that help to make Six Sigma work.

2.2.1 Poka Yoke – Error Proofing in Hospitals

In hospitals, errors can occur due to failure of people, method or material/equipment. Errors due to failure of people include mistakes made by hospital staff such as nurses and physicians (e. g. wrong diagnosis), by patients themselves (e. g. overdosing) or by employees of external organisations (e. g. inadequate advice by pharmacies or medical supply stores). Errors due to failure of method may appear due to silo mentality (e. g. shift changeovers), power struggles and competitiveness among hospital staff; especially among decision makers such as senior physicians (Trusko et al., 2007). Errors due to failure of material or equipment result from defective devices and materials (e. g. outdated technology or even unsterile disposables). These errors are interrelated and interactive. In any case, errors in hospitals are regarded especially fatal because they harm patients’ safety or lives. According to Graban (2008), errors in hospitals do not occur because employees are unwilling or incapable. Instead, most errors result from the complexity of the hospital system itself. Thus, errors are not necessarily caused by bad judgement, malpractice or carelessness. Instead, there is a need to understand the error itself to solve and to avoid future problems. And this method is known as poka yoke – error proofing. Poka yoke goes beyond simple corrective actions or extra inspection (yet hardly possible due to time pressure in hospitals). So, error proofing is an approach to understand the source of the problem and is therefore related to the Six Sigma methodology.

2.2.2 Defining Six Sigma

Six Sigma is a management methodology or statistical improvement toolkit with the aim to identify and reduce process variation that leads to defects. Developed by Motorola in the 1980’s, it nowadays enjoys widespread popularity in many business industries. Six Sigma belongs to quality management since its objective is to perform at an error rate not greater than 3.4 errors per million opportunities (Trusko et al., 2007). The following table visualises how the sigma levels are allocated to defects per million:

Table 1 – Sigma Quality Allocation

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Source: own, following isixsigma and Trusko et al., 2007

As we can see, there are two defect numbers related to the levels of sigma in table 1. The figures under short-term refer to the initial determination of Motorola when the 6-Sigma-Programme was primarily introduced. After years of experience and subsequent statistical data collection, it turned out that long-term processes vary over time and the number of defects is therefore different to that of short-term processes. According to statistical findings, the 6 sigma level therefore actually translates to 2 defects per billion opportunities which signifies a variation between 1.4 and 1.6 sigma (isixsigma, 2008). Since hospitals are typically organisations with complex structures and long-term processes, it is advisable to consider the average 1.5 sigma process shift in the calculation. Provided that Six Sigma is implemented correctly, this also means that hospitals have almost zero possibility to commit an error exactly because of that complexity (Trusko et al., 2007). There are two main ways to implement Six Sigma: DMAIC (Define, Measure, Analyse, Improve, Control) and DMADV (Define, Measure, Analyse, Define, Verify). Whereas the DMAIC method is used to improve existing business processes the DMADV method aims at new process design. In the following, the DMAIC method will be examined since this method is more relevant for problem shooting in running hospitals.

2.2.3 DMAIC Methodology

Classically, the basic method of Six Sigma is divided into five steps: Define, Measure, Analyse, Improve and Control. Each phase has its expected outcomes and objectives that can be reached by certain tools used in the respective phase. This paragraph gives an overview about characteristics and tools of the DMAIC method referring mainly to information given by Trusko (et al., 2007).

The Define Phase concentrates on the design of an objective that is concordant with customers’ demands and the strategy of the organisation. In this phase, the scope, benefits, time schedule and value proposition are defined, customers’ demands are determined and a common understanding among all participants for key elements of the process is created. After the creation of a corporate knowledge basis, the project team can agree on suitable tools to be used in the defining phase to identify customer demands, to gain process knowledge and to define the problem.

First of all, hospitals are designed to provide service to external clients, primarily patients but also accompanying people and institutions. Additionally, internal customers – the hospital staff – must be considered. Suitable tools to identify customer demands are methods such as the Kano Model, an Affinity Diagram or a Pareto Analysis. Second, the project team must gain knowledge about the process to work successfully on the project. Thus, team members must become acquainted with many aspects of the process such as the purpose, details and key performance elements. Moreover, team leaders must be able to think in statistical terms. Appropriate tools to gain process knowledge are Process Mapping and the SIPOC Analysis (Supplier, Input, Process, Output, and Customer). Third, the problem itself must be defined. Two adequate tools to get to the core of the matter are a Force Field Analysis or the development of a Project Charter. At the end of this phase, every project member should know about the problem, key process elements, the time schedule and the organisation of the project, goals and objectives and the plan how to reach the target.

The main purpose of the Measure Phase is to collect and measure relevant data about current processes, to establish a baseline and to eliminate variables that are counterproductive. In hospitals, variable data include patient waiting time, duration of treatments and procedures, length of hospital stay, discharge, bed turnover time, parameters that are critical to quality and even hospital mortality. To develop basic statistics, statistical software programmes can be used to plot information about tendencies, variation or inconsistencies and even defects and process errors. Adequate measurement tools are a Basic Statistical Analysis, Random Versus Assignable Variation, Cost of Quality, Measurement System Analysis and Process Performance Measures, last of which will be examined in detail in chapter 2.2.4 – Performance Measurements.

After data acquisition, information is analysed to verify cause-and-effect relationships. In this phase, team members concentrate on the root cause of a problem or a set of problems while focusing on key variables identified in the measurement phase. Among others, key tools of this phase are the Multi-vary Analysis, Cause-and-Effect Analysis (also Fishbone or Ishikawa Diagram) and Failure Modes and Effect Analysis (FMEA). Given the assumption that most problems emerge from variation, organisations can use a Multi-vary Analysis to reduce the scope of problems by concentrating on the variation rate of a process. Here, one distinguishes between positional, cyclical and temporal variation. Data of the three variation types are collected and the largest number of variation within each group is identified. One will then concentrate on the highest-in-number variation to consequently reduce it.

The Cause-and-Effect Analysis is used to identify the source of a problem by tracing an effect to its cause. The creation of a Fishbone Diagram is a fundamental principle of the Six Sigma methodology because it helps to identify all possible factors that contribute to process variation. To create a meaningful diagram that leads to cause-and-effect identification it is important that all members involved in the problem-solving process agree on the final problem statement and contribute with their ideas and opinions about causes that are then added to the tree. The diagram first of all helps to visualise possible causes of a problem or negative effects and it can also be used as a brainstorming tool. Figure 2.A shows an example of a cause-and-effect diagram for medication errors.

Figure 2.A Fishbone Diagram for Medication Errors

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Source: Australian Resource Centre for Healthcare Innovations (ARCHI), 2008

The FMEA Analysis helps to identify potential failure modes and their frequency within a system, to evaluate their effects and to determine their impact on the quality output. With FMEA findings, hospital teams are enabled to estimate associated risks and their impact on patients’ safety with the aim to reduce errors that lead to malpractice or death rates. The main objective of FMEAs is to eliminate the failure mode, to minimise the severity of the failure, to reduce the frequency or occurrence of the failure and to improve detection. Consequently, the use of FMEAs in hospitals leads to improved quality and patient safety, increased patient and employee satisfaction, reduced costs, wider knowledge of complex structures and processes, early elimination and risk reduction, and the creation of a positive working climate since team members are enhanced to participate in a creative idea process.

The purpose of the Improve Phase is to design alternative solutions targeting at further enhancement of the process improvement. Thus, new solutions are developed and compared whereas the best solution will be selected for optimisation of the process performance. To solve problems and to select the best solution certain improvement tools such as Statistical Hypothesis Testing, Comparative Experiments or Design of Experiments are used. The Statistical Hypothesis Testing is a method to validate a statement about a potential change. Thus, two hypotheses are set whereas one is about the expected change (alternate hypothesis) and the other one is about the remaining possibilities (null hypothesis). The alternate hypothesis can be accepted if statistical evidence proves that the null hypothesis is false. In hospitals, this method can be used, for example, to come to the decision whether to purchase state-of-the-art equipment or not. Whereas Statistical Hypothesis Testing is used to draw conclusions merely on statistical evidence, Comparative Experiments are used to evaluate real outcomes, usually with a two-sample experiment. In hospitals, this method can be used to measure the outcome of a clinical trial, testing new drugs or introducing a new treatment. The Design of Experiments (DOE) is a method that is based on experiments where input variables are changed whereas the impact of this change on the output is examined. Therefore, models with multiple variables can be designed to identify leverage effects for improvements and to determine disturbances. In hospitals, the DOE method can be used e. g. to examine the maximum capacity in an emergency room.

Finally, the Control Phase aims at maintaining reached process improvements and ensuring that any derivation from the ideal process flow is corrected before it leads to further defects and errors. With frequent control and observation, organisations have the opportunity to standardise new improvement processes. Besides statistical tools such as control charts, the Control Phase furthermore emphasises on continuous documentation, training programmes for employees, the creation of an open communicative atmosphere, business and management reviews, and the introduction of recognition and reward systems. These techniques and activities will help to sustain the improvement process, to challenge the status quo, to generate action and to drive further progress.

2.2.4 Performance Measurements

To make Six Sigma work there is a need for understanding the methodology’s performance measurements. For organisations it is not enough to know about the concept. Additionally, leaders must understand the meaning of certain key performance measurements such as DPU, DPMO and the sigma level. DPU stands for defects per unit and measures the performance of a product or service with respect to customer expectations (Trusko et al., 2007). In hospitals, a unit can be any activity such as patient registration, a treatment or surgery. DPU is the ratio of number of defects over the number of units tested. For example, if the registration time for 80 patients out of 100 is estimated too long then the DPU rate is unacceptable. But measuring the DPU rate is complex and tricky: only DPU levels of the same type can be compared. This means, you cannot compare the DPU ratio of a difficult 8-hour-heart-surgery with that of a simple hernia operation. Therefore, the DPMO (defects per million opportunities) has evolved. The measurement DPMO “is the average of number of defects per unit observed during an average production run divided by the number of opportunities to make a defect on the product under study during that run normalised to one million” (isixsigma, 2008). The formula is as follows:

DPMO = (DPU x 1,000,000) / Average number of opportunities in a unit The DPMO is then translated to the sigma level already presented in table 1 – Sigma Quality Allocation. In hospitals, sigma levels can be used to compare performances of different shifts or departments considering all steps that take part in that performance unit. If the error rate is different, analysing tools such as the Fishbone diagram can be used to understand the cause of the error.

For hospital leaders it is important to understand how to quantify performance (to think in units), to evaluate performance units (DPU), to determine improvement opportunities (DPMO) and to gain meaningful information that leads to six sigma level performance.

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