1. © SigmaMed Solutions 2011 all rights reserved Lean Sigma Healthcare A New Model for CAH and Small Hospital Quality and Performance Transformation

2. © SigmaMed Solutions 2011 all rights reserved SigmaMed, the People  Jamie Martin, President & CEO  Six Sigma Black Belt from GE  20 years in Healthcare IT, EMR, Surgical Sales  6 years Applying LSH to HIT Workflow in CAHs & Clinics  Instructor in CEU/CME rated courses  Commercial Pilot with over 1,000 hrs in Light Aircraft  Wray Paul, VP Professional Services  MSEE and BSChemE, PMP  Master BB, 35+ years of LSS PI  Rural Hospital Director  EMR/PACS implementation Consulting  Design, development of PACS/EMR (5+ years on the “Dark Side”)  Contract Healthcare Black Belts, including Nurses, PCMH and Quality Directors, and EMR Implementation Experts

3. © SigmaMed Solutions 2011 all rights reserved SigmaMed, the Company Focus on Small and Rural Healthcare Facilities  Generalized PI and QI in all departments  EMR Deployment and Meaningful Use Process Redesign  Lean PCMH and ACO - Lean Core Process Redesign Contracted Lean Six Sigma Provider for:  Colorado Rural Health Center  CORHIO and CO-REC  Contracted work for Wyoming PCA Teach CE and CME rated Courses on LSH for:  Colorado AHEC  CU College of Nursing HIT Leadership Program  HRSA  Hospital and Practice Management Groups

4. © SigmaMed Solutions 2011 all rights reserved Key (Unconventional) Ideas  Lean Sigma Healthcare is not an additional project Rather, it’s a way to optimally complete projects you are doing anyway, while simultaneously building internal capacity  You don’t need to master all of Lean Six Sigma to be successful… learn a few tools and get going We teach a version called Lean Sigma Healthcare, which is a subset of LSS specific to healthcare  LSH doesn’t require huge commitment of time or money The most effective transformations begin with results LSH teaches proper project management LSH done right can be revenue positive in a very short timeframe  Change Leadership and Project Management are as important as LSH tools/technique…we teach all

5. © SigmaMed Solutions 2011 all rights reserved Why Lean Sigma Healthcare in Rural HC? 40-70% of healthcare spending is Pure Waste!  By Most Estimates, 40-70% of healthcare spending is Pure Waste!  External Demands making our care provision processes much more complex  External Demands for PCMH, MU, JC, and payor models are making our care provision processes much more complex  HIT Isn’t Mature Enough to Help with Complexity…and in fact make it worse!  Resource Constraints in Rural Areas Limit our Options….can’t just throw money or people at problems  If we don’t take a proactive approach to designing care processes things will only get worse as HIT is layered on… Safety-Quality-Cost-Patient & Staff Satisfaction

6. © SigmaMed Solutions 2011 all rights reserved The Lean Sigma Healthcare Equation Start with a Healthcare Specific Subset of Lean Six Sigma… Lean Lean (Toyota Production System) adapted for a Complex service industry…eliminate waste, improve flow Six Sigma Six Sigma (Motorola and GE) adapted for a Defect- prone service industry…focus on perfecting process Work on the Right Project(s), Scoped Properly With the Right Team add… Change Leadership plus… Process-focused ProjectManagement plus… Process-focused Project Management = LSH…A Simpler Methodology for = LSH…A Simpler Methodology for Healthcare

7. © SigmaMed Solutions 2011 all rights reserved Errors Reduced on Outpatient Services Yuma District Hospital and Clinics, 2012 Substantial Reduction of A/R Eliminated 1+ FTE in Billing Department

8. © SigmaMed Solutions 2011 all rights reserved Cheyenne Health and Wellness Center Increased Patient Visits past point of Break Even in 3 months Greatly Improved Staff and Patient Satisfaction Developed Internal Capacity to Continue Leading LSH Redesigned Care Delivery Processes to Meet PCMH Level 1 & 2

9. © SigmaMed Solutions 2011 all rights reserved CAH and FQHC Results with LSH  Decreased insurance defects at clinic admission by 100x (50% defects to 0.5% defects) - Rio Grande Hospital, Del Norte  Increased customer satisfaction on test results notification from 60% to 80%+ (red to green trending up,)  Increased patient visits 47% yr/yr in 3 months and Intake appts. 83% within 5 months at WY FQHC  Reduced rework required on outpatient procedure orders from 20% to less than 0.6%  Reduced patient waiting time for ortho surgery from 14 weeks to 31 hours (first call to surgery)— Theda Care, Wisconsin 1 1 From “Lean Hospitals” Mark Graban, 2008

10. © SigmaMed Solutions 2011 all rights reserved So Why Doesn’t Everybody Use LSS? Benefits Cost Satisfaction Quality Safety Perceived Barriers Investment cost Too many other “big changes” Not enough staff resources What are some others?

11. © SigmaMed Solutions 2011 all rights reserved Models for LSS – the Big Bang…  Big Idea  Big Implementation Hire consultants Train everyone Start lots of projects  Big bet… Leadership has too many projects to provide needed attention $$ makes everyone impatient Hard to show results fast enough to justify $$ Fire consultants  Not Realistic for CAHs

12. © SigmaMed Solutions 2011 all rights reserved Models for LSH – Organic Growth  Big Idea  Small Implementation Start with one project Train one team Leadership support for that one project Grow your capabilities  Small Bet… One Project = Low Risk  Something you have to do anyway $$ often under the radar Grow excitement from results Plan LSH growth from there

13. © SigmaMed Solutions 2011 all rights reserved Successful Change Begins with Results  Activity Focus  Activity Focus -- many organizations cite the number of trained LSS resources, the number of projects, etc. as evidence of success of program  Results Focus tangible results  Results Focus -- the only really meaningful measure of PI success is tangible results, bottom line impact lose patience and pull back  Without tangible financial benefits, organizations lose patience and pull back before effort has gained steam small, visibly, and meaningfully  By starting small, visibly, and meaningfully word of project success may permeate an organization and create the internal pull necessary to spread throughout not “flavor of the month”  Change is greeted with open arms when it is proven to generate positive benefits and is not seen as another “flavor of the month” change program “internal pull”  This generates “internal pull” vs. shoving an unwanted program down an organization’s “throat” This is from Schaffer & Thomson’s 1992 Classic, “Successful Change Programs Begin with Results,” in the Jan-Feb Harvard Business Review

14. © SigmaMed Solutions 2011 all rights reserved Keys to LSH Transformation Success Successful LSS Implementations  Committed Leadership  Use of Top Talent  Supporting Infrastructure Formal Project Selection Process Formal Project Review Process Dedicated Resources Financial System Integration Not So Successful LSS Implementation  Supportive Leadership  Use of Whoever was Available  No Supporting Infrastructure No formal project selection, review process, not integratged

15. © SigmaMed Solutions 2011 all rights reserved SMS Virtual LSH Project Model 1.Train and Mentor Execs in Requirements for Leading a Successful LSH Transformation 2.Assist in Picking the Right Project, the Right Team, Scoping Correctly, and Keeping on Track First project can be key to a successful LSH launch 3.Just-in-Time LSH training for Teams – “Learn & Use” immediately increases retention 4.Intensive 1-on-1 Mentoring of Team Leaders in LSH methodology and Project Leadership 5.Virtual Project Facilitation by SMS BB’s to advise teams and make mid-course corrections 6.Always-available, “Asynchronous” Online LSH Training for Teams and YB Certification Program for Team Leaders 7.Ongoing mentoring in LSH roll-out to maintain momentum and assist in overcoming obstacles (that always appear!)

16. © SigmaMed Solutions 2011 all rights reserved LSH Thoughtware  It’s the Process that’s broken not the People…  It’s the Process that’s broken not the People… design perfect processes and people perform perfectly (almost!)  The only people that can fix a process are those that work in it  The only people that can fix a process are those that work in it every day (not managers)  Data is your ally  Data is your ally….opinions are (nearly) always wrong (otherwise the problem would have been fixed!)  You Must Plan Change  You Must Plan Change in as much detail as you plan for new implementation DMAIC framework  Follow the DMAIC framework for all improvement projects, great and small, to stay on track  Work can (and must) be done OTIFNE  Work can (and must) be done OTIFNE!

17. © SigmaMed Solutions 2011 all rights reserved The Change Effectiveness Formula The Effectiveness of any change initiative is a function of the Quality of the technical solution “times” its Acceptance by the culture. (E) Change Effectiveness E f (Q*A) (Q) Technical Strategy (A) Acceptance Strategy Courtesy of Destra Consulting, LLC

18. © SigmaMed Solutions 2011 all rights reserved What do the Numbers Say?  With Effective OCM, Change Investment ROI =143% That’s a gain of 43% with Effective OCM  Characteristics of Successful OCM Senior and Middle Managers and Frontline Employees all were involved Reasons for the project were understood and accepted throughout the organization Everyone’s Responsibilities were clear  With Poor OCM, Change Investment ROI65%  With Poor OCM, Change Investment ROI = 65% That’s a loss of 35% without OCM  Reasons for the Failures Lack of commitment and follow through by senior executives Defective project management skills among middle managers; Lack of training and confusion among frontline employees (Source: McKinsey & Co)

19. © SigmaMed Solutions 2011 all rights reserved 19 Kotter’s Change Model 2/3 of all Transformation efforts fail. Kotter found that 2/3 of all Transformation efforts fail. However, Successful Change Follows a Pattern Create Shared Sense of UrgencyCreate Shared Sense of Urgency Remove Obstacles to the New VisionRemove Obstacles to the New Vision Systematically Plan and Create Short-term WinsSystematically Plan and Create Short-term Wins Develop a Powerful Guiding CoalitionDevelop a Powerful Guiding Coalition Create a VisionCreate a Vision Over-Communicate The Vision by a Factor of Ten – Yes 10X!Over-Communicate The Vision by a Factor of Ten – Yes 10X! Don’t Declare Victory Too Soon!Don’t Declare Victory Too Soon! Anchor the Changes in Organizational CultureAnchor the Changes in Organizational Culture When these 8 factors are addressed, change efforts are highly likely to succeed!

20. © SigmaMed Solutions 2011 all rights reserved Human Elements of Change Groundbreaking Thinking in “Switch…”, 2010, by Dan and Chip Heath When you ask people to change you are Tinkering with Behaviors that have Become Automatic “Self control is Needed to Override Behaviors that have Become Habits However, People’s Self-control is Finite and they can Only Handle so much Change People Aren’t Closed to Change, Just Exhausted by the Effort Required for Head to Over-ride Habits! From “Switch…”, 2010, by Dan and Chip Heath

21. © SigmaMed Solutions 2011 all rights reserved “How to Make A ‘Switch’  Direct the Rider – Rational Follow the Bright Spots – clone what’s working Script the Critical Moves – specific behaviors Point to the Destination – vision, big picture  Motivate the Elephant – Emotional Find the Feeling – make people feel something Shrink the Change – make it manageable Grow Your People – cultivate sense of identity  Shape the Path – Process Tweak the Environment – change situation Build Habits – habits are “free” Rally the Herd – behavior is contagious, help it spread From “Switch…”, 2010, by Dan and Chip Heath

22. © SigmaMed Solutions 2011 all rights reserved Essential Ideas for Change Change Plan  Developing a Change Plan is just as Important as Using Tools/Methodologies like Lean Six Sigma Early Win  An Early Win on a Visible Project is Necessary to Build the Hope and Belief Necessary for Change  Leading Change is About Engineering Hope and Working with Teams to Build a Path Your Change Plan must Appeal to Peoples’ Heads (logic) and Hearts (emotions) for Change to Last People are Generally Not Unwilling to Change, Rather, They are Exhausted by the Extra Effort!

23. © SigmaMed Solutions 2011 all rights reserved Value and the Voice of the Customer  You are in Business to Deliver Value – good care – for Patients  Steps in Your Process not Delivering Value Create Waste  Your Survival Depends upon Making Customers (Patients) Happy every chance you get  View Your Processes from the Patient’s Perspective We mistake our view of the process for the customer’s The customer doesn’t care about our process GE Concept of “Wing-on-Wing”  Projects need to have a clear connection to customer needs expressed by the customer These are called CTQ’s – Critical to Quality – or CTs An good project improves top Customer CTQ’s (as determined by a VOC, ie patient surveys, focus groups)

24. © SigmaMed Solutions 2011 all rights reserved Needed - A Process View People do a “bad job” because they are working in a “bad Process” People do a “bad job” because they are working in a “bad Process” What is wrong with HC Processes? What is wrong with HC Processes?  They were generally never “designed”, they just happened. When they didn’t work, they got “patched”  There is usually not a standard process—people just modify (on a whim)  Few indicators of Process performance get measured We use measures broad outcomes (infections) Usually don’t measure leading indicators (adherence to sterile process for central lines)

25. © SigmaMed Solutions 2011 all rights reserved What is the Result of “Bad” Process?  Wasted Time… In end to end processes (Clinic door to door, ED door to door, surgery appointment to discharge) 75% or more of the time is wasted. Time = money Time = money and patient satisfaction  Defects… Healthcare Business processes often run at 50% defect levels Defects (like insurance information) often have to be fixed. 25% plus of the billing department are often working on fixing Admissions Defects Defects = money Defects = money, patient safety & satisfaction  Net result  Net result is 40-70% of what we do is pure waste!

26. © SigmaMed Solutions 2011 all rights reserved The Universal Complaint (UC) “If [Department X] would just do their job, then we [Department Y] could do our job better, easier, faster, cheaper…” Sometimes (rarely) it is the people, but far more often it is the Process that is Broken 1% of the people in an organization should probably be in another line of work… But that means that the other 99% can be very effective—If we get the Process(es) right.

27. © SigmaMed Solutions 2011 all rights reserved Decoding the Universal Complaint (UC) go wrong at the interfaces and handoffs  Processes usually go wrong at the interfaces and handoffs. Therefore the UC is caused by: The Process actually is designed well, but Depts X and Y don’t have a single view of how the process works so they don’t interface correctly (Rarely). OR (more likely) The process never worked right & even if X and Y “did their jobs”, they would still be frustrated and Defects and Waste would rule the day.  Therefore if you put good people into a bad process, they will perform badly.  Bottom Line: If you are have a problem, put 99% of your effort on changing the process, 1% on changing the people.

28. © SigmaMed Solutions 2011 all rights reserved How Can LSH Help?  It provides tools and methods to: See where Waste is happening Find the Root Cause of Defects Redesign the Process to dramatically reduce both  It engages the staff to: Apply their intelligence and “profound knowledge” of the Process to fix global problems If they help design it, they have ownership of the Process  It gives the organization principles to make effective change and lead LSH expansion

29. © SigmaMed Solutions 2011 all rights reserved The LSH Equation  Give people the Tools to Lead Change and Lead Projects  Work on the 20% that cause 80% of your Problems!  Redesign High Defect or Time Inefficient Processes Get processes to 99.5% “good service” and high Time efficiency  Data and statistics get easier  Minimize the number of LSS tools and learn to use the “vital few” Simple Process and Value Stream mapping Six Sigma DMAIC project management methods Fishbone and the 5 Whys for getting at Root Cause Fail Early and Cheaply…

30. © SigmaMed Solutions 2011 all rights reserved “OTIFNE” Work  Work is defect free ONLY if it is: On Time wait On Time – the next process step doesn’t have to wait for it In Fullcompletely finished In Full – completely finished so nobody downstream in the process has to “fill in the blanks” No Errorsdefects No Errors – there are no defects that somebody downstream has to fix or the customer will see.  Simple Process Redesign Can Get You There

31. © SigmaMed Solutions 2011 all rights reserved LSH Defect Goals  Manufacturing aims for 6 Sigma performance, or 3.4 defects per million opportunities…  But, Healthcare isn’t Manufacturing. They are way ahead of us!  Healthcare should start with a goal of ~4.5 Sigma, or 5 defects per 1000 opportunities 1000 times 5 OTIFNE If we do something 1000 times, we should expect no more than 5 OTIFNE errors (more on this later) Don’t design new processes that can’t meet that goal.  Design Safety Critical processes so they are “failsafe”  Design all others to meet this “Lean” Goal  Lean Sigma Healthcare will get you There

32. © SigmaMed Solutions 2011 all rights reserved Defects are Just Symptoms… Can’t fix Symptoms  BUT…You Can’t fix Symptoms Root Causes  You Can Only Fix Root Causes!  Example “Shortness of Breath” Is only a symptom. To fix it, the ED Doc has to find the Root Cause  Root Causes of “SOB” (a few of 100 or so) Altitude induced pulmonary edema Pneumonia Heart disease COPD  All of those Root Causes require different treatment!

33. © SigmaMed Solutions 2011 all rights reserved Tools 1 -- DMAIC  Define  Define – what do we want to do?  Measure  Measure – how can we see what we do now and set an improvement goal  Analyze Root Cause  Analyze – see what our data tells us and find the Root Cause of our issues  Improve  Improve – design an new process, try a pilot of the new process, debug, improve, train & scale  Control  Control – select a few key metrics that tell us whether we have actually improved things. Use them to control the process in operation.

34. © SigmaMed Solutions 2011 all rights reserved DMAIC Solves Four Big Problems  Answers 4 Key Questions Before we Start Right Stuff Right Way Are we working on the Right Stuff (in the Right Way)? Management/Leadership & Stakeholders approve Do Management/Leadership & Stakeholders approve of what we are doing? Who Who should be on the Team? When When will we be done?  It answers the fear-inducing question: What do we do next? What do we do next?

35. © SigmaMed Solutions 2011 all rights reserved Tools (2 of 4)—Process Mapping  We see too much of this…  Problems Hard to see who does what Very hard to see Waste Problems at handoffs not obvious Can’t figure out what to do next.

36. © SigmaMed Solutions 2011 all rights reserved Better Process Mapping - Swimlanes  Much better to do this…  Advantages Easy to see who does what Easy to see Waste Defects/Inspection/ Rework Overprocessing Handoffs explicit (messages) Easy to figure out what to do next.

37. © SigmaMed Solutions 2011 all rights reserved Tools (3 of 4)—Fishbone  World’s best brainstorming tool  Advantages Aims directly at Root Cause(s) Avoids patching symptoms Pareto voting narrows the investigation of potential Root Causes

38. © SigmaMed Solutions 2011 all rights reserved Fishboning turns Symptoms into Root Cause(s) of Defects  If you’re fixing a Defect problem, at first you only have the Symptom (the Defect). “300/1000 [=30%] of our Radiology orders have Defects” will add Complexity to your process and Create Waste! If you throw “solutions” at it, they will probably won’t fix the problem and will add Complexity to your process and Create Waste!  People who actually work on the process  People who actually work on the process have a lot of ideas about what might Cause the Defect.  Fishbone Diagrams  Fishbone Diagrams are a structured brainstorming technique to get their ideas out. Pareto Once you get all of the ideas out, you can Pareto the ones you want to work on. correctly identifies the Root Cause In our work, we almost always find that the Team correctly identifies the Root Cause with a Fishbone Diagram.  The beauty of Root Cause is it saves you from working on the 80% of the “issues” that won’t solve the problem

39. © SigmaMed Solutions 2011 all rights reserved Deep Dive on Causes…The “5 Whys”  Why do we create Defects on the “rooming form” (1)? Because we feel rushed  Why do you feel rushed (2)? Because we only have 5 minutes Why do you only have 5 minutes (3)?  Because the Provider is Waiting and Impatient Why is the provider waiting (4)?  Because there are a lot of patients in the exam rooms Why are there lots of patients in exam rooms (5)  Root Cause  Root Cause = Because we send them back whether we are ready for them or not…. The real Root Cause of a problem is often at the bottom of the 5 Why chain. Everything above that is a symptom, not a cause.

40. © SigmaMed Solutions 2011 all rights reserved Tools (4 of 4)—Graphing  Visualize your data 1  Advantages People draw conclusions from graphs, fall asleep looking at data tables. 95% of the time, don’t need much statistical analysis. 1) Needless to say, you have to make Process measurements in the first place

41. © SigmaMed Solutions 2011 all rights reserved Selecting the Right Project  Good Projects Clear Objectives  Directly connected to customer needs Project is Scoped Correctly  Able to Complete within 3-4 months Fixing Problem is Relevant to the Business Fixing the Problem is Part of Team Leader’s (GB’s) job responsibility  Makes life much easier Data is easily available Benefits are easy to calculate Have a high likelihood of Success

42. © SigmaMed Solutions 2011 all rights reserved Good Projects have SMART Objectives  Specific Is it obvious what we want to do (and what’s out of scope (bounds))?  Measureable Can we count defects and measure time, money, and other important variables?  Aggressive  Aggressive (but Achievable) Is it a little bit of a “stretch” but still possible?  Realistic Can we do it with the people, skills, time, and money we have available?  Timebound Have we specified when we plan to get it done?

43. © SigmaMed Solutions 2011 all rights reserved LSH Projects Ideas on New Initiatives Build It Right the First Time AND Processes that take less time, reduce cost, AND give you the results you need Coming Down the Pike…or already on you! PCMH/ACO/VBP ICD-10/JC EMR MU, etc… Tend to add cost, because we layer them on over already-stressed Processes

44. © SigmaMed Solutions 2011 all rights reserved The path forward…what we need to do  Life is Short…Eat Dessert First  Change our thinking We can't solve problems by using the same kind of thinking we used when we created them.” Albert EinsteinAlbert Einstein  Set new goals 5 defects/1000 50%+ Flow Time Efficiency  Use new Tools Lean Sigma Healthcare to eliminate Defects and Wastes of time and human potential

45. © SigmaMed Solutions 2011 all rights reserved  eMaster Black Belt Services (eMBB) Project Oriented Team Training, Mentoring, Facilitation  Virtual eMBB – high value, effective projects  Combo Virtual and On-site – SMS resource leading on-site partly  Single and Dual Project MBB – for facilities Facility PI/QI/Data Analytics Redesign Green/Black Belt Project Mentoring  LSH Practitioner Certification Services Mentored Green or Black Belt certification in LSH Online Training  Yellow Belt Certification Course – 4o Hrs of detailed training for team Leaders  Team Training Course – 4 hrs of basic training for team members  Multi-Platform Data Reporting and Analytics Software sales, implementation, and PS LSH Services through WY ORH