SOM uses Business Model for Healthcare

The Daily Collegian - 5/15/07

Americans are listing health care as the nation's most important problem after the War in Iraq in a recent poll- and a working group at the University of Massachusetts Amherst is doing something about it.

By applying a quality control program first developed in American industry, the UMass working group is seeking to improve the quality of health care and control costs at the same time, according to Soren Bisgaard, interim dean of the Isenberg School of Management.

The quality-control program, called Six Sigma, was born at Motorola, Inc. in 1979, when two engineers, noting that electronic pagers the company manufactured were failing at unacceptable rates, applied statistical techniques to improve the quality of the manufacturing process. Since then, the Six Sigma process has been applied in an array of fields to improve quality and control costs. Bisgaard said he's convinced the process can work well in health care, as well - the field which Americans consistently are listing as their most important concern after the Iraq war.

In fact, a report the Institute of Medicine (IOM) published in 2000 estimated that between 44,000 and 98,000 people die each year in the United States as the result of preventable medical errors. "Even using the lower estimate," the report said, "preventable medical errors in hospitals exceed attributable deaths to such feared threats as motor-vehicle wrecks, breast cancer, and AIDS."

Such errors, the report says, cost the nation between $17 billion and $29 billion per year in additional care to rectify the errors, lost income and household productivity, and disability - not counting a loss of trust in medical systems.

The IOM report recommended tackling these issues with renewed leadership, attention and resources - some of which came together at UMass as Bisgaard hosted a workshop for health care experts focused partly on applying the Six Sigma process in health care settings to improve health care quality while controlling the costs.

"Because of poor quality [there can be] hospital acquired infections…administrative errors…and other quality problems that make health care more expensive and less satisfactory to the customers," said Bisgaard.

Part of the problem, added Selena Kaplan, a registered nurse and graduate student in nursing and public health who assisted in setting up the workshop, "We need to address healthcare quality management on a system level and not as a series of unrelated pieces. When we design a process with the expectation of re-evaluating and changing it as our needs change, we save time and effort in the long run." Such efforts may help reduce not only the concerns Bisgaard raised, but time wasted in handling patient information, and patient wait times.

Bisgaard said that if health care prices continue to rise at the current rate, "health care is going to be too big of a burden to society."

In 2005, total health care spending cost $2 trillion, or $6,700 per person, and made up 16 percent of the gross domestic product (GDP), according to the Washington, D.C.-based National Coalition on Health Care (NCHC). At this rate, by 2015, health care expenditures will equal $4 trillion and comprise 20 percent of the GDP, the group said.

The problems and costs will accelerate as the baby boom generation ages and requires more care, Kaplan said.

Bisgaard said that health care experts may be able to improve the quality of care by using new technology and innovative ideas to reduce medication errors and unnecessary medical procedures. One analytical means to do so, he explained, is to follow the five stages the Six Sigma model, to correct quality problems while providing a stable working environment.

The five stages of Six Sigma, he said, are: define, measure, analyze, improve and control (DMAIC), a process that he said can provide a solid base for working through a problem, no matter what a company's specialty. He said that Six Sigma only works if there is a focus on a specific issue or problem.

Six Sigma is a fairly new implementation in hospitals and other health care-related industries. In 2002, a Red Cross hospital in the Netherlands started using Six Sigma to solve problems, according to a 2005 article written for Six Sigma Forum Magazine by Bisgaard, Jaap van den Heuvel and Ronald J.M.M. Does.

Results at the hospital from applying the model included shortening the length of stay for chronic obstructive pulmonary disease patients (COPD), creating a standard payment policy to medical suppliers, reducing the number of incorrect invoices by temp agencies and reducing the number of invoice mistakes, decreasing the length of children's stay by allowing parents to "room-in" overnight, and reducing the number of patients on expensive and sometimes-unnecessary intravenous antibiotics by administering such medicines orally, the article said.

Using Six Sigma, the patients received better care while the hospital saved over $400,000 annually.

"We are beginning to see [Six Sigma] really work in health care," Bisgaard said. He sees technical innovation ahead that "can make [health care] more effective, efficient and better." Bisgaard said. One such innovation, he said, is in retail health care.

Retail giants such as Wal-Mart and CVS are installing walk-in clinics in some of their locations, where patients can receive treatment for minor injuries, common illnesses, and the filling of prescriptions, according to MinuteClinic, Inc., a Minneapolis based firm specializing in installing and operating such clinics.

Retail health care availability might "provide a health care that is more efficient and provide low cost service to a broader segment of society," Bisgaard said. "I don't want to judge how well it works…but it is those kind of things [retail health care] we need to experiment with to find more efficient ways…[for] providing health care," he said. "As soon as we start to experiment with various ways of doing it, over time we will figure out better ways of delivering health care."

Bisgaard said that it's important to improve the health care system without a major overhaul, but through changes made directly to the system. Both incremental improvements that gradually refine procedures and breakthrough changes, on the order, for example, of what MinuteClinic proposes "go hand in hand [toward improvements]," Bisgaard said.

Americans appear ready for such change. In a 2003 ABC News poll, 34 percent of Americans said they were dissatisfied with current health care costs, and 59 percent worried about affording health care in the future.

Bisgaard seems convinced that once the quality of health care systems are improved by Six Sigma processes, costly errors will be minimized and the direct cost to patients and society can be lowered. "When you improve the quality, you automatically reduce the cost," he said.

Bisgaard's workshop last Friday at ISOM pulled together campus participants from nursing and public health, management, and medical and medical process specialists from the Pioneer Valley. Participants included his two European co-authors, and others from three universities and eight different health care organizations, he said.

"We expect this to be the first of several workshops where we are going to educate each other about what we can do…in heath care quality."

The United States currently has a publicly and privately-funded mix of health care. While government-funded programs such as Medicare and Medicaid cover older people and many, but not all of the poor, most health care insurance is funded by employers or directly by individual subscribers.

Because prices of health care for individuals are very expensive, many people and families who do not have coverage at the workplace are unable to afford adequate, or any, health care.

According to a report by the U.S. Census Bureau issued in 2006, 15.9 percent of the population had no health care in 2005.