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Two holistic approaches to combating rising healthcare costs

Matt Walkup
May 14, 2019 · 5 min read

What would you do if you won $1 billion dollars in the mega millions jackpot? You could do many things with that money; purchase a nice beach front property, a Ferrari, a trip around the world. One thing that you couldn’t do with that money is pay for every American’s healthcare for one year. $3.65 trillion dollars is what Americans spent on healthcare in 2018. The $3.65 trillion in spending represents $11,212 per person, with 59% of the spending going to hospitals, doctors, and clinical services (Fortune, 2019). I implore healthcare systems to start implementing two things to reduce the wasted expenditures and inefficiencies that have saddled all of us with this massive debt that is currently out pacing wage growth rates. These two things are High-performance Work Practices (HPWPs) and Lean Six Sigma (LSS). You might be asking yourself, what are High-performance Work Practices and Lean Six Sigma?

What are HPWPs? High-performance Work Practices are practices that have been shown to improve an organization’s capacity to effectively attract select, hire, develop, and retain high-performing personnel. How HPWPs are approached for each organization is similar but not necessarily identical. From Garman and colleagues (2011) they identified four different parts that made up their HPWPs.

The first part identified was engaging staff. It is important for staff members to be aware of and have a responsibility to pursue the organization’s vision.

Second, acquiring staff and developing talent. A Center for American Progress study looked at 30 difference case studies on cost of employee turnover and concluded that on average it costs a company one-fifth of an employee’s salary to replace that employee.

Third, it is important to empower the customer facing employees. Clinicians as an example, have a lot of influence over the quality and safety their team can provide. Allowing them to have greater decision making capability and job security allow them to better focus on the patient rather than their boss.

Lastly, assuring leadership is a cohesive unit. Leaders should have an organizational focus and organizations should always be cultivating leaders to step in when needed.

What is LSS? Lean Six Sigma is a method that relies on a collaborative team effort to improve performance by systematically removing waste and reducing variation. It combines lean manufacturing/lean enterprise and Six Sigma to eliminate waste. Lean Six Sigma has training programs with different levels signifying an individual’s experience with LSS. These levels (belts) are white, yellow, green, black, and master black belt.

Healthcare organizations should implement HPWPs and LSS because they will directly impact their goals.

How do HPWPs and LSS align with the goals healthcare organizations have? Currently, Quadruple Aim is the industry standard for business goals. The four goals are improved patient experience of care, improve the health of populations, reduce the per capita cost of healthcare, and reduce clinician and staff turnover. HPWPs and LSS both impact all of Quadruple Aim goals. As previously stated, HPWPs would improve the goals through staff that is more engaged, talented, empowered and leadership that pushes the organizational goals.

LSS projects improves the processes tied to the Quadruple Aim goals. One example of a LSS project that would be tied to Quadruple Aim would be a project conducted to reduce patient wait times in the emergency room. LSS projects should follow the DMAIC process. DMAIC is an acronym that stands for Define, Measure, Analyze, Improve and Control. Through the use of these phases a problem will be methodically solved to find the optimal solution.

Through the use of HPWPs and LSS companies should increase financial security this will draw more employees to work for a company because they desire to work for a more stable company. It is important to note that successful implementation of HPWPs and LSS can only be realized through leadership support because ultimately company leaders have the power to cultivate a project or kill off a project.

So why haven’t all companies adapted to HPWPs and LSS, what is the catch? Impatience. HPWPs and LSS can range from as little as a few months to a few years with many variables attributing to the large range. A quick win is easier to sell to top management, than a slow victory. Unfortunately, it could take more than a year to see measureable improvement, it is a marathon with many hurdles to get through not a quick sprint. However, all companies can implement HPWPs and LSS and find success if they have the leadership championing LSS projects and pushing HPWPs while being patient for positive results. There are many success stories out there such as General Electric, they implemented LSS in 1995 and through their implementation they were able to detect many defects that were attributing to the build-up of waste. In five years, General Electric implemented LSS and reported twelve billion dollars in savings. Presently, there are many large companies such as Amazon, Samsung, Ford etc. that have implemented LSS or HPWPs to some degree.

In a perfect world all healthcare companies would implement LSS and HPWPs to some degree. It should be phased in slowly and given adequate leadership support and time to improve the goals of quadruple aim and reduce waste in all the healthcare sectors. Wouldn’t it be awesome if one day you won a jackpot of $1 Billion dollars and with that money you could pay for every American’s healthcare for one year?

1- U.S. Health Care Costs Skyrocketed to $3.65 Trillion in 2018. (2019). Retrieved from http://fortune.com/2019/02/21/us-health-care-costs-2/

2- There Are Significant Business Costs to Replacing Employees. (2012) Retrieved from https://www.americanprogress.org/wp-content/uploads/2012/11/CostofTurnover.pdf

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