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Huge Profits by Year Three

This year, the company projects a return of $9 million because of Six Sigma.

September 18, 2003
 
Name: MOUNT CARMEL HEALTH SYSTEM
Location: COLUMBUS, OHIO
Business: HEALTH-CARE PROVIDER
Employees: 7,000

June 2000 was a pivotal time for Mount Carmel Health System. Escalatinghealth-care costs forced the company to lay off 200 people, which affectedemployees’ ability to deliver good customer care. Expenses were rising 4 to 6percent annually, and reimbursement payments weren’t going up, says TammyWeidner, Mount Carmel’s vice president of Six Sigma. "We knew that we neededto do something differently."

At the time, the chief quality officer and the CEO were both reading booksabout Six Sigma. It hadn’t been done yet in health care, but the results inother industries were so impressive that the executive team decided to pursueit, Weidner says. "Someone in health care needed the courage to take theinitiative, and they said, ‘If not us, then who?’"

With the commitment to find a solution in place, the leadership team, whichincluded the CEO, CQO, COO, and CFO, attended a Six Sigma seminar in June. ByJuly 27, 2000, they had signed a contract with BMG, and they started executivetraining on July 31.

BMG consultants began by working one-on-one with executives to teach them theSix Sigma concept of fact-based problem solving, to answer their questions, andto understand their fears. "It was critical to deliver the executive trainingfirst, because they would be the voice of the initiative," says Weidner. "Theyneeded to know how to respond to employees’ concerns and what to do if therewas resistance."

After the two-day executive training, the company’s vice presidents, whowould become "champions" of the program, were trained in Six Sigma processesand methodologies. They were then asked to identify 44 potential black beltsfrom their existing teams. "The black-belt candidates were pulled from theirpositions and they weren’t replaced," Weidner says. It was a sacrifice forthe business units that lost them, especially so soon after a layoff, andtherefore it was critical that the VPs understood and embraced the Six Sigmaconcept or there could have been a lot of resentment. By October 30 the firstwave of black belts began training.

"It was unprecedented for a health-care company to move so quickly,"Weidner says. "It showed the staff that there was significant commitment tothis change effort."

Because Six Sigma was so new to the company and to the health-care industry,the black belts became a community among themselves, supporting and encouragingeach other through the early projects, she says. They were also supported by the"core team," a Six Sigma task force made up of the vice presidents of HR,finance, communications, and PR; Weidner; a senior executive; a representativefrom the IT department; key operations people from the three hospitals; and thedirector of education. It was their job to create the infrastructure for SixSigma, which included making technological improvements to support projects andtraining, building job descriptions, defining roles and compensation for SixSigma personnel, and creating an organic FAQ to answer any employee questionsabout the company’s Six Sigma methodology and how to be a part of it.

At that time, having a core team was unusual, Weidner says, but sheattributes much of the success of Mount Carmel’s Six Sigma program to the coreteam and the infrastructure they built. There were no companies to use as guidesin the industry, so the core team was largely responsible for customizing SixSigma for health care and spreading the message across the organization throughnewsletters, meeting agendas, and an informational Web site. "Every day Ireceive calls from people asking what’s going on with Six Sigma," Weidnersays. "It’s a great litmus test of the excitement people have about SixSigma and their acceptance of it."

Another convincing measure of employees’ acceptance of Six Sigma is thereturn on investment the program has shown. The first year, $650,000 was spenton the rollout, and even though training was not completed until March of 2001,by June 2001 (the end of the fiscal year) Six Sigma efforts had saved thecompany $946,000 from three projects conducted over two months. The second yearsaw a savings of $6.5 million, and this year Weidner projects a return of $9million. "It just shows if you have courage, commitment, and the willpower tostick with it, the payoff can be exponential."

Workforce, May 2003, pp. 68-69 -- Subscribe Now!