Six Sigma: Business process re-engineering and continuous improvement efforts
such as TQM and Six Sigma are both designed to improve efficiency, produce better
product quality and greater customer satisfaction. The purpose for using operational
improvement programs such as bench-marking, best practices, business process
re-engineering, TQM, and Six Sigma is to improve the performance of strategy critical
activities and promote superior strategy execution
Business process re-engineering and continuous improvement efforts such as TQM and Six Sigma are both
designed to improve efficiency, produce better product quality and greater customer satisfaction. The purpose
for using operational improvement programs such as bench-marking, best practices, business process
re-engineering, TQM, and Six Sigma is to improve the performance of strategy critical activities and promote
Case:
Illustration Capsule 11.1 discusses Charleston Area Medical Center’s use of Six Sigma practices. Read the
case below and answer the questions that follow.
Established in 1972, Charleston Area Medical Center (CAMC) is West Virginia’s largest health care provider in
terms of beds, admissions, and revenues. In 2000, CAMC implemented a Six Sigma program to examine
quality problems and standardize care processes. Performance improvement was important to CAMC’s
management for a variety of strategic reasons, including competitive positioning and cost control.
The United States has been evolving toward a pay-for-performance structure, which rewards hospitals for
providing quality care. CAMC has utilized its Six Sigma program to take advantage of these changes in the
health care environment. For example, to improve its performance in acute myocardial infarction (AMI), CAMC
applied a Six Sigma DMAIC (define-measure-analyze-improve-control) approach. Nursing staff members were
educated on AMI care processes, performance targets were posted in nursing units, and adherence to the
eight Hospital Quality Alliance (HQA) indicators of quality care for AMI patients was tracked. As a result of the
program, CAMC improved its compliance with HQA-recommended treatment for AMI from 50 to 95 percent.
Harvard researchers identified CAMC as one of the top-performing hospitals reporting comparable data.
Controlling cost has also been an important aspect of CAMC’s performance improvement initiatives due to
local regulations. West Virginia is one of two states where medical services rates are set by state regulators.
This forces CAMC to limit expenditures because the hospital cannot raise prices. CAMC first applied Six Sigma
in an effort to control costs by managing the supply chain more effectively. The effort created a one-time
$150,000 savings by working with vendors to remove outdated inventory. As a result of continuous
improvement, a 2015 report stated that CAMC had achieved supply chain management savings of $12 million
in the past four years.
Since CAMC introduced Six Sigma, over 100 quality improvement projects have been initiated. A key to
CAMC’s success has been instilling a continuous improvement mind-set into the organization’s culture. Dale
Wood, chief quality officer at CAMC, stated: “If you have people at the top who completely support and want
these changes to occur, you can still fall flat on your face. . . . You need a group of networkers who can carry
change across an organization.” Due to CAMC’s performance improvement culture, the hospital ranks high
nationally in ratings for quality of care and patient safety, as reported on the Centers for Medicare and Medicaid
Services (CMS) website.
Sources: CAMC website; Martha Hostetter, “Case Study: Improving Performance at Charleston Area Medical
Center,” The Commonwealth Fund, November–December 2007,
www.commonwealthfund.org/publications/newsletters/quality-matters/2007/november-december/case-studyimproving-performance-at-charleston-area-medical-center (accessed January 2016); J. C. Simmons, “Using
Six Sigma to Make a Difference in Health Care Quality,” The Quality Letter, April 2002.
Please answer the following three questions below
1.List three tangible benefits provided by the program.
2. Explain why a commitment to quality control is particularly important in the hospital industry.
3. How can the use of a Six Sigma program help medical providers survive and thrive in the current industry