Six Sigma teams define, measure, and analyze

Barriers, opportunities identified

It’s impossible to fully explain Marlton, NJ-based Virtua Health’s emergency department (ED) cash collections project without discussing the multihospital health system’s Six Sigma quality assurance program, officials there say. Motivated by a recent Healthcare Advisory Board report touting the improved cash flow and customer service benefits of collecting revenue at the point of service, rather than through billing the patient later, the health system began the ED project in October 2003.

Using the methodologies of Six Sigma, the Virtua team worked to define, measure, analyze, improve, control (DMAIC) a new standard operating procedure (SOP) for ED cash collections, with the aim of increasing patient satisfaction and reducing costs. Six Sigma teams are led by people who have attained the level of "black belt" or "green belt" or by Six Sigma analysts trained in statistical analysis, process improvement, and team facilitation.

Tracy Carlino, RN, who is a black belt at Virtua Health, explains how the Six Sigma concepts were applied to the ED project:

Define

To help define the cash collection process, staff members with firsthand experience in ED operations were selected for the Six Sigma project team, including representatives from patient access, patient accounting, information services, internal audit, and marketing and internal communications. The team worked to identify barriers, opportunities, and structural and process differences. To further define the task at hand, the team focused its efforts on managed care and managed Medicare copay collections. The idea was to create an SOP that could be tested, implemented, and applied to other cash collection opportunities.

Measure

Before a formal cash collections program was developed, the Six Sigma team measured data that indicated the system’s collection agency was collecting approximately 50% of all potential copays from the ED at a cost of 5.2% of the total revenue. The agency collected a net of slightly more than $1 million before the start of the project. The data also showed that the average copay was $50.

Analyze

Through careful analysis, the team researched how other institutions were handling ED cash collections, both locally and nationally. Additional research from the Health Care Advisory Board showed that hospitals collecting 80% of copays were deemed best practice. Those considered strong performers collected 60% of copays, and those collecting 50% of the copay opportunities were deemed average practice. In addition to benchmarking information, the team sought legal advice to ensure compliance with the Emergency Medical Treatment and Labor Act (EMTALA) regulations regarding ED cash collections. Analysis of the benchmarking information and the legal interpretation led the team to decide on a goal of collecting copays after treatment, with a first-year target of 50% of potential collections.

Improve

Before the team could make recommendations for improvement, issues such as security, space, equipment, EMTALA considerations, staff education, and technology were addressed. A cost analysis of the new design process was completed, with expenses including costs for minor renovations, credit card machines, safe and drop boxes, cash drawers, panic buttons, and security cameras for safety purposes, as well as signage for each ED. Staffing changes were made within patient billing services to support the additional workload. Changes included moving the cashier to the ED and moving the auditor/educators to the registration area to help out during peak times.

Control

A change acceleration process (CAP) is another part of the Six Sigma methodology that was put in place to encourage change early in the process, with actions including education plans, scripting for registrars, and public signage regarding the new collection procedure. To promote continued success, the design team agreed to send progress reports to a broad audience of key stakeholders, including senior management. The reports — designed to reflect both cash collected and payment due notices generated through the computer system — were produced weekly during implementation but only sent monthly.