NC hospital uses Six Sigma initiative to train staff and target bad debt

Patient financial services team approach gets great results

Wake Forest University Baptist Medical Center in Winston Salem, NC, joined the growing ranks of health care organizations implementing the innovative quality assurance and process improvement strategy — Six Sigma.

Keith Weatherman, CAM, MHA, associate director of patient financial services (PFS), is part of three Six Sigma teams — one for bad debt reduction, one for emergency department collections, and another for ancillary collections — and says the program already has had a dramatic impact. "I can see silos literally crashing down," he says. "People are appreciating people; there’s a team approach. If we stopped now and didn’t do anything else, I’d say it had been worthwhile."

One of the most notable aspects of the Six Sigma strategy is its use of individuals — trained as "black belts" — who work full time as team leaders. That commitment "shows the administration is taking it that seriously," Weatherman adds. "It isn’t one of those flavor-of-the-month things. It’s here to stay."

Instant credibility

Projects begun under that kind of sanction have instant credibility, he notes. "Trying to get team members from certain departments is not an issue. Everybody is willing — that’s the biggest thing. It’s not a PFS problem or opportunity; it’s an organizational opportunity."

Heading up the 15-member bad debt reduction team at Wake Forest is Kyle Nifong, one of six people hired and trained as black belts. Formerly employed in the information systems (IS) department, Nifong says moving from the IS arena into Six Sigma has been a great learning experience. "I did a lot of project management before, but it was in information technology," he notes. "This is a functionally based project. Six Sigma is a data-driven process that brings so many tools to the table. Instead of ideas being based on hunches, they’re really based on data. It gives you a broader perspective."

In pursuit of bad debt reduction, Nifong explains, the Six Sigma team addressed the number of cases written off to bad debt and their dollar amount. "We looked at the causes: Most bad debt is from copays, deductibles, and coinsurances that don’t get paid. Our goal," he adds, "is to try to get more of those payments prior to the patient leaving the medical center."

After using Six Sigma tools to identify the problem, Nifong continues, the team determines which functions it will repair. "We’ve identified several causes, but we try to focus on getting one particular thing fixed," he explains.

In this instance, the desired outcomes became:

  • getting payment of whatever the copay is at the time of discharge;
  • making arrangements for a payment plan if necessary;
  • verifying the patient’s address, based on the knowledge that returned mail is a nationally recognized issue for hospitals.

In setting up a pilot project — or what is known in Six Sigma’s manufacturing world as "design of project" — the team targeted two of the specialty areas with the highest bad debt ratio, Nifong says.

One of the key issues being addressed by the project, notes Weatherman, is the increasing number of patients who are not scheduled in advance, but come to the hospital as direct admits.

Limited time for discharge planning

With emphasis on customer satisfaction leading to more patients going directly to their rooms, he adds, "there’s not as much time to get everything done, [such as having] that leisurely interview with the patient."

At Wake Forest, Weatherman points out, only 25% of inpatients come through the admitting office. Shorter lengths of stay mean access representatives sometimes aren’t able to get to every patient’s room before discharge to review financial and demographic information and, if necessary, arrange for payment, he explains.

A cardiology patient who is out of his/her room having a procedure done, for example, might fall through the cracks of the registration process, Nifong notes.

"In the past, we could have preadmitted them [and] worked upfront. But now we have to change our processes to figure out how to do the work while the patient is here," Weatherman says.

As part of the pilot project, Wake Forest has set up a discharge station near the door where inpatients leave the hospital to go to the parking area, he explains. With assistance from nursing and transportation personnel, departing patients — instead of being discharged directly from the nursing unit — will go by the new discharge area, adds Weatherman . "Financial counselors can talk to the patient, make sure all the information is up to date, and make payment arrangements," he says. "It’s a final check."

In this way, Weatherman notes, accounts that might otherwise have become uncollectible — because, for example, a secondary insurance was not identified early enough or an address was no longer valid — can be verified.

Six Sigma steps

Vice presidents over different areas of the hospital submitted suggestions for what the first Six Sigma projects would be, Weatherman says, with a priority put on those that would help the bottom line most. While PFS is taking a leadership role in the bad debt and collections projects, he points out, its personnel also are serving on teams that are championed by other departments, such as one that is focused on operating room scheduling.

Six Sigma projects are owned by the appropriate vice president, or champion — in this case, Wake Forest’s vice president of finance, Nifong explains. A team is assembled by the owner of the actual process involved, who is someone at the director level, he adds. For the bad debt reduction project, that person was the PFS director. To identify the causes of the problem, Nifong explains, the team completes a diagram showing Steps A-Z, and asks, "What are the key areas involved? Does [the problem] cross over another area?"

An example of that overlap, he says, is the patients being registered by admissions staff, their information sent to the insurance verification area, and then going to a financial counselor to discuss payment options. Once that process is identified, Nifong adds, the team examines the data (using bar charts, for example) to do a graphical analysis. (See LOS graph.) "Then we do a statistical and mathematical analysis that looks at different models to see what the data are showing as a potential problem, he says.

Minitab is a software tool commonly used by Six Sigma practitioners that helps with statistical and data analysis, he points out. (For more information on this product, go to the Minitab web site at

"After we identify the data that might be pertinent, we use a fishbone diagram to help facilitate a brainstorming session," Nifong says. (See fishbone diagram.) "We look at the loopholes, then do a cause-and-effect matrix. For each cause, we list an effect." A bad address is an example of a cause, he adds, and the effect is returned mail — and duplication of work.

Information from the cause-and-effect process is put into the failure mode effect analysis (FMEA), Nifong continues. "It’s a powerful tool for narrowing down what the potential problems are. Y’ is bad debt, and the Xs’ are the causes of bad debt. You come up with the top ones that you intend to repair."

Using the FMEA, he says, the team identifies the key functional areas to work on — in this case, getting payment at the time of discharge and verifying the patient’s address at discharge — and sets up the pilot. "With Six Sigma, you make sure there is a tracking mechanism," Nifong notes. "You compare your graphs with the original graphs to see if the percentage of bad debt goes down." The difference is in the level of detail, he adds. "You make sure you have had the gains and successes you forecasted."

(Editor’s note: Keith Weatherman can be reached at Kyle Nifong can be reached at