Out of the box thinking pays off big!

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Can workers’ compensation organizations get a big payoff by looking outside of the industry for new ideas?

At Paladin Managed Care Services, Six Sigma quality black belt Jeff Miller is using total quality management (TQM) tools developed by W. Edwards Deming and implemented by Toyota, Motorola, and General Electric to radically re-think workflows and achieve very significant improvements.

According to Miller, the basics of Six Sigma are a relentless focus on outcomes, continually raising the bar, eliminating waste, extra steps and wait time, improving efficiency with systematic problem solving, reducing variation in outcomes and being nimble.  A better process will generate both a better patient outcome and a lower cost.”

Miller spent the first 20 years of his career in workers’ comp claims and managed care.  Then, while running a consulting firm outside of the industry he saw the benefit of the Six Sigma / TQM approach.     Upon returning to the industry as COO of Paladin, he began to apply these powerful tools that are not currently part of the workers’ comp culture.

Some of the significant improvements:

Dynamiting the classic utilization review (UR) process!    The classic UR process has claims examiners refer to nurses who then refer to physicians and then back to nurses and examiners.  Six Sigma analysis showed large amounts of waiting time, high levels of re-work (appeals) and excessive hand-offs.  In the re-engineered Paladin process all UR requests are handled directly by physicians.  This speeds up treatment because peer review physicians can intervene early and negotiate “Dr. to Dr.” with treating physicians to insure appropriate treatment.  What are the results?

  • 1.5 day average turnaround for prospective reviews vs. the California mandated  < 5 days.
  • Despite all work being done by higher cost physicians, overall costs are roughly the same.
  • ROI for every dollar spent on UR is $18 compared to an industry average of $9.
  • Despite the fact that Paladin denies or modifies more URs than industry average, only 3.3% are appealed and of these only .82% are overturned.
  • Employees that are back to work 11% faster

Summary:  better results for the injured worker and lower costs for the insurance company.  A win for everyone!

Radical redesign of bill review processes – The traditional approach to implementing new bill review and other managed care software and services is business analysis, which involves mapping the new platform(s) to the existing systems and traditional workflows.  The result is often to automate old, inefficient processes.

When Paladin implemented a new bill review process in partnership with a large East Coast insurance company, they took the more radical approach advocated by TQM – they re-thought the entire managed care process.  Six Sigma quality black belts partnered with the client to re-think key work flows and desired outcomes.   The results:

  • Instead of the client using an in-house team of 8-10 bill reviewers, the analysis showed them that they could lower overall costs by outsourcing most of that work to Paladin’s more efficient team.
  • Processes were re-designed with a state of the art Paladin business rules engine so that 80% of bills were auto-adjudicated and paid immediately.  The remaining 20% were put through the classic scrutiny.
  • Physician over site was also built into the bill review process. Physician-guided care enables the Paladin physician to work with the treating physician to adjust the course of treatment if needed. Physician review also effectively identifies unbundled and duplicate services as well as contra-indicated treatments resulting in savings for the client.

As a result, bill review savings were significantly improved and met agreed objectives.

 What is the role of technology in Six Sigma?  Paladin uses a state-of-the-art bill review rules engine, advanced UR software and an imaging system which gives all key players simultaneous access to the full medical file. While this technology is critical, the key to getting the most out of the technology is to leverage it and the Six Sigma re-engineering to ensure the work is in the right hands at the right time. It’s this combination that enables Paladin to achieve better results for insureds and the insurers.

 What can you learn from the Paladin experience?

 The Six Sigma approach requires leadership from the top; at Paladin, it starts with Miller.

  • Do your homework – Jeff Miller recommends starting out by reading “Demystifying Six Sigma” and then studying the Deming method.   Two good books are The Deming Management Method and Dr. Deming’sOut of the Crisis”.
  • Training is key – at Paladin, two black belts and one green belt support the effort and all team members get TQM orientation and training as part of the on-boarding process.
  • At this time, Paladin is still in the early phases of Six Sigma implementation with most of the work being done within departments.  Cross-functional teams are now in the process of comprehensive development and implementation.

Six Sigma is not a quick fix and it requires strong, ongoing commitment and leadership from the top.  However, if you are looking for a systematic, proven approach to rethinking your business, consider following in the steps of  Toyota, Motorola and General Electric … and Paladin.

 

 

December 7, 2012 |

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