measuring and evaluating the roi from six sigma

1Copyright BCBSF™ 2005

Measuring and Evaluating the ROI from Six Sigma

Six Sigma in Healthcare

March 4, 2005

Presentation Outline

• Six Sigma at Blue Cross Blue Shield of Florida

• Calculating the costs and savings from Six Sigma projects

• Building an effective tracking system for CI/Six Sigma

• Integrating Six Sigma as part of your general Continuous Improvement toolkit

Six Sigma at BCBSF

March 4, 2005

Six Sigma at BCBSF

• Deployment initiated in July, 2003– First “wave” of Black Belt training in September, 2003

– Infrastructure launched in October, 2003

– First “wave” of Green Belt training in March, 2004

• Results to date– $6.8 million in savings during 2004, $8 million forecasted for 2005

– Over 2,000 Yellow Belts

– 43 Black Belts, 20 more scheduled for April

– 38 Green Belts

– “DNA” Index• Project Pipeline Ratio

• Project Leadership

• E-Learning/Training

• Certification

Six Sigma at BCBSF

Infrastructure Highlights– Leadership/Governance

• CEO

• Office of the COO

• Continuous Improvement Enablement Office (CIEO)

• Continuous Improvement Council

– Black Belts• Two year assignment/full-time

• Decentralized matrix reporting structure

– Green Belts• Short term assignment/training project

– Enabling Area Integration• Finance

• Human Services

• Information Technology

• Decision Support

Calculating the Costs and Savings from Six Sigma Projects

March 4, 2005

Valuation Deliverables

1. Project Opportunity Assessment

2. Unvalidated Forecast

3. Initial Validated Forecast

4. Final Validated Forecast

5. Realization/Reforecast

Project Opportunity Assessment

• Required for the project to be submitted into the pipeline

• Owned and delivered by the sponsoring champion

• Based on high level assumptions

• Benefit rangesSix Sigma Project Candidate For assistance, please see document instructions on the next tabProject Opportunity Assessment (P.O.A.)

Project PipelineProject NameChartering BeltChampionBusiness Area Finance Lead

Benefit 1Benefitting AreaBenefit TypeBenefit Value

Describe calculation details and sources of data

Total Estimated Benefit $0

Approval of Initial EstimateApproval = belief that the P.O.A utilizes available data to estimate project benefits in a fair manner while understanding that the estimate may evolve as more information is gathered.

Champion Name, 1/15/05Chartering Belt Name, 1/15/05

Business Area Finance Lead Name, 1/15/05

Financial Valuation Timeline

Unvalidated Forecast

Validated Forecasts

Keys to Valuation

• Engage Champion, Implementation Lead and Finance Rep early and often

• Don’t spend too much time trying to get perfect numbers at the beginning of your project

• Be careful in managing expectations

• Document delays in benefit realization

• Get the organization to own the financial results

Building an Effective Tracking System for CI/Six Sigma

March 4, 2005

Project Tracking Infrastructure

Roles and Responsibilities

3.1.1 - May request Ad-hoc changes to plan

through BB

1.2 -PA w/BB reviews and baselines the project plan

1.3 – PA publishes plan to Project Server

2.2 - See Weekly Update Cycle

2.5 - Accepts wkly updates in PWA by

COB Monday

4.1 - Approves Forecastsand maintains Financials

(Actuals)

At the start of Define Phase Ad-hoc changes to plan available in 1

business day

Wkly Updates (Avail. Tuesday AM) Monthly updates to Financials avail. day

after closing

2.6 - Project plan updated and published to server

2.1 - Log into PWA to view new tasks

2.3 - Log into PWA and view new tasks

2.7 - Func. Admin. locks down prior time period by

Wed noon of following week

2.4 - See Weekly Update Cycle

End of Control Phase

5.4 – Change project resources (except

Financial resources) from “Committed” to

“Proposed”

Lockdown project after all tasks are 100% complete (except benefit realization)

2-3 Days 1 Day 1 hr

4.2 - OLAP cube auto-refreshed the night of month-end closing.

Financial views updated.

Financials updated by COB of month-end closing

Mondays - Fridays

Weekly updates to be completed in PWA by

COB Friday

3.5 - Publish updated plan

3.4 - Performs changes to project plan, and Re-

baselines if requested.

3.2 - Approve/Reject Ad-hoc Project changes in PWA

3.1 - Request Ad-hoc changes to project plan(See Ad-hoc updates)

Ad-hoc update requests to be sent by 3pm

R1 - IDEAs/Potential projects input to pipeline

R2 - Pipeline project

submitted

R3 – Pipeline project gets

approved by CIEO, belt is assigned,

project plan created from pipeline

Recognize Phase

1A 2A, 2B 3A, 3B 4A 5A 6A

During Realization

Version: 2.0 Last updated on: January 21st, 2005 Last updated by: Neil Johnson (Pcubed) Project Plan Management High Level Process Flow

6.1 - Tracks Financial Benefits (Actuals) & signs-

6.4 - End of Phase – Close

out project.

6.2 - At end of realization-

requests project closure.

5.2 – Champion sends request to PA to lockdown

project

1.1- PA customizes the project plan using Project Pro with input

from Belt

3.3 – Views change requests to project plan in PWA – Action Items page.

5.1 - Sends request to Champion to lockdown

project after all tasks are 100% complete

5.3 – Views lockdown request to project plan in

PWA – Action Items page.

6.3 - Views Project closeout request in PWA

Monthly basis (for 12 months)

Pipeline – General Information Screen

Project Tracking System

Pipeline – Criteria Selection Screen

Pipeline – Criteria Selection Screen (cont.)

Pipeline - Project Charter Screen

Pipeline – Initiate Project Screen

Project Health Indicators

1. Project Level View

Project Health Indicators

1. Task Level View

Integrating Six Sigma as part of your General Continuous

Improvement Toolkit

March 4, 2005

Medium

Medium High

Lean DFSS“InvestingProjects”

Go Do NA

Scope / Complexity

Financi

DMAIC(Sweet Spot)

Project Identification

Basic Continuous Improvement

Low Complexity

High Project Volume

Green Belt ProjectsMedium Complexity

Moderate Project Volume

Black Belt ProjectsHigh Complexity

Low Project Volume

Overarching Framework

Balance!

Although this focus has produced substantial results, we have identified several gaps:

– Opportunities for both Black and Green belt projects are slow to develop

– Projects have not been yielding financial returns consistent with our assumptions

– Projects often lack data or commissioned to solve problems that have not been substantiated

– Incorporating CI/Six Sigma into our DNA has taken hold in pockets, but is inconsistent

Gap Analysis

CI/Six Sigma Training Structure

Black Belt

Green Belt

Blue Belt

Yellow Belt

All Employees

Six Sigma Integration

• Go Do Projects

• “Individual” Process Improvement Techniques

• Process Management

• Rapid Process Improvement/Workout

• Lean

• DMAIC

• DFSS

ject V

ject C

Questions and Answers

March 4, 2005

measuring and evaluating the roi from six sigma

effective

project health

project opportunity

healthcare

sigma wcbf

project

projects

pipeline

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