Executive Summary

During the mid 1980s, manufacturing giant Motorola developed an internal quality control process it dubbed “Six Sigma,” a method used to identify and eliminate manufacturing defects. The concepts behind the Six Sigma process clarified the role of quality control so well, they were widely adopted across the globe by companies, institutions and governments.

Today, the concepts of Six Sigma are reflected in initiatives designed to streamline a wide range of business processes. In healthcare, many aspects of Healthcare Performance Management reflect the Six Sigma movement. HPM has rapidly become a welcome addition to the corporate arsenal for containing ever-rising healthcare costs.

In many respects, the choice to move to an HPM system is increasingly driven by the frustration companies have experienced with the prevailing model of purchasing insurance through third-party- payer systems. Pursuing this method of providing employee health benefits is a growing challenge. Purchasers are typically in the dark about key cost components. This approach offers no insight on how the health of their workforce affects skyrocketing healthcare cost. And they have little visibility or control over what can and should be done to address the healthcare needs of their employees.

"One of the first things that must be overcome in the healthcare marketplace is the barrier that the insurance industry places in front of purchasers of healthcare to access meaningful data," says Scott Haas, vice president at the Wells Fargo Insurance Services USA. “In reality, the funding mechanism chosen by any given plan sponsor should be a function of available data being turned into information and business decisions made that are prudent and founded on knowledge. Being fully insured or self-insured should not be a decision driven by the size of an employer group, but rather the chosen risk transfer method based on consideration of all facts related to the group’s own situation.”

The business discipline of HPM entails learning about and deploying four key elements which, when implemented, lead to better outcomes in terms of employee health and productivity, and in healthcare spending.

• Measure the key cost elements of healthcare spending
• Manage key aspects of healthcare spending and important health outcomes
• Engage employees and family members in material health improvement initiatives
• Save money through cost-avoidance, better workforce health and improved productivity

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Document: 

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