Global yet local: focus Ecuador

A non profit organization improves its operations in a hostile environment

By Guillermo Arosemena-Arosemena

When the government does not have the will, money or knowledge to fulfill its public duties, private sector must step in. This is what happened 118 years ago in Guayaquil, Ecuador, when a group of businessmen decided to set up a non profitable organization – Junta de Beneficencia de Guayaquil (JBG)- to take care of the health and education of 50,000 thousand people who at that time lived in the largest city port in Ecuador. At present there are near 3 million inhabitants and 4 hospitals of JBG service over a million patients per year, most of them are the poorest of the poor, several schools, retirement homes and cementery. Hospital Luis Vernaza (HLV) with over 900 beds and 6,000 employees, including doctors and nurses, is the flagship and largest general hospital in Guayaquil and Ecuador.

As the biggest hospital in the country the number of transactions handled is staggering, a 1% reduction in just about anything can represent over 250,000 dollars in savings. For decades as the demand for HLV services was considerably higher than supply, it was management policy to increase the number of doctors, nurses and technologists, basing its growth strategy as extensive instead of intensive. In 1999, Ecuador had a serious economic recession which hit JBG very severely due to a bank holiday, destruction of crops on account of El Niño and oil price collapse. JBG´s funds were frozen and the sale of the national lottery sharply declined (JBG´s main source of income). The JBG was at a crossroad: turning down patients and shrinking its services or getting involved in a full blown administrative transformation. The board of directors chose the latter and some of its members assumed the responsibility of initiating and supervising the changes which involved reviewing the structure, infrastructure, process, people and leadership. The main objective was to improve sales, reduce costs and provide better quality services. JBG had to fight in order to survive.

The situation before the changes was the following: the accounting system was obsolete, there was no cost accounting, limited records not updated, no key performance indicators, no use of computers nor softwares, very little communications inter and intra institutions belonging to JBG, no accountability, poor planning, terrible controlling, lack of coordina tion and so on. Basically there was an outdated management system which was not prepared to succeed in a difficult environment. We had to start from scratch

During 7 years we have been changing just about everything, except core values. We have: a new organizational structure, IT applied in the most important activities, internal processes have been reviewed and improve, budgeting and cost systems developed and are working properly. At HLV we begun using lean manage ment and it was certified to meet ISO stan dards. Having collect enough data through the years, during the second half of 2006 we decided that it was time to begin implementing six sigma, as ISO9001 had a weakness, in not providing a means to reach the objectives established when ISO was implemented. Six sigma became a need to ISO, a sort of support ing tool.

In spite of the significant cost improvements achieved during the last 7 years, we were not satisfied, there was a need to keep looking for ways to identify more cost reductions possibilii ties, we had to dive under de iceberg. Six sigma was the best tool to do it in term of reducing cycle time and non value added activities. Optimizing time, more patients could be taken care of with the same number of doctors and nurses. We had never before determined time variations nor managed or eliminated them and six sigma was the ideal tool as it is about reducing variations. But in order to start using DMAIC methodology, we had to retrieve the data from the computer system and not having any data mining nor warehouse softwares, we were held up. To overcome this serious obstacle, JBG hired 3 systems engineers to do the work. At the same time we set up a team responsible to identify cycle times and waste in each of the 37 clinical services at HLV.

The first service which we started to apply DMAIC methodology was outpatient consulta tion where 63 doctors per shift, take care of 13,000 patients monthly. By reducing the non value added activities in the entire process by 10 minutes, an additional 600 patients per month can be checked. The same metholology will be applied to the rest of clinical and admin istrative services.

Perhaps one change to the use of a Lean Sigma tool that could have a BIG short term impact on Healthcare risk is the addition of a +1 to 5S to make it 5S+1. The addition is a consideration of the ‘Safety’ (i.e. Risk / Patient Safety) impact during each of the normal 5S steps – for example, whilst a defibrillator may only be used once every year (and therefore using traditional 5S might warrant being moved away from the area) a 5S+1 solution would say that when it is needed, it is needed quickly – so keep it close by!

When we opened this short article, we mentioned that Lean Sigma is set to have a big impact on Healthcare as it can address the needs for improved efficiency and effectiveness there by helping deliver reduced lead-times and costs. A closing thought for Lean Sigma practitioners in Healthcare is: Whatever the operational benefits possible, they must not be achieved at the expense of patient safety!

by Mark Boult DNV & Mark Eaton Amnis-UK