Hospital Nurse Staffing, the Six Sigma Way

What is Six Sigma?

Six Sigma is a quality management system that originated in the manufacturing industry but has become
increasingly popular in healthcare. Hospitals are implementing Six Sigma programs to improve and
control organizational processes that can help reduce clinical errors, achieve higher levels of care, reduce
costs, and increase patient and employee satisfaction.

Six Sigma improves processes by focusing on understanding and reducing the variations in process
execution. The Six Sigma methodology centers around five phases, commonly referred to as DMAIC (see
Figure 1):

• Define: Identify the problems to be solved. Develop the criteria for success via an objective statement.
Define performance metrics.
• Measure: Map process flow. Develop data collection plan for the process. Collect data. Establish data
and metric validity. Establish performance baseline.
• Analyze: Brainstorm potential sources of variation. Statistically validate the few, most important root
causes and identify improvement opportunities.
• Improve: Develop, implement, test, and standardize improvement solutions.
• Control: Establish process to ensure that the solutions are sustained and measured. Correct problems
as needed.

The final step — Control — is a hallmark of the Six Sigma methodology.

By implementing the DMAIC method to reduce both the magnitude and frequency of variations, outcomes
are easier to control and plan for.

DEFINE
• Identify the problem

CONTROL
• Sustain solution
• Correct as needed
MEASURE
• Map process flow

s
ANALYZE
IMPROVE • Separate the vital few from the
trivial many
• Develop, implement test • Identify improvement

Figure 1. The DMAIC Model

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Applying Six Sigma to Hospital Nurse Staffing

One of the key challenges in hospital nurse staffing is ensuring that there is always the right number and
skill mix of caregivers. This can be challenging for several reasons:

• The census fluctuates and is hard to predict, especially on an individual department level
• The nurse managers who are responsible for scheduling don’t always know which qualified and
competent nurses are available for work, especially those from other departments
• There is no real-time view of overstaffing or understaffing based on actual census and acuity
• There is no real-time view of where nurses are working to allow managers to redeploy them as needed.

Consequently, many hospitals are finding that they can easily either overstaff (thus incurring unnecessary
costs) or understaff (thus risking quality of care and employee morale). This is where Six Sigma, with its
emphasis on reducing process variations, can help a hospital better match the number of nursing hours
(and skill mix) to the fluctuating work volume. The Workforce Central® suite from Kronos® can play an
important role in such an initiative. A description of how the Workforce Central suite can help in a Six
Sigma initiative is given below, using the DMAIC framework.

Define
The first step in any Six Sigma initiative is to clarify the problem in the form of a problem statement. An
objective statement is then developed to spell out the criteria by which success is measured.

For the problem of matching nursing hours to work volume, an example of a problem statement may be:

“Actual number of worked ICU RN hours is 40% above FY05 staffing target
for the first six months of FY05.”

and an example of an objective statement may be:

“Reduce the variation in the actual number of worked ICU RN hours to +/-10% of
the FY05 staffing target for the last five months of FY05.”

“Actual number of worked hours” needs to be clearly defined, i.e., they are the hours spent directly or
indirectly on patient care and not on training, leave, and other non-productive activities. The target also
needs to be clearly defined, i.e., “staffing targets” are the hours that should have been spent, given the
actual census and acuity levels and taking into account nurse-to-patient ratios and other labor standards.

To determine whether the objective is achieved, metrics first need to be defined. For this problem, a
possible metric is the number of times the absolute value of the variance between actual and earned hours
exceeds 10% of the earned hours. Another possible metric is the number of times productivity (which is
simply the ratio of actual vs. earned hours) dips below 90% or exceeds 110%. Either of these metrics can
provide a baseline performance evaluation of how well labor is matched to the actual work volume.
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Measure
The outcome of the second step, Measure, is a performance baseline against which improvements can be
made. A key challenge in obtaining an accurate performance baseline is data collection. The task of
manually collecting actual worked hours information can be time-consuming and error-prone, and can
generate inconsistent data. In contrast, an automated time and attendance solution such as Workforce
Timekeeper™ can provide highly accurate, timely, and consistent data. Since a time and attendance
solution is used to record worked hours for payroll purposes, there is a strong incentive for both employees
and managers to maintain the accuracy and timeliness of the data.

While a payroll system may provide the labor data needed for analysis, a time and attendance system is
preferred for the following reasons:

• Payroll systems do not always include all types of labor, e.g., agency hours. Agency nurse hours can
be (and should be) put on a time and attendance system to provide an accurate view of how they are
being utilized.
• Payroll systems generate data once per payroll period, usually biweekly. More precise data, e.g., data
collected on a daily basis, is preferable for a Six Sigma project. An automated time and attendance
system can generate data on a daily or per shift basis.

Kronos’ labor analytics solution, Visionware®, can provide time series data (actual worked hours and
workload volume) all together and in one place for generating a performance baseline. Visionware first
takes data feeds from the time and attendance system, as well as from systems containing actual daily
volume of activities (e.g., billing systems). It then applies the labor standards against the volume of
activities to calculate earned hours and productivity. Finally, Visionware produces daily trending reports
that can readily be used to establish a performance baseline.

Analyze
In the Analyze phase, the performance baseline collected in the Measure phase is examined. Statistical
correlation analyses are performed. The purpose is to determine the key drivers responsible for the
variations, i.e., separate the vital few from the trivial many. In this phase, Visionware can help highlight
significant variations using both at-a-glance executive dashboards and detailed diagnostic reports. You
can then set up control charts and feed them with actual productivity, labor utilization, and cost data from
Visionware.

Based on the specific variations, the Variance Improvement Plan (VIP) feature of Visionware also offers
“canned” analyses that point out possible reasons for further research by the project team. These analyses
leverage over 15 years of experience in healthcare labor management and learning from 800+ installations.
Visionware also helps estimate the hours and dollars impact for each variation to help prioritize the vital
few from a business perspective.

Improve
In the Improve phase, solutions are developed, tested on a small scale, and then rolled out across the
organization. For each of the “canned” analysis, VIP also suggests potential actions to take. It additionally
provides a tracking spreadsheet for managers to track progress and maintain accountability of the solution
development, testing, and roll out.

A key component of any nurse staffing improvement plan is an automated time and attendance solution
such as Workforce Timekeeper. Workforce Timekeeper provides nurse managers with a real-time view of
employees currently on premise and what departments they are working in. Armed with this information,
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managers can re-assign their people in real-time to meet changing census.

Another key component is an automated scheduling decision support solution such as Workforce
Scheduler™. Workforce Scheduler provides automatic translation of census forecast into workload, and a
whole-house view of staff availability, preferences, certification, and skill set. Managers can thus create
staff schedules that most closely match forecasted needs using the best people for the job at the lowest cost
— and use regular FTE before overtime or agency.

The benefits of Workforce Scheduler can be significantly enhanced if the application is used across all
departments and for all types of staff (including agency nurses and interns), and schedules are coordinated
via a central staffing office. This allows staffing to be optimized at the enterprise level.

Control
To achieve long-lasting benefits, improvement solutions need to be monitored, sustained, and adjusted
over time. To achieve this, a control tool needs to be implemented. Visionware is such a tool because it
provides productivity and labor utilization variance reports at all levels, from department to enterprise. On
the input side, daily automatic data feeds ensure that the labor, census, and budget information are accurate
and up to date. On the output side, the Management Exception Desktop (MED) provides a clear, easy to
understand dashboard for senior management to monitor processes. Finally, VIP provides an automated
spreadsheet to help managers conveniently make adjustments and track their impact. In summary, with the
help of Visionware, hospitals can ensure that the benefits of a nurse staffing initiative will be sustained.

Benefits of the Workforce Central Suite in a Six Sigma Project

There are several advantages of buying an integrated suite instead of separate applications. The integrated
Workforce Central suite can help simplify the implementation and sustainment of a Six Sigma labor
management project by providing:

• Accurate data — no error in reading from the wrong tables

• Timely data — no latency
• Precise data definitions — “worked hours” mean the same thing in Workforce Timekeeper, Workforce
Scheduler, and Visionware
• Convenience — all data in one place
• Ease of implementation — pre-integrated data interfaces
• More efficient training — common look-and-feel and navigation allow end users to be trained faster.

By buying an integrated suite from one vendor instead of separate components from different vendors, a
hospital can reduce the total cost of ownership, streamline implementation and IT support, and reduce
complexity for end users on an ongoing basis.

Case Study: Reducing Labor Costs Through Better Matching of

Labor to Volume
A large community healthcare system consistently exceeded its budgeted nurse staffing levels. To solve
the problem, a Six Sigma project focusing on effective staff scheduling was launched as part of a wider
Six Sigma initiative.

The objective of the project was to develop a replicable staff scheduling process with actual staffing of less
than ten percent from target. In the Measure phase, the Six Sigma team calculated the baseline process
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capability by looking at the number of instances where actual staffing hours were more than +/- ten
percent of earned hours.

Next, by analyzing the data, the team isolated overtime, agency hours, and census as the key drivers of
staff-level variation. Once these drivers were identified, the team designed and implemented process
changes such as better communication during shift transitions to reduce overtime and agency labor.
Finally, with the changes implemented, the hospital implemented a process-control tool to ensure that the
solutions were sustained.

With the new process changes, the hospital estimated that it could save more than $500,000 in overtime
and agency costs in just one pilot unit.

About Kronos
Kronos Incorporated is the most trusted name in workforce management. Kronos helps organizations staff,
develop, deploy, track, and reward their workforce, resulting in reduced costs, increased productivity,
better decision-making, improved employee satisfaction, and alignment with organizational objectives.
More than 20 million people use a Kronos solution every day. Learn more about Kronos' high-impact
enterprise solutions at www.kronos.com.

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