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Fairfield Medical Center Looks for Fast-Paced Method to Achieve Operating Margin Goals

Fairfield Medical Center, a 220 bed not-for-profit medical system located in the Midwest had been facing escalating margin pressures and set a goal of improving their operating margin by $10 million by year's end. Years earlier, Fairfield had embarked on a quality journey and made substantial investments in their quality program. Selected members of the team were all trained in Lean-Six Sigma and were actively engaged in numerous efforts to improve the organization's operating processes. Yet senior leaders reported that they were not seeing the return on their investment in Lean Six Sigma and the existing pace of progress was lagging behind their financial objectives.

Fairfield Medical's Needs

  • Achieve profit margin goals
  • Solidify team for rapid change deployment
  • Reduce waste throughout the organization
  • Increase speed of making improvements

Fairfield Turns to CBA for Rapid Implementation of Margin Improvment Efforts

CBA assisted Fairfield by changing the focus from tools and methods to mobilizing the entire organization and establishing an action-oriented approach. The first order of change was implementing a strong accountability structure to make progress or its absence instantly visible and demanding a corrective response when deviations from plans are unacceptable.

Action Targets: The next step in the process was the adoption of action targets for everyone in the organization including members of senior leadership. Every manager, director and senior leader was committed to completing two quality-driven changes per manager per month that would move the hospital toward their financial goals. This had the effect of creating a sense of urgency and demonstrating the commitment to change that permeated the entire organization.

Implementation of Rapid Cycle Testing: CBA mentored the Fairfield team on the implementation of methods that increased speed and reduced barriers to change. An experimental mind set was fostered through the introduction of Rapid Cycle Testing. This methodology delivered the benefits of reducing the fear of failure, creating a culture that values experimentation, and increasing the speed of the organization.

Change Type Dollar Impact for WorkoutImplementation of Waste Categories: Caldwell Butler & Associates provided a general introduction to Lean concepts and provided an easy-to-understand overview of 7 categories of waste. By the end of day one each manager had recorded several ideas and was expected to have 8 plans recorded that they could fully implement in the next 100 days.

Comprehensive Planning: CBA guided senior leaders as they embarked on a parallel 100-Day Workout in which they prioritized their current and proposed efforts into a comprehensive plan. They achieved consensus on what were the most important priorities to be completed in the next 100 days and proceeded accordingly.

Results: Fairfield Medical Center leadership responded to this challenge by creating 384 separate plans to improve margin, quantifying 272 plans, resulting in $8.3M in expected overall savings. By the end of the first 100-Days they had implemented 93% of the quantified plans and had achieved $2.5M in CFO validated savings. An additional benefit of the 100-Day Workout was a dramatic increase in the amount of collaboration between departments.

Demonstrated Statistically Significant Results of the Fairfield Medical Center Implementation

Change Type Dollar Impact for Workout

Measurable Benefits:

  • Over $7.6 million in expected savings through company-wide participation
  • Quality Waste Recovery efforts generated 369 plans representing over $7.6 million in margin improvement, including:
    • Over $2.68 million in material and information movement
    • $1.4 million in Out of Quality Staffing
    • $702,000 plus in Over Inventory
    • Over $1.7 million in Waiting

Intangible Benefits:

  • Dramatically increased collaboration between departments
  • Improved team efforts in anticipating and overcoming objections