How to Use Six Sigma to Reduce Billing Errors in Healthcare

How to Use Six Sigma to Reduce Billing Errors in Healthcare

By Discovery Lean Six Sigma

0/5 stars (0 votes) 300w, 768w" sizes="(max-width: 800px) 100vw, 800px">

In 2000, a landmark report dubbed ‘To Err is Human” was published by the Institute of Medicine that aimed to place issues of safety, errors and management of quality on the radar of all healthcare providers as well as accreditation agencies. Among its aims was the specification that healthcare systems should be made more efficient so that the resources available are put to use in offering value for money spent while reducing waste. Among the areas identified as wasteful in a large number of healthcare facilities was the billing process.

Application of lean and Six Sigma processes in healthcare quality management has rapidly grown over the past decade, especially in hospitals, clinics and clinical laboratories. In order to decrease the costs associated with healthcare, billing processes are investigated in order to identify areas where defects occur and determine where Six Sigma tools could be applied to improve defective processes.


During the Define phase of a Six Sigma project, the implementation team is challenged to find a problem, define its scope and establish any measures that can be taken to bring about improvements. To gain a better understanding of the billing process, it is necessary to create a Supplier-Input-Process-Output-Customer (SIPOC) diagram.

The team also collects Voice of the Customer information related to the process in order to set up a baseline for the assessment of customer satisfaction with the process output, while identifying and prioritizing the main characteristics of quality, customer satisfaction and the project stakeholders.

In a healthcare billing scenario, the process customers are mainly providers – those who work in medical information management and patient accounts departments, who generate a healthcare organization’s invoices.


Measurement of the billing process starts with plotting dollar amounts for all patient care procedures and tests that were conducted but were not billed over the course of a set period of several months. The result is a process control chart that gives a visual representation of average monthly billing for any test conducted.

This is used to find out how frequently individual procedures and lab tests were conducted but were not billed. This creates a baseline against which the Six Sigma team could assess changes after the interventions they propose.

In many cases, unbilled procedures can be linked directly to specific areas of the healthcare system. Six Sigma can focus attention on particular departments, clinics and labs to establish the physicians who conducted or ordered for the unbilled clinical procedures.


The Six Sigma Analyze phase involves measuring how frequently clinical procedures are carried out but are not billed as a result of systemic defects. The team then goes ahead to generate a Cause-Effect Tree diagram to establish the reason for the defects.

The Cause-Effect Tree diagram helps the team to display and visualize the problems and their root causes plotted in contrasting colors. In addition, the Cause-Effect diagram allows them to look into possible proximal causes as well, which may also be targeted for intervention. Many cases of billing defects in healthcare systems boil down to poor documentation of necessity of applied clinical procedures.


After the causes of the unbilled medical procedures have been identified, possible solutions can be laid down within an Impact Effort Grid diagram. To improve documentation of the necessity of clinical procedures, one solution could be to implement an electronic ordering system for any request that would require physicians and lab techs to input the medical necessity or any procedure needed.

‘Cheat Sheet’ printouts are also common, as they help healthcare providers to know which procedures are necessary based on the diagnosis of the patient’s symptoms, while also educating the clinical staff involved in ordering of procedures and the request of requisitions.

The Impact Effort diagram allows the team to rank various solutions on the basis of their impact and efforts, letting them easily identify interventions that offer the greatest impact while requiring the least amount of effort.


After putting interventions in place, there are multiple steps within the Control phase that help to monitor improvements, including:

  • Documenting process changes: Keeping records of any requisitions and requested procedures by all parties involved including physicians, laboratory technicians, clinic managers and patient accounts.
  • Support of process changes: After changes are made, reports are produced, which summarize the billing defects identified and how frequently they occur. The reports are shared with physicians and management.
  • Recommending future plans: This is an overview of any other initiatives that can be taken to look at the issues identified in a broader sense.


Application of Six Sigma tools to improve the quality of processes within a healthcare setting is vital in identifying specific billing-related processes that require modification and improvement. Specific interventions can then be applied to the billing process in order to maintain improved performance.

The post How to Use Six Sigma to Reduce Billing Errors in Healthcare appeared first on Shmula.

By: Shmula Contributor
Posted: July 24, 2018, 3:00 pm

comments powered by Disqus

Discovery Lean Six Sigma

Dummy user for scooping articles

I'm a dummy user created for scooping  great articles in the network for the community.