The Power from the Combination of ISO, Lean & Six Sigma – A Case Study in Healthcare

The Power from the Combination of ISO, Lean & Six Sigma – A Case Study in Healthcare

Quality System Consolidation in Healthcare


The Power from the Combination of ISO, Lean & Six Sigma


August 18, 2013

Wes Chapman




I took over as CEO of Medical Media Systems, Inc. in 2000 in a moment of madness – the company had $17 in the bank and had missed the Christmas payroll (never a great morale booster). The company produced a software product, Preview, which was regulated by the FDA as a medical product, and had a cleared 510 K. Despite a bleak start, the companies had great promise, and ultimately produced a 70%+ return to investors loony enough step up to the opportunity.


     Preview Model

Preview – a tool for detailed anatomical analysis


From the moment that I stepped in the door, it was clear that the product had tremendous clinician support – and it was developed to support endovascular aneurysm repair, which was taking off as a new technology. The product had over a dozen first rate peer reviewed papers supporting its efficacy. The company was, however, a financial, operational, regulatory and quality nightmare. The documentation for the FDA system was a nightmare of unnecessary complication. Production of a single Preview unit took 1.5 days of technician time, rework rates were 75% and costs exceeded $1,500 per unit – a unit that we hoped to get reimbursement at $750 per case (a premium of 400% to the existing CPT code). For obvious reasons, things needed to change.


 Virtual Graph

A “Virtual” Stent Graph in a Preview Model


A 3 Phase Approach to a Quality Driven Solution


We took 9 years to fully implement a three phase approach to a fully functional, integrated and lean ISO based quality management system (QMS).


Phase 1, Phase 1was pretty rudimentary, and I won’t spend much time on it here. We started with a “parallel paths” approach for ISO, FDA, CMS (reimbursement) and a “proto-stage” lean six sigma effort (really focused on simple statistical process control concepts – coupled with massive operator training). This Phase was a study in episodic regulatory successes, contrasted with continued and constantly measured improvements in quality, productivity, customer (and employee) satisfaction, and commensurate financial performance. By the end of Phase 1 we were making money, generating cash, and I was sleeping through the night.


The key focus in this phase was training. We invested with our clinical/technical staff in an Associates Degree program with a local technical college. For all mid-level managers and up, we did internal auditor training and LSS training. It took time, but it clearly raised expectations internally, and resulted in dramatic improvements in both product quality and customer service.


I had aspirations of initiating a rudimentary statistical process control program during the first phase – but the system was simply too juvenile to gather any accurate and timely data. As a warm-up we initiated a push to answer a single question on an accurate and timely basis –“ how many cases through the door so far today”. A very simple question that we were simply incapable of answering – the incoming came from too many sources and too many channels (electronic and physical) to get an accurate count. It took six months, but when we were capable of answering the most fundamental of process questions, the rest started to come together quickly.


Phase 2 The business depended on the centralized processing of CT and MRI images from hundreds of hospitals around the US in a centralized processing facility in West Lebanon NH. Image transfer was typically conducted through a proprietary hardware/software interface called the DICOM Armored Car (DAC). The rough flow chart of data and product is shown in the following graphic.

MMS Workflow

A complex data acquisition process from hundreds of hospitals

Phase 2 started as a strategic initiative, launched in response to adverse changes from CMS regarding reimbursement. The business depended on reimbursement for its products by Medicare (CMS) which was continually under pressure. The Company initially received reimbursement in 2001 from CMS at $648.11 per unit, which was precipitously cut to $250 per unit in January of 2006. At the time, our variable costs were on the order of $200, per unit, with turnaround times of around 5 business days, and rework rates around 20%, including initial production flaws referred to as duplicates.


We initiated a major ISO 9001/Lean six sigma project, dubbed the Fab 50. The Fab 50 project was a crash response to the new price point, with an objective of achieving a variable cost of $50 per unit by project end. This was a “make-or-break” project for the company, and its first large (system) scale application of integrated ISO and LSS. Specifically, project management was standardized in the ISO system to accommodate the broad use of LSS tools.


Initial State


The company had focused its efforts for several years on achieving production efficiencies in the actual technician time required for anatomical determination in the production of Preview units. This had been quite successful, and had reduced average time to produce a 3D anatomical model from 1.5 days to around 3 hours. Turnaround times had been reduced from over 10 days to 5 days or less, and the DAC had reduced transit time for raw scans and finished product from days to minutes. The DAC had also reduced shipping costs from over $25 per case to zero. The company had operated as an ISO facility for several years, and therefore had good process documentation, although data to support LSS was generally lacking. The company enjoyed an 80 % market share in its niche, and had grown unit sales by an average of 40% per year for several years.


We needed to make big changes in a hurry – and we needed to change from the top management through to the line production workers. Fortunately, we had put a lot of effort into training in the prior years, and the clinical capabilities, technical know-how, and LSS process knowledge were up to the task. We developed teams for major steps along the entire process – starting with sales and customer support, and including engineering, software development and technical/clinical. We made a big effort to tie authority, responsibility and accountability to the teams – they were in charge, and would have the resources to get the job done.


Initial Plan


The first step was the development of a preliminary ISO based corrective action and preventive action (CAPA) system which was based on the application of LSS tools. Next we did a value stream map including all elements of the data gathering (raw material), production and distribution to the customer. From the initial value Stream Map, and from data already being gathered plans were made to: 1) Substantially upgrade the data receipt process – which was the principal cause of rework in the system, 2) Improve the modeling tools using patented iterative processes which determined when additional technician time was not improving the quality of the anatomical interpretation, and eliminating a number of data receipt and return options – all physical which were dramatically increasing costs, causing system complications and failures, and were of little or no value to the customer – they certainly were not willing to pay for them.


Perhaps most importantly, the internal software development process to support this effort was totally changed. Historically, software development had been loosely controlled, and not directed at achieving specific and quantified quality/cost/efficiency targets. For the first time in the company, software was developed to specifications targeted to rigorously determined customer requirements as well as internal production requirements.


Finally, we did the initial leaning of the ISO system – it was really clunky and loaded down with far too many wordy SOPs and not nearly enough process maps and checklists (documents in ISO parlance) to turn into records (data). At the same time we installed our first computerized ISO document management system – with tremendous results for me as the CEO. For the first time I had visibility into status of the QMS and the projects that it generated. While there were a lot of problems with this “generation 1” system, it opened my eyes to the importance of computerized system control.


The general accomplishments are tabulated below:



Fab 50 Project Results



Initial State

Fab 50 Target

Actual results   18 Months

Average time to bring data in house

Bi-Modal, 10 minutes or 5 days

1 day

Less than 1 day

Average time to prep data prior to   processing

2 days

2 hours

1 hour

Median time to process Preview

3 hours

1 hour

0.5 hours (bi-modal, 15 minutes up to   a day for problem cases)

Rework rate for entire system



< 1%

Average variable Production cost




Average total turnaround time

5-7 days

3 days

1.5 days

Total number of identified quality   projects






Phase 3 In Phase 3 we did 4 critical changes to the ISO QMS: 1) Made the ISO system the only management system for all management meetings, 2) Used dashboards for all relevant management data and projects (as close to real time as possible) – and made them broadly accessible to constantly update progress on quality objectives (internally and in certain circumstances with clients), 3) Consolidated all quality/management/certifications inside the new ISO 13485 and 14972 standards, and 4) Leaned out the ISO system just as much as we possibly could (or so we thought).


Moving to weekly ISO based meetings, and blurring the lines between CAPAs and projects (if a project isn’t preventing a problem or correcting one, why do it) made a huge difference in responsiveness. Initially, we treated all of our quality systems and certifications as independent functions – each requiring its own documents, schedules, staffing and management/control system. The reduction in time spent in wasted meetings was a blessing. One meeting, one agenda and one set of minutes, resulting in clear problem identification and resolution. This was a real blessing – and appreciated by everyone on the team. Equally important – there were no blank spots in coverage – if it was important enough for us to do – then we all needed to understand what was going on.


Integrated dashboards and projects took some getting used to – but it made a huge difference. We reported on projects once a week – and weekly updates are no problem once you get used to it. We built drill downs into the projects components, so summaries were driven by detail – not some SWAG. Data relevance is pretty clear when a CAPA is right in front of you – do the metrics actually reflect the project requirements?


Along the way we had tiered our CAPA system into three tiers – Chairman CAPAs for “never events”, regular CAPAs for problems that required time and attention, and so-called “penalty box tickets” for small recurring issues that we wanted to understand via data and better description before we addressed them systematically.


Along with project management/CAPA reform, we moved to a monthly quality close – matching our monthly financial close. This was a spectacular success. By forcing the team to treat quality like an integral part of financial success, we ended up with a single meeting at which financial success and quality were indistinguishable – which they should be.


We made a conscious decision to manage all of our quality related requirements out of a single ISO system, causing us to switch to ISO 13485 – a standard harmonized with both FA and EU standards. Whatever we needed to manage – we did it out of a single system. The products of the company had grown considerably more complicated by this point – including clinical data registries and radiographic imaging reading to support clinical trials. For these products the information and documentation were the products – and operating the whole company via ISO was the only way to make it work.



ISO as a Management System


The final requirement was to lean out the system itself. We had operational SOPs in three distinct product areas – which weren’t as distinct as the SOPs indicated. Most of the processes were common – and the distinct processes were really determined by customer requirements – which had to remain both separate and yet tied to the individual product. Additionally, the development of software, which was crucial to our business model, was complicated by quality requirements.


We attacked the software development first, and with a real passion. The reduction in “time-in-quality” for our development efforts were reduced from 75-90%. This both saved a lot of money, and dramatically increased developer satisfaction.


By the end of Phase 3, the team was doing some amazing stuff. We made a small acquisition, and moved it into our facility, changed out personnel and equipment, moved the acquired entity onto our document system, and passed a customer audit all in a 72 hour period! The amazing point was that this did not require any special project or oversight – we just ran the whole thing like any other project in our system.


Key Lessons Learned


  • It starts from the top. I pushed this from the first day right through to the last. Everyone in the organization knew that quality and process improvement were the central themes for the entire corporate strategy. We did it as a team – and everybody benefited – and those that didn’t buy-in were soon gone.
  • It doesn’t matter what you call it – just make it work. We had a system based on ISO 9001, then 13485, but using large amounts of lean, six sigma and SPC. The system was constantly being upgraded, and went from a single question to real time data powered dashboards and process control charts. Our quality system and our quality improved in lock step – one step ahead of the reimbursement cuts from Medicare.
  • Training and team work were central to success. Everyone got training, everybody participated in quality from the ground up, and the improvements in quality were astounding.
  • Lean out the quality system. We started with thousands of complicated SOPs and work instructions, and ultimately reduced it to a blessed few hundred. The fewer we had the better it all worked.
  • Combine it all into a single system. We had half a dozen quality and operating systems as well as various required certifications (ISO 9001, GMP, GCP, etc.) – a preposterous situation for a small development stage company. By the time we finished, they were all incorporated into our ISO QMS, and suddenly became comprehensible and operationally feasible.
  • Review constantly, and minimize meetings. We consolidated everything into a single weekly one hour meeting. It was data and project driven. We had to have a few required additional meetings that I never figured out how to cancel, but very few and far between.
  • We bought an electronic management system, and it really made a huge difference. ISO requires multiple issues that need to be dealt with on a periodic basis. Until we went electronic it was impossible. Afterwards, it became manageable, and it allowed us to have a monthly quality close just we did our financial close. Within a few months – it became the same meeting – in the end, financial performance cannot be separated from quality.



Wes Chapman
Written by Wes Chapman

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