Medicare Fraud – Inspecting Quality into a process rarely works well
I just watched a story on 60 Minutes on how simple it is to game the Medicare system out of millions of dollars. Essentially, with a few pieces of static data a criminal can bill the system for medical equipment without having even met the Medicare patient. The government will pay the charges in 30 days and if the criminal gets a hint that they are under investigation, they just close shop and open up another business reusing the same list of patients.
The criminals purchase lists of patients for $10 per patient and bill Medicare for any number of devices or drugs. In the report they interview a person whose credentials were used to bill the system from two prosthetic arms. The man had his real arms and only learned of the fraud from a quarterly statement from Medicare.
What I found most interesting is that the solution being employed to reduce the fraud is more law enforcement and more auditing. To me this is backwards. The government is trying to inspect quality into the billing and payment process. No matter how successful the government is, given the simplicity of the crime, I doubt the effectiveness of their efforts.
Instead of inspecting quality at the back end of the process, it is always better to prevent the defect. From what I know of the process based on the report, it seems that the main flaw is the fact that it is so simple to acquire the static patient credentials needed to bill the government.
While there are probably more ways to prevent fraud, the solution I thought of immediately is giving each patient a single use token device like Secure ID. If the patient is involved in a medical transaction, they would be required to provide the provider a single use number which the provider would use to authorize that transaction with the government. While this would not prevent fraudulent companies from billing for unnecessary equipment, it would immediately render the patient lists useless since companies could not use them without the single use token.
A second line of defense would be to employ data mining software like those used by credit card companies. I imagine it would be possible to develop algorithms that would catch potential fraud before invoices are paid. For example, prior to paying for prosthetics, the system would assure that amputations had been billed.
It is usually simpler to add more inspections to the end of a process, but it rarely has the impact that error prevention does.
The Toyota A3 Report | shmula
This is a really good article on the Root Cause analysis technique developed by Toyota.
The Toyota A3 Report | shmula.
Everyone is so G*d D*mn unique
I have yet to find a company that feels that they are just like everyone else. In my career I have been fortunate to work in a variety of industries including Pharmaceutical, Manufacturing, Semiconductor, Entertainment, Standardized Testing, Software etc. Everyone always thinks they are unique. It’s probably a defense mechanism or an excuse as to why things are so poor in that particular company.
This morning I was watching a live Q&A with 37signals and David Heinemeier Hansson was talking about customizing their application to a specific industry vs. being generic. That’s when he inspired this post with the words that became it’s title.
DHH went on to say:
Everyone thinks they are this perfect little snowflake
What he said was that the things that work are those which work for everyone, like email. I couldn’t agree more. People think that just because some solution worked at one company it does not mean that it will work at theirs. What companies don’t see is that most of what they do is pretty generic. If you focus on the 5% that may be unique, your company will not progress because it will get stuck in never ending analysis.
At a company I once consulted for, they were developing a large piece of software for something I knew other companies were doing. I was not in a position to convince them that they should find an off-the-shelf solution, but I knew it was wasteful to try to build something internally especially if what they were building was not their core competency. Needless to say that company didn’t complete that project because when new management came in and saw the lack of progress, they quickly killed the project and set out to implement the generic off-the-shelf solution which was used at other companies.
If what you are doing is that much different from your competitors and you are not the leader of the pack, then you should seriously analyze what you are doing because your “uniqueness” may be your downfall.
Make an effort to learn what works at other companies even if they are in other industries. You will gain a tremendous amount. I’ve had clients who talk every acronym under the sun from LEAN and Six Sigma to PRINCE2 and RUP. In most cases what they were missing was not a unifying technique for improving their business. What they were missing was a change to their corporate culture which hindered progress. In the end these companies were not unique because of what they did, but because of how they were doing it. So stop thinking you are so special and work on actually getting things done and changing the complacent attitude which is what is really holding you back.
Bad Design will piss off your customers
Over at the Signals vs. Noise blog there is some great dialog about the poor American Airlines online reservations systems.
As a person who has done a lot of flying as part of my consulting work and as an Industrial Engineer, analyzing processes comes second nature to me. AA.com has always been my #1 worst site. Come to think of it, American Airlines in general has been at the top of my list for worst companies to deal with. The funny thing is that what is being discussed in the post above goes far beyond online reservations, it gets to the root of the real issues at American Airlines and the other major carriers in the US.
Their entire operation’s design sucks…
OK, maybe not all of it, but most of the customer facing ones. Here are examples of things I have encountered while flying AA and other major airlines in the US.
1. Booking online is a nightmare
Most of the websites are designed like it’s 1995 and no one has heard of web 2.0. You can’t do simple searches easily and God help you if you need to change a date once the search results are displayed.
2. Checking in feels like you arrived at a cattle call or you wait and wait…
Anyone who likes using the electronic check-in kiosks at the majors hasn’t flown Jet Blue or Southwest. I flew on United in November and not only did I have to enter my name and destination, I also had to enter the confirmation ID(I think that’s what it was). How about we just do the confirmation number like Jet Blue and output it with a bar code so I can just scan it? If I enter a confirmation number, don’t ask me where I am going, you should know that…
How about redesigning the checkin area so it is less intimidating for passengers? At LAX they actually have an employee at the front of the line whose whole job is to call out which kiosk is open. Ridiculous.
The funny thing is that if you are lucky enough to be a Platinum AAdvantage member as a was a few years ago, you can opt-out of electronic checkin and actually go up to a person. Only problem is that this process is actually slower. Two employees serving a line of about 10 customers takes over 45 minutes. I don’t know why this takes so long, but I sure hear a lot of typing when all I want to do is check into my flight.
3. Why don’t you take my bag?
So you go through the nightmare of checking in, now you get the privilege of waiting in another line. At American Airlines at LAX there is another place you have to take your bags so they can be x-rayed before they go on the plane.
It’s been seven years now since security measures were changed. Maybe it’s time to redesign this whole process?
Why is their design so bad?
I would guess that these airlines approach problem solving from the company’s point of view with little to no regard for their customers. They know they need to reduce costs, so they decide to work on an online reservation system for their customers and when customers don’t use it because it’s lousy, they will just impose surcharges to force them to use it. If they need to cut employees to reduce costs the can just install kiosks and give customers no option but to use them. Security procedures change? We can just add another process as an afterthought and never look back.
Herein lies the problem. No one is thinking “we can make this better.” They are not saying:
- “The internet is here to stay, how do we improve our site so customers WANT to book online”
- “Pre screening the bags is not going to change and electronic checkin is here to stay, maybe there is a way to redesign the terminal so the process is more efficient and less intimidating to our customers.”
- “If we are going to have a loyalty program, we have to make the experience for our most valuable customers exceptional”
I challenge the executives of the major US airlines to fly Southwest, Jet Blue, and travel internationally is I did to Singapore in November to see how much better the process can be for both the customers and the airlines.
If you design your product to meet and exceed your customer’s expectations, you will be able to command a higher price than your competition. On the other hand, if you approach every problem with a selfish attitude and not from the customer’s point of view, you end up like GM and the countless other companies who focused too much internally and too little on the customer.
Improving your processes doesn’t mean buying expensive tools
The other day I was speaking to my cousin, a dentist, about process improvement. His thought process quickly led him to describe how expensive some of the tools in his industry can be. These tools tend to revolve around digitizing the dental office.
I quickly shifted the conversation to Southwest. He knew where I was going with this as he had read a book about how Southwest used one model of planes, etc. The classic Southwest case study. I think he understood that process improvement does not have to mean capital expenditures. Sometimes the biggest wins are the low hanging fruit.
If a secretary sends and receives a lot of faxes, but has to walk to another room to perform this action, is there a way to move the fax machine closer? Most people can identify this because it is pretty obvious, but in a dentist office, like with Southwest, utilization is the most important thing. So keeping this in mind, what can be done so that chairs are never empty? What could he do to increase the number of patients he sees in a day?
I know he has down time between seeing patients, so he may be able to improve utilization by examining the set up process for each station. How long does it take to prepare a chair for a new patient? When he gets there are the tools he needs ready for him? How long does it take to sanitize the area once the patient is done? By asking simple questions he may find ways to carve out an additional appointment in a given day.
There are many things you can do to improve a process without spending a dime. You just have to be creative and ask the right questions.
Your office is moving to the web, get ready
Today I woke up to read a tweet from Robert Scoble (@Scobleizer) and it was the canary in the coal mine for me. For years I have felt that enterprise collaboration was moving to the web and this tweet confirmed my intuition. (for those who are mistified by the “tweet” visit Twitter <- this is more then “telling people what you are doing”). Okay, back to the post, so what did Robert say?
Info on GE going with Zoho …
WHAT? That can’t be the Six Sigma, continuous improvement General Electric I know, can it? Well, I click on the link Robert provided which led to this article (GE Drops Google, Selects Zoho ). Wow, that’s huge, but I am just finding out something which was stated back in September of 2008.
So what is this all about? Well, Zoho is a company which is offering a suite of office applications on the web, think Microsoft Word, Power Point, Excel. They not only provide these applications, but a whole host of other collaboration tools.
If you have ever used one of these tools you may have thought that they are not as full featured as their desktop counterparts and you’d be right. The revolution however is how these tools are changing the way we work. Think of the last MS Word document you created which you needed to share with someone else. If you are like most people out there you created it on your computer, possibly saved it to a network drive, and then emailed it off to some people for review and input. If you are lucky they turned on track changes and when you get back their comments and changes you take your time making sense of all the files and compose the final document. Some of the “more advanced” companies will have implemented systems like Microsoft Share Point or some other document management repository which helps the collaboration process, but most companies aren’t even doing that. The problem with these document management systems is that they are within your companies’ firewall so collaboration is usually limited to employees of the company, but collaboration has no bounds. In today’s global economy people need to collaborate with customers, suppliers, and even competitors as part of standards setting bodies.
GE’s move is a sign of things to come. You can bet yourself that if they get the concept of the “web office” then many companies are soon to follow. Actually, there is more evidence in Robert’s stream (here, here and here). Maybe Robert is just pointing out examples which support his argument and I am just reiterating to make my case stronger, but if you don’t think this is reality, go look for yourself.
If these tools aren’t that great, how are they going to succeed? Well, if you used the web in the mid to late 90′s and if you can remember how limited the whole web experience was at that time you would not have predicted YouTube, Hulu, or Salesforce.com
Technology moves at an amazing speed and Zoho is a perfect example of that. I have been following their products for a while and every time I visit their site, I see some new product offerings. Extrapolating to 2012 there is no doubt that these tools will be up to the task and many more companies will be using them. It makes sense. You no longer need to install programs on your desktop, you no longer need to email files around. You can get new features as soon as they are ready, you can access your files from anywhere. You need to collaborate with someone outside your corporate firewall? No problem, just share that single document with them. In some cases you can all work on the same document at the same time and see each other’s changes as they happen. All your changes get saved so that you can go back to previous versions of the document if you need to. The entire workflow is streamlined. What if you don’t have internet access? No problem, some of these tools have off line mode and you can be sure that by 2012 internet connections will be even more ubiquitous than the are today. (did you know you can already get internet access at McDonald’s?)
So get ready and stay ahead of the curve. When you are analyzing your processes think about your collaboration tools and learn how the innovators are improving their processes. Technology alone does not solve process issues as I mentioned here, but with a good process, the right technology can mean the difference between modest and significant improvement.
Get to the root of the problem if you want to fix it
The other day I read this post about how Jeff Bezos facilitated root cause analysis at Amazon when a worker was hurt at a distribution center and it gave me great insight on how Amazon works. Getting to the root cause of a problem and implementing a fix is the basis of real continuous improvement, but if you look around you will find many who rather deal with problems as they arise instead of dealing with the issue that led to the problem in the first place. It’s like looking for your lost keys every day instead of determining why you lost them in the first place.
Finding the root cause can be difficult in certain instances, but you may find that a lot of the time there are quick fixes all around you in both your personal and professional life which you can fix by going through the 5 why’s.
As an Industrial Engineer, I live and breathe root cause analysis. I always ask deeper questions to everyday problems, but my wife, who has a career in social services didn’t originally think this way. When she would ask me where her keys or her glasses were I would walk her through root cause analysis and illustrate by example how I never lose my stuff because I have a system. I just put things in the same place every day. Annoying as that may sound, I am amazed how my wife now applies these techniques in her job. Now when she recounts stories of how people in her workplace don’t attack the root cause I can’t help but smile.
Root cause analysis is a way of life. Once you embrace it you will find opportunities all around you and you will no longer lose your keys. :-)
A great tool won’t fix your bad process
It’s amazing how often people think that simply implementing a new tool will solve their problems. If there is something to be solved, a computer can surely do it, right? The trouble with this conclusion is that technology is just a piece of the solution. More often than not, the better approach is to spend time understanding your process by defining what you are trying to achieve and determining how the process fits in with the company’s goals. I suggest fixing the process prior to adopting a new tool instead of trying to fix it with the tool.
The need for a new tool may be the catalyst an organization needs to revisit their processes, but usually most people are focused on implementing the tool, not fixing the processes.
It has been my experience that good processes benefit from new tools while bad processes are made worse. If a company starts with the presumption that whatever they do can be done better, then they will learn from the exercise of selecting the tool. First, map the “as-is” process or remap it if it does not match documentation, then step back and figure out why the process was put in place in the first place (what is the goal of the process?). Brainstorm on how it can be improved by taking out unnecessary touches, automating segments, and even eliminating parts which add little to no value.
Once you understand what you intend to improve with the new tool, you will be able to subjectively analyze the potential candidates. Your questions to the vendors and their references will be more specific and you will be able to create demonstration scripts for the vendors to follow as they present their tool as it would work with your processes. Their ability to make your process more efficient will lead you to the right tool for your company.
Throughout the selection and implementation activities you must fight the urge to customize the tool. If the tool does not do what you want, you have two options; change your process, or change the tool. I usually presume the tool is right. After all, most of the time you won’t be the first to implement the tool, so best practices are probably already baked in. The questions to ask yourself are: “Is our process world class?”, ”Are there others using this tool without customization at a similar company?”, ”Are we holding on to sacred cows?”
More often than not you will find that your company is not the model for the Malcolm Baldrige award. Your processes can always be improved. If others are using the tool without customization, how are they doing it? Are there other areas of your organization that need to be improved first? Be willing to slaughter your sacred cows and don’t incorporate poor decisions made on other processes into your new and improved process. Customization means more time and money and most likely it will yield less return than improving more fundamental issues with your company.
This inevitably will mean a longer analysis and selection process, but it will expedite implementation and in the end, the tool will indeed improve your process because you took the time to improve the process along the way.
If you are afraid to break it, how will you fix it?
Today I came across a process flow chart which made me think of past experiences where I was blamed when something was not quite perfect with something I did. As I mentioned in the whining article, people sometimes have a need to blame their surroundings and don’t take action to make improvements.
So the question I pose to the nay sayers is; “How will anything improve if nothing changes?” If you don’t try you will certainly not get blamed, but you will certainly not succeed at improving anything.
However, if you are not afraid of failing, being told you are wrong, or taking responsibility when things do go awry, you can accomplish great things. I have learned that things tend to go right more than they go wrong and things that go wrong usually just need a minor adjustment.
By far I have found that persistence and commitment to improvement have garnered more praise than blame. I have a hard time thinking of solutions I have put in place that are still not in place. Most people appreciated the improvement and those who embraced the change became my cheerleaders and advocates. I also believe I won the respect of the whiners because I had an impact that could be measured.
So go ahead, change things. Don’t be afraid to break something and if someone blames you when something is not perfect, just remember they are whining. If you are persistent, your great ideas will win out in the end.
Bottom up solutions miss the mark
If you were trying to get to the Statue of Liberty and didn’t know where it was located, would you just head out and hope you would find it? If you don’t know where you are and where you need to go, will you ever get there?
Although many people can agree that in order to solve a problem well, one must take a top down approach to problem solving, it is my experience that people take the path of least resistance and solve problems bottom up. For some reason most of the time I come across people who want to just dive in and “solve a problem.” Some of these people see the situations in front of them as black and white.
Like many in the business world, I too just want to get down and dirty. I want to implement solutions and move on to the next challenge. The problem with this approach is that unless you step back and take a birds eye view of the situation prior to getting down in the weeds, not only will you manage to create a locally optimized solution, but you will likely find it more difficult to achieve your goals.
Most people can step back and get a broader view, but they rarely go beyond the areas outside their immediate control. Whereas the people who jump into a solution know the situation as the black and white squares above, the ones who take a broader view know there is more to the problem.
These people realize they are in a maze, but their Achilles heel is that they stop widening their view here because they see multiple paths to take. Any one path may be the optimal path and so they do some analysis around the 3 possible solutions. They show their analysis to management, select the path, and go on to implement the solution.
In rare situations, you will have management who will help you see the entire maze. These are the great managers who realize that locally optimizing a system may adversely affect someone else. These managers realize that for the company to succeed, it need solutions that go beyond their immediate area of responsibility and which are aligned with the corporate goals.
If you don’t know where to start or what your goal is, any path will do. So start at the top, understand where you’ve been and where you want to go, then find the solution to today’s challenge which will optimize the entire system.