Cigna

[SIX SIGMA]
Corporation
A study on Six Sigma principles and its application in Cigna Corporation
Paviter Kaur A/P Autar
Singh
 MANAGING BUSINESS

TECHNOLOGY PARK MALAYSIA

INDIVIDUAL ASSIGNMENT

BM027-3-2 MBUSS

MANAGING BUSINESS

UC2F0906IBM

NAME: Paviter Kaur A/P Autar Singh

LECTURER: Rohizan binti Ahmad

HAND OUT DATE: 22/02/2010

HAND IN DATE: 09/04/2010
WORD COUNT: 2390

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Table of Contents

Abstract.............................................................................................................................................................4
Introduction.......................................................................................................................................................5
Application of DMAIC in CIGNA..........................................................................................................................7
Define............................................................................................................................................................9
Measure.........................................................................................................................................................9
Analyze.........................................................................................................................................................10
Improve........................................................................................................................................................11
Control.........................................................................................................................................................12
Six Sigma Organization and Implementation Roles in Cigna............................................................................16
Master Black Belt.........................................................................................................................................17
Black Belt.....................................................................................................................................................17
Green Belt....................................................................................................................................................17
Yellow Belt...................................................................................................................................................18
White Belt....................................................................................................................................................18
Champions...................................................................................................................................................18
Executives....................................................................................................................................................18
Conclusion.......................................................................................................................................................20
References.......................................................................................................................................................21
Appendices......................................................................................................................................................24
Appendix 1...................................................................................................................................................24
Appendix 2...................................................................................................................................................26
Appendix 3...................................................................................................................................................27

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Abstract

The following assignment is an in-depth study of the case study given by the lecturer Ms. Rohizan
binti Ahmad.

It gives detailed knowledge about the Six Sigma methodology with the use of diagrams and charts.
Also it gives sufficient knowledge about CIGNA Corporation and how they turned their company
around with the use of Six Sigma principles.

It also talks about the DMAIC- Define, Measure, Analyze, Improve and Control methodology which
is comprised from Six Sigma. Later it goes on to talk about the implementation roles which are the
various belts used in Six Sigma and the ones that are used in CIGNA. It talks about the Six Sigma
organization as a whole and later goes on to conclude and provide real life statistics on the success of
CIGNA with the use of Six Sigma.

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Introduction

The Six Sigma of today speaks the language of management: bottom-line results. It institutionalizes
a rigorous, disciplined, fact-based way to deliver more money to the bottom line through process
improvement and process design projects—selected by the top leadership and led by high potentials
trained as Black Belts or Master Black Belts in Six Sigma—that aim to create near-perfect processes,
products, and services all aligned to delivering what the customer wants.(Qiunn, 2002) Six Sigma
accelerates careers by delivering projects through applying a well defined set of statistical tools and
techniques of process improvement by people who are well trained in an organization.

Companies view Six Sigma in two ways: as a set of powerful tools for improving processes and
products and as an approach for improving both the process- and people-related aspects of business
performance. (Quinn, 2002)

The companies that reap the most benefits from the Six Sigma practice are the ones that use it to
develop leadership and change management skills. This companies higher the gradient of links
between people, processes, customer and culture.

CIGNA Corporation was facing a problem in 2002 because their Intensive Case Management (ICM)
program, which was developed to assign personal ICM care managers to improve patients’ ability to
engage and stay compliant with their medications and outpatient treatment recommendations. The
purpose was to reduce re-admission rates for problems such as substance abuse. This was in fact
proven unsuccessful as the rates were still high and increasing.

Then CIGNA jumped on the bandwagon of Six Sigma by appointing the vice president of Six Sigma
business excellence just two levels below the CEO on the organizational chart. The woman who
holds this title, Leslie Behnke, reports directly to a member of the corporation’s management team.
This simple fact helps to explain the rapid growth, holistic use and impressive results of Six Sigma at
Cigna. “Since beginning its quality journey in 2003, CIGNA has transformed from a company with
little or no experience in Lean Six Sigma principles and practices, to one that has embraced Six

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Sigma training and gone on to earn national recognition for its commitment to excellence in service
and quality. In 2006, a panel of judges of Lean Six Sigma experts from industry, academia and
publishing recognized CIGNA's evolution when it named CIGNA Chairman and CEO Ed Hanway
the Lean Six Sigma CEO of the Year.” (Cigna, 2010)

CIGNA Corporation provides employee benefits, including health care products and services, and
group disability, life and accident insurance. It achieves USD18B annual revenues, with 28,000
employees, and over 200 years of service. It is a service and is a highly transactional business with
no manufacturing aspects.

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Application of DMAIC in CIGNA

The DMAIC process is a Six Sigma methodology for improving an existing or established process of
service. Five steps compose this process and each step may be used in an interactive or cyclical
fashion.

Figure 1,

DMAIC Process of Six Sigma

(SixSigma.us, 2005)

There are many antecedents to the methodology such as the Cause and Effect, Fishbone or Ishikawa
theory. But this wasn’t as helpful to CIGNA as it would be time consuming.

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Figure 2

Fishbone Diagram

http://www.balancedscorecard.org/Portals/0/PDF/c-ediag.pdf

When talking about the DMAIC process of Six Sigma, many do not first talk about the leadership
roles. The Six Sigma Leader Roles for DMAIC are:

 Establish project selection criteria

 Establish and use communication process
 Approve projects – ensure linkage to strategy and key needs
 Review the entire process every 3-6 months
 Select Project Champions
 Establish reward and recognition structure
 Provide needed resources and training
 Link rewards to performance

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 Review Black Belt and Green Belt projects monthly

 Be accountable for the success of the effort

(SixSigma.us, 2005)

Now we go on to DMAIC.

Define- What is important?

A Six Sigma project starts with a very specifically defined problem. Most people are used to
defining problems broadly. For example if a company were to have a problem with their staplers
they might say “we define the problem as to the office equipment”. Such definitions won’t work in
Six Sigma. A better definition would be “the problem is defined as the staples that are being used in
the staplers are of low quality.”

Here, the “Six Sigma project team identifies a project based on business objectives and the
customers of the process and their needs and requirements. The team identifies CTQs (critical to
quality characteristics) that have the most impact on quality - separating the “vital few” from the
“trivial many”- and creates a map of the process to be improved.” (SixSigma.us, 2005)

At CIGNA, “the problem was defined as despite all the efforts that they had taken, even to the extent
of implementing the ICM program, re-admission rates for certain types of mental illness and
substance abuse were increasing.” (Daniels, 2007)

Measure- How are we doing?

Next comes the most time consuming phase of the DMAIC methodology; determining the
characteristics that influence the behavior of your process. This is the analysis of the existing system
with various measurement techniques for the defects and levels of perfection that exist. In this step,
accurate metrics have to be used to define a baseline for further improvements. It is accomplished by

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making measurements and collecting data. This helps Six Sigma team leaders understand if progress
has been achieved when process improvements are implemented.

Another big part of the Measure phase is beginning with proper metrics. Valid and reliable metrics
to monitor the progress of the project are established during the Measure phase. Cause and Effect
Matrix is the best way to track project metrics. (SixSigma.us, 2005) (Refer to Appendix 1)

At CIGNA “the measure phase was identified by the potential causes of the gap between perceived
performance and goals for readmission under the ICM program and to implement improvements and
monitor long-term results.” (Daniels, 2007)

Analyze- What is wrong?

It's not enough, however, simply to collect data. You must analyze the data using powerful
mathematics and statistical tools. When you employ those tools properly, you get a clear picture of
the variation in your process and how to limit it. This phase is extremely important in order to
determine any disparity that may exist in the goals set and the current performance levels achieved.
The understanding of the relationship between cause and effect is necessary to bring about any
improvements, if needed.

Through analysis, the team can determine the causes of the problem that needs improvement and
how to eliminate the gap between existing performance and the desired level of performance. This
involves discovering why defects are generated by identifying the key variables that are most likely
to create process variation. (SixSigma.us, 2005)

At CIGNA, “analysis revealed some interesting facts, including:

• Re-admission metrics were misleading—in fact, understated—because they did not include
subsequent admissions and treatments of problems other than those related to the original diagnosis
and treatment.

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• Identification or engagement of patients at high risk was inadequate.

• Follow-up discharge plans and use of outpatient treatment were inadequate.

• Follow-up communication was not effective (too much and too confusing).” (Daniels, 2007)

Improve- What needs to be done?

Improvements in existing systems are necessary to bring the organization towards achievement of
the organization goals. Creative development of processes and tools brings about a new lease on life
for the organization’s processes and takes them nearer to organizational objectives. Solutions must
be tested to see how they interact with other input variables. Ultimately, the team chooses the best
solutions for implementation.

“This phase is often the most fun and at the same time the most difficult. Once problem causes are
determined in the Analyze phase, the team finds creative new improvement solutions. More often
than not simple process experimentation and simulation bring the team big gains in this step.” The
team also identifies what will happen if needed improvements are not made and what will happen if
the improvements take too long.” (SixSigma.us, 2005)

At CIGNA these actions were taken which included five improvements:

1. Redefine a more comprehensive, customer focused re-admission metric.

2. Improve discharge and follow-up planning.

225%

250%
ICM Group
200%
Control Group
11%

-49% 11 -53%
Paviter Kaur A/P Autar Singh Cigna Corporation
 MANAGING BUSINESS
150%

100%

50%

0%

-50%

-100%

Total inpatient costs Inpatient admits

ICM = intensive case management

Figure 3

Quality Progress

(Daniels, 2007)

3. Provide automatic ICM enrollment to providers and patients.

4. Consolidate patient communications, and improve delivery.
5. Implement protocols, templates and training for all care coordinators, including employee
assistance programs and nonclinical services, while emphasizing the importance of a
comprehensive, holistic approach to care.

Control- How do we guarantee performance?

It might seem that the application of a solution ends the Six Sigma process, but it doesn't. The last
phase of DMAIC is the Control phase. It helps ensure that variations in the processes are rectified

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before they have a negative effect. Controls can be used to ensure sustained improvements in new
processes and operating procedures.

In the Control phase, tools are put in place to ensure that the key variables remain within the
acceptable ranges over time so that process improvement gains are maintained. The team develops a
project hand off process, reaction plans, and training materials to guarantee performance and long-
term project savings. Finally, the team identifies what the next steps are for future Six Sigma process
improvement opportunities. (SixSigma.us, 2005)

At CIGNA, “a full-year study was designed using 286 patients enrolled in the ICM program
compared with 517 patients with similar problems in a control group.” (Daniels, 2007)

Some of the improvements made by the DMAIC methodology are shown below in figures 4, 5 and
6.

Voice of the customer

Strategic

Analysis

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Six Sigma High level define,

methods and measure and analyze

tools to translate (DMA) to select

high level target area Six Sigma

business goals methods and

into specific Metrics alignment, tools to hit those

improvement quality assurance targets, driving

Operational
target areas standard operating continuous
Governance procedures, improvement and

change achievement of

management business goals

Tactical Execution
Specific

projects or
Define, measure, Design for Six Sigma
events
improve, analyze (DFSS) Kaizen

and control

(DMAIC)

DMAIC solves root cause problems to optimize existing processes. DFSS helps design and test new
products, services and technology. Kaizen is an accelerated process streamlining event.

Figure 4

Cigna’s Holistic Six Sigma Model

(Daniels, 2007)

Voice of customer
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Improve service, especially claims handling.

Improve the loading of hospital and doctor contracts data,

which has a high impact on claims accuracy and timeliness.

Strategic

Monitor data loading in more detail. Launch teams to Analysis

address specific. improvement opportunities found.

Operational
Specific projects launched. One project’s results:
Governance
• A fivefold improvement in the accuracy

of hospital data loading

• Improved on-time completion of hospital Tactical execution

contract loading from less than 70% to

more than 90% (DMAIC) (DFSS) Kaizen

• $36 million per year of financial benefit

Figure 5

Improving Claims Handling

(Daniels, 2007)

• 90% productivity gain in number of claims processed per hour

• 49% reduction in rework (claims adjustments)
• 75% reduction in held claims

Upper
Numbers control limit
of claims Average
being held Lower

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control limit
0 Weeks
• 70% reduction in processing time to add a new doctor to Cigna’s network

Figure 6

Dramatic Claims Processing

Improvements

(Daniels, 2007)

Six Sigma Organization and Implementation Roles in Cigna

Six Sigma professionals exist at every level, each with a different role to play. These are the
certification levels achieved by the employees of the organization who want to achieve the Six
Sigma level. Through continual learning and improvement of projects, these members attain
expertise in their areas. (Refer to Appendix 2)

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At the project level, there are black belts, master black belts, green belts, yellow belts and white
belts. These people conduct projects and implement improvements. Every level achieved is a
responsibility that has to be handled with due care and expertise. The belt titles are awarded in
recognition of the levels achieved by these people. The Six Sigma Belts are as follows.

Master Black Belt

The Master Black Belts (MBBs) train and coach the Black Belts and Green Belts. They function
more at the Six Sigma program level by developing key metrics and the strategic direction. They act
as an organization’s Six Sigma technologist and internal consultant. The process to achieve the Six
Sigma level is highly complex and difficult. The proper utilization of these members is necessary.
The perfect handling of some of the most difficult situations in the organization and disciplined
improvements efforts is an important responsibility.

Black Belt

The Black Belt’s lead problem-solving projects. Trains and coaches project teams. Their training
also includes an in-depth study of different statistical tools and methodologies, which are highly
complex in nature. They would normally lead the Six Sigma team in a particular area. The most
important part of their training is the successful completion of a Six Sigma project. (Refer to
Appendix 3)

Green Belt

The green belts assist with data collection and analysis for Black Belt projects. They also lead Green
Belt projects or teams. The training includes the study of the basics of Six Sigma and the essential
elements of Six Sigma statistical tools. These members will be working on smaller project in their
areas, under the guidance of the Six Sigma Black Belts.

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Yellow Belt

The lowest level of Six Sigma expertise; applies to a professional who has a basic working
knowledge and who may manage smaller process improvement projects, but who does not function
as a project or team leader. The Yellow Belts participate as a project team member. They review
process improvements that support the project.

White Belt

White Belts can work on local problem-solving teams that support overall projects, but may not be
part of a Six Sigma project team. They understand basic Six Sigma concepts from an awareness
perspective.

Every project needs organizational support. Six Sigma executives and champions set the direction
for selecting and deploying projects and company matters. At a high level they make sure that
projects succeed, add value and fit within the organizational plan.

Champions

Champions take responsibility for Six Sigma implementation across the organization in an integrated
manner. The Executive Leadership draws them from upper management. Champions also act as
mentors to Black Belts. They translate the company’s vision, mission, goals and metrics to create an
organizational deployment plan and identify individual projects. They also identify resources and
remove roadblocks.

Executives

Executives include the CEO and other members of top management. They are responsible for setting
up a vision for Six Sigma implementation. They also empower the other role holders with the
freedom and resources to explore new ideas for breakthrough improvements. They provide overall

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alignment by establishing the strategic focus of the Six Sigma program within the context of the
organization’s culture and vision.

There's a lot of Six Sigma momentum at CIGNA. They now have 165 trained Black and 250 trained
Green Belts, as well as their own small cadre of Master Black Belts. Thousands of CIGNA
employees have been through Yellow Belt training and awareness sessions. Most of their senior
executives, including our CEO Ed Hanway, have completed Blue Belt training for champions.
Notably, Cigna has blue belt training, in which executives and managers learn the basics of Six
Sigma, lean, kaizen and the basics of design for Six Sigma (DFSS). Hanway was the first graduate of
the blue belt course. As a result, they have:

 “Completed hundreds of process improvement projects

 Held numerous, successful "Kaizen" events in several departments, quickly finding and
eliminating wastes in such areas as claims processing, doctor on-boarding, life and disability
insurance, sales and implementation, etc.
 Successfully tackled large, complex cross-functional issues, including some directly involving
major clients and/or suppliers
 Kicked off the use of Design for Six Sigma on selected key new development projects”
(Cigna, 2010)

After the implementation of these belts and the employees successfully been train with Six Sigma
methodologies, the results were as following:

• “A 53% decrease in re-admissions

• Savings of about $3,000 per patient and the previously mentioned 49% decrease in total in-
patient care costs
• A 14.9% improvement in the rate of patients taking medications as prescribed

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Along with the impressive cost savings in outpatient care, Cigna saw even more significant
savings for patients in the ICM inpatient care program:

• The total number of admissions in the ICM group decreased 53% vs. increasing 11% in the
control group.
• The total cost for inpatient care decreased by 49% in the ICM group vs. an increase of 225%
in the control group” (see figure 6). (Daniels, 2007)

Conclusion

As you can see, the results of implementing Six Sigma have been totally remarkable for CIGNA
Corporation. It has turned the organization around.

“The Six Sigma initiative at CIGNA has become a corporate-wide driving force for helping CIGNA
achieve its business goals and mission to improve the health, well-being, and security of the people

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we serve. Its wide array of tools has proven effective in not only improving existing processes and
designing better new processes and systems, but also in helping CIGNA tackle large, complex,
cross-functional challenges, including those directly involving clients and suppliers.” (Cigna, 2010)

“Our progress has been remarkable, and has been recognized externally. In addition to being a
featured speaker at numerous national quality conferences, CIGNA also recently won two top
awards from the Northeast Division of the American Society for Quality (ASQ). And in 2006, our
Ed Hanway, was recently named “Lean/Six Sigma CEO of the Year,” by the World Conference of
Business Forums (WCBF). During a recent national conference at which Ed was a keynote speaker,
he said, “Blending the principles of Six Sigma with a true consumerist approach to health care—an
approach in which individuals can make the right health choices for themselves and their families—
is a powerful and promising way to improve health care in America. And that’s fundamental to our
strength and vitality as a global competitor.”” (Cigna, 2010)

References

Books

Brussee, W., 2004, Statistics for Six Sigma Made Easy, McGraw-Hill, Penn Plaza, New York.

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Dailey, K., 2005, The Kaizen Pocket Handbook, DW Publishing Co., USA

George, M., Price, M., Rowlands, D., Maxey, J., 2005, The Lean Six Sigma Pocket Toolbook,
McGraw-Hill, USA.

Pyzdek, T., 2003, The Six Sigma Handbook – Revised and Expanded, McGraw-Hill, Penn Plaza,
New York.

Tapping, D., 2006, The New Lean Pocket Guide XL, MCS Media Inc., USA.

Online

ASQ, 2010, Belts, Executives and Champions – What Does It All Mean?, Accessed on 23rd March
2010,

http://www.asq.org/learn-about-quality/six-sigma/overview/belts-executives-champions.html

Cigna, 2010, Cigna and Six Sigma, Accessed on 11th March 2010,

http://www.cigna.com/about_us/sixSigma.html

Daniels, S., 2007, Quality Progress, Accessed on 22nd March 2010,

www.asq.org/quality-progress/2007/05/six-sigma/six-sigma-at-cigna.pdf

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Harris, W., 2010, Introduction to how Six Sigma Works, Accessed on 14th March 2010,

http://money.howstuffworks.com/six-sigma8.htm

Marx, M., 2005, Cigna Six Sigma Business Excellence, Accessed on 25th March, 2010

http://www.sixsigmacompanies.com/archive/cigna_six_sigma_business_excellence.html

Quinn, D, 2002, What is Six Sigma, Accessed on 13th March 2010,

http://media.wiley.com/product_data/excerpt/40/04712512/0471251240.pdf

SixSigma.us, 2005, DMAIC Six Sigma, Accessed on 17th March 2010,

http://www.6sigma.us/dmaic-step-zero-leadership.php

Six Sigma Training Assistant, 2008, The DMAIC Model in Six Sigma, Accessed on 14th March,
2010,

http://www.sixsigmaonline.org/six-sigma-training-certification-information/articles/the-dmaic-
model-in-six-sigma.html

Six Sigma Training Assistant, 2008, Six Sigma Belt Levels – Striving for Perfection, Accessed on
14th March, 2010,

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http://www.sixsigmaonline.org/six-sigma-training-certification-information/articles/six-sigma-belt-
levels-%E2%80%93-striving-for-perfection.html

Smith, R., Dr. T. Rhines, Crowley, R., The Application of Six Sigma, Accessed on 15th March 2010,

http://www.naturalproductsinsider.com/articles/2006/04/the-application-of-six-sigma.aspx

SurveyMethods, 2006, Six Sigma Belts, Accessed on 15th March 2010,

http://www.surveymethods.com/glossary/Six_Sigma_Belts.aspx

Presentation

Behnke, L., 2005, A 3-Tier Approach for Using DFSS to Pull and Govern Six Sigma Projects in a
Transactional Environment, WCBF Design for Six Sigma Conference.

Appendices

Appendix 1

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Cause and Effect Matrix

www.spreadsheetzone.com/template...3Fi%3D98

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Appendix 2

Six Sigma Organization Chart

cll.emory.edu/sixsigma/industry/

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Appendix 3

Black Belt

www.kataaro.com/Departments/Imag...gma.aspx

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