Coolies no more

Once dismissed as white-collar coolies because ostensibly they did low-end work, Indian back office workers are improving processes the world over by employing Lean and Six Sigma.

The Miami Children’s Hospital (MCH) is a 289-bed hospital in Florida, the largest teaching hospital in southeast US with more than 650 physicians and 2,000 employees, and 40 paediatric specialities and sub-specialities, among them the state’s only free-standing paediatric trauma centre.

Sometime last year, the hospital found that its rather exacting standards were slipping somewhat. The “wait time”, the time spent by a patient from the moment he walked into the hospital to when treatment started, had gone up to two hours.

In the emergency room (ER), especially, where the speed of care can often make the difference between life and death, such a long wait time needed to be pared down. Incidentally, the wait time is an important parameter in the US and rigorously monitored by the government as a measure of the quality of healthcare hospitals offered to citizens.

So, earlier this year, MCH brought in Genpact to help optimise processes in its ER. The hospital was on the verge of making a large investment in information technology, but realised that unless the processes were improved first, digitisation would not achieve much.

“The brief,” says Kevin Hammeran, the chief operating officer at MCH, of this pilot project, which was undertaken pro bono by Genpact, “was to do a thorough analysis of the workflow in the ER, improve patient interface and cut down on the wait time and...ultimately, create resources that we can plough back into the system.”

Genpact, which began life in 1997 as GE Capital’s BPO arm and became independent three years ago, took recourse to Lean, a process management philosophy traditionally associated with reducing waste and improving workflow in the manufacturing sector. It broke down the entire workflow in the ER to 120 key processes and developed a value stream map. This meant charting out, from the patient’s perspective, how work moves.

“A patient with a fracture would come into the ER, wait half an hour for the nurse to put his arm on a splint. She’d send him to a paediatrician, who would call for an X-ray and then call in the radiologist before finally operating. There was a lot of unnecessary waste, for example, with the nurse waiting for the doctor, and a lot of paper-work,” explains Hammerman.

Analysis made, Genpact suggested 13 improvement ideas to improve the workflow in the ER. These included pre-registration triage — sorting of cases according to the need for, or likelihood of, benefit from speedy care; so a cardiac arrest gets precedence over an arm fracture, and so on — and new triage nurse staffing schedule. Genpact also proposed a redesign of the patient’s case sheet and the ER space itself to improve visual management and reduce clutter by throwing out things that hadn’t been used for years, as also “point-of-care” kits.

The result was a 10 per cent cut in the running costs in the ER and a 75 per cent reduction in the wait time. Not surprisingly, MCH has extended its contract with Genpact to make similar interventions in the rest of the hospital. Hammeran estimates that the cost saved with the changes in place will already be about $1 million a year. In the years ahead, he expects to save $10 million annually.

The next frontier
S Bala, Genpact’s senior vice-president, re-engineering, who led the project at MCH, explains that a number of American hospitals are moving towards digitising their medical records and since they operate on wafer-thin margins, cleaning up the processes makes a lot of sense. The company, which has built a team of 100 personnel for its process optimisation practice over the last three years, has done similar projects elsewhere, most notably with a big investment bank in New York whose name it wouldn’t divulge.

But…an Indian company working to maximise processes in a US hospital? Aren’t these a bunch of dummies who are paid to be shouted at by incensed credit card holders, or some such thing? It’s time for the cynics to wake up and smell the coffee. But the bigger picture is whether process optimisation, using Lean or Six Sigma principles, is the next chapter in India’s success story of business process outsourcing.

Hammeran is naturally happy with the results. Culturally speaking, he asserts, that Genpact’s being primarily Indian made no difference at all. “The Lean techniques of trial and error of taking a step, doing a review of it and only then going on to the next one is the most scientific, and culturally the most appropriate,” he says.

He points out to the way the initiative took care, at each step, not to make huge demands on the already crammed schedules of the ER staff, and how the MCH team was trained in the Lean Basics in Healthcare to implement and sustain the improvements.

According to Viral Thakker, director, information technology advisory, at KPMG, “BPOs are no longer vendors, but drive processes. Labour arbitrage is no longer the sole advantage offered by BPOs who also need to move up the value chain. Typically, more deals lately incentivise some amount of productivity gain, year on year. Earlier some amount of sharing of gains was optional, now it has almost become a contractual requirement.”

According to data recently released by TPI, the global data sourcing firm, a major factor contributing to the record increase in the value of outsourcing contracts to Indian IT firms in the first half of 2007-08 — 24 per cent in the total value and 36 per cent in the annualised value — has a lot to do with the high number of such new scope contracts which factor in restructuring and adjustments of existing contracts.

“The entire business model of the BPO industry is structured on measuring changes,” says Thakker. “Hence you have, for the first time, real data on how much time each process takes, and how much it costs. Besides, BPOs are getting more and more efficient themselves, especially given the downturn in the global economy. To a certain extent they are only using the lessons that they have tried out themselves.”

In much the same vein, another recent document by Gartner identifies “process excellence” as one of the factors behind the huge gains that TCS, Infosys and Wipro have made since 2004 — along with other factors like superior human resource management and high quality at low cost. “To achieve process excellence, the ‘India-3’ (Gartner’s name for the three companies) providers have invested heavily to establish frameworks and have aggressively marketed these capabilities as evidence of being able to deliver in a consistent, predictable manner.”

And, indeed, the Infosyses and TCSes have all jumped into the process optimisation fray, says Thakker, with most of the projects being in the automotive sector, as also in hospitality, hospitals and aviation.

TCS, for instance, offers clients something called “IT-enabled Lean business solutions”, which is a 75-consultants-strong practice that specialises in sectors like industrial machinery, aerospace and chemicals, with others like metals, pharmaceuticals and high technology fast catching up.

“We have evolved a Lean Tool Kit,” says Milind Lakkad, vice-president and head, manufacturing, TCS. “We extensively leverage that to drive the desired benefits. The optimisation process itself leads to a number of sub-projects which again require business-process-centric interventions. Only after this can the IT enablement and digitisation commence. There is an increasing demand from clients to embrace Lean solution frameworks.”

What about clients? Lakkad will not divulge the names, given confidentiality provisions, but he does let on that “for a large global automotive player from North America, we have facilitated a supply chain transformation exercise leveraging the Lean enablement principles. It is now in the process of IT enablement.”