1© 2002 Six Sigma Academy

Define

• Point one• Point two• Point three

Workman’s Compensation

2© 2002 Six Sigma Academy

Define

• Point one• Point two• Point three

Currently Worker’s Compensation Reserves are projected to be $2 Million for the Year 2000.

Problem Statement

ObjectiveReduce Worker’s Compensation Reserves

Critical to Quality – CTQFast, appropriate medical treatment to affected employee

Current/Goal/Stretch Goal

21.5 DPMO – Current (Clinical visits) 23.2 DPMO - Current (Phy. Therapy) 247 DPMO – Current (L.T. Claims) 6.45 DPMO - Goal (Clinical visits) 6.96 DPMO - Goal (Phy. Therapy) 74 DPMO – Goal (L.T. Claims) 5.3 DPMO – Final (Clinical Visits) 5.3 DPMO – Final (Phy. Therapy) 102 DPMO – Final (L.T. Claims)

Benefits Achieved

$712,000 Savings in Worker’s compensation reserves75%, 77% and 59% improvement in DPMO respectively

3© 2002 Six Sigma Academy

Define

• Point one• Point two• Point three

Metrics

Critical to Quality - CTQFast, appropriate medical treatment to affected employee

DPMO – Clinical Visits DPMO – Physical Therapy DPMO – Lost Time Claims

Year Claim Count Incurred

• 2000 191 $ 470,195

• 1999 307$1,195,924

• 1998 276 $ 782,013

• 1997 224 $ 546,730

• 1996 145 $ 123,416

• 1995 173 $ 253,066

Reported claims have been increasing at an average rate of 33 per year from 1995 through 1999.

4© 2002 Six Sigma Academy

Define

• Point one• Point two• Point three

Claim Procedure

Reports are receivedby Third Party

Administrator (TPA)

TPA determines what type ofinjury and if any loss time will

be involved.

Major Injury(Surgery)

Minor Injury No Loss Time Loss Time

QuestionableInjury

TPA paysmedicalpayment

TPA estimates the ClaimAmount using themaximum PPD

percentage.

A settlement isdetermined withthe employee's

Lawyer andLear's Lawyer

Case Closedwithin 90 Days

A settlement isdetermined by

Lear's Lawyer &TPA

Employee'sLawyer Involved

No Yes

Travelers sendsaletter to the

employee andexplains why the

claim is beingdenied

TPA to Investigateand determine if Lear

is responsible

LearResponsible

The employeedecides whether ornot to contest the

case.

The case isclosed

No

The case isdiscussed

among lawyers

Yes

TPA’s Claim

Procedure

PROCESS MAPPING•Reserve setting procedure identified as as one area for improvement

5© 2002 Six Sigma Academy

SCORING REPORTDATE: 04/20/2000

Attribute Legend5 (used in computations) NAME: Lear Corporation

1 A PRODUCT: Workman's Compensation All operators

2 B BUSINESS: agree within and All Operators

between each agree with

Other standard

Known Population Y/N Y/NSample # Attribute Try #1 Try #2 Try #1 Try #2 Try #1 Try #2 Agree Agree

1 A A A A A B B N N2 A A A B B A A N N3 B B B B B B B Y Y4 B B B B B B B Y Y5 A A A A A A A Y Y6 B B B B B B B Y Y7 A A A A A A A Y Y8 B B B B B B B Y Y9 B B B B B B B Y Y10 B B B B B B B Y Y11 B B B B B B B Y Y12 A A A A A A A Y Y13 A A A A A A A Y Y14 B B B B B B B Y Y15 A A A A A A A Y Y16 A A A A A A A Y Y17 B B B B B B B Y Y18 B B B B B B B Y Y19 A A A A A A A Y Y20 A A A A A A A Y Y21 B B B B B B B Y Y22 B B B B B B B Y Y23 B B B A A B B N N24 B B B B B B B Y Y25 B B B B B B B Y Y26 A A A A A A A Y Y27 A A A A A A A Y Y28 A A A A A A A Y Y29 B B B B B B B Y Y30 B B B B B B B Y Y

% APPRAISER SCORE(1) -> 100.00% 100.00% 100.00%

% SCORE VS. ATTRIBUTE(2) -> 100.00% 93.33% 96.67%

SCREEN % EFFECTIVE SCORE(3) -> 90.00%

SCREEN % EFFECTIVE SCORE vs. ATTRIBUTE (4) -> 90.00%

Operator #1 Operator #2 Operator #3

Attribute Gage R & R

Pass!Pass!

MSA•Measurement system passed with 90% score

6© 2002 Six Sigma Academy

1 2 3 4 5 6 7 8 9

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cal

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om

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Total

Process Step Process Input

1Case Management 8 9 9 8 8 9 9 9 9 702

2Nurse's Evaluation 7 9 9 2 8 9 9 9 2 571

3Physician's Evaluation 9 2 9 2 6 9 9 9 2 506

4Employee's Accident Report 2 2 2 9 3 3 2 2 2 250

5Workman's Comp Report 2 2 6 4 3 3 3 2 2 246

6Accident Investigative Report

2 2 2 9 2 2 2 2 2 232

Total 240

234

333

340

270

315

340

264

171

Cause & Effect Matrix

Areas of Focus!Areas of Focus!

C&E MATRIX•Identified potential areas for improvement

7© 2002 Six Sigma Academy

Lost Time Claims

Clinical Visits

Physical Therapy Visits

MonthNumber of

UnitsOpportunities

per UnitNumber of

DefectsTotal

Opportunities DPU DPO DPMO Z LT

MonthNumber of

UnitsOpportunities

per UnitNumber of

DefectsTotal

Opportunities DPU DPO DPMO Z LT

Aug-99 - Mar-00 220 4428 23.25 974050 0.1057 0.0000234 23.438 4.235

Aug-99 - Mar-00 220 4428 21 974050 0.0955 0.0000215 21.452 4.167Month

Number of Units

Opportunities per Unit

Number of Defects

Total Opportunities DPU DPO DPMO Z LT

Jan-00 - Mar-00 220 4547 1.25 1000267 0.006 0.00000 1.12289 5.503

Initial Capability AnalysisBASELINE CAPABILITY

8© 2002 Six Sigma Academy

Among Seats Built vs.

Clinical Visits, PT Visits, Lost Days, & OSHA Recordable Injuries

• Correlation of Seats Built and Lost Time Claim P-Value = 0.332

• Correlation of Seats Built and Clinical Visits P-Value = 0.125

• Correlation of Seats Built and PT Visits P-Value = 0.122

Correlation Studies

No Statistical Significance!

P-values all greater than 0.05

Correlation studies used to determineif linear relationships exist between factors (X’s) and response (Y)

9© 2002 Six Sigma Academy

FridayThursdayWednesdayTuesdayMonday

1.5

1.0

0.5

0.0

Day

Tota

l In

juri

es

1

2

Month by Num

Shift

Multi-Vari for Total Injuries by: Shift - Day - Month

Thursday’s and Friday’s had an increase in injuries!

Multi-vari studies used to look for differences between factors (x’s) andresponse (Y)

10© 2002 Six Sigma Academy

• In-service was initiated to show supervisors the proper procedure on how to complete a supervisor’s report including an investigation report.

• Accommodating an employee’s restrictions. The number of loss time work days directly effects claim dollar amount.

• Employees referred to Barnes Care, by the nurse, must be approved by Human Resources.

• Case Management - Daily communication concerning cases, course of treatment, surveillance/investigation, and review of medical evidence to determine the validity of the claim among the Human Resources, Plant Nurse, Physicians, TPA, and Physical Therapy.

• Monthly meetings are scheduled to discuss and review open claims.

Process Improvements

11© 2002 Six Sigma Academy

April00 - Sept00Aug99 - March00

82

72

62

52

42

Num

ber of

BC V

isits

Old Process

New Process

Main Effects for

Clinical Visits by Month Two-sample T

Month 1 N Mean

A 8 82.9

B 6 44.0

Difference = mu (A) - mu (B)

Estimate for difference: 38.9

T-Test of difference = 0 (vs not =): T-Value = 3.46

P-Value = 0.011 DF = 7

Ho = There is no difference between Aug-March & April-Sept

Ha = There is a difference between Aug-March & April-Sept

2 Sample T-TestClinical Visits

REJECT Ho

Hypothesis test shows statistically significantdifference (improvement) between old and new process

12© 2002 Six Sigma Academy

April00 - Sept00Aug99 - March00

85

75

65

55

Num

ber of

Phy

sica

l The

rapy

Vis

its

Old Process

New Process

Main Effects for

Physical Therapy Visits by Month Two-sample TMonth N MeanA 8 84.6B 6 55.2

Difference = mu (A) - mu (B)Estimate for difference: 29.5T-Test of difference = 0 (vs not =): T-Value = 2.13

P-Value = 0.047 DF = 11

Ho = There is no difference between Aug-March & April-SeptHa = There is a difference between Aug-March & April-Sept

2 Sample T-TestPhysical Therapy Visits

REJECT Ho

Hypothesis test shows statistically significantdifference (improvement) between old and new process

13© 2002 Six Sigma Academy

Control Plan put in place consisting of following: Nurse is responsible for case management, on-site care, scheduling therapy, advising and tracking restrictions, analyzing jobs, and meeting with the safety committees. Also, initiated internal care by treating minor injuries & illnesses resulting in a reduction of outside medical visits and costs. Set Permanent Partial Reserves at the mean percentage opposed to the maximum percentage. Worker’s Compensation Administrator reviews all reserves set for each reported claim. Monthly meetings are scheduled with our Worker’s Compensation Specialist & Worker’s Compensation Health Care Provider to discuss further tests, specialist referrals, and case closure of reported claims. An EDI Programming System has been installed to assist the nurse in submitting claims immediately, tracking injuries, review worker’s compensation claims, and increases efficiency and productivity. Carma System is being installed to allow access to all the information in the TPA’s system. Company will be able to view the reserves and adjustments made for each claim, and all claims an employee has or has had.