Irving's Healthy Budget

Case_23_City_of_Irving.pdf

Problem
Irving, Texas is a city of approximately 200,000 residents located in the Dallas/Fort Worth Metroplex. It operates on a yearly budget of $350 million and has 2,180 employees. In 2006/2007, the city wanted to find breakthrough improvements in the services it provided to residents, visitors and businesses. To achieve these goals, the city decided to employ Lean Six Sigma (LSS) methodology. Irving was the first city in Texas to implement LSS citywide.

Areas in which improvements were needed included: commercial permit issuance, the police hiring process, animal services processes, satisfying legal service requests, water disconnects, sidewalk repairs and, most recently, purchasing healthcare services for city employees and their families.

Approach
The city embarked on identifying specific projects within these service areas. All projects were outcome-oriented. Teams of employees were formed to work on the projects, identify improvements and implement solutions. This is a typical LSS execution approach.

Regarding healthcare purchasing, a different approach to using LSS has been used. First, the city competitively selected an outside firm to perform health plan administrative services. The major components of the approach this firm recommended included use of an Onsite Health Coach and high efficiency networks of primary care doctors and specialists. The onsite coach works directly and proactively with healthy, but at-risk employees, who have potential to progressively become catastrophic claimants. These individuals are advised of their recommended treatments and the wellness support services available to them. The onsite coach also serves as a liaison between employees and their doctors.

The use of high efficiency networks of primary care doctors and specialists represents a paradigm shift from the premise that greater choice of doctors and hospitals in close proximity to employees is good, to the fact that use of only established networks of doctors who use advanced technology and best practices to achieve desirable outcomes at lower costs is better. The city now understands that expansion and capital expenditure to increase choice is actually driving healthcare costs up. The primary care network has been a leader in digital medical records since 2000. Using these records provides better communication between the primary care doctors and specialists to reduce duplicate tests and services. Using this network enables employees to share the savings from the efficient delivery of care by the doctors involved. (1)

Results
The LSS-delivered results have been impressive. In aggregate, savings on the order of $18 million and 26,000 man-hours have been achieved since October 2007. (2)  By 2010, Irving ranked as the third most affordable city in the Dallas/Fort Worth area in terms of total municipal cost of service. Irving’s costs are fully 29% lower than Fort Worth’s and 24% lower than those of Dallas. (3)  In recognition of Irving’s financial efficiency and improved services resulting from LSS, City Manager Tommy Gonzalez was recognized as one of the top minority business leaders in North Texas by the Dallas Business Journal in March 2010. He was the only representative of a city government to earn this elite recognition. (4)

For projects that have been completed, the following specific improvements have been achieved:
** Commercial permit review time has been reduced by 76% (15.7 days to 3.7).
** The police hiring rate has increased by 105% and 25% more applicants are being processed.
** For animal service processes, shelter processing time has been decreased by 50% to 66%; saving 1,120 hours annually. The veterinary process has also been decreased by 50% to 66%; saving 520 hours annually.
** Legal services requests have experienced a 72% reduction in cycle time (18.5 days to five) and a reduction in the number of steps involved (23 to 19)
** For water disconnects, delinquencies have been reduced by 15% and cut-offs by 25%.
** Sidewalk repair cycle times have been reduced from an average of 14 weeks to less than six weeks. (5)
For the healthcare purchasing improvement project (which was started in 2010), implementation is scheduled for mid-April 2011. Expected results include annual savings of $880,000 which will put Irving’s medical costs 4.65% below the trend in the Dallas/Fort Worth market.  (6)

1. • City of Irving applies Six Sigma to Improve Healthcare Efficiency and Cost Effectiveness
   • Lean Thinking
   • Bret Starr, Assistant Chief Financial Officer, City of Irving, Texas, FY2010-11 Proposed Budget
   • http://www.irvingchamber.info/main/2010/03/city-manager-tommy-gonzalez
   • Lean Thinking
   • City of Irving applies Six Sigma to Improve Healthcare Efficiency and Cost Effectiveness