The Continuous Improvement Blog

Lean diagnostic drives insurance claims process transformation: A case study

Written by Colin McArdle on 22 Nov 2017

lean_diagnostic.jpgIf you’re in charge of your company’s operations, you may already know the nature of your problems. Perhaps you even know what needs to change. But if you don’t, or are seeking clarity, a Lean Diagnostic assessment could help.

A Lean Diagnostic assessment reveals a snapshot of an organisation’s current state of processes. It provides a useful platform for identifying waste or non-value adding activities, strengths and weaknesses, and improvement opportunities.

And if you are considering implementing Lean in your organisation, a Lean Diagnostic assessment will provide you with an insight into what can be achieved.

In this blog post, we demonstrate the value of a Lean Diagnostic assessment by sharing a recent case study.

Objectives and approach

A UK based insurance claims processing company wanted to reduce the cost of processing claims, improve quality and ontime completion to meet contractual KPIs.

Working closely alongside key members of the claims processing team Kaizen Kulture's Lean Consultants conducted a Lean Diagnostic assessment of the claims processes.

A sample snapshot of processing activities was captured, and Lean tools and techniques were applied to analyse the process.

The objectives of the analysis were to:

  • Understand the process characteristics impacting claim flow
  • Understand the demand and work allocation
  • Understand the effectiveness of interactions between Claimants and Assessors

From various consultations, process observations and interviews, a hypothesis was formulated: “Using Lean process analysis, Lean process design enhanced by Automation will improve KPIs and productivity.”

Data was collected by observing Assessors and Team Leaders carrying out their normal daily routine in order to be able to prove or disprove the hypotheses.

A Value Stream Map was created to understand the current as is process phase from Claimant, through systems, to claim closure. Process design characteristics such as work scheduling, productivity, work flow, quality, activity cycle times, skills assessment and organisation structure were used to identify improvement opportunities.

Key findings

The Lean Diagnostic Assessment highlighted a number of opportunities to simplify, standardise and automate processes to reduce processing time, increase productivity, and improve quality.

Here we summarise the five main problems revealed from the diagnostic and the potential solutions recommended for solving them.

Problem 1: Variations in work allocation and prioritisation procedures. Team leaders were issuing work by email on spreadsheets, and Assessors were working the list in line with their own prioritisation rules. 

The solution: Introduce a standardised way to allocate work using a system driven for one-piece work flow.

Problem 2: Low productivity due to process design. Work was being distributed into separate regional teams and further fragmented to individuals and smaller groups. There was £229K of unallocated work due to staff absence in one team when other team members and other claims teams had the capacity to complete it. Not sharing capacity was contributing to failing KPIs.

The solution: Change from dispersed, fragmented team structures to large work cells designed for one-piece flow with activities routed based on exceptions, volumes, and work content.

Problem 3: Limited workplace performance measures and metrics resulting in Assessors and teams being self-driven and operating at their preferred output levels.

The solution: Create accountability and ownership by monitoring processes with Lean measures. Some of the Lean measures recommended were Cycle Time (time to complete a process step), Process Lead Time (overall time from start to finish) and Rolled Throughput Yield (right first time), as well as other KPIs.

Problem 4: Poor retention rates and low morale amongst Assessors. Staff had the desire and capabilities to acquire new skills but felt constrained due to being permanently allocated to specific claim types.

The solution: Develop work rotation schedules to provide a mix of work and a skills development path. Increase skills and capabilities so that staff can be deployed to maintain and improve productivity levels during peak periods and staff absence.

Problem 5: Processes were not error proofed and required high occurrences of human intervention. With high volumes of mundane activities human attentions spans wane leading to lower than desired quality levels and failure to meet KPIs.  

The solution: Error proof and automate Claimant data and information entry. Use decision based robotic rules system to automatically issue claims in order of defined policies for prioritisation and work cell routing. Automate approval of claims that meet requirements. Automate closure when an Assessor confirms a claim is ok to process.

Conclusion and next steps

Based on the findings the hypothesis was accepted.

The impact on KPIs were deemed significant with an expected 20-30% improvement in productivity. Additional benefits included reduced claim processing time, reduced errors and increased quality levels.

The following recommendations were made:

  • A 12 week Lean Pilot Plan should be implemented to determine current state performance, design new ways of working and test solutions before wider implementation;
  • During the pilot, Automation opportunities should be identified and where practical tested to evidence their impact.

 

With a Lean Diagnostic assessment, you can evaluate exactly how your company is performing. You'll reveal many opportunities for improving efficiencies in your business, and how far away you are from being ready to implement Lean.

At Kaizen Kulture, we are regularly being asked to help organisations understand the state of processes in their organisation, and we work closely with key individuals in the organisation to run the Lean Diagnostic. If you are interested to learn more, set up a consultation here.

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Topics: Business Improvement

Colin McArdle

Written by Colin McArdle

Colin McArdle, the Founder and Managing Director of Kaizen Kulture is a Lean and Six Sigma Master Black Belt who has over 30 years industry experience. Kaizen Kulture's mission is to be true to the ethos of continuous improvement.