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Lean Six Sigma in Hospitals

Although Lean Six Sigma has its origins in manufacturing, many services effectively use it. One such example is the Oncology Department at UC San Diego Health.

The Oncology Department applied a variety of Lean Six Sigma tools to produce $3.73 million in additional annual revenue.

The main source of waste was identified to be the way that several cancer drugs were used in dosing. These drugs were placed in a vial by the manufacturer with a single use dosage concept. In many cases, not all of the contents of the vial were used, as dosage is adjusted to the size of the patient. Many of these drugs have a limited shelf life, and generally it’s not practical to use the vial for another patient. Additionally, reuse brings concerns about infection.

As a result of having to discard partially-used vials, the Centers for Medicare and Medicaid Services agreed to reimburse care providers for a portion of the waste if properly documented. Unfortunately, UCSD was missing much of the documentation.

By applying Lean Six Sigma tools, the department reduced waste by changing the process, adding additional staff, and adding new technology. The result was a 46% increase in documentation of the reimbursable cancer drugs, that resulted in the reimbursement of $3.73 million per year.

Video Spotlight:  

This post is based on the iSix Sigma article, How Six Sigma and Lean Tools Helped Recover Nearly 4 Million Dollars in Annual Revenue, by Lori Kinney, April 1, 2023, and the YouTube video in the Spotlight.  Image source: Katrina Wittkamp/Getty Images

Discussion Questions:

1.  What were some of the lean six sigma techniques used at UCSD?

Guidance: Cause-and-effect diagrams, Kaizen events, a focus on identifying 8 wastes, and using 5 Whys.  Although not directly named in the article, it appears a Pareto chart was used as well.  Students could discuss what other techniques may have been used.

2. Why would drug manufacturers produce a “one size fits all” product?

Guidance: The most logical explanation is that by limiting the variety to one size, efficiencies are gained in the production process, in inventory management, and distribution. Creating vials of different sizes would potentially add costs to the overall supply chain, and it would be cheaper to produce one size, and incur the waste. However, pricing and availability of drugs needs to be considered in this analysis.

3. From a societal view, is wasting cancer drugs acceptable?

Guidance: Obviously, the answer is that wasting lifesaving drugs is bad. Economically, producing one size vials results in enough cost savings to produce more of the drug. However, one concern is the disposal of the unused portion of the dose. Although beneficial to cancer patients, this medication could be hazardous to others. So, disposal may incur additional costs that should be considered.

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