When faced with the news that drug manufacturers of cancer medication were responsible for causing a massive amount of financial waste, the oncology department at UCSD utilized Six Sigma and Lean tools like a cause-and-effect diagram, a Kaizen Event, the 5 Whys, and others in order to improve scanning processes that could help in recovering the department’s share of lost revenue.

The Oncology Department at UCSD Had a Problem

In March of 2016, The New York Times published a bombshell report of a study that showed that private health insurers along with the Medicare program were participating in egregious waste. In the referenced study, researchers who were part of the Memorial Sloan Kettering Cancer Center found that 3 billion dollars of waste every year due to vials distributed by drug manufacturers that contained more medication than was necessary for most patients.

The waste would come from the medications administered to meet the proper needs of the patient and then having to throw out the excess due to health and safety concerns. Drug manufacturers were engaging in a one-size-fits-all approach to these medications, which led to overcharging since a small and elderly woman is not going to take the same amount as someone that is six feet tall and two hundred pounds.

The study found that the discarded waste generated by the top 20 highest-selling medications used in cancer treatment was then billed to insurance companies by the drug manufacturers for a total of $1.8 billion on an annual basis. About $1 billion in markups from the drug companies to hospitals and doctors were also part of the total waste.

The potential outcomes of this waste include patients having to contend with higher treatment costs as well as a possible shortage of necessary medications. Healthcare providers could also face major financial burdens when providing medications.

In light of these revelations, the Centers of Medicare & Medicaid Services agreed to reimburse care providers for a portion of the waste.

The medical center at UC San Diego was slated for some of this reimbursement, provided it could furnish the necessary documentation. Unfortunately, the medical center did not yet have processes running for capturing the relevant data when dispensing the medications. New technology was installed to compile the necessary information after the fact.

While all this was happening, Lily Angelocci was a quality improvement specialist at UCSD. Looking at the oncology department of the medical facility, Angelocci decided to embark on a year-long analysis of operations to see where money could be saved for improving patient care.

Angelocci Utilized Several Six Sigma Tools to Improve Processes and Recover Revenue

When analyzing the situation, Angelocci noted that the staff was extremely frustrated and exhausted. With no process in place, the staff was overworking and wasting expensive medication and could do nothing about it. Angelocci also discovered that not all of the drugs met the qualification criteria for reimbursement. With this reality in mind, she and her team identified the top 23 oncology medications that were the most costly. Of these 23, 8 of them were responsible for 80% of the waste.

In surveying the staff and how they managed things without a proper process in place, Angelocci made some interesting discoveries. She found an exhausted staff that was running back and forth between the IV room and the dispensing area. As far as the needed information, not everyone was complying with recording it, and there was a lack of consistency as to what information was actually captured.

Equipment problems were also an issue. The scanners often did not work properly, which significantly slowed down the process. When they did work, some of the information scanned correctly, while some did not scan at all. Once scanned, there were inconsistencies as to whether the information would import.

Angelocci realized that if they could at least successfully bill for the 8 medications that were creating 80% of the waste and make key improvements to the current process, the savings could be significant. It was time for Angelocci to put Six Sigma and Lean tools to use.

To make improvements, the team began by working with a cause-and-effect diagram, developed from information pulled from the survey. Angelocci led a Kaizen Event and during this event, the staff put particular focus on the 5 Whys and strategies to eliminate as many of the 8 Wastes as possible.

Angelocci thought a cause-and-effect diagram would be helpful because this type of diagram organizes the possible causes of a problem by displaying them graphically. It is a highly functional tool that helps break down the root causes of an issue.

A Kaizen Event is a collaborative, 3-5 day workshop that serves to make improvements in processes. By holding this event, Angelocci was able to fully understand what factors were contributing to the issues directly from the staff.

The 5 Whys is a technique utilized in root cause analysis. It is a very useful tool employed during the Analyze phase of DMAIC, a cornerstone concept of Six Sigma. With the 5 Whys, the goal is to determine the root causes of problems and then protect the processes once they improve.

The 8 Wastes are the categories of waste that can be detrimental to an organization and should be eliminated. These wastes are overproduction, waiting, inefficient operations, transport, inventory, motion, poor quality, and misused resources. Angelocci was able to find several of the 8 Wastes present in the oncology department in relation to the medication process.

Once committing to successfully bill for the medications that were creating the most waste, the team made several improvements to the process in order to address scanning issues. These were directed toward making the desire to improve a reality. Changes included adding staff during the weekends in order to prevent bottlenecks. Processes were standardized, while clarification was given on tasks and responsibilities. Non-value-added movement was cut down by the strategic placement of scanners and the most commonly used medications. Touch screens were also installed for the system in order to prevent it from going to sleep.

The Outcome Was Impressive

From these improvements, the department was able to report a 46% increase in scanning. In real-world numbers, this amounted to an annual $3.73 million in recovered revenue. This annual recovered revenue provided UCSD with additional funds to direct toward improving operations and providing patients with even better care.

3 Best Practices When Implementing Six Sigma Tools in Your Organization

Through this project, the Oncology department at UCSD found that by using Six Sigma and Lean tools to improve processes, small adjustments can add up to a sizeable impact.

1. Seemingly small improvements add up

When looking at the individual changes made in the oncology department, none of them seem major on their own. However, when all put together, the changes increased scanning by nearly 50% and brought in almost $4 million in recovered revenue annually. The lesson here is to make improvements where you can find them. Seemingly small improvements to individual processes will add up to something much bigger once looked at as a whole.

2. Narrow your focus to where you see the biggest impact can be made

Angelocci had the wisdom to realize that trying to focus on all 23 of the most costly medications could be too difficult. Upon analysis, she found that 8 of the medications were responsible for 80% of the waste, so the primary focus was placed on these. In business, you will find that instead of trying to tackle everything, being able to narrow your focus can make a major difference. One example would be in handling collections for a company when revenue gets tight. The person handling collections might try to direct their effort toward the clients that account for the most lost revenue.

3. Focus on activities that add value

When looking at the activities of the staff, Angelocci found that there were movements being made that were not adding value and were likely contributing factors to their exhaustion. The unnecessary movements were likely to play a role in improper scanning. The running back and forth from the IV room to the dispensing area did nothing to improve the process and contributed to time waste so that fewer patients could be seen. The lesson to be learned here is to make sure all movements that are part of the process for you and your team are always adding value. By eliminating the movements that do not, you can significantly improve your process, and that can contribute to real financial savings.

UCSD and Its Patients Continue To Benefit From the Improvements Made

With the annual revenue recovered, three additional staff could be added, and improvements could be made in other areas and departments. The improvements laid a foundation of understanding amongst the staff on how to foster change together as a team. In doing so, they were able to not only recover revenue but also provide better care for their patients. By eliminating waste, you have more time to offer the individual patrons of your organization, which provides greater service satisfaction. This lesson can be applied to all organizations, not just those in the medical field.