Lean Is Smart Approach to Major Lab Cost Savings

By engaging staff, Lean methods also improve morale and potentially increase employee retention

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CEO SUMMARY: It’s a time when clinical labs are under extreme pressure to cut costs, even as they deal with understaffing. One proven approach to reducing expenses while preserving quality is to apply Lean methods in conjunction with Six Sigma tools. It is often true that successful use of Lean to streamline workflow engages lab personnel in ways that help staff retention.

CUTTING COSTS IS NOW A MAJOR PRIORITY AT CLINICAL LABORATORIES AND ANATOMIC PATHOLOGY GROUPS throughout the United States. The challenge is how to reduce expenses by substantial amounts while sustaining quality in all aspects of the lab’s operation and clinical service mix. 

There is a powerful cost-cutting secret in use by savvy lab managers in labs both large and small. It is the use of Lean methods—distinct from Six Sigma tools. Effective deployment of Lean in a clinical lab can produce swift and substantial reductions in lab costs while at the same time reducing or eliminating systemic errors (that increase lab costs) and raising the quality of services. 

It has been almost 20 years since pioneering labs and hospitals began to implement Lean and Six Sigma methods. While some organizations made it their goal to not only implement Lean, but to infuse a permanent culture of continuous improvement and system of prevention, there were other labs and hospitals that used Lean Six Sigma on a per-project basis, without attempting to change the existing culture. 

This background is important because it sets the stage for those clinical labs and pathology groups that have an urgent need to cut costs by a large amount, but are worried about cutting quality at the same time. 

This is to remind those lab managers that Lean, as developed by Taiichi Ohno of Toyota and others, is designed to be a fast, low-cost approach to savvy cost cutting. By contrast, basing an improvement initiative using primarily a Six Sigma philosophy is usually a more deliberate, slower approach that focuses on driving down the variation in work processes, thus producing higher quality outcomes at a lower cost. 

Today most labs face higher supply costs, increased labor costs, and a shortage of enough skilled staff to accomplish daily test volumes without paying overtime or using temporary medical technologists. It is apt to observe that these are “desperate times” and there are lab administrators desperate to drive down costs in their lab. 

One expert who is hands-on helping labs deploy Lean methods to maximum effectiveness is Rita D’Angelo, PhD, owner of D’Angelo Advantage in Rockwood, Mich. D’Angelo founded her company in 2013 to offer consulting and training for healthcare organizations. She previously spent nearly eight years as Manager of Quality Systems for Pathology and Laboratory Medicine at Henry Ford Health in Detroit. 

Rita D’Angelo, PhD, owner of D’Angelo Advantage
Rita D’Angelo, PhD

D’Angelo is also the instructor for The Dark Intelligence Group’s two-day Lean Six Sigma Boot Camp for Clinical Labs.

“Many lab managers will be surprised to learn that a well-executed Lean initiative will actually help with two problems,” D’Angelo observed. “Its first and immediate benefit is to generate significant cost savings that compound and continue growing over time. 

“The second benefit to labs is that the introduction of Lean methods—including continuous improvement—makes staff feel a part of the whole and makes them feel like they’re contributing” she noted. “Streamlining work processes reduces stress and that directly improves retention of staff.”

Lean and Six Sigma Defined

D’Angelo uses a Lean Six Sigma model that emphasizes the speedy improvements that Lean methods deliver, complimented by appropriate use of Six Sigma tools. A prime example is the use of three-day or five-day kaizen events to identify opportunities, implement opportunities, and assess the success of those improvements over the course of the kaizen event. 

D’Angelo briefly described these methods during the free Dark Daily webinar, “Improving Clinical Lab Performance: How Lean Six Sigma Methods Help Eliminate Waste, Save Money, and Increase Productivity.”

To start, Lean is a systematic approach to identifying and eliminating waste. A typical example of waste comes from D’Angelo’s own lab experience: “If our lab lost a biopsy, we’d go into the biohazard closet where we kept months of biohazard waste. We’d haul out those bags and spend days finding the lost biopsy. This is waste that doesn’t add value to the lab. Nobody pays for it.”

In differing from Lean, Six Sigma is a statistical methodology for identifying and reducing defects and process variations. “A Six Sigma organization has work processes that generate only 3.4 defects per one million opportunities,” D’Angelo explained. 

“The Six Sigma tools help identify variation and sources of errors so we eliminate them,” she continued. “As such, it’s a data-driven approach. Decisions are not based on opinion. Rather, we collect the data and analyze it.”

A laboratory call center provides a simple example: Patients might complain about waiting too long on hold. Suppose an analysis reveals that wait times for about half the calls are six to eight minutes, but the lab has a customer service requirement that patients not wait any longer than three minutes.

“Using Six Sigma tools, I can explore the problem,” D’Angelo said. “A lab would investigate the cause of the wait times through observation and a root cause analysis, with the goal of eliminating the defect. Six Sigma is a measure for quality. We strive for near perfection.”

These examples demonstrate how Lean methods and Six Sigma tools are combined, with the common element that data is gathered and used to identify and eliminate waste.

Dissecting Lab Processes

Employees in clinical laboratories and pathology practices play a critical role in the success of Lean Six Sigma efforts to identify inefficiencies. 

“Where are defects occurring? What happens daily when something goes wrong and the lab is constantly putting out fires?” D’Angelo asked. “Nobody knows this better than the staff, and that’s who we consult with to identify waste in their areas of the lab.”

This, she said, involves observing a lab process from start to finish. It might begin where specimens are collected, after which a courier delivers the specimens to the lab, where they go into a centrifuge and then to testing and interpretation.

The goal is to discover what happens at each stage, she added, ultimately resulting in a “process flow” where the laboratory identifies bottlenecks and other inefficiencies.

“Then we can work to eliminate some of these events or defects from happening,” she said.

Fixing Problems Immediately

Curiosity serves Lean Six Sigma well, D’Angelo notes. 

When advising clients, “we’ll go to the workplace and ask the staff, ‘How do you do your work?’ This is a simple question. But we learn a lot when we ask these questions,” she observed. “How do staff know their work is correct? Once they pass it off, how do they know that it’s defect free? What if it’s not defect free?” 

D’Angelo points to an example at Ford Motor Company manufacturing plants. As cars come off the assembly line, vehicles with defects are diverted to a quality control area for repair. The lesson from Ford? “Build a culture to fix problems immediately,” she said.

Such thinking applies to labs as well and starts with small but effective changes. 

“In anatomic pathology labs, if pathologists find errors, they can fill out a short form, place that form with their slides, and put the slide in a bin,” she explained. “Then the person who delivers the slides picks up that form, fixes whatever is wrong, and puts the slide back into service.”

Simple, Effective Changes

D’Angelo described another lab that discovered inefficiencies related to courier specimen pickups. 

Deliveries came in at 12:15 p.m. and 6:20 p.m., leaving a large gap in the afternoon in which specimens were not being tested. That setup led to bottlenecks at night for laboratory staff.

So, the lab added a pickup time while also working with clinics to get their specimens earlier in the day. “It was a simple, but very successful, improvement,” she noted.

D’Angelo advised labs to assemble a core team, preferably consisting of volunteers so people don’t feel left out if they want to help. 

Key roles include “champions” who ensure that the team has adequate support and resources, “executives” who have the authority to approve actions, “coaches” who teach and guide other members, and “process owners” who enforce successful outcomes.

Using this team structure can lead to better staff morale because employees feel more engaged with their work, D’Angelo explained. 

Helping Retain Lab Staff

As The Dark Report has noted previously, one way to retain more clinical laboratory staff during the “Great Resignation” is to provide workers—particularly younger members of the staff—with a sense of purpose and community in their jobs. (See TDR, “‘Lab Workforce Crisis Takes Top Spot–CAP Today,” April 25, 2022.)

“Give your lab team members a project where they can participate and feel good about themselves,” she added. “They can work toward eliminating all this waste and inefficiency.

“At the same time, we want to stay away from groupthink,” in which the process is driven by opinion, she advised. “Six Sigma is a data-driven approach, and we really can’t make change unless we understand what the true problem is.”

For clinical laboratory directors and pathologists, Lean Six Sigma works in an area they are familiar with—data collection—to uncover process flaws that can lead to improved efficiency. Labs looking to gain a competitive edge will gain value in taking a Lean Six Sigma approach. TDR

Contact Rita D’Angelo at 734-678-1529 or dangeloadvantage@gmail.com.

Five-Step Program to Decrease Waste

LEAN SIX SIGMA uses a five-step approach to eliminate waste. An acronym sums up this process: DMAIC, or Define, Measure, Analyze, Improve, and Control. Let’s explore the elements of DMAIC in more detail: 

    • Define centers on discovery. “Maybe somebody hands off a problem to you,” said Rita D’Angelo, PhD, owner of D’Angelo Advantage. “You need to understand how the problem happened and where it happened.” The result is a problem statement and ideally a map that shows each step in the relevant process.
    • Measure involves collecting relevant data, such as hold times for patients on a call center line. “What are we going to collect? How are we going to collect it? Where are we going to collect it? And who’s going to collect it?” she asked. This gathering of information needs to be formalized as a plan because eventually it is shared with the entire team assigned to address the issue.
    • Analyze digs at the root cause of a problem, such as why the patients are waiting so long for their call to get off hold. “We might create a fishbone diagram, which identifies causes of a problem,” D’Angelo explained. “We’ll brainstorm with our team. We’ll run statistical tests.”
    • Improve involves redesigning an existing process or putting a new one in place. Then, the team pilots the new approach in a simulation to see how it works. “If it’s a great fit, perfect, we’ll validate it,” she said.
    • Control brings the new process to an “owner”—in other words, the person responsible for enforcing it. “We will work with the new owner to ensure that this will not fail and that they’re monitoring it, maybe with a quality control chart,” she noted.

How Much Can Labs Save with Lean? Plenty!

IT WAS 2003 WHEN THREE MAJOR HOSPITAL LABORATORIES WERE THE FIRST IN THE NATION to use Lean methods to reconfigure the layout and workflow in their high volume core labs, involving primarily chemistry, immunoassay, and hematology. 

Each project was a total makeover of the core laboratory. The lab administrators at these three large hospitals were taking a huge risk, because no other lab in the United States had applied Lean methods in such a dramatic, all-encompassing fashion. 

The three pioneering labs were Naples General Hospital (Naples, Fla.), Fairview Health (Minneapolis), and Jackson Memorial Hospital (Jackson, Tenn.). Each engaged the ValueMetrix Division of Ortho-Clinical Diagnostics to lead the Lean project. It was a three-month process to make the changes in the core lab and the outcomes were remarkable. 

When interviewed by The Dark Report, the three lab administrators reported impressive gains. The 12-week Lean project allowed them to slash turnaround times by 40% or more. Errors were reduced by 38% to 45%. Staff productivity skyrocketed by 35% to 46%. (See TDR, Sept. 8, 2003.)

To give these accomplishments more context, prior to this Lean makeover of their core labs, these three lab leaders were confident that their labs were operating at maximum efficiency. They expected gains in the range of 10% to 15%. Thus, the 40% gains in TAT, error reduction, and staff productivity in just 12 weeks made them the envy of the lab industry. 

At a time when pressure to cut costs is intense, all lab managers should consider using Lean and Six Sigma methods. This is a proven and speedy way to realize lower costs and better quality. 

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