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The Cost of Medical Quality
By Daniel L. Gee; MD MBA
The cost of medical quality actually goes up when the variation and error rate of a process goes up. For example, the costs of pharmaceutical errors alone, in terms of lives and money, are huge. Consider the legal implications of incorrect procedures to an institution. Coding errors that lead to variability in reimbursements costs physicians and other providers, lost revenue.
Think also of the cost of additional safeguards, such as inspectors, that must be put into place to oversee defective processes. When a process is improved, the cost of quality goes down. There are fewer costs due to redundancy, lost time and lost labor.
A Variations Analogue
The concept of looking at medical variations in a process is analogous to the process of teaching a child to ride a bicycle for the first time. The child will be wobbly when he or she gets on the bicycle, at first and, may even fall, several times. As long as you are watching closely, to help the child back on the bicycle, help steer a little and provide encouragement, the child soon learns to ride smoothly and it appears all so natural. The child soon learns to balance from the feedback gained from you and the internal feedback from the brain. After studying the learning process closer, you may find the child to be more successful learning on a set of training wheels or on a bicycle a little smaller in size.
Regardless, the closed loop feedback, analysis, and monitoring by a teacher or process “champion,” keeps the child from wobbling too much and to stay on a straight and narrow course.
A Closed Feedback Loop
Businesses and medical practices wobble too in their processes and, in Six Sigma terminology, this wobbling is the variation that needs continual feedback to help correct and stabilize. Unlike riding a bike, where when once learned it becomes natural and smooth, businesses continue to wobble in their processes and may fall without ever being able to get back up. The institution of Six Sigma methodology is a closed feedback loop to prevent instability in processes.
More: http://businessofmedicalpractice.com/bonus-e-material/
Assessment
Virtual perfection may not be as easily attainable in an industry – like medicine – as computer chips coming off an assembly line; and the healthcare industry certainly has its share of “wobbliness;”
It is, nonetheless, the desire to constantly improve operations, perfect the way healthcare business is done – and tune in to what the patient needs – that separates the Six Sigma Sx improvement method from those QI techniques that have come before.
Moreover, the benefits of setting high performance goals, is a strategic decision to accelerate improvement, promote continual learning and sustaining efforts to succeed. It is a cultural change in medical mind-set to attain quality at its highest level.
Conclusion
And so, your thoughts and comments on this ME-P are appreciated. What is your SS experience with medical variations? How should we define cost; in economic or human terms? Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, be sure to subscribe. It is fast, free and secure.
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Filed under: Quality Initiatives | Tagged: CPHQ, Daniel Gee, healthcare quality improvement, medical quality, medical variations, Six Sigma |
The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants 
Six Sigma Case Model
One purpose of SS in healthcare is to reduce medical variations.
Example of a Six Sigma Healthcare Pioneer
One early SS healthcare adapter familiar to me was the Mount Carmel Health System of Columbus, Ohio. As I recall in my stint as President of a PPMC at the time, the organization was barely breaking even in the summer of 2000 when competition from surrounding providers made things worse. Employee layoffs added fuel to an already all-time low employee morale.
Chief Executive Officer Joe Calvaruso was determined to stem the bleeding, break the cycle of poor financial performance and return the hospital system to profitability. He sought the potential of Six Sigma and began a full initiation of its methodology. The plan was an audacious one, as the organization ensured that no one would be terminated as a result of a Six Sigma project eliminating his or her previous duties. These employees would be offered an alternative position in a different department. Moreover, top personnel were asked to leave their current positions to be trained and work full time as Six Sigma expert practitioners that would oversee project deployment while their positions were backfilled.
The Six Sigma deployment was the right decision. More than 50 projects were initiated with appreciable success. An example of one of these early Mount Carmel success stories was the dramatic improvement of their Medicare+Choice product reimbursements, previously written off as uncollectible accounts. These accounts were often denied by HCFA due to coding specifically around those patients classified as “working aged.”
Since the treatment process status often changed in these patients, HCFA [now CMS] often rejected claims or lessened reimbursement amounts, effectively making coding a difficult and elusive problem. The employment of Six Sigma process improvement tools fixed the problem, resulting in a realized gain of $857,000 in previously uncollected funds. The spillover to other coding parameters also has dramatically boosted revenue collection.
Dr. David E. Marcinko MBA, CMP™
http://www.CertifiedMedicalPlanner.com
[Editor-in-Chief]
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Drs. Gee and Marcinko
This new study on medical errors estimates that measurable medical errors cost the U.S. economy $19.5 billion in 2008.
http://www.healthcarefinancenews.com/news/study-medical-errors-cost-us-economy-almost-20-billion-08
Linda
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Measures of Medical Performance
Another way to reduce variance and improve performance is to use more meaningful measures of performance. Financial measures of performance provide only part of the information needed for decision making.
Meaningful medical management performance measures must also include the following:
• quality of clinical outcomes;
• retention of expert clinical care providers;
• patient satisfaction;
• retention of staff and physicians;
• volume and market share growth; and
• revenues and operating costs, etc.
Inclusion of these dimensions provides a more balanced scorecard, which then becomes an instrument that can be used to measure the attainment of strategic objectives.
For example, poor performance on return on investment may be traced down to poor return on assets and low asset turnover.
In the same vein, the balanced scorecard approach can be modified to what has been termed a “dashboard” approach to accounting. The dashboard approach avoids information overload by benchmarking critical dimensions of performance. The performance of the healthcare organization on any dimension is compared to the industry average and the average of competitors.
The dashboard approach also condenses information but allows for drill down from aggregate accounting measures to more detailed accounting measures when more specific information is required.
Dr. David Edward Marcinko MBA CMP™
http://www.CertifiedMedicalPlanner.com
[Publisher-in-Chief]
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Medical Variability
Using real data, many suggest that variability is the single biggest issue facing healthcare today, affecting not only unit operations but the entire supply chain design and management.
The presence of significant variability requires systems that can ‘sense and respond’ in real-time, so that issues can be resolved quickly and before they impact product quality.
Dr. Zeekle
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