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Joseph A. DeFeo

Health Care

A Positive Prognosis: Transforming Health Care in America

The only way to eat an elephant is bite by bite

Published: Friday, July 8, 2011 - 08:22

In the U.S. health care system, quality and safety have developed into strategically important issues. Progress is being made at the local level, even if it is slow and doesn’t get much of the public’s attention. Health care improvement has certainly come a long way since the early 1990s, when an improvement resolution took shape, thanks in part to the efforts of the National Demonstration Project on Quality Improvement in Healthcare, with Dr. Don Berwick (then from Harvard Community Health) and Blanton Godfrey, CEO of Juran Institute. Organizations today are more open to improvement, and to the importance of managing quality.

In 2002, the Midwest Business Group on Health and I conducted one of the first cost-of-poor-quality benchmarks for health care in the United States. Since then, many hospitals have begun to drive down costs while improving outcomes.

Today, the work continues. A number of health care systems have won national quality awards, and hundreds of hospitals are pursuing the Malcolm Baldrige National Quality Award, the nation’s highest recognition for organizational performance excellence through innovation and improvement. Lean and Six Sigma are now commonplace. But even with all this progress, challenges remain. Some are being addressed through policy, some through management, and others through technology.

Here are some of the major challenges:
• Lowering the costs of health care to insurers
• Improving outcomes at lower costs to society
• Overcoming implementation bottlenecks
• Inadequate and inaccurate measures of success
• Disengaged staff
• Overly complex systems


Strategic initiatives to address challenges in health care

During the new century, the aim of the health care system has transitioned from simply caring for patients with disease and injury to improving the health of whole communities. Process redesign has led to changes across the board, and a number of initiatives have been implemented for the measurement, control, value improvement, and cost reduction of health care. Some of these include:

Health care reform. Escalating costs continue to price people out of health care. The National Coalition on Healthcare has identified five principles for a reformed system:
1. Coverage for all
2. Cost management
3. Improvement of quality and safety
4. Equitable financing
5. Simplified administration


Accountable care organizations (ACO). In an effort to further reduce costs, an ACO seeks to link provider reimbursements to quality metrics and reductions in the total cost of care for an assigned population. Health care organizations are actively aligning with a strong base of primary care providers to be accountable for quality and costs across a continuum of care for a population of patients.

Financial performance. This is greatly influenced by an organization’s ability to detect and minimize the costs of poorly performing processes. Some of these costs may even be apparent to those working within the process. Health care organizations lose a lot of money annually dealing with hidden costs in the following four important categories:
1. Internal failures—these may include medication errors, billing reconciliation, patient falls, and the development of hospital-acquired pressure ulcers.
2. External failures—two examples would be readmission due to improper initial treatment and diversion of patients due to capacity constraints.
3. Appraisal
4. Prevention 


It’s estimated that 30 percent of all direct health care outlays result from poor-quality care having to do with overuse, misuse, and waste. That translates to roughly $420 billion spent each year as a direct result of poor quality. And it’s private purchasers who absorb about one-third of those costs. That’s a serious toll on our nation every year.

Electronic health record (EHR). There are many potential benefits to be gained from integrating all aspects of the care delivery system into a single EHR system. These include easy access to care, improved safety and outcomes, and the reduction of cost. Health systems, practices, and federal and state governments are all investing billions in the hopes of achieving significant return on investment. Additionally, incentive payments are available to health care organizations and providers by meeting meaningful use (MU)standards. MU is a set of determined critical levels for the use of electronic health records and related technology within a health care organization or provider practice. So far, there is little evidence that automation will yield significant savings, and the improvement in care and safety may be modest as well.

The best way to maximize the benefits of EHR would be to focus on process redesign prior to the implementation. “The electronic medical record (EMR) is the Holy Grail for most hospital executives,” says health care expert Joseph Duhig. “By integrating all aspects of the care delivery system, hospital systems are hoping to reduce costs and improve outcomes.”

Value-based purchasing (VBP). Formally called "pay for performance," these types of programs are being put into place more and more for the purpose of rewarding providers for meeting performance goals or showing demonstrable improvement. Additionally, providers are penalized for not meeting or improving performance. VBP represents a necessary alignment of incentives for achieving excellence in service and quality patient care delivery. Both physicians and hospitals will be required to share their individual and collective outcomes.

Institute of Healthcare Improvement (IHI). The U.S. health care delivery system has long been criticized for an overemphasis on the treatment of urgent conditions while neglecting prevention and wellness. This is why the IHI has put a plan into place to get health systems to simultaneously tackle three important aims: improvement of care, improvement of the health of populations, and reduction of the per capita cost of care.

Consumerism and provider transparency. Interest in collecting and reporting information on health care quality and cost has been growing. Price and quality transparency is being advocated across the board for controlling costs, improving outcomes, and helping consumers take an active role in their care.


Transformational change is definitely needed, on both global and national scales. But even without that kind of change, quality care is still possible. To accomplish this, quality and quality management methods in health care must be properly defined. Patients must be provided with the appropriate services in a technically competent manner. Quality in health care is evaluated based on structure, process, and outcomes.

Developing the structure to improve performance

Boards of directors are now being held responsible for their organizations’ missions to provide the best care and promote safety. A board’s responsibility cannot be delegated to the staff or executive leadership. In this way, system-level expectations and accountability can be effectively set.

One thing hospital boards all have in common is that most of the members aren’t health care professionals. The attention to quality and safety is left to executive leaders and the medical staff. Boards today are involved in setting aggressive goals, monitoring data, and establishing levels of accountability for achieving those goals.

The role of the leaders is to provide direction, and establish the vision, mission, and values. They also provide the resources to attain the mission. Stating methods provides a common language and approach to doing that.

Board involvement is crucial to a quality-driven culture, with board and physician partnerships a main contributing factor. Hospitals employ a variety of strategies to bond with physicians, and the measure of effective engagement is, ultimately, results. To design an effective approach to engagement in the quality agenda, the first step is to make an assessment of the hospital-physician relationship.

Managing for quality and safety

Quality management methods have spread rapidly from dozens to hundreds of hospitals, on the momentum of increased awareness and initial success. Quality councils were organized, improvement teams became commonplace, and redesigns made systems more patient-friendly. Despite cultural barriers, the promise of quality improvement in health care is great—especially now that health care systems are adopting more sophisticated lean and Six Sigma methods and principles.

Quality control is all about maintaining performance according to accepted standards. When a process extends beyond certain boundaries, action is needed to bring the process back and eliminate the causes of poor performance. The plan-do-study-act (PDSA) cycle, special cause analysis, and root cause analysis are three means to accomplish this.

Lean principles are nothing new, but health care tends to lag behind other industries in adopting management-driven change initiatives, and so lean production is generally viewed as the latest innovation in care delivery. A lean production system removes many of the hassles that create frustration for patients and care providers by eliminating nonvalue-added activities such as wait time, excess transportation, and duplicating paperwork.

But for lean principles to work, there must be an organizational culture that’s receptive to lean thinking. In the health care industry, where scarcity of resources is the focus, there must be a shift toward seeing the waste in work processes.

Additionally, many health systems have adopted Six Sigma methodology to provide a data-driven and disciplined approach to quality improvement. This is especially useful when the organization lacks knowledge of root causes in its own work processes. Six Sigma is the preferred methodology under these circumstances, thanks to its rigorous application of measurement and analysis tools. Health systems are now realizing the need to be more strategic in their deployment of improvement initiatives.

Improving patient safety

Patient safety has been defined as freedom from accidental injury. Errors typically occur as a result of failure of a planned action to be completed as intended, or the use of a wrong plan. Obviously, processes shouldn’t harm patients via accidental exposure to dangerous agents like chemicals, foreign bodies, or trauma.

A health care environment must be safe for all patients, in all processes, all the time. Patients should only have to tell their caregivers something once. Care must be seamless, especially at handoff and transitions in care. Information about patients must be available, yet with confidentiality protected. Patients must be informed, and able to participate as much as they wish. Complications should be dealt with openly and honestly, and errors need to be tracked, analyzed, and interpreted for improvement purposes.

The culture of an organization can be described by its mission, vision, and values. A just culture and accountability model must be established. There are several ways to accomplish this, including clear and concise chain-of-command procedures, a human-resources performance management system that reduces noncompliance, team leader rounding, use of Red Rules, and peer coaching programs.

Reducing human error is accomplished through mistake proofing, but even with this method there is room for accidents. Implementing an error prevention program is key. Processes must be hardwired, which essentially means that they are established in a way that makes deviation from them very difficult. Needless to say, we must ensure the process is a good one before fixing it in place in such a way.

In short, the global future of health care will require many more years of improvement to create an efficient, effective model that meets all of society’s needs. As the saying goes, the only way to eat an elephant is bite by bite. Reform will occur in much the same way—one process and system at a time.


About The Author

Joseph A. DeFeo’s picture

Joseph A. DeFeo

Joseph A. DeFeo is president and executive coach with Juran. He is recognized worldwide for his training and consulting expertise which enables organizations to achieve superior results. For additional information, visit www.juran.com.