Performance Improvement in Hospitals and Health Systems

Managing Analytics and Quality in Healthcare, 2nd Edition

James Langabeer II

• Publisher: Productivity Press
• Year: 2018
• ISBN:
  9781351584944
• Edition: 2
• Topic: Negocios y empresa
• Subtopic: Operaciones

Healthcare Organizations offer significant opportunities for change and improvement in their overall performance. Hospitals and clinics are generally large, complex, and inefficient, and need serious development in process workflow and management systems, which will ultimately lead to better patient and financial outcomes. The National Academy of Medicine has stated that hospital systems are broken, and that they must begin by "… improving hospital efficiency and patient flow, and using operational management methods and information technologies." In fact, costs and quality are two of the important aspects of the "triple aim" in healthcare.

One area that offers significant potential for improvement is through the application of performance improvement methods to patient and process flows. Performance improvement has a significant impact on a hospital's over financial and strategic performance. Performance improvement involves the deployment of quantitative and scientific methods to model and influence the functioning of organizations. Performance improvement professionals are tasked with managing a variety of activities, such as deploying new information technologies, serving as project managers for construction events, re-engineering departmental process workflow, eliminating bottlenecks, and improving the flow and movement of patients between resource-intensive clinical areas. All of these are high risk, and require use of advanced, sophisticated methods to improve efficiency and quality, while minimizing disruptions from change.

This updated edition is a comprehensive and concise guide to performance improvement in healthcare. It describes the management engineering principles focused on designing optimal management and information systems and processes. Case studies and examples are integrated throughout all chapters.

QUALIT Y AND PERFORMANCE IN HEALTH

I

In the first two chapters, we explore the theories and concepts underlying performance improvement. Chapter 1 provides a very in-depth discussion of quality and quality management. Quality pioneers and theories are described, along with the various perspectives on quality in healthcare. Chapter 2 describes the link between strategy and operational effectiveness, and provides a framework for performance management. It is important to note that the term performance means different things to different people, depending on your perspective and the setting. In the retail industry, a customer might consider performance to be the quality of the product she is buying, while the retail executives might view it as return on assets or same-store year-over-year sales growth. In healthcare, performance is a broad and complicated topic. A provider might look at safety or process of care measures, while administrators and the board of trustees might define performance in financial terms. Analysts should know that quality and performance management is multidimensional, and is defined by clinical, quality, financial, and strategic dimensions. Before we try to improve, we need to know which area we are focusing on.

Chapter 1

Quality and Quality Management

James Langabeer

Contents

Introduction

Quality

Quality Management

Core Components of Quality Management

Planning, Improvement, and Control

Need for Healthcare Improvement

Performance Improvement

Summary

Key Terms

Discussion Questions

References

An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.

Jack Welch

Former CEO of General Electric

Introduction

Quality is defined both internally (did we meet specifications?) and ­externally (did our customers and patients receive the value they expected?). Quality management philosophy guides all performance improvement for an organization. Performance improvement is essentially about changing results for an organization, whether it is a clinic, hospital, surgical center, health department, insurance company, or healthcare delivery system. Implied in this are changes to both the inputs and the process that produce those outcomes. There is generally ambiguity about definitions and differences between process improvement, performance improvement, and quality improvement, and many other terms. In this chapter, we review the theories and concepts underlying quality management and performance improvement.

Quality

Remember, just a few years back, when the American car industry was heading toward disaster? Quality—in the eyes of the consumers who purchased and drove these vehicles—was gauged to be extremely low and sales declined to such a point that countries such as Japan and Germany were thought to be the only places to find quality. Some U.S. carmakers had even declared bankruptcy. The competitiveness of American car manufacturers was limited. But then the American car industry rebounded and now tops many of the consumer quality ratings for different car types. At the same time, other countries, such as South Korea, have also emerged as leaders. What happened? Changes in design, manufacturing, and service. In short, process and quality improvement allowed companies to focus on consumer needs.

Similarly, the healthcare industry is trying to rebound from its own crisis. The landmark report by the National Academy of Medicine (formerly the Institute of Medicine), called To Err Is Human, helped to create a national awareness of the significant quality and safety issue surrounding health (Kohn et al., 2000). The report estimated that between 44,000 and 98,000 people die every year from preventable accidents and errors in hospitals. The combined costs of these deaths and other quality issues alone could amount to up to $29 billion each year.

We start with a basic definition for quality. Quality is a perception of the level of value a customer places on an organization’s outputs, and the degree to which these meet established specifications and benchmarks. Everything an organization does impacts quality, from the type of furniture to the recruitment of employees. Quality is reflected at both the institutional level (e.g., overall number of medical errors) and the process or departmental level (e.g., aspirins administered to cardiac patients).

Even the use of basic information technology (IT), such as the electronic health record (EHR), creates potential quality concerns. An EHR is a comprehensive longitudinal electronic record that stores patient health data in a hospital or clinic, including patient demographics, prior medical history, interventions performed, laboratory and test results, and medications (Healthcare Information and Systems Society, 2017).

Sittig and Singh (2012) point out that EHR information systems have a significant impact on quality, including miscommunication between providers; system downtime and access issues that impact patients; “alert fatigue,” where providers override system messages; and many other quality concerns resulting from failure to adopt and implement new systems properly.

Aside from clinical quality and outcomes, there are issues with regard to the quality of business and administrative processes. There is an extremely high amount of inefficiency and administrative waste, in everything from revenue cycle to supply chain management. Prominent researchers have claimed that nearly $1 trillion in wasteful spending occurs because of administrative complexity, process failures, fraud and abuse, overtreatment, and overspending, among others (Sahni et al., 2015; Berwick and Hackbarth, 2012).

Quality costs can be high. Cost of quality represents the sum of all costs associated with providing inferior, error-prone, or poor-quality services. Some of these are the avoidable costs of failure, defects, and errors (e.g., ­surgery on the wrong body part or an avoidable hospital readmission). Other costs are necessary, such as the cost of preventing errors (e.g., checklists and protocols). Then there are the opportunity costs of what your organization could have done with the resources that went into poor quality and rework. Cost of quality is the sum of all costs to avoid, prevent, and provide inferior services.

Cleary, quality is a major concern. Improving quality and performance needs to be taken seriously. The term quality conjures up a lot of different definitions. Despite lots of attention, there is still ambiguity surrounding the precise meaning of quality (Reeves and Bednar, 1994). Quality can be defined by multiple dimensions, including the following:

Customer: Customers pay bills, so this definition suggests meeting (or exceeding) the customer’s expectations. Of course, in healthcare, the term customer is also confusing, since we have a separation between the consumer of the service and the payer in many respects. Regardless, many marketing and management scholars over the years have thought that organizations should deliver what the customer wants and needs, and that if they meet those expectations, then the products will sell and the company will grow (Buzzell and Gale, 1987; Deming, 1986). This is one of the most important definitions for quality in healthcare.

Value: Quality is often seen as being equal to the value produced in terms of total outcomes in relationship to their costs. Dr. Michael Porter, a leading scholar from the Harvard Business School, suggests that this definition is the most applicable to healthcare (Porter, 2010). It makes sense, because everything we do to improve quality should be considered relative to its cost. If we add 10 patient rooms to reduce wait times, is that change in service level offset by higher costs that cannot be recovered? Value in healthcare is an expression of the relationship between outcomes produced by an organization and costs over time.

Fitness for use: The term fitness for use was created by Joseph Juran to indicate that the product or service should do what it is intended to do. Users (customers) should be able to count on it to do what it is supposed to do (Juran, 1992). In healthcare, this would suggest that customers intend for our physicians’ diagnoses and treatments to be correct, and to help heal us. Waiting rooms should be comfortable enough, technology should support the process, and staff should be trained appropriately. All these suggest fitness for use.

Conformance: Quality is often viewed in terms of how well it meets or conforms to the specifications or requirements for the product or service ...