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Making Quality Your Core Business Strategy: A Foundational Element

W. Edwards Deming, the father of quality improvement, defined “waste” as any circumstance in which a quality failure increases operating costs. The latest fully comprehensive study on waste from the National Academy of Medicine in 2010 used Deming’s approach to conclude that “a minimum of 30%, and probably over 50%, of all money spent on health care delivery is waste.” That means that quality-associated waste dominates all other financial performance strategies within health care delivery. It links directly to pay-for-value and other provider-at-risk payment. The path to financial success runs through clinical excellence.

Improving quality to remove waste and improve financial performance requires clinical change. At its best and most effective, strong clinical change leadership links directly to the values and culture of the healing professions. One critical, early step in driving quality as a core business strategy is creating a cadre of leaders, spread through all levels of an organization, who have a deep understanding of care delivery science. These leaders are the key vehicle for culture change, quality improvements in daily operations, and long-term organizational success.

View this webinar with Brent James, MD, MStat to hear him discuss proven methods to create and maintain just that sort of clinical change leadership.

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Making Quality Your Core Business Strategy: A Foundational Element

  1. 1. Brent C. James, M.D., M.Stat. Quality Science Making Quality Your Core Business Strategy: A Foundational Element Health Catalyst Weekly Webinar Wednesday, 6 November 2019, 11:00a – 12:00n MST Brent C. James, M.D., M.Stat. Quality Science
  2. 2. SQ cience uality Disclosures I receive a monthly retainer as a part time (3 days / month) senior advisor for Health Catalyst. I also own (a small amount of) stock in Health Catalyst. Other than that, neither I nor any family members have any relevant financial relationships to be directly or indirectly discussed, referred to or illustrated within the presentation, with or without recognition.
  3. 3. SQ cience uality Definition of waste under Deming’s quality theory 1. Quality improves which causes 2. costs to fall
  4. 4. SQ cience uality Opportunities for “better” where higher quality drives lower costs (waste) – the clinical view
  5. 5. SQ cience uality The opportunity (care falls short of its theoretic potential) 1. Massive variation in clinical practices (beyond even the remote possibility that all patients receive good care) 2. High rates of inappropriate care (where the risk of harm inherent in the treatment outweighs any potential benefit) 3. Unacceptable rates of preventable care- associated patient injury and death 4. Striking inability to "do what we know works" 5. Huge amounts of waste, leading to spiraling prices that limit access to care James, B.C. Testimony to the U.S. Senate Finance Committee, February 2009
  6. 6. SQ cience uality The waste opportunity is HUGE 30-50+% of all health care resource expenditures are quality-associated waste: • recovering from preventable foul-ups • building unusable products • providing unnecessary treatments • simple inefficiency Institute of Medicine Roundtable on Value and Science-Driven Healthcare. The Healthcare Imperative: Lowering Costs and Improving Outcomes. Yong, Pierre L., Saunders, Robert S., and Olsen, LeighAnne, editors. Washington, DC: National Academy Press, 2010.
  7. 7. SQ cience uality Case-rate utilization (# cases per population) Within-case utilization (# and type of units per case) Efficiency (cost per unit of care) 1. 2. 3. % of all waste 45% 40% 15% Nested sources of waste Waste class a) Inappropriate cases (risk outweighs benefit) (e.g., many cath lab procedures; CTPA) b) Preference-sensitive cases (when given a fair choice, many patients opt out) (e.g., elective hips, knees; end-of-life care) c) Avoidable cases(hot spotting; move upstream) (e.g., team-based care) Waste subclasses a) Supply chain b) Administrative inefficiencies - regulatory burden - billing thrash - TPS Lean observation - current EMR function a) Clinical variation (e.g., QUE studies; surgical equipment) b) Avoidable patient injuries (e.g., serious safety event systems; CLABSI)
  8. 8. SQ cience uality -11% -22% -21% +4% +13% -11% 1 Emergency Room Visits Hospital Admits PCP Visits Urgent Care Visits Radiology Tests Other Avoidable Visits and Admissions Team-Based Care (3rd generation patient-centered medical home) An investment of $22 per-member-per year (PMPY) decreased medical expenses by $115 PMPY Reiss-Brennan B, Brunisholz KD, Dredge C, Briot P, Grazier K, Wilcox A, Savitz L, and James B. Association of integrated team-based care with health care quality, utilization, and cost. JAMA 2016; 316(8):826-34 (Aug 23/30).
  9. 9. SQ cience uality Financial impact of clinical quality improvement at Intermountain $3,000 $3,500 $4,000 $4,500 $5,000 $5,500 $6,000 2011 2012 2013 2014 2015 2016 NetRevenue(inMillions) Status Quo Net Rev 2011 5-Yr Plan Net Rev Actual Net Rev $728MM (~13%) $688MM (~13%) James Brent C and Poulsen Gregory P. The case for capitation: It’s the only way to cut waste while improving quality. Harv Bus Rev 2016; 94(7-8):102-11, 134 (Jul-Aug).
  10. 10. SQ cience uality Nearly always with proper clinical management better care is cheaper care through waste elimination The path to financial success leads through clinical management
  11. 11. SQ cience uality
  12. 12. SQ cience uality Key factor for success (survival?): an ability to manage clinical care delivery up and down the entire continuum of care
  13. 13. SQ cience uality Leading clinical change The rate of change in health care delivery continues to accelerate – this is your wake-up call: change or die – Our core business is clinical care delivery – that means leading effective change among clinicians – In leading clinical change, it really helps if you speak the language of the natives
  14. 14. SQ cience uality The clinical professions already have a foundational culture Ø It has defined the clinical professions for hundreds of years Ø It is always present – strong and reliable Ø It is the bedrock of effective clinical change Ø Any other culture layers on top of it
  15. 15. SQ cience uality How do you breathe that flame alive?
  16. 16. SQ cience uality Critical starting point: training Aims: 1. create an effective change leadership / implementation cadre that “gets it” 2. build widespread organizational culture 3. solve important problems 4. show real ROI
  17. 17. SQ cience uality Along with very effective tools Ø Systems design Ø Process management and improvement - data-based problem solving Ø Measurement Ø Variation Ø Root cause analysis Ø Service quality - etc.