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.

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. 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.

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Definition of waste under Deming’s quality theory
1. Quality improves
which causes
2. costs to fall

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Opportunities for “better”
where higher quality drives lower costs (waste) –
the clinical view

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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

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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.

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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)

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-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).

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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).

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Nearly always with proper clinical management
better care is cheaper care
through waste elimination
The path to financial success leads
through clinical management

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Key factor for success (survival?):
an ability to
manage clinical care delivery
up and down the entire continuum of care

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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

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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

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How do you breathe that flame alive?

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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

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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.