Healthcare Quality and Efficiency Incentives

A better tool to fight rising health costs? – The Boston Globe

From a lean perspective, you have to admire any sincere efforts to help improve quality and efficiency in healthcare. As a country, we can’t afford double-digit cost increases every year, that just isn’t sustainable. At some point, it will cost more for our employers to provide health insurance than it costs for our wages. As with manufacturing, one would expect that quality, efficiency, and cost should all move in the same direction with lean healthcare.

Some of the basic incentives in healthcare are skewed. Providers are paid for WHAT they do, not for what the outcomes are. If a provider makes a mistake in a procedure and follow up work is required, the insurance companies notoriously pay for the “rework” (although some companies are starting to change that and insist that it “be done right the first time”).

In manufacturing, we don’t pay our supplier double for defective parts. We don’t pay them to rework materials that arrived defective at our dock door. Clear incentives are place to encourage suppliers to reduce defects (and hopefully not just hide them or inspect their way to quality).

I think of the Lean Thinking principle that Value is defined by the Customer. This gets horribly complicated in healthcare, however. There are many “customers” — patient, payer, provider, patient families, healthcare support staff, etc. “Value” is tough to measure… how to quantify someone’s relative health? It’s not like we have a “Health Scorecard” that’s comparable to Supplier Scorecards. Does “Value” mean “alive” vs. “not alive” or a relative health and quality of life measure? I’m feeling “92 out of 100” today, how are you?

But, I’m convinced that we have to figure out how to reward healthcare providers for results, not just for the activity involved.

“Without providing specifics, Blue Cross executives said they may begin to replace automatic inflation increases with quality and efficiency incentives.”

We don’t accept “automatic inflation increases” in the manufacturing world any more. If anything, we force “deflation” and cost decreases on suppliers, or that is the expectation. Again, the “specifics” are the hardest part to work out for healthcare.

“For primary-care physicians, Blue Cross has chosen quality performance measures like the number of patients who receive cholesterol screenings and diabetics whose blood sugar is carefully monitored, which are widely viewed as sound indicators of a physician performance, it said.

But there is little agreement about the best performance measures for specialists, short of measuring patient outcomes, including how many live or die, a step that Blue Cross is so far unwilling to take. For now, it will measure how specialists’ adopt programs to reduce medical errors, Blue Cross executives said. Hospitals will be graded on five standards they can choose from a list of 14. They also will be evaluated based on patient satisfaction surveys….

”I don’t know of great quality measures for dermatology, so it might be a while before we get to measures for them,” he said. ”And the dermatologists might be happy about that.””

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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an eBook titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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