1
The Business Case for Quality Improvement

“Value—Not everything that can be counted counts, and not everything that counts can be counted.”

—Einstein


The workshop convened a panel of five practitioners and managers to learn about different views of the business cases that have been made in health care. Although each speaker comes from a different background, there is a need to think about how each view contributes to the creation of a high-value health care system for the general population, said Paul O’Neill, forum co-chair. Speakers were asked to address at least two of the following questions:

  • Is there a business case in today’s health care environment that is responsive and relevant to the leadership of health care and related research enterprises (including providers, payers, patients, government officials, academia, and employers)?

  • If so, what are the economic/financial benefits of pursuing quality improvements and related research in the field? Illustrate how quality improvement and quality improvement research can impact greater production use of plant and human assets, lead to product differentiation and branding, generate revenue enhancements, improve cost structure, and impact other core operational goals to create competitive advantages.

  • What are the characteristics of an ideal enterprise culture and effective governance orientation that promote and accelerate improvement in quality and quality improvement research?

  • What are the business disciplines and support structures that are essential for leadership to fully exploit the economic/



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1 The Business Case for Quality Improvement “Value—Not everything that can be counted counts, and not everything that counts can be counted.” —Einstein T he workshop convened a panel of five practitioners and man- agers to learn about different views of the business cases that have been made in health care. Although each speaker comes from a different background, there is a need to think about how each view contributes to the creation of a high-value health care system for the general population, said Paul O’Neill, forum co-chair. Speak- ers were asked to address at least two of the following questions: • Is there a business case in today’s health care environment that is responsive and relevant to the leadership of health care and related research enterprises (including providers, payers, patients, government officials, academia, and employers)? • If so, what are the economic/financial benefits of pursuing quality improvements and related research in the field? Illustrate how quality improvement and quality improvement research can impact greater production use of plant and human assets, lead to product differentiation and branding, generate revenue enhance- ments, improve cost structure, and impact other core operational goals to create competitive advantages. • What are the characteristics of an ideal enterprise culture and effective governance orientation that promote and accelerate improvement in quality and quality improvement research? • What are the business disciplines and support structures that are essential for leadership to fully exploit the economic/ 

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 CREATING A BUSINESS CASE FOR QIR financial benefits of quality improvement and quality improvement research? • In order to drive organizational improvement from validated, well-researched data, how do you effectively measure and evaluate progress against quality improvement targets and quantify returns on investments made? What are the essential components of such a system? • Are there models in other industries such as aviation and nuclear power wherein the drive for quality has transformed prod- uct outcomes and customer/public safety? How do we learn from them? MANAGED CARE Herb Fritch of HealthSpring, a managed care company, engages physicians in making a business case for quality improvement as part of HealthSpring’s business plan. HealthSpring, located in six states, specializes in Medicare Advantage plans that cover 150,000 lives and yields $1.5 billion in annual revenue. HealthSpring con- siders its physicians to be key elements of costs, outcomes, and quality. Part of its responsibility is to help organize large networks of independent physicians in which physicians themselves create risk-sharing structures. Fritch described HealthSpring’s pay-for-quality program, which focuses on ensuring that preventive care and chronic disease man- agement are based on evidence (as measured by 25 measures of quality and outcomes) for small groups of providers. According to Fritch, 15 percent to 50 percent of physician reimbursement should ideally be linked to performance, measured in terms of cost, qual- ity, and outcomes. This requires collection of data at the individual physician level (e.g., resource use and outcomes), governance, and clinical support. In a pilot program, HealthSpring provided physi- cians with support services, such as nurses, to improve care delivery. In a physician group provided with support services, Fritch saw a 20 percent to 25 percent improvement in performance, as well as a 5 percent decrease in costs from the initial state. Specifically, support services and a focus on primary care for chronic disease manage- ment have resulted in improved care, fewer emergency room visits, and fewer admissions, yielding large financial savings. Costs actu- ally increased 5 percent to 10 percent among HealthSpring’s other providers. With this success, HealthSpring decided to expand the program to four other markets; in 2006 it served eight groups, or approximately 9,000 patients. In 2007 the program expanded to

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 THE BUSINESS CASE FOR QUALITY IMPROVEMENT 31 groups, or approximately 27,000 patients and 330 primary care physicians. HealthSpring’s pay-for-quality program costs an average of $10 extra per member per month, which includes the costs associated with support persons, program expenses, and physician bonuses. The estimated savings from fewer admissions and better health out- comes were approximately $45 per member per month, Fritch said. Many indirect nonmonetary benefits were also associated with the programs, such as better relationships between HealthSpring and physicians due to the potential for bonuses (which may be awarded three to four times a year) and the support services provided. Addi- tionally, the ability to help organize primary care physicians facili- tated HealthSpring’s efforts to develop incentives for efficiency. In its path to a successful pay-for-quality program, Health- Spring identified many challenges. Although its program worked in a Medicare Advantage setting, it is unclear whether this pay-for- quality program would easily translate to a fee-for-service setting. The program worked in a managed care, capitated payment system because the care was focused on primary care services and refer- rals. Primary care physicians therefore often followed their patients across the entire spectrum of health care services and had access to all of their health information, becoming a patient’s “medical home.” Patients were happier with the care they received because the care was more patient centered, as best shown in settings offer- ing concierge services, such as HealthSpring’s Personal Assistant Liaison program, which provides one-on-one support to help mem- bers manage their own care. One critical factor in HealthSpring’s success was the addition of electronic medical records to promote evidence-based medicine. However, benefits of electronic records were seen in some clinical areas, but not others. For patients seen in fee-for-service payment systems, the use of electronic records required an extra 30 seconds to treat each patient, which was not sustainable across a volume of 40 patients per day per physician. Instead, savings were derived largely by providing evidence-based care for expensive services, such as managing chronic diseases. If the program was to be generalized to a fee-for-service system, the major stakeholder, Medicare, must become the driver of change, Fritch said. DEPARTMENT OF VETERANS AFFAIRS Information is extremely important in driving change because it indicates when a problem exists, said James Bagian of the Depart-

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 CREATING A BUSINESS CASE FOR QIR ment of Veterans Affairs (VA). From his perspective as director of patient safety at the VA, Bagian believes the data show that a busi- ness case for quality improvement exists. For every $100 spent on VA operations, 10 cents is spent on implementing patient safety pro- grams, equating to $130,000 per facility per year. The cost of adverse events is much greater, exemplified by the following: • Falls resulting in fractures cost an average of $25,000 to $35,000 per fracture (more importantly, one in three patients over age 65 with a fall-related fracture dies). • Adverse drug events cost approximately $5,000 per event. • Nosocomial infections cost a minimum of $5,000 per episode. These costs, aggregated from data outside the VA, resulted in losses for the institutions where the adverse events occurred. In terms of benefit ratios, Bagian provided the following data on savings: • An investment of $1,000 in hand hygiene yielded $60,000 in avoided care costs. • An investment of $25,000 in a fall prevention program yielded $115,000 in savings in fracture care. Chief executive officers (CEOs) and chief financial officers (CFOs) often express strong resistance to changes in care until cost–benefit analyses are provided, Bagian said. With the data, the benefits of quality improvement quickly become apparent. The need to create a business case for quality improvement is only one constraint to providing high-value health care; it is not the goal. The ultimate goal of health care is to improve patient care and safety, while the ultimate goal of patient safety is to prevent inadver- tent harm to the patient resulting from the care he or she receives. But who should ultimately be responsible for quality and patient safety? In a survey taken within the Veterans Health Administration (part of the VA) and other private health care organizations, only 27 percent of respondents believed patient safety was important for good patient care. Yet safety should be everyone’s concern, Bagian said. No health care provider or institution is immune. The culture of health care is a driving force behind the health care problem because health care providers are plagued by both ignorance (i.e., trying to be perfect, an impossible goal, instead of recognizing the role that common system failures play in causing harm) and arrogance (i.e., believing the problem lies with everyone else). As a cultural issue, quality has not been well understood. Medicine has been viewed

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 THE BUSINESS CASE FOR QUALITY IMPROVEMENT more as a cottage industry in which practice is either based on phy- sicians’ personal preferences or unsubstantiated by evidence. With a lack of standardization and accountability, medicine has not been viewed as an effective, efficient system. Bagian suggested that the way in which medicine is organized needs to be redesigned to induce change. In medicine, there is lit- tle understanding of how systems function in relation to people and processes. Not enough people in health care even know what systems-based solutions would look like because most health care professionals are not trained in systems engineering, Bagian said, although this concept is starting to be incorporated into some parts of medicine (e.g., Accreditation Council for Graduate Medical Educa- tion). From a systems approach, Bagian suggested that current inter- ventions are aimed at the wrong level: The primary focus should be on changing systems, not on correcting individual physicians. Other industries have achieved change. Bagian described les- sons learned from aviation in World War I, where 14,000 Royal Air Force pilots were killed, 8,000 of whom were killed during train- ing. A similar situation occurred in the United States during World War II; as more planes crashed, more were built, and pilots were replaced. This continued until Congress decided it could no longer support such a system. The military was forced to develop programs and to find opportunities within the system to minimize accidents. In 1954 the United States Navy destroyed 774 aircraft. The imple- mentation of standardized systems resulted in dramatic reductions in mishaps; in 1996 only 39 aircraft were destroyed. If a process deviated from the norm, a reason had to be given. People finally began to understand the value of using procedures and checklists to reduce mistakes. Change requires goals, which must be clear, compelling, and reinforced by leadership. Change in health care is not just about reducing costs; it is more about improving value and delivering good care. This must be understood to enlist the support of care providers. The goal must be clearly articulated by leadership, so that various ways to achieve the goal can be developed. Many obstacles prevent systems change. One obstacle is prob- lem recognition. Many health care professionals believe their level of performance is above average, so statements about substandard performance do not apply. Good data systems are needed to show physicians their actual levels of performance and how they compare to others so improvement efforts can be strategically targeted. A sec- ond obstacle is fear of punishment, blame, and the shame in having made mistakes. The current system does not encourage reporting

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0 CREATING A BUSINESS CASE FOR QIR of mistakes, but instead fuels a culture of hiding errors, which pre- cludes learning from other people’s mistakes. Fear is also the cost of implementing safer systems. A third obstacle to systems change occurs when mistakes are made and people do not know what to do because adequate systems are not in place to change the way they practice. A fourth obstacle is a lack of evidence showing that different practices or tools can improve care. This type of evidence can galvanize behavioral and attitudinal change, steps necessary for cultural change. One tool used by the VA to change culture focused on remov- ing workers’ fear of making mistakes, introduced as the concept of blameworthiness. It was well known that issues associated with health professionals involved in criminal acts, substance abuse, or intentionally unsafe acts would become public, and punishment would follow. However, by changing the environment and clarifying that only those types of activities were subject to punitive measures, workers reporting unintentional errors to the safety system could feel safe. The VA experienced a 30-fold increase in reporting in the first year; this rate has increased continuously over the past 8 years, Bagian said. For the concept of blameworthiness to succeed, the pro- gram needed to be fair and transparent, requiring the VA to develop precise definitions with unions, patient groups, and oversight com- mittees before the program was initiated. The confidentiality of error reporting was another critical factor for success. It ensured that the name of the reporter was never revealed, except in cases of crimi- nal acts, substance abuse, or intentionally unsafe acts, as different systems exist to deal with those cases. Quality and safety programs should not be mixed with accountability systems, Bagian argued. The criteria for prioritizing errors must be made transparent for both internal and external purposes. The VA developed a single set of prioritization criteria based on risk—defined as both severity and probability of an event’s occurrence—that was used to satisfy multiple regulatory bodies, such as the Food and Drug Administra- tion, the Joint Commission, and the Centers for Disease Control and Prevention (CDC). This set of criteria made it procedurally easier to meet requirements of all regulatory bodies and allowed for greater transparency to patients, professional organizations, and other external stakeholders. Human error is not a cause of error, but rather an effect of systems error. If human error is the cause, the solution is to avoid mistakes. The more practical solution is to change the system so that making mistakes is difficult, Bagian explained. For example, potassium chloride, a potentially fatal chemical compound, was

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 THE BUSINESS CASE FOR QUALITY IMPROVEMENT once available in concentrated form on hospital floors. Now it is premixed in intravenous bags to avoid errors. Management must be involved in safety efforts by talking about it and making it a priority and a regular part of all activities; it is a marathon, not a sprint. Identifying causes of errors requires root cause analyses, but solving errors requires development of actions, outcome mea- sures, and a commitment to provide resources necessary for change. If the resources cannot be committed, a new action plan must be developed to fit within those constraints. The process and rationale for this decision-making process must be communicated clearly between management and frontline personnel. The focus of research must be different, Bagian explained. Eval- uation of actions is critical, both in terms of processes and outcomes. One example is physician hand hygiene. The effect of hand washing on infection rates has been shown and does not need to be studied again; however, research should be conducted to examine whether physicians actually wash their hands properly and the factors asso- ciated with the obstacles to achieving success. The following ele- ments are necessary for sustainable improvement: • Appropriate goal identification and selection • Transparent prioritization • Identification of real causes • System-based countermeasures that address underlying causes • Explicit, strong actions • Measurement of actions • Top leadership involvement/visibility Research on how to get people to do the right thing is needed, Bagian asserted. Some research has been completed determining what the right thing to do is, but implementing the right thing is much more complicated. SYSTEMS Toward the end of marathons, there tends to be a gap between the leaders and the other runners, said Steve Spear of the Insti- tute for Healthcare Improvement and the Massachusetts Institute of Technology. The leaders run with effortless strides and composed faces. They are followed by a second group of runners who are still impressive, but not quite as composed; this pattern of decline continues through the rest of the groups of marathon runners. What is the difference between the leaders and the rest of the pack? The

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 CREATING A BUSINESS CASE FOR QIR runners all have similar access to training facilities and nutrition, but front runners always emerge, Spear said. Applying this analogy to industries, how does a company become the pacesetter within its own industry? Competing companies work within the same regu- lations, develop similar products in similar sectors, and work with the same customers, suppliers, and worker pools. The competition should be cutthroat, but consistent leaders exist for a variety of industries, with pacesetters’ market caps and profitability being far greater than those of the rest of the industry (e.g., leaders such as Toyota, Alcoa, and Southwest Airlines). The implication for health care, Spear stated, is that great science offers hope for improvement. There is a lot of hope that care can improve and costs can decrease, but performance is poor because there is a gap between promise and delivery. Twenty to 50 years ago, medical science was in its infancy. Breast cancer, for example, was thought of as one disease. It is now known that the term “breast can- cer” is actually an umbrella term for dozens of types of cancers. This evolution in thinking came as a result of better science, which gives hope for advancement. In 1955 a physician managing the care of a patient with breast cancer either provided mostly palliative care or performed radical mastectomies in hopes of a cure. Both require the management of small teams (e.g., surgical team and postoperative team). The bad news was that the science was poor, causing teams to practice and advance disciplines within silos. The good news was that patients were being treated in a simple system where the dif- ficulty of coordination between teams did not have to be faced. That situation has now changed. The good news is that the science has improved dramatically. The bad news, however, is that scientific advances require deep knowledge of specific issues, so as science advances, what one person knows becomes more and more narrow. This makes the task of managing the care of all patients going through a system nearly impossible for one person. Each patient is individualized, making systems failures difficult to iden- tify. Physicians are now practicing in a complex system. Physicians struggle to balance constantly advancing science with the interde- pendencies and unknown interactions between complex systems. Coordination and collaboration must become the focus of systems, Spear said. The underperformance of health care is often noted, Spear said. This is not because the individual fails, as Bagian also recognized; individuals often perform extraordinarily well. The system is what fails. One reason systems fail is that they are managed in pieces when the focus should be on managing the integration of the pieces. The

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 THE BUSINESS CASE FOR QUALITY IMPROVEMENT BOX 1-1 An Example of System Failure A woman recovering from a successful elective surgery suffered full- body seizures. No tests could explain the symptoms. When she returned to the nursing unit, it was discovered that she had low glucose levels, but the discovery came too late and the patient died. Heparin, a blood thinner, is a clear, colorless liquid, stored in a glass vial. The night nurse had responded to an alarm to break a blood clot and instead had inadvertently administered insulin. Insulin is also a clear, color- less liquid and contained in vials of about the same size, shape, and weight as the heparin vials. The print labeling on both vials was tiny and hard to read in the dark. The nurse inadvertently administered insulin as opposed to heparin, which caused the death of the patient. Should the nurse be at fault? Should the pharmacy be at fault? No, because although the work of the pharmacy was good from its own perspec- tive, it was bad from the perspective of the nurse. In fact, the system was at fault because of the lack of understanding of the interaction between the elements: the actual administration of the medication. current system makes it too easy to do the wrong thing, explained Spear. The system must change to make it easy to do the right thing. As Box 1-1 indicates, there is a need to measure outcomes, not of individual actions, but of how well the parts of the system work together. To prevent breakdowns within systems, Spear offered two solu- tions. First, people currently work in silos, leaving no manager of patient care from start to finish. People need to be held responsible for processes within organizations to complement what is already going on in care facilities. Second, the system needs to change so that the behavior of catching and reporting mistakes is rewarded. Mistakes and problems are solved only when they are elevated. The system needs to be managed as a whole, not in pieces; when problems are identified, they must be dealt with in order to achieve a safer health care system. INTEGRATED HEALTH CARE SYSTEM The journey to high-quality, efficient systems is a long one, said Gary Kaplan, CEO of the Virginia Mason Medical System. The jour- ney is one of culture change. Virginia Mason’s goal is to change in

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4 CREATING A BUSINESS CASE FOR QIR such a way that it may influence the ability to transform the health care industry. Virginia Mason is a not-for-profit integrated health care system with a 336-bed hospital and 480 physicians in 9 locations. Its vision is to be a leader in quality. In describing Virginia Mason’s strategic plan, Kaplan said the patient is the customer. But in 2001, processes and systems were designed around physicians, nurses, and other health givers, not the patient. To address this structure, Virginia Mason adopted the Virginia Mason Production System, modeled after the Toyota Pro- duction System, to deliver the best products and services possible to customers. Now in its sixth year of implementation, culture change has become the largest part of the strategy. A culture of feedback must be instilled, along with measures to ensure responsibility and accountability of both good and bad actions. People must be held accountable when lives are both saved and lost. To enforce this culture change, Virginia Mason developed a com- pact with its physicians. Traditionally in group practices, compacts tend to mean physicians will be protected, have autonomy, and have a sense of entitlement, leading to a physician-centered health care environment, Kaplan said. However, in an environment focused on evidence-based guidelines and patient safety, the traditional compact is inappropriate, leading Virginia Mason to develop a new compact. This compact details the responsibilities of both the organization and its physicians. For example, one physician responsibility is to take ownership, including “implementing Virginia Mason–accepted clinical standards of care.” These are best practices as shown by evidence and should be delivered to every patient every time unless there is a clear clinical rationale for not following the evidence-based best practice. Quality has been defined by Virginia Mason with the following equation: Quality = Appropriateness × (Outcomes + Service) Waste It was discovered that reducing waste on the non-value-added vari- ations of services can improve quality and simultaneously reduce cost. In addition, if a procedure is performed correctly but is unnec- essary, then there is no quality. Much of what is done in medicine is unnecessary and is done for a number of reasons, Kaplan said. At Virginia Mason, many processes have more than 50 percent waste. Examples from other industries are shown in Table 1-1. To address the problem of waste, Virginia Mason turned to the

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 THE BUSINESS CASE FOR QUALITY IMPROVEMENT TABLE 1-1 Validated Industry Averages Percentage Target Reduction Direct labor/productivity improved 45–75 Cost reduced 25–55 Throughput/flow increased 60–90 Quality (defects/scrap) reduced 50–90 Inventory reduced 60–90 Space reduced 35–50 Lead time reduced 50–90 NOTE: Summarized results, subsequent to a 5-year evaluation, from numerous com- panies (more than 15 aerospace related). Companies ranged from 1 to >7 years in lean principles application/execution. Toyota Production System, the purpose of which is to standardize processes and remove waste to deliver what is needed, when it is needed, and where it is needed. A key to this is mistake proofing in real time, which has yielded better, faster, and more affordable prod- ucts. Much of the stated opposition to standardization comes from the belief that people in such a system would be pushed toward widespread mediocrity; however, standardization is about wide- spread standard best practices, Kaplan explained. Double-blind con- trol evidence supports only about one-third of health care delivered; the rest is emerging evidence. For care based on emerging evidence, standards should be set so this care can be measured and therefore be proven at the level of controlled studies. A lack of double-blind control evidence is often used as an excuse for variation, Kaplan stated. Instead, procedures for which there is no evidence should also be standardized to avoid error-prone situations. In standardizing some of its processes, Virginia Mason discov- ered that much of the waste and delays could be condensed, reduc- ing costs and time spent. When an insurer pointed out that Virginia Mason was not as cost-effective as it could be in certain areas, it looked for ways to make its processes more cost-effective. The com- pany engaged in a process with the insurer, providers, and employers to focus on the highest cost diagnoses and applied evidence-based guidelines, with lean and cost accounting to redesign care delivery. This is exemplified by the back pain “value stream,” depicted in Figure 1-1. Before the processes were streamlined, patients with back pain waited a long time for appointments with a primary care physician, referrals to magnetic resonance imaging (MRI), and neu- rosurgery. After applying the Virginia Mason Production System,

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 CREATING A BUSINESS CASE FOR QIR Original Back Pain Value Stream Neurosurgery PT: 1–15 visits PCP PCP MRI PCP Physiatry Time VMPS Waits and delays Non-value-added Evidence-based value Current Back Pain Value Stream Spine Clinic PT: 2.8 visits Wait for appointment Time FIGURE 1-1 Back pain value streams. NOTE: PCP = primary care physician; MRI = magnetic resonance imaging; PT = physical therapy; VMPS = Virginia Mason Production System. changes were made to the system that reduced that waiting period. fig 1-1 For example, patients were able to be seen on the same day in the spine clinic. As a result, overall waiting time decreased from more R01223 than a month to one day; fewer patients received MRIs due to more specific decision rules about a Business Creating who should receive MRIs; and patient satisfaction improved as patients were able to return to work more quickly. With this process, a business case for quality was also made. For back pain, Virginia Mason originally made profits only on MRIs, but after standardizing processes and dramatically reducing num- bers of MRIs, the employer agreed to triple payments for physical therapy to allow Virginia Mason to break even. The revised, more efficient processes required fewer staff and saved the employer $17 per hour in indirect costs. Due to its success, the Virginia Mason Production System has been used to improve processes when a number of other diagnoses

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 THE BUSINESS CASE FOR QUALITY IMPROVEMENT arise (e.g., migraines, irregular heart rhythm, heartburn). This has led to a decrease in use of services, especially emergency room use and MRI use. The cumulative savings from 2005 to 2006 from decreased use of the emergency room and MRI totaled around $7.8 million. Kaplan shared some lessons from his experiences. First, the Vir- ginia Mason Production System has improved quality, access, and patient satisfaction and has decreased costs. This has led to an over- all improvement in the value of care, leading Virginia Mason leaders to conclude that about half of health care costs may be avoidable. Another lesson was that the current payment system separates buy- ers and sellers. As alluded to in the back pain example, streamlin- ing processes throughout the organization would be unsustainable if implemented broadly, for the organization would not be able to generate enough revenue. Therefore, payers must be enlightened enough to change the way they pay in fee-for-service payment sys- tems and work with employers and providers. Aligning reimburse- ment with value is critical. Culture change is a requirement for a higher quality delivery system. Leaders in health care need to address both the techni- cal and human dimensions of change, Kaplan said. The technical dimension is the Virginia Mason Production System. The human dimension includes a number of components. First, a critical mass must articulate the urgency with which change must be addressed. Second, leaders must evolve from being advocates for physicians to being sponsors of change. Third, a broad and deep commitment to a shared vision is needed. Fourth, a new compact that aligns with the shared vision needs to be adopted. These components must be completed together to achieve culture change. Patients must come first, and there must be a shared belief in delivering zero-defect care. There is enough money in the health care system, Kaplan said. The challenge is to use what is in the system more wisely by removing waste and changing mind-sets. NURSING PERSPECTIVE Marita Titler of the University of Iowa was asked to briefly discuss the business case for quality improvement from the nursing perspective. Employed mostly in hospitals, nurses are the largest group of health care service providers in the United States, with a growing body of evidence that shows nurses contribute a great deal to quality of care and patient outcomes. Titler shared a number of

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 CREATING A BUSINESS CASE FOR QIR examples based on improvements in nursing that not only improved quality, but also avoided costs. The first example of cost avoidance was a cluster randomized trial to improve acute pain management for older adults with hip fractures, Titler explained. This study, funded by the Agency for Healthcare Research and Quality, investigated a translating research into practice (TRIP) intervention that included strategies to address communication processes, education, audit and feedback, out- reach by an advanced practice nurse, and modifications in orga- nizational standards of practice for acute pain management and clinical documentation tools. Study outcomes included measures of nurse and physician adoption of evidence-based acute pain manage- ment practices and improvements in pain intensity of patients. Pain assessments and pharmacological treatment practices improved at a statistically significant level. Patients experienced more around- the-clock administration of opioids, experienced less pain intensity, and received more evidence-based acute pain management care than those in the comparison group. The net cost savings of patient care for those in the experimental group was $1,500 per patient less than those in the comparison group. The TRIP intervention resulted in improved management of acute pain and saved the hospitals money. Titler offered a second example of cost avoidance through qual- ity improvement programs—the implementation of an advanced practice nurse transition model of care. Care delivered in accor- dance with this model improved care coordination, resulting in fewer readmissions, reduced numbers of hospital days, and increased percentages of patients without rehospitalizations. The net savings of the advanced practice nurse transition care model totaled $5,000 per patient and reduced total costs by 38 percent (McCauley et al., 2006; Naylor et al., 2004). Efforts have also been made by quality improvement and inter- disciplinary teams to address patient falls, which cost more than $20 billion in direct health care costs annually, Titler said. A program using unit-based scorecards and fall prevention interventions to reduce fall rates helped decrease falls and subsequent injuries, sav- ing $100,000. Interestingly, a trend was found that correlated more fall prevention activities performed in a day with more money saved (Titler et al., 2005). Retention of nurses is another important factor to consider, Titler noted. The costs of training new employees range from $75,000 to $115,000 per new hire. Efforts must be made to improve nurse retention rates because nurses are critical to continuous improve-

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 THE BUSINESS CASE FOR QUALITY IMPROVEMENT ments in care. The findings from these examples should be applied broadly to improve patient care, Titler stated, reminding the work- shop attendees that changes in health care must be directed toward promoting provision of evidence-based care to treat patients and improve patient outcomes. Nurses have a central role to play in making these necessary changes. DISCUSSION An open discussion followed the panel’s presentations. Forum members and audience members (from the public) asked the speak- ers questions. The following sections summarize the discussion session. Roles of Other Care Providers In response to a question regarding the roles of nurses, Kaplan stated that nurses are critical to the execution of health care delivery and are integrally involved in delivery teams, process improvement, and the front lines of care. Although nurses have systems training in their education, as noted by Titler, most health care providers lack that type of training, Kaplan said. All players must be engaged to creatively and comprehensively change the system. Bagian added that quality improvement is not “physicians versus nurses”; instead, everyone, both clinical and nonclinical, plays important roles. Interdisciplinary work is needed. Efforts to face challenges brought about by changing culture therefore must address physicians, nurses, and all other health care professionals. Each professional must change his or her own practices and adapt training to meet the demands of a changing health care system and, more importantly, the patient. The role of incentives was discussed next. Incentives must be available for everyone in the system to produce a culture of safety, explained Bagian. People who report errors must receive some sort of incentive, which can be monetary or nonmonetary. Focusing on the nonmonetary incentives, Bagian said leadership is essential to creating honest and fair systems where problems can be fixed, moti- vating people to do the right things, and improving quality. Because safety is not just about financial rewards, good systems can motivate people to stay at institutions. Fritch noted the high value that HealthSpring nurses add, espe- cially in the care support and chronic disease management programs. One challenge is that bonuses provided by pay-for-performance

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0 CREATING A BUSINESS CASE FOR QIR programs are awarded to physicians who employ nurses, not the nurses actually doing the work. Some of HealthSpring’s programs are now modifying their incentive programs to award to support staff and nurses. Responding to the notion of nonmonetary incentives, Kaplan said that professional satisfaction is a key factor in reducing waste and work errors. For example, skill–task alignment should be con- sidered so that nurses are not doing what technicians should be doing. There is a need to better understand value streams for all stages of work and to implement those findings to improve care. Systems Change Health care must be focused on the patient and how disciplines (e.g., physicians, nurses, occupational therapists) can collaborate to fix the care system to make it easy to do the right thing, Titler said. Echoing Titler’s point, health care professionals must share the belief that the purpose of health care is to provide good health care and improve or maintain the welfare of the public, Bagian said. Much progress has been made over the past decade, but change has been slow overall and not measurable in some places. If the system is to improve, the thinking cannot stay the same. First, a framework must articulate what needs to be accomplished to induce change (e.g., the goal of eliminating non-value-added care), followed by providing evidence for the framework, which together allow the system to reform. Payers of health care have to narrow down peo- ple’s choices of health care providers so that only providers willing to provide high-quality, high-value care are rewarded. It must be broadly recognized that current resources are being misdirected. Urgency for change does exist, Kaplan asserted. The system must tell and accept the truth. While some would say that Virginia Mason is different because it practices in community settings and an integrated system, the problems are the same: Evidence-based care is not followed consistently, and society is overpaying for medical procedures. Advances made by Virginia Mason have been great, Fritch said, but cannot be widely implemented and sustained in the current health care system. Overall incentives need to change to encour- age programs such as managed competition and capitated regional health systems so that health care organizations are not driven out of business by improving efficiency and eliminating waste.

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 THE BUSINESS CASE FOR QUALITY IMPROVEMENT Staff Competency In response to a question about staff competency inhibiting quality improvement, Bagian suggested that the problem is more of a systems issue because not knowing how to assess competency or how to outline it is a management issue, not a personnel issue. For example, the vision of nurses and surgeons is seldom checked, if ever, but can be problematic and cause adverse events to occur. Instead of reacting only after an adverse event has occurred because of a vision limitation and dealing with a single practitioner, a more systems-based approach would mean that all individuals requiring a specific level of visual acuity be proactively evaluated. Kaplan said that training and education are a big part of the problem. A lack of team-based training and systems training hinders progress. Simulation-based training could be used to ensure the competency of providers. Bad systems can make the most competent people look incom- petent, Spear said. In health care, it is often hard to find incompe- tent people, but it is very easy to find people who appear that way because the system often sabotages attempts to do the right thing. Physicians are poorly positioned to contribute to the well-being of systems because many never receive formal systems training. Additionally, physicians are not rewarded for the performance of the overall system, just their individual pieces. Research Pay for performance is producing results for only 50 percent to 55 percent of physicians, not 100 percent, which creates skepticism about whether financial incentives really can improve quality, Paul O’Neill said. Although a degree of patient compliance is involved, physician practices have the responsibility to implement improve- ment programs and change their own behaviors, responded Fritch. For example, one practice waived patient copays and provided the nurse support on its own. When the CDC declared that beta blockers should be used in 90 percent of cardiac patients by 2010, the VA was already up to 99 percent, said Bagian. Some argue that the VA had such success because it is a military system, but this is false. The obstacles to care are much the same, and the realistic pressures of physician reten- tion are the same. Physicians stay at the VA because of what they can do there, especially with the VA’s electronic medical record. The patients are also involved through the electronic medical record.

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 CREATING A BUSINESS CASE FOR QIR Combined, these result in better systems of care, which allows the VA to perform well on those measures, Bagian explained. Why more physicians do not participate in incentive programs is unclear, Fritch said. Some physicians do not believe the credibility of the data. Chart reviews have helped to allay some of the skepti- cism, but have not driven more people to change. This should be better understood. Current measures of quality evaluate only discrete aspects of care, Bagian said. Measures tell people that something needs to be fixed, not how to fix it. The problem is that many providers do not know how to improve. Therefore, poor performance should not nec- essarily be deemed as ignorance on the part of providers. Research should be looking at and advancing processes of care, regardless of the process’s utility. Often research can paralyze a process through analysis, Bagian argued. The lack of systems integration and management must be researched, Spear said. Health care is now measured in many disci- plines, but far less is captured about the experience of patients from start to finish. Drawing an analogy between health care and the automobile industry, the engine is not purchased from one place, the chassis from another, and the brakes from yet another. When consumers purchase cars, they let Toyota and General Motors worry about the integration. Yet, in health care, patients often manage the pieces and integrate them on their own. Additionally, consumer reports provide comparisons of different cars for people’s different preferences. Learning about patient experiences in health care is not as easy. Processes must be measured to provide incentives to work on overall processes of care as opposed to specialties of care. Until that happens, it will be difficult for both payers and patients to make informed decisions, Spear said. Transparency (and Consumers) Transparency is about processes and measures, as well as the work, challenges, and foibles of doing better, Kaplan said. Only when the system is fully transparent can an environment conducive to high-performing teams of physicians, nurses, and others be cre- ated to reduce defects, improve value, and take inefficiencies out of the system. Although it is encouraging that some efforts have moved toward becoming more efficient, many people are resistant. Agreeing with Kaplan, Bagian noted that transparency often is mentioned in the context of providing knowledge to consumers.

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 THE BUSINESS CASE FOR QUALITY IMPROVEMENT However, transparency is also critical internally within organiza- tions, for people must feel comfortable acknowledging that they can harm patients, a mind-set that must be supported by organi- zational leadership. Fritch agreed, adding that consumers must be made aware of improved quality and have consistent access to such information.