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 product outcomes and customer/public safety? How do we learn from them?


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 considers 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 management 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, quality, 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 physicians 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 management have resulted in improved care, fewer emergency room visits, and fewer admissions, yielding large financial savings. Costs actually 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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