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The future of healthcare will be about money. As we move past the access issue, the remaining key issue for healthcare is the amount of money we are spending as a country, both as a percent of GDP and in absolute terms of dollars per person. We spend more than any country in the world and increase our spending every year. The U.S. spends almost twice as much per capita on healthcare as other developed countries, and although other countries are spending more each year, no one is close to catching us.1, 2
Value in Quality, Outcomes?
Peter Orzag, former director of OMB, has spoken frequently about the danger that rising Medicare expenses will crowd out other areas in the discretionary spending budget. There is also some evidence that we are not getting our money's worth in terms of either quality of care or outcomes. Within the U.S., there is wide variation in the amount spent per capita and the results of care, but the two are not correlated; spending more does not guarantee better care or better results. Surgeon and noted author Atul Gawande has written eloquently about McAllen, TX, the poster child of entrepreneurial excess. 3
Supply and Demand
At one time we thought that increasing the supply of providers would foster competition and bring down the unit cost of healthcare. Medical schools were expanded and new ones created, but since prices are determined by third parties, the net result was more doctors providing more care for more money.
Recently, proposed solutions have focused on the demand side by encouraging patients to take better care of themselves and thus reduce their need for healthcare. Another approach to reducing cost has been to simply reduce payments within public programs, such as Medicare and Medicaid.
The response from many providers to this latter approach has been to withdraw from these programs and, indeed, from all health insurance programs and bill patients directly. These solutions work at the margins for some individual practitioners, but they will not solve the problem for the country as a whole.
New Demands
Improving the health of individuals and changes in personal habits induced by health promotion may reduce the need for healthcare, but not soon and not by much. Healthcare demands in our aging and obese population will likely overshadow any gains achieved by sharing risk with younger members. In addition, the epidemic of obesity in the U.S. population will produce more demands for healthcare in every segment. There will always be a need for the healthcare services we provide, although we may not be paid as well in the future. The challenge thus becomes how to provide the same service at a lower reimbursement while making enough on the transaction to keep the doors swinging.
Innovative Solutions
The usual sort of cost-cutting efforts will not suffice here. Dramatic cost reductions will require "disruptive innovation" and a re-thinking of the way we conduct our business. Specifically, we need to think about an umbrella management system such as ISO 9001 to ensure that our patient care processes are running well. The future will demand greater efficiency in the provision of services at all levels, both in the physician office and hospital.
Healthcare as an industry has not been subject to price competition, so process improvement techniques successfully utilized in other industries have not been widely deployed in healthcare. There are isolated examples of Lean or Six Sigma used successfully in healthcare organizations, but examples of system-wide implementation are rare. Thedacare in Wisconsin and Virginia Mason Medical Center in Seattle have demonstrated that such efficiencies are possible, but even when process improvement tools have been implemented, they have not resulted in a reduction in charges for that service or loss of market share for less efficient competitors.
Enter Integration
To some extent, this relates to a failure to integrate various systems within an institution. It's hard for many hospitals to know exactly what it costs to repair an inguinal hernia or perform a total hip replacement because the many systems that contribute costs to these procedures are not integrated. Hospital accounting systems are not well equipped to allocate relevant costs to a given patient encounter. In sum, we generally lack a management system to focus efforts on common goals and produce metrics to document progress toward those goals.
In any given organization, there are probably isolated areas of excellence with respect to efficiency. The trick will be to translate those efficiencies to all areas and reinforce the focus on cost savings throughout the organization so that it becomes part of the organization's culture. This will require a management system that establishes clear goals from the top down and measures progress on those goals from the bottom up.
One example is ISO 9001:2008. ISO as a management system has made some gains in the healthcare industry and is part of the DNV accreditation program for hospitals. ISO demands measurable goals from senior management and documented progress toward meeting those goals at every level in the organization. These ISO standards force the organization to declare common goals and objectives, then require process owners to measure their performance relative to those goals and objectives. As well, the organization must identify their key services and define metrics for their progress and outcomes. At the end of each year, an outside auditor will verify that these things have been done.
Importance of Metrics
Admittedly, this is not a perfect science, and the metrics initially chosen may not relate perfectly to organization goals or customer needs. However, with prodding from senior management, metrics become progressively more relevant and may even provide objective evidence of a need for more resources. Employees involved in the process itself become skillful at improving efficiency.
The state department is a bureaucracy without a profit motive, so we emphasized time as a process metric. It's easy to measure, well understood and consistent with customer needs.
In an employee survey one year after instituting ISO 9001 in the State Department Medical Services, one employee remarked, "Stuff happens faster now."4 For example, eliminating one form cut two weeks off the average time to hire new employees. The Physicians' Clinic of Iowa (PCI) saved over $200,000 in the first year as a result of initiatives related to ISO. 5 They also more effectively managed new initiatives by implementing the mandatory steps in the ISO standards for new services.
Most of the changes instituted after ISO could have been done without it, but the management system prodded us to do those things we knew we should be doing. In that sense, ISO is an enforced discipline.
We believe that a management system such as ISO 9001 can provide the necessary structure to support improvements in efficiency. The result will benefit everyone-patients, providers and payers.
References:
1. White, Chapin. Health Care Spending Growth: How Different is the United States from the Rest of the OECD? Health Affairs, 26, no. 1: 154-161, 2007.
2. http://www.oecd.org/document/38/0,3746,en_21571361_44315115_48289894_1_1_1_1,00.html
3. Gawande, Atul. The Cost Conundrum, The New Yorker, June 1, 2009.
4. 5. Burney, Robert, MD and Levett, James, MD; Quality Progress 2009
(The last 2 references requested are based on the experiences of each of the two authors.)
Dr. Robert Burney is director, Quality Improvement, U.S. Dept. of State and chair-elect of ASQ Healthcare Division. Dr. James Levett is past chair of ASQ's Healthcare Division and chief medical officer, Physicians' Clinic of Iowa. They have co-authored a new book called Using ISO 9001 in Healthcare.
 The content for the Eye on Quality is contributed by ASQ (American Society for Quality) as part of a partnership with Executive Insight. For more information on ASQ activities, educational offerings and/or membership, visit the ASQ website at www.asq.org/healthcare or call ASQ at 800-248-1946.
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