Removing Barriers to Improved Healthcare Quality - health care management theory - Brief Article

Healthcare Financial Management, May, 2001 by Jeanne Schulte Scott

"America's health system is a tangled, highly fragmented web that often wastes resources by providing unnecessary services and duplicating efforts....The time is ripe for a major overhaul."

--From the Institute of Medicine's 2001 follow-up report on medical errors, Crossing the Quality Chasm: A New Health System for the 21st Century.

"The system is failing because it is poorly designed. For even the most common conditions, such as breast cancer and diabetes, there are very few programs that use multidisciplinary teams to provide comprehensive services to patients."

--William C. Richardson, executive director of the Kellogg Foundation and chair of the Institute of Medicine Committee on the Quality of Health Care in America, which recently issued the above report.

A little over a year ago, an Institute of Medicine (IOM) report, To Err Is Human: Building a Safer Health System, shocked the nation with the revelation that at least 48,000--and perhaps as many as 96,000--people were dying each year as a direct result of medical treatment errors. The issue of medical errors surfaced during the 2000 elections, and several dozen bills relating to medical errors have been introduced in Congress this year. HHS Secretary Tommy G. Thompson has said his department will address the issue as well.

In March, the IOM released its follow-up report, Crossing the Quality Chasm: A New Health System for the 21st Century. The report makes the following recommendations for revamping the nation's healthcare system to improve patient care:

* Healthcare providers, payers, policymakers, purchasers, and patients should commit to a national effort to raise healthcare quality to "unprecedented levels";

* Providers, patients, and payers should agree to a "redesign" of the processes by which care is delivered;

* The Federal government should identify "priority conditions" that need to be addressed first and provide resources to "stimulate innovation" and "initiate the change process";

* Healthcare organizations should support fully the changes needed to improve care; and

* Participants in the healthcare industry should foster an environment for change in healthcare delivery by creating an "infrastructure to support evidence-based practice," facilitating the use of information technology, and aligning "payment incentives" to encourage quality

The IOM proposed 10 rules aimed at making health care more responsive to patients' needs. These rules call for the customization of patient care and stipulate that patients should be given information about their care and retain control over it. The healthcare system should "anticipate patient needs rather than simply reacting to events," the report states. The report also calls for clinical decisions to be based on the "best scientific evidence" available and urges increased communication and coordination among clinicians.

Beneath the rhetoric of these recommendations, challenges exist for the healthcare industry, in general, and healthcare financial managers, in particular. The needed changes all will cost money, and healthcare financial managers will be asked to find ways to finance them.

The IOM calls on Congress, the president, and healthcare entities (including information technology vendors) to make a "renewed national commitment" to building an information infrastructure that would measure outcomes and effectiveness, help identify potentially fraudulent and abusive billing practices, and reduce medical errors through better legibility of orders, prescriptions, and diagnoses. The goal would be to eliminate virtually all handwritten clinical data by the end of the decade. The estimated cost of building the health information infrastructure that may be needed to meet the IOM's goal is $30 billion to $50 billion.

The IOM report partially addresses the cost issue by suggesting that the government has a responsibility to encourage development of this infrastructure, both directly through grants and aid and indirectly through tax incentives and accelerated depreciation schedules, among other devices. Given the current political preoccupation with balanced budgets, tax cuts, and spending restrictions, such a suggestion probably is not realistic. But the IOM also suggests that private and public payers (including HCFA) need to change the way they pay providers to "remove barriers which impede quality improvement" and provide incentives for quality enhancements. To accomplish these goals, the following practices should be instituted:

* Payment policies should compensate providers adequately for care of all patients, neither rewarding nor penalizing providers that care for sicker patients.

* Payment should be aligned with best practices and the achievement of better outcomes. In a free-market society better outcomes are more probable when providers are rewarded for providing more efficient, effective, patient-centered care.

* Providers should have an opportunity to share in the benefits of quality improvement, with rewards being shared with the entities at which the necessary reengineering or process design has taken place.