While health care delivery has always focused on quality, recent developments on both a national and a regional level are forcing clinical quality to the forefront as a critical issue confronting health care providers. The great impetus for this increased focus on enhanced clinical quality arises from the seminal studies published by the Institute of Medicine ("IOM"). The 1999 IOM study "To Err Is Human" estimated nearly 98,000 deaths occur annually from preventable hospital mistakes and errors. This IOM study spawned the creation of the Leapfrog Group ("Leapfrog"), an employer-led association dedicated to improving patient safety and reducing health care costs.
MARKET MANDATES
Leapfrog is aggressively promoting three patient safety initiatives focusing on computerized systems for medication orders, the use of critical care physicians in hospital ICUs and the development of evidence-based hospital referrals. While Leapfrog is clearly one of the major market forces driving health care systems to evaluate strategies for enhancing and touting quality, many other market constituents are also demanding enhanced clinical quality practices.
In the Spring of 2002, the Department of Health and Human Services issued its first public ranking of nursing homes based on certain quality measures in a number of regions around the country. While this is a pilot program focusing on long-term care facilities only, it is now clear this type of quality assessment will be applied to tertiary and ambulatory care centers in the near future. In fact, Rhode Island is presently implementing a mandatory reporting system for clinical outcomes in acute care hospitals. Under the Rhode Island regime, the state health department must report how well each hospital is complying with clinical guidelines for specific disease categories. Similarly, New Jersey recently announced the creation of a mandatory hospital report card that will roll out in 2004.
In the fall of 2002, IOM published a new study entitled "Leadership by Example: Coordinating Government Roles in Improving Health Care Quality" calling upon the federal government to develop quality of care standards and to create financial incentives to reward the delivery of quality care.
In evident response to the recommendations of IOM, the advocacy of Leapfrog and experiments by state regulators, Health and Human Services Secretary Tommy Thompson recently announced the creation of a new voluntary quality reporting program for hospitals that will be promoted by the Centers for Medicare and Medicaid Services ("CMS"). CMS will initially publish quality data for participating hospitals in three disease areas: heart attacks, heart failure and pneumonia. While still a voluntary program, this CMS-led initiative is backed by a number of industry groups, including the Joint Commission on Accreditation of Health Care Organizations, the American Hospital Association, the Federation of American Hospitals and the Association of American Medical Colleges. In light of the recommendations of IOM and mandatory quality reporting systems developing at the state level, it is only a matter of time until mandatory quality reporting is adopted by CMS as a condition for provider participation in the Medicare program. In the meantime, CMS will publish the quality data of hospital participants, and will also highlight hospitals that decline to participate.
All of these market forces are creating a groundswell of governmental, patient, employer and payor demand for demonstrable quality. For example, Leapfrog will use its quality rankings to identify health care systems that meet or exceed benchmarks, and to reward them by encouraging member corporations to contract with and seek care from these organizations.
Almost every major health care trade organization or association in the country has launched some type of focused quality initiative. Virtually all of these organizations provide some national clinical quality excellence award to at least one of their members annually. In fact, these quality awards are so prevalent that Modern Healthcare recently ran a cover story referring to the "Quality Award of the Week."
The current environment mirrors the environment for health plans in the early 1990s. During this time, regulators and employers teamed to create performance standards for health plans. These standards were used in the selection of plans by employers, and several large employers used performance to determine the level of employer contribution to the employee's health care coverage. We can learn three principal lessons from the 1990s.
First, parties controlling the purse strings will have their way, even though the various methodologies for discriminating between quality performance of providers will be imperfect.
Second, once all providers meet the "new" quality standard, external requirements will function less as a discriminator and more as a minimum qualification for participation, a "needed to play" requirement of the marketplace. As such, health care leaders are faced with the choice of investment in their clinical programs so that the standards can be achieved, or investment in marketing to explain why they do not meet the standards but should still be chosen.
Third, health care organizations prepared to prove their superior quality will have a leading role in establishing relevant benchmarks and metrics for quality performance. Reactive organizations will simply be judged by the established standards.
So how should health care organizations view and respond to this rapidly changing environment so as to remain "in the game" and indeed excel without suffering the organizational chaos created by responding to the "quality award of the week"?
STRATEGIES FOR HARNESSING THE POWER OF QUALITY
Depending upon the circumstances of the particular health care provider or system, there will be multiple avenues to pursue the enduring quest for clinical quality and excellence. The following is a brief discussion of relationships or strategies to spur quality improvement initiatives. The goal should be to build clinical improvement incentives in each of the organization's programs just as financial requirements exist currently. In order for the total organizational performance to achieve strong clinical performance, it will be important to build these performance expectations and alignment through incentives at the individual program level.
Clinical Quality Management. Clinical management arrangements may be designed with a specific quality emphasis. Clinical management arrangements are typically structured between an organized group of physicians in a particular specialty and a health care system. The physicians are engaged to assist the health care system in the management of certain elements of a particular clinical service line. In the clinical quality improvement setting, the physicians provide leadership and clinical consulting services designed to develop quality performance improvement plans and to help implement and execute those plans. In many instances, compensation may be paid to the physician/managers based upon a contingent compensation model pursuant to which the physician/managers are only compensated if and to the extent they are able to succeed in achieving certain quality goals or benchmarks.
Unlike the "gainsharing" arrangements that pose significant regulatory compliance issues, quality-based clinical management arrangements may create at-risk performance incentives for physicians. When structured properly, these incentives should enhance patient care, improve efficiency and reward physicians for the quality of clinical care delivered.
Health care systems may use quality-based performance incentives in a wide variety of settings. While quality incentives may be used in any number of areas, they are particularly effective in creating performance-based objectives for physician leaders and managers. Examples of these incentives include:
- Quality Incentives for Medical Directorships and Physician Compensation Programs. Rather than paying medical directors on the traditional hourly basis, compensation tied to the achievement of specific quality goals may be used to re-engineer and reinvigorate the role of the medical director. Similar incentives may be designed to drive quality enhancement by physicians employed in a group practice.
- Quality-based Rewards for Patient Care Teams. In the current competitive environment for recruitment of nurses, medical technicians and other clinical staff, quality incentives for broader patient care teams may improve employee retention, while empowering employees to take greater ownership for ensuring a quality experience for the patient.
- Quality-driven Privileging and Scheduling. In settings where acute care hospitals are struggling with divert status and inadequate capacity to meet growing patient demand, the award or retention of certain clinical privileges may be tied to the achievement of specified quality measures. For example, physicians who do not perform a sufficient number of surgeries to satisfy national benchmarks may not qualify for full privileges. Similarly, physician scheduling preferences may be tied to the achievement of quality goals. As a general matter, the highest quality physicians also tend to be highly efficient.
- Medical Staff as "Quality Institute." For health care organizations looking to embrace the quality movement in a bold fashion, it is possible to convert the entire medical staff into a "quality institute" with the mandate of achieving the highest quality standards.
Depending upon the nature of the particular organization, one or more of the foregoing quality incentive techniques may be useful. For example, clinical quality management arrangements may be best used to create durable alliances between acute care hospitals and groups of independent specialty physicians. In a more integrated setting, a quality incentive pool may be used to fund a non-qualified deferred compensation program for participating physicians. Where nursing recruiting and retention are key priorities, a quality-based retention incentive may be used to reward nursing units for improving patients' clinical outcomes while achieving high marks for patient satisfaction.
THE MULTI-FACETED VALUE OF QUALITY
The value of enhanced clinical quality is multi-faceted and may be measured on several different levels. The following is an inventory of areas where improved quality should produce significant dividends:
- Patient and Referral Source Satisfaction. Enhanced quality will create a better experience and more patient-focused care resulting in highly satisfied patients, families and their referring physicians. In the health care marketplace, like all other marketplaces, there is no substitute for the satisfied customer. As patients are asked to pay more of the cost of their care, the strategy to create more transparency with regard to clinical outcomes is structured to encourage patients to select providers who meet or exceed the minimum performance standards.
- Center of Excellence Status. A clinical program that distinguishes itself through a sustained quality-based initiative will develop a regional or national reputation and image that makes that health care center the system of choice for patients and referring physicians alike (e.g., there is a reason that former President Bush traveled to Rochester, Minnesota to have a routine appendectomy).
- Physician Leadership and Empowerment. A truly coordinated effort to improve clinical quality will recognize the necessary leadership role that physicians must play in managing and delivering patient care. A quality-focused clinical environment is likely to be a place where physicians prefer to practice and care for their patients. Physicians are likely to find a more balanced approach, requiring both financial and clinical performance to be a refreshing change and one which is more consistent with the core values of a health care organization.
- Clinical Best Practices. A robust clinical quality improvement effort will enhance the development and implementation of best clinical practices. These best practices inevitably lead to a reduction in variation of approaches to similar patients and a related reduction in the cost of medically unnecessary diagnostics and therapies. As a result, higher quality medicine should cost less over the long run.
- Enhanced Risk Management. Health care organizations that strive to set the community standard for quality health care will produce better clinical outcomes and fewer malpractice claims over time. For health care organizations insured by or contemplating captive insurance arrangements, the financial return for enhanced quality may be significant.
- The Bottom Line. Because quality-based performance will help clinical programs grow, while engaging physicians to enhance productivity and to reduce costs for delivering care to reduce risk, the highest quality programs will produce a better operating margin and will enable the health care system to invest further resources in the clinical service line.
ONE HOSPITAL'S APPROACH TO IMPROVING QUALITY FOR CARDIAC CARE
The recent efforts of one major metropolitan hospital are instructive. While this hospital maintained a solid full-service cardiac program, the competition for maintaining and growing market share was intense. The hospital was struggling to distinguish its services from its principal competitors.
In response to these pressures, a simple goal evolved: to become the cardiac program of choice for patients and physicians based upon exceptional clinical quality and service. While the goal was simple, the means to achieving the goal was not. Three key areas were initially identified: (i) improving processes for treating emergent patients; (ii) improving and standardizing the patient experience; and (iii) empowering a physician's "cardiac council" to make certain "best practices" decisions (within budget) regarding an array of clinical matters.
Once these objectives were identified, hospital administration began meeting with physician leadership for Cardiology and Cardiac Surgery and the directors of the related nursing units to develop an implementation plan with specific milestones. Benchmarks were also identified or established along with metrics to assess performance.
The hospital formalized its quality improvement plan through a written clinical co-management ("CCM") agreement. The CCM agreement established and authorized the physician's "Cardiac Council" to implement initiatives to improve the quality of care provided and created meaningful incentive compensation opportunities for participating physicians.
Through the leadership of the Cardiac Council, a collaborative partnership was established among emergency department physicians and staff and the cardiovascular physicians and staff. As a result of this collaboration, a patient presenting with an acute myocardial infarction is now seen and treated by a cardiologist in the cardiac cath lab 39% faster than before the quality initiative was launched, and 33% faster than the national average. To measure this objective, benchmarks were distilled from the Solucient database.
The Cardiac Council also adopted and implemented certain best practices for treating specific patient conditions. These best practices were based in large part on the American College of Cardiology's "GAP" program. Over a one year period, a significant degree of practice standardization occurred, and costs declined as unnecessary practice variation was eliminated. A consistent approach for the application of certain pharmacologic therapies and smoking cessation also emerged. Taken together, these steps reduced the average length of stay and significantly improved patient outcomes.
As part of this initiative, quality and service objectives identified by the Cardiac Council were assigned to medical directors with responsibility for specific segments of care (e.g., cardiac rehab, CHF program). A significant portion of the compensation for medical directors was tied to their quality objectives. This sense of ownership empowered these directors and created visible physician champions for quality and service improvement.
In order to align the efforts of medical directors with the nursing staff in each unit, specific patient satisfaction and quality objectives were also developed as part of an incentive program for nurses. Essentially, the program created a minimum and maximum annual percentage pay increase for nurses in each unit and higher pay increases were earned by the achievement of measurable objectives. (Note: This approach may be difficult to implement if the nurses are part of a collective bargaining unit.)
After two years, the results are very positive:
- The hospital has regained its status as a "Top 100 Hospital" for cardiac services and received a "5 Star" ranking from Health Grades. These awards are featured prominently in the current marketing campaign seeking to expand market share.
- The financial performance of the cardiac service line has also improved: productivity has improved while costs are lower. The Cardiac Council is presently engaged in a significant technology assessment initiative to address the future use of drug coated stents and the expansion of high-end cardiac diagnostics.
- Physicians and nurses are partnering to improve clinical outcomes and the patient experience. The recent awards have created a new sense of identity and esprit de corps for everyone associated with the cardiac service line. Physicians and the nursing staff, in particular, report that they feel like valued members of the care team.
CRITICAL ELEMENTS FOR SUCCESS
The choice to improve your clinical program means establishing an infrastructure which provides the capability of producing year-over-year improvements in clinical outcomes. Critical components of that structure are:
Clear goals – with measures
A methodology and an action plan
Performance Monitoring including
- measures of the desired outcomes
- measures of the effectiveness of the methodology
Strong and empowered physician leadership
- with appropriate assignment of responsibility and authority, coaching, feedback and development [training]
Coordination – Focus and Alignment among program components
- alignment of resources
- alignment of incentives of the participants towards the results you would like to achieve.
In order to stay ahead of the quality curve, disciplined and farsighted leadership will be required for successful organizations. While CEOs, CMOs and other senior executives must be standard bearers for exceptional quality care, Boards of Directors and Trustees must also embrace a quality-driven culture. Ideally, Board members should be actively involved in the creation of a dedicated quality committee to oversee initiatives for their health care organizations in order to fulfill their obligation to improve the health of the local community.
About the Authors
Forrest G. Burke, Esq., is a Principal of Dorsey Health Strategies and the Chair of the Health Practice Group of Dorsey & Whitney LLP. He may be reached at 612.340.6321 or burke.forrest@dorseylaw.com.
Meredith Mathews, M.D., M.P.H., is a Principal of Dorsey Health Strategies. He may be reached at 206.903.8816 or mathews.meredith@dorseylaw.com