The continuing quest for excellence in health care delivery.

Physicians have struggled for centuries to find better ways to deliver high-quality health care. Only in the past two decades have they begun to ask: What is quality, and how can it be achieved? Even more recently, a new question has been added: How can quality be measured?

TQM: One Path to Quality

In a presentation on "Health Care Quality and the Physician Executive," Harvey Dershin demonstrated how TQM works in the health care arena. Dershin, who is Executive Vice President and Chief Operating Officer of Grant Hospital, Chicago, Ill., noted that "TQM is an evolution in the way work is done."

When a quality management strategy is employed, everyone has responsibilities, Dershin said. Customers are responsible for transmitting needs to suppliers, providing feedback to suppliers, and obtaining feedback from suppliers. Processors are responsible for planning a process to meet customer needs, controlling the process to meet customer needs, and improving the process based on those needs. Meanwhile, suppliers are responsible for knowing who their customers are, avoiding creating problems for customers, and obtaining feedback from them.

"Get over the idea of being defensive," Dershin advised. "Every problem is a jewel and should be treated like one. Give serious thought to organizing for quality."

Kevin Sullivan, founding partner of the San Diego-based consulting firm Sullivan/Luallin, got into the nitty gritty of quality in his presentation, "Nuts, Bolts, and Bailing Wire: What They Don't Tell You about Implementing TQM." "Why is it that some hospitals and medical practices that get involved in quality improvement are very happy that they did and can count the results and others cannot? What separates those who are glad and those who wish they were?" asked Sullivan. "We believe the secret is implementation."

Sullivan admitted that "quality improvement will not solve every problem; it's not a cure-all." Quality should also not be construed as "a bail-out strategy for organizations that are going down the tubes."

"In an uncertain market where there is a certain amount of chaos, where there's tougher competition and more demand from customers, you and I have only three strategies," Sullivan said.

* "Lead in one of them; it hardly matters which one you pick - as long as you pick one and do it right. The idea is to redefine quality for patients, indicate to them that they can expect a higher level of responsiveness to their needs if they choose your service," he said.

* Sullivan suggested that quality be folded into the existing process. Hold seminar retreats to assess patients. Establish a quality council. Reach a consensus. Bring in a quality improvement coordinator. Orient physicians and staff, and teach facilitators the process so they can teach others. Establish pilot quality teams. "Then, look back in 12 months," Sullivan advised. "See if it's the right time. If it is, implement quality improvement."

But the hospital and the physician cultures are very different worlds, Sullivan added. "It would make sense that the hospital and medical group must be able to talk the same language, must be able to collaborate on projects," he said. "But since hospitals and medical tracks are different, we must have two tracks for implementing TQM."

* Finally, he warned, "if something goes wrong, there's an 85 percent chance it's the fault of process-not people."

Michael Pine, MD, MBA, president of Michael Pine and Associates, a Chicago-based consulting firm, urged that those who want to implement a TQM program should first "start looking at what we've been doing before we reject everything we've learned."

Pine stressed using "individual designs" for TQM programs and said planners should ask themselves a few basic questions before making any changes: "Where do we get the ingredients? What is the clinical necessity and preference? What do you do when the pot boils over? How is the stew going to taste?"

Pine agrees that improved data collection and sharing of information are necessary, but he doesn't want physicians to be left out of the process. "As physicians, we have to be allowed to set our standards," he said. "We've moved into a world where outcomes will define standards for us, but we still have to be involved in creating the analytic framework."

Clinical Benchmarking

Consistency of process is a quality problem that hinders clinical benchmarking, according to Alan C. Brewster, MD, Vice Chairman and founder of MediQual Systems, Inc. Brewster's firm uses computerized algorithms to classify patient admission severity and monitor changes in severity during hospitalization. The system provides a measure of medical performance that permits focused quality of care review and resolution of resource overuse.

Clinical benchmarking is a technique that takes some of the mystery out of achieving quality. The hospital model of clinical benchmarking looks at patients'clinical findings, histories, results of physical examinations, and laboratory data. Brewster believes that performance differs among hospitals and can be measured. He also believes that "performance is improved by managing clinical processes. You can actually describe the financial and clinical results of improving the clinical process. The best performing hospitals have consistent processes 24 hours a day. The clinician makes sure."

But before clinical benchmarking can be undertaken, the patient population must be studied. "If you have no knowledge of the patient population, you will not understand the patient care process," Brewster said. "The discharge diagnosis does not give the information necessary for the subpopulation of clinical requirements that are necessary."

He advises clinicians to create a management plan and make sure it's measurable. "Appropriateness to patient is a quality issue; the use of resources is not," he said. "Efficiency is also a quality issue. If you're giving too many resources or too few, it's a quality problem." Brewster added that utilization is also a quality issue and that, if it's addressed as an efficiency issue, it will never be resolved.

Clinical Guidelines

J. Jarrett Clinton, MD, MPH, has been administrator of the Agency for Health Care Policy and Research (AHCPR) since 1991. The agency, which is one of eight within the Department of Health and Human Services, is charged with developing health care quality measurement and improvement.

"Just looking at disease alone is insufficient," Clinton said, adding that clinical guidelines must address credibility (the degree to which guidelines are graded by science), disclosure (making findings known), and validity (proof of evidence). The guidelines should answer the questions: What looks best? Has the patient improved? By how much? From whose viewpoint?

AHCPR'S new Medical Treatment Effectiveness Program contains the following components: data system, research, guideline development, dissemination and evaluation, technical assistance, and computerized decision support systems. Clinton said guidelines are revised every two years, and it's a laborious process.

"The lag time of literature is so great," he said. "We're now working on low back pain literature. There are an average of 40 new articles on the subject per month, and all that information has to be synthesized." The literature that the agency provides for physicians is designed to help them make a correct diagnosis and treat the problem and to guide them in deciding when to appropriately refer the patient to a specialist.

The Role of Peer Review

Organizations in Quality

William H. Heydorn, MD, Associate Medical Director of California Medical Review, Inc., discussed the evolution of peer review. The first medical care review organizations were formed in 1970 and comprised physicians who checked on the performance of hospitals. In 1972, Professional Standards Review Organizations (PSROs) were established. There were 200 such groups, which were financed by the Health Care Financing Administration (HCFA). "Congress thought the function of PSROs was to save money; the members thought it was for quality of care. HCFA thought it was both," Heydorn said.

In 1982, the Tax Equity and Fiscal Responsibility Act was enacted by Congress, and peer review was reorganized. Then, in 1983, Congress mandated that health care costs be contained and came up with the prospective payment system of DRGs. Peer Review Organizations (PROs) were charged with monitoring reimbursement and had the power to sanction those who didn't comply.

"They were to make sure Medicare services were reasonable, necessary, appropriate, and of high quality," Heydorn said. "But nothing in that mission said that one had to be effective; they didn't say anything about results. Peer review is not working."

The main reason it's not working, according to Heydorn, is because the government collects data but does not convert the data to information that could be evaluated and used to improve care. Another stumbling block is that peer review varies from state to state, and the information is not shared. In an attempt to solve these problems, the Quality Assurance Initiative was created last year. Using a new data collection system called the uniform code data set (UCDs), medical records are studied and data points noted. This system reveals performance above and below a mean. The idea is to inform the out-liers and give them an opportunity to change their behavior and conform to the norm.

"Every PRO in the country is using it [UCDS] for at least some of the data," Heydorn said. "The way to change doctors' behavior is to change the way you pay them. I can see a time when, if you don't use the right intervention, you're probably not going to get paid for it."

Two other projects are also under way to provide improved information. The Medical Information Project deals with hospital mortality data and ways to enable PROs to present the information in an understandable fashion. The Cooperative Cardiovascular Project is collecting data with the UCDS system. Various cardiovascular procedures, such as coronary artery bypass grafts, are being studied to improve patterns of care and outcomes.

While Heydorn doesn't believe PROs are as effective as they could or should be, he said there have been some improvements in the way the groups are doing their jobs. They are looking at "patterns of interest," out-liers on the good side of the curve and what they are doing to achieve their success. They are also looking at "patterns of concern," out-liers on the bad side of the curve, and getting them to correct their behavior.

"The emphasis of PROs has switched from a one-on-one confrontation to one where PROs will deal with the institution (instead of pointing the blame at physicians)," he said, adding that PROs have also stopped assessing points for errors. "They still have the ability to catch a few bad guys, but their success rate is not very good. Offenders would have to be bad and unwilling to do anything about it before they're sanctioned."

Quest for Quality Also

Pervades industry

The quest for quality is not new to industry. Companies such as Eastman Kodak and Xerox pioneered quality improvement long before the health care industry got involved. One of the keynote speakers at the conference, Patrick Mene, Vice President for Quality at the Ritz-Carlton Hotels and winner of the Malcolm Baldrige Quality Award, talked about the effects of poor service and how TQM turned the hotel around and allowed it to grow from one hotel eight years ago to 27 today.

"We hire people scientifically," Mene said. "We have a gate review, character trait recruiting. If they don't match, they don't get in." During the first hour of work, the hotel's president and CEO "aggressively communicates our vision, values, and key methods. The vision is genuine care and comfort of our customers."

New employees are quickly integrated into the hotel's TQM program and become part of a quality team. The teams are responsible for setting objectives for the hotel. They must write a mission statement and identify the most important suppliers and problems. They are also required to write an action plan to solve the problems.

Mene admitted he knew nothing about TQM when he first became a hotel manager. While instituting TQM was not cheap, he believes it was money well spent. Quality is a capital improvement process," he said. "You can save $100,000 for a $15,000 investment [in TQMI." 11

Relationships Foundation of Organizations

In spite of many sessions over several days, the message for those who attended Perspectives in Medical Management was quite clear: All improvements in systems are the residue of interpersonal relationships. Relationships are the foundations of all events in an organization.

According to Kenneth Blanchard, author of The One-Minute Manager, "Everything is about relationships." People - senior managers included - must accept their own vulnerabilities and weaknesses if they are to communicate effectively with others. The days of paternalistic and ultrahierarchical organizations are coming to an end.

The success of any system is based on several parameters: being customer-driven (meeting customer needs), being cost-effective, being fast and flexible, involving everyone in the organization in problem solving, and continuing to improve. A "learning organization" must emerge, or the system will never have the competitive advantage it needs.

Winning companies stand on three legs. First, they design such excellent services that customers become "fans" who "sell" the organization to others. Second, they empower workers and give them feelings of ownership of the company. Finally, they have financial strength. It is not enough to have two of these legs. All three must be present and strong. Otherwise, the organization will struggle and eventually fail to compete with those that have the three legs.

Blanchard points out that vision does not equal implementation. Visionaries may have good ideas, but it takes another type of expertise to make systems work. The best organizations have vision, direction, and effective leadership. When leadership is effective, the people "at the front line" are part of the designing team. The workers should design the system to deliver quality and service and should be empowered by the leadership to do it regularly and do it well.

These thoughts are not just one persorfs view. Andre Delbecq, Phd, of Santa Clara University, Santa Clara, Calif., also pointed out that success comes from empowering people who possess local knowledge and who find alternative right answers because they want to improve the system. Centralization and hierarchy are barriers to innovation and success, he said.

Finally, Patrick Mene, Vice President of Quality for the Ritz-Carlton Hotels, said that "relationship management" is the key to quality. The social structure of an organization is critical. Teams that do the work must set their own goals.

As managers and leaders, physician executives have an opportunity and face a risk. We can work aggressively on building positive relationships within the workplace, or we can ignore the messages of the experts. The former allows ur, the opportunity to carry health care forward. The latter risks our disappearance from the world of medical management.

Health Care Debate Reduced to Speculation

The first 100 days of the Clinton Administration were slated to be the subject of a debate between the Chair of the Board of Trustees of the American Medical Association and the senior advisor to HHS Secretary Donna Shalala at the Perspectives in Medical Management conference. However, because the Clinton Administration did not produce a national health care plan by the 100th day, the thrust of the exchange moved to speculation about what might be forthcoming.

According to press accounts, the AMA was miffed that its key players were not invited to sit at Hillary Rodham Clinton's Health Task Force table. But its board chair, Raymond Scalettar, MD, denied it. "We weren't rebuffed," Scalettar said. "We hadn't asked to be part of it. We don't want to sit at the same table as Mrs. Chnton; we want access." Scalettar said AMA members have since met, not only with the task force but also with health care plan architect Ira Magaziner, on numerous occasions.

Although details of the Administration's plan are not known, the AMA is very clear on what it wants for its physician members nationwide. "No system is going to work unless it gives physicians the right to change patients or practice plans," Scalettar said. "Strict global budgets and price controls are unworkable."

He further stated that physicians must have the ability to negotiate with Medicare and its schedules. "Look at the Medicare system," he said. "Capricious denials of benefits that fly in the face of what is high-quality care. We need regulatory relief and liability reform. They must be part of the deal."

The AMA fears the Administration will create a benefits package Scalettar described as a "high-priced Christmas tree. They're going shopping for cheap medicine," Scalettar asserted. "They'll pull the rug out from medical innovation, which will lead to another bureaucracy. As a prelude to real reform, all the players must consider voluntary constraints of fees and expenditures. It's a shared sacrifice."

The AMA, Scalettar said, supports universal access, insurance reform, community ratings, employer mandates, and tort reform. "We can only support reform that's all-inclusive," he said. "We're not on board yet. We'll wait and see what they propose before we make any judgment. The devil is in the details."

Although Scalettar provided plenty of fodder for dissension, HHS Secretary Senior Advisor David Kindig, MD, PHD, didn't retaliate. In fact, Kindig said he wasn't "plugged into" the task force meetings. Instead, his efforts have been directed at helping Donna Shalala headhunt cabinet appointees.

Kindig knew Shalala when she was chancellor at the University of Wisconsin, where he's Professor of Preventive Medicine and Director, Administrative Medicine and Health Services Administration Graduate Programs at the university's school of medicine.

"I had known for 6 weeks prior to her nomination that she was interested in this position," Kindig said. "She called me and said, |Would you help?' I said, |Of course.'" For the first two months, Kindig said, he worked with Shalala on issues of confirmation, transition, the budget and key appointments. "I think the department will definitely feel her mark," he added.

Kindig had little to say on the subject of the national health care plan. He said he's not upset that the administration passed its deadline for releasing a health care plan and that it was wise to take extra time and perfect the plan. He said he would be very surprised if Ira Magaziner "didn't include the basic elements of managed competition" in the plan. Kindig speculated that there will be "some kind of global budget setting" and that individual states will be given flexibility in formulating their health care plans.

The impact of Diversity in Health Care

Diversity can be defined in many ways. It can take the form of cultural, religious, gender, age, or even work ethic, according to Lee Gardenswartz, Phd. Gardenswartz, who's a partner in the consulting firm Gardenswartz & Rowe, has specialized in the "human side of management" for about a dozen years. In her program at Perspectives in Medical Management, she focused on some of the aspects of diversity physician executives should consider in managing employees and getting along with people in general.

In preparing for her discussion, Gardenswartz said, she interviewed men and women physicians around the country to gather examples of how diversity has affected their work forces and their lives. One physician told her his patients older than 60 have a different relationship with him than his younger patients do. "In the older group, doctors are still the gospel and can't do anything wrong," Gardenswartz reported. "People in their 20s, 30s, and 40s are coming into a hospital saying, I want a partnership with my physician. You tell me something and if I don't like it, I'm going to go out and get a second opinion."'

Gardenswartz pointed out that 70 percent of the people in the world view life differently from the way we do. "In health care, in the ethnic culture, there is a strong sense of predestination and fatalism and that what happens is God's will," she said. "What that does is significantly alter how people view medicine and the role of medicine. In this culture, we talk about prevention and wellness and take responsibility for our life-styles."

Some of the women physicians experienced a gender bias. Gardenswartz said one told her that her 6-week recovery period following a C-section was criticized, while a male colleague's 6-week recovery from back surgery was not questioned. Another said she was told that, if she weren't pregnant, she'd make a great president of the medical society.

"You don't notice where the rubs are unless you're calling the shots," Gardenswartz said, adding that good clinicians and managers often excel in their work but sometimes lack the ability to deal with and understand people whose backgrounds are different.

In another instance, Gardenswartz was told that hospital recruiters are having a hard time finding enough female physicians to hire. The recruiter, she said, used poor taste in referring to women physicians as "hot items."

There's also diversity in race. "In my mind, diversity is a business issue," she said. "Human beings tend to spend time with people most like them." In some cases, racial diversity can be a financial advantage to a health care organization, she said, pointing to a hospital located in a community heavily populated by Southeast Asians. This hospital brought in interpreters and recruited Asian physicians. By catering to the ethnic population, the hospital was able to capture that market.

Where and how people are raised also contribute to their diversity and affects the way they view and live life, just as religion does.

"There's also a diversity in work ethic," Gardenswartz said. "Some people are willing to work long hours; others want shorter hours and life-style choices. That affects how people work together. I want people to understand that culture is a two-way street and show some sensitivity. We all think our way is the right way."

The Future Uncoiled 

Futurist Russell C. Coile Jr., MBA, likened the various health care providers to fish in the managed competition food chain of the future. He warned participants at Perspectives in Medical Management that those that don't take the bait and form physician/hospital organizations (PHOs) now will be tomorrow's bottom feeders.

"The incentives that will drive the new system under health care reform and managed competition aren't fully understood yet. But, all over America, we are finding cadres of physicians and physician organizations and hospitals that understand what needs to happen next," Coile said.

Coile pointed to Minnesota, Oregon, New Mexico, and a few other states that didn't wait for federal mandates to initiate change. They have already begun "reinventing hospitals' future" by launching innovative plans that incorporate managed competition strategies.

Coile predicts three major structural reforms in the new health care system:

* Cost controls.

* Universal access.

* Creation of a market of buyers and sellers that agree to a capitated payment.

Cost controls are "the painful part of the prescription," Coile noted. He sees voluntary controls, with a built-in trigger factor - a cap that will prohibit physicians, hospitals, and pharmaceutical companies from exceeding an established limit.

Coile foresees that universal access will be initiated within three years, with a five-year roll-out period. "They [the federal government] will start with the largest firms and work down to the smallest" in instituting employer mandates through a utilization payroll tax mechanism. "Every one percent increase in Social Security withholding generates about $25 billion to $30 billion worth of new revenue," he said. "We can also compel employee cost sharing in these increases through payroll taxes."

Coile believes capitation will be an integral part managed competition, which he said is inevitable. "The interesting thing about capitation is that purchasers have zero risk," Coile said. "Providers accept 100 percent of the risk - the financial, legal, clinical risks and the risk of meeting consumer expectations. This is a terrific deal for the purchaser. But it's also good for providers, because, for the first time, they get control of the money. The opportunity under managed competition is for providers to allocate resources in their best clinical judgment, using their best sense of medical economics."

The building blocks holding together the system that Coile predicts are PHOs. "Hospitals need to move very swiftly to form PHOs that can move into the vacuum we have in our market today," he said. "The market is being filled by primary care medical groups that are treating hospitals like vendors. Hospitals can either be network organizers, or they will be vendors."

Under the current system, Coile said, hospitals receive 38-40 cents on the dollar. Under managed competition, that amount will fall to 30 cents, "so hospitals need to reposition themselves with a physician partner to cooperate, collaborate, and develop the new structures that the market is going to demand."

Under the new system, which will emphasize primary care, those with clinical and managerial expertise in health care will be in great demand. "We need medical executives to manage these organizations," he concluded. "Managing clinical care is the make/break factor in health care reform."

Donna Vavala is a Contributing Editor of Physician Executive. She is Managing Editor of College Digest, ACPE's bimonthly newsletter.