Total quality management and the utilization review process.

Early in the development of the utilization review process, it was recognized that the more significant issues raised were related to quality assessment. There appeared to be an increasing interdependence between these two institutional processes. Health care organizations, striving to be responsive to the standards of outside reviewing and accrediting organizations, have historically separated these processes within the organization. However, neither utilization review nor retrospective quality assessment ensures appropriate utilization or delivery of quality in subsequent patient encounters. This has lead to new buzzwords in the health care environment: "efficiency" and "effectiveness."

Through the teachings of W. Edwards Deming and Joseph M. Juran (total quality management, TQM) and the application of Masaaki Imai's theory of "Kaizan" (continuous quality improvement, CQI), these buzzwords are becoming the internal "standard bearers" for the redesign of an organization's utilization and quality processes. The application of TQM and CQI principles to these processes transforms "utilization review" and "quality assessment" to "utilization management" and "quality assurance," thereby promoting the delivery of cost-effective quality.

TQM Principles

What does total quality health care mean, and how can its principles be applied in health care delivery environment? Issues of quality of care have challenged quality assurance professionals since the expansion of QA/UR functions in the 1980s. Quality improvement and system integration applications have similarly pre-occupied other service industries. The lessons learned from nearly a decade of applications elsewhere are now being transferred to the health care environment.

TQM, and its action corollary CQI, are theory-based models that integrate different departments or functions within a facility and guide process improvement through the evolution of a revised mission statement and strategic vision, problem-solving techniques, teamwork, statistical process controls, quality standards, and monitoring. TQM is a method of examining all processes within the system, establishing key preference indicators, and continually improving them. All employees should be included, not only because all processes can be improved, but because it is they and they alone who are ultimately empowered to transfer the organization's planned changes into reality.

In a TQM/CQI culture, quality is measured against the benchmark of customer satisfaction. Key indicators for improvement must be carefully selected in a departmental and interdepartmental framework and coordinated across functional areas. Techniques such as quality function deployment, benchmarking, and Pareto analysis can be used to match customer demands with system response, to set standards, and to identify problems for team quality circles to address. In this way, improvements in one department reinforce and strengthen the operation of others. Integrated cross-functional communication is improved, and better coordination of functional units creates a strategic design plan for the improvement of quality throughout the facility.

These changes not only require top management support, but also changes in the internal working environment. A TQM health care organization manages quality by strengthening horizontal communication, conducts concurrent evaluation, encourages team interaction and collective accountability, and fosters the creation of internal, customer-validated standards. This is in stark contrast to traditionally managed systems, which reinforce vertical hierarchies, assign blame retrospectively, suppress personal accountability, and increase autonomy by the promotion of external standards.

The focus of a TQM organization on internal process improvements facilitates improved outcomes. To accomplish this, the working definition of a "customer" is extended to include anyone affected by the decisions or actions of the health care facility. TQM breaks down processes into a series of identifiable customer-supplier transactions in which the objective is to improve the process and meet or exceed expectations of the organization. This may apply to a report for one's superior or to the delivery of timely laboratory results. It is only by considering the many transactions that make up an organization's actions that valid measures of quality can be developed. The key combination for transforming to a TQM organization is a behavioral-cultural change in concert with the previously mentioned statistical monitoring capacity. In this manner, the dynamic improvement process can be guided and monitored to reach desired quality levels, to increase efficiency and effectiveness, to reduce costs, and to improve overall system productivity.

TQM Application to Utilization

Management

Despite rising health care costs, institutional providers have seen a progressive shrinking of net income as a result of increasing operating expenses, capital outlays, and contractual obligations with fiscal intermediaries, third-party payers, and both third-and fourth-party administrators. Hospitals, especially tax-supported institutions, have the further financial burden of providing care to the uninsured. In addition, through its legislative representatives, society has demanded that the health care delivery system define and implement quality from a more accountable and less autonomous perspective.

In this arena of continuously changing policy direction and mandates requiring adherence to outside standards, health care has an opportunity to develop standards for efficiency and effectiveness from within the profession and its various institutions. While there are historical examples of such long-range planning opportunities, they have not always been recognized by providers and their organized representatives. In retrospect, the untimely demise of professional standards review organization (PSROs) and their replacement by professional review organizations (PROs) is an example of such a missed opportunity. TQM and CQI represent new opportunities. TQM does much more than just lower operating costs. It can significantly improve all aspects of quality and can lead to the creation of more economical delivery alternatives that can subsequently enhance access to the system. More important, it sends a clear message to those outside that the health care industry is capable of responding to societal concerns and that it can promote continuous improvement from within.

The list of health care provider institutions that have initiated TQM is growing. These progressive institutions, however, still represent only a small percentage of the total health care industry. If all of the recognized potential are accurate regarding the TQM (CQI) process, why are so few organizations committed to the concepts? Health care managers have raised a whole host of questions and defenses in resisting change. Typical responses of managerial resistance are.

* What will it cost, both in resources and risks?

* We can't afford it.

* Why do we need it?

* Can you guarantee it will work?

* We already have quality and excellence.

* We won't be able to sell the concept to staff and physicians.

* If we decide to try it, where do we start?

* We may not be able to change thinking so that we can plan to avoid the crisis.

In addition, there are those who need to have the benefits of such a change proven before they make a commitment. Perhaps part of the answer can be found in the reluctance of health care administrators and top managerial personnel to upset the status quo when the industry is experiencing such tumultuous times. Finally, there are top managers who are uncomfortable with any type of transformational approach.

TQM and CQI involve a transformation in a "top-down" fashion. However, as hierarchial resistance to change is encountered, it may become necessary to look for other windows of opportunity. One such window is the organization's utilization review process. The rationale behind utilization review was that if one could review, direct, and even control the way physicians used hospital services, the rate of cost escalation could be controlled. Predictably, the approach began to alienate professional staffs. External and internal review groups' asking the once autonomous physician for justification, demanding documentation, and questioning use of resources have done little to bond the hospital and the physician.

In more recent years, many health consultants and institutional task forces have demonstrated that the causes of overutilization of services frequently rest with institutional inefficiency in how services are delivered. There is a lack of systems integration essential to effectively and efficiently process patients and respond to their needs. Utilization review, along with quality assurance, interacts with nearly every system within the institution. Therefore, it offers the opportunity to increase the effectiveness and the efficiency of multiple departments simultaneously. It provides the opportunity to demonstrate the merits of the quality management process to skeptics. This more subtle approach, with its quantifiable results, can win support from administration and the professional staff. In addition, it can reduce contractual losses and lessen potential risk management exposures.

For such a process to work, the director of the utilization management function must have knowledge of the TQM principles as well as experience in applying them. Through ongoing education of UR coordinators and all of the interacting departments, an environment is created that stimulates initiative and leadership. Regularly scheduled integrated meetings in each patient area provide opportunities to express ideas and review progress of the implemented changes. Among the areas included in this type of process orientation are all nursing care areas, regardless of intensity of service; emergency services; surgical suite; recovery suite; admitting and discharge areas; social service; nutritional services; and diagnostic services. The interconnected "team" system used to define and analyze effective utilization and efficiency moves the organization closer to true quality assurance (as opposed to retrospective quality assessment). Also, the interdepartmental "teams" foster a sense of pride of participation in greater goal achievement. The various service delivery areas rapidly recognize that they too have entered an era of increased accountability.

Physician education, in a nonadversarial and nonthreatening environment, helps to move away from the historical position of autonomy and into the era of creative and collective accountability. Society as a whole has become more actively involved in the health care industry. This has increased the requirement for accountability, justification of the use of limited resources, and documentation of rationale for patient management strategies. Meeting these standards, when driven by external forces, constricts the process to the specific situation. By contrast, if these standards are created within the organization, as identified by the utilization management process, fear is removed and barriers are broken among the staff within a continually improving team approach. The development of this team approach presents opportunities directed at examination of processes, such as improving delivery quality, conserving limited resources, and improving the process of risk management. This approach opens the opportunity of looking at outcomes other then mortality. Examples of such outcomes measurements can be avoidable complications, costs per case, length of stay, and patient satisfaction.

This nontraditional approach to the implementation of TQM has proven merits. If the net result of TQM is to improve the process in an ongoing fashion, it must have an applicable role in the utilization review process. Once the principles of working in teams and identifying problems and resolving them takes effect and assigning blame stops, utilization review ceases to exist and utilization management becomes an integral part of ensuring proper utilization and ongoing quality. TQM becomes the umbrella for quality assurance, utilization review, and risk management. In so doing, it improves quality, reduces the cost of delivery, and offers an opportunity for increased accessibility to the health care delivery system. It once again readdresses the public policy issues of cost, quality, and access.

Jack B. Miller, MD,MBA, is President of Healthcare Consulting Resources, Inc., and is presently Consulting Director of Utilization Management, Mercy Hospital, Miami, Fla. Michael Milakovich, PhD, is an Associate Professor, Department of Political Science, University of Miami, Coral Gables, Fl. and a Consultant to Healthcare Consulting Resources, Inc.