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Quality in the health care industry.

The cost of health care in the 1980s grew at an unprecedented rate, and the escalation of this cost is predicted to continue into the next century. Expenditures for health care accounted for 11.1 percent of Gross National Product (GNP) in 1988 and are projected to reach 20 percent of GNP in the near future. This figure represents an expenditure of $539.9 billion in 1988. The cost of health care is projected to rise another 400 to 500 percent by the year 2000.

The rising cost of health care, the Health Care Financing Administration's release of hospital mortality rate information, as well as political, social, ethical, and legal pressures that began in the 1960s have all been cited for the race of health care institutions (hospitals primarily) to adopt "total quality" management techniques. It would be rare to find any major hospital not trying to implement some form of industrial quality management. These techniques are also known by such labels as quality assurance, quality control, quality management, continuous quality improvement, or total quality management.

Evolution of Quality in Health Care

The concept of quality in health care can be traced as far back as the 5th century B.C. (for Western civilizations) to the Greek physician Hippocrates. Hippocrates established a medical code of ethics to guide physicians in their practice of medicine which basically stated "never do harm to anyone" (among other things). This code of ethics is still in use in the form of the Hippocratic Oath taken by all medical school graduates.

Florence Nightingale is considered the mother of modern quality assurance. It was Nightingale's efforts to improve the quality of medical care given to British soldiers during the mid-1800s that is considered the beginning of modern quality assurance. Quality assurance activities were centered on and elaborated upon the British experience for the next hundred years.

In 1952, the Joint Commission on Accreditation of Hospitals (now the Joint Commission on the Accreditation of Health Care Organizations) developed a voluntary accreditation program for hospitals. The program established standards to evaluate if hospitals have the mechanisms in place to provide high-quality patient care. The program has been expanded and is currently the primary accreditation program for hospitals and other health-care facilities in the United States.

In the mid-1960s, the government established Medicare and Medicaid to care for the elderly, poor, and disabled. Medicare implemented the Medicare Conditions of Participation. These conditions established minimum standards for monitoring and reviewing the appropriateness, effectiveness, and overall quality of health care received by beneficiaries of Medicare. This was subsequently followed by the enactment of Professional Review Organizations (PROs) in 1972 and a prospective payment system in 1983.

In 1973, the American Hospital Association adopted the Patients' Bill of Rights. This doctrine acknowledged and permitted a patient's right to considerate and respectable treatment, complete information, informed consent, continuity of care, refusal of treatment to the extent permitted by law, and confidential handling of records. Along these same lines, the National League for Nursing recognized the rights of patients and encouraged nursing professionals to communicate and protect these patient rights.

Product vs. Process Quality

When considering quality, it is helpful to distinguish between the quality of the product and the quality of the process that produced the product. Although process quality can affect product quality, the use of inspection and other techniques can ensure acceptable quality products from poor processes. For example, if a process is producing 50 percent defective products but these defects could be identified and scrapped before the product reaches the market, a reputation of providing high-quality products could be maintained.

All the consumer cares about is the quality of the product, not the process. If the process is poor, the consumer will have to pay for process inefficiencies through higher prices. "Total quality" programs are based on the philosophy that if the process is of high quality, the result will be a high-quality product with reduced prices due to process efficiencies. What many don't realize is that short-term costs will be incurred to improve the process, with subsequent benefits coming long-term.

The health-care industry has a long history of striving to provide product quality and, by most measures, is judged to be the best in the world. However, the need for process quality is a relatively new concept in health care. Until the middle of the 20th century, health care had primarily been provided in the home, with hospitals considered a last resort. It has only been in the last few decades that technology, transportation, and demographics have combined to create large, modern health institutions such as hospitals. It is these very institutions that have developed and continually improve the processes of health care and, as the "total quality" programs suggest, have created advances in product quality (people are healthier and living longer).

Although product quality has increased, costs have also increased (which is not inconsistent with the "total quality" theory). However, this cost increase has resulted in the close scrutiny of the health care process as a possible cause of increased costs and has most hospitals considering "total quality" programs.

Lessons From Other Industries

Approximately 75 percent of companies claim to have a "total quality" program of some form. However, with the exception of a few widely-publicized successes, it is becoming increasingly clear that the majority of these quality programs are failing. A recent survey by Arthur D. Little of 500 American companies found that only a third felt their "total quality" programs were having a significant impact on their competitiveness. This is further substantiated by experts who estimate two-thirds of all programs in effect for more than two years are abandoned because they fail to produce expected results. An A.T. Kearney study of over 100 British companies revealed that only 20 percent believed their quality programs had delivered tangible results.

With so many "total quality" programs failing, why are so many companies still trying? For some it is the continual pursuit of a quick fix, but most of these are also doomed to fail. However, for the few that realize the payoff is not in short-term cost reduction but the long-term strategic advantage, the payoff can be substantial. The most common reasons for the failure of "total quality" programs are a short-term perspective, cost reduction motivations for implementation, not moving responsibility for quality to the lowest level, and the inability to maintain clearly-defined objectives.

Conversely, those organizations that have successful "total quality" programs have taken a long-term view on quality. They measure the success of a program by its ability to provide a competitive edge in the marketplace through increased customer satisfaction and demand that translate into increased value for their products. Successful programs have been found to be twice as likely as unsuccessful programs to have pushed the responsibility for quality down to the individual worker.

Quality programs are founded on the principle of simultaneous long-term continual change of all areas of the organization to improve quality. The ability to keep the entire organization focused on this goal over an extended period of time is considered one of the most difficult tasks for a successful program.

The Long-Term Process

Health care can benefit from the lessons learned by industries. If "total quality" programs are implemented as a cost-control technique, as it appears they are, then the programs are not likely to be considered a success. However, if they are undertaken as a long-term process to ensure patients the highest quality health care, then the outlook is promising.

Given the historical and long-term commitment of health-care workers of all levels to product quality (patient care), it is predicted that "total quality" programs will be considered a valuable tool for health-care management in spite of the fact that they will not produce the major cost reductions that motivated their implementation.

Dr. Vineyard is an assistant professor in the department of Management Information Systems at Memphis State University.
COPYRIGHT 1992 University of Memphis
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Author:Vineyard, Michael L.
Publication:Business Perspectives
Article Type:Industry Overview
Date:Jun 22, 1992
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