Cost is NOT the threat to US healthcare quality

Guys, listen:  on my recent daily read through of articles on healthcare quality, I ran across one that made me want to share.

It all started with a quote that “Cost is the number one threat to quality in the United States…”


Before I jump in and comment on the quote, just a few things.  First, the person who gave the quote is really very excellent and quite intelligent.  Second, sometimes what we say in the context of an interview doesn’t exactly come across correctly once the article is written out and distributed out there for all of us to see.

For instance, I’ve done interviews for USA Today and several other publications…all with excellent reporters attached to each article.  No matter how good they are, sometimes they select something for the final article that doesn’t really make sense out of the context of the interview.

Maybe some of that is what happened to Peggy O’Kane with her quote I describe above.  (Click the link at the bottom of the entry for the full article including her quote.)

Now, allowing for that:  the idea that cost is the number one threat to quality in the United States is, to my mind, a cart-before-horse type statement.

It’s way off the mark.  Here’s why:

  • Even low level quality improvement projects in healthcare routinely recover $300,000+ from the Cost of Poor Quality (COPQ).
  • US healthcare spends around 14% of its GDP to achieve a median life expectancy that is usually ranked worse than 20th in the world.

If these facts weren’t enough, here’s just a sample off the top of my head that highlights how much cost is incurred by a healthcare lab owing to poor quality:


Originally shared on LinkedIn by Jennifer Dawson


Each answer option in Ms. Dawson’s question is a well-known truism in quality improvement circles.  (She asks which one best highlights long term cost savings to be had via investment in quality.) But look at choice D–that demonstrates how costs for the lab are increased by Cost of Poor Quality (or COPQ).  Reducing that COPQ would allow for improved profits to the hospital.  A poor level of quality is a great deal of the REASON for higher costs…and that level can be improved.

That’s the whole point here:  given the performance of our system overall (and, by the way, our health system can do some awesome things) it is exactly backwards to claim that cost is a threat to quality.  In fact, it’s the other way around.

For all you healthcare colleagues out there, let me say it this way:  you wouldn’t say a patient’s abdominal pain is a threat to their perforated gastric ulcer.  So don’t blame the symptom that is high healthcare costs on the real issue:  healthcare system quality.  It’s just plain backwards.


Cost is the number 1 threat to quality in the United States,” said Peggy O’Kane, founder and President of the National Committee for Quality Assurance. “It hurts the ability of doctors to do a good job. We have a lot of high deductibles that stand in the way of getting the kind of primary care and chronic disease management care that people need.

Source: Cost is top threat to care quality, and fixing that can repair our broken healthcare system | Healthcare IT News

Secrets Of Applying Value Added Time Concept in Healthcare

Ahhh Healthcare…few things are straightforward with you aren’t they?  For those of you following along, take this as one more example of the special nuances of applying classic quality concepts in healthcare:  value added time.

In other fields, value added time (VAT) has a relatively straightforward application.  It’s often defined as time spent in a system that contributes value for which the customer will pay.

But oh, Healthcare…you wily creature:  who is the customer we are talking about here?  Who gives the Voice Of the Customer (VOC) that we use to reconcile the process?  Let me share how I’ve applied the concept of VAT to healthcare processes before…

First, we have to remove ourselves from all the buzz and worry about what perhaps should be in Healthcare and focus on what is:  the third party payer of some kind (government, insurance company, someone else…) is the person who reimburses for services provided.  Sometimes patients pay for their own care.

Bottom line:  in general, these third party payers decide whether (and how) to reimburse for services rendered based on the note written by the “provider” (whether that be the physician, the advanced practitioner, or someone else).

…and that’s where the VAT finds its application.

Amazingly, if you haven’t seen it before, the VAT in many systems is only about 1% of the time spent in the system (!) Only 1% of the time we spend doing something is actually contributing value.  In healthcare, what is that VAT?

One way to look at it is that the VAT in providing care to a patient is the time spent writing the note.

Now, of course, what we write in the note has to be things we did or thought about.  So if we write we took out an appendix, well, we actually need to have done just that.  Writing down things we didn’t do is inaccurate and may even hurt the patient.  It’s also probably illegal.

But placing the note at the center of the universe for VAT does some important things.  Consider some important questions that come up routinely:

  • If the note is so important for VAT, shouldn’t we make it easier to create the note by improving the user design of Electronic Health Records?
  • If the note is so important for VAT, shouldn’t we embed coders and billers more directly in our systems that create them….even at night and on weekends?
  • If the note is so important for VAT, shouldn’t we encourage collaboration between coding staff and the providers creating the note?

The application of VAT in healthcare, in this way, has some interesting consequences for how we improve the value in our systems.

In healthcare there are some special issues in application of this definition.  For example, who is the payer in the situation?  When we say value-added time as anything for which the customer will pay, who is the customer? We usually use a third party payer’s perspective as the answer for “who is the customer” because they are usually the ones actually paying for the services and systems.  Rather than talk about who should be paying for services in American healthcare we, instead, focus on who does.  In this respect we treat the third party payer, the source of funds, as the actual entity paying for use of services. This also has some interesting consequences.  The third party payer, in fact, bases their payment on physician, surgeon or healthcare provider notation.  In fact what they actually are paying for is the tangible product they see which is the note.  Again, the note the physician, advanced practitioner, or healthcare provider supplies is what the third party payer reimburses.  In fact, they also use that as a rational to decline payment.  Consider how, if we gave a service but didn’t write it down, we would not be reimbursed.

Source: Takt Time and Value Added Time in Surgery and Healthcare Processes – The Healthcare Quality Blog