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Quality Variation and the Resulting Higher Cost of Care

The Law of Quality Variation is defined as “the difference between an ideal situation and an actual situation.” Dr. W Edwards Demming(1), the founder of quality management movement, asserted that organizations that focused on improving quality would automatically reduce costs. In contrast, those that focused on reducing cost would automatically reduce quality and actually increase costs as a result.

Can reducing quality variance in healthcare propel us toward the triple-aim?

We strive for the triple aim of healthcare, improving the patient experience of care (including quality and satisfaction), improving the health of populations, and reducing the per capita cost of health care. Can we get there by reducing quality variance?

Each of these goals could be categorized under the broad operational umbrella of “population health management, or outcomes management.” Additionally, all these goals are directly tied to quality. Here’s how they connect. From the patient perspective, quality is about their experience and satisfaction. From the provider perspective, quality means the best possible outcomes from each individual encounter. In the context of population health management, this process expands the quality experience across a community, healthcare network, or payer member group.

How do you measure and manage quality in health care?

Quality is quantified by complex “quality measures” that vary from contract to contract, payer to payer, and provider to provider. Measures are calculated using both clinical and/or claims data. With more data points, leaders are provided additional opportunity for analysis.

Analyzing and comparing similar metrics across providers, groups or TINs provides opportunity to uncover areas of improvement.  Medical leadership can more easily ensure that similar care is delivered in a similar manner across the organization. In an ideal situation, similar care can be provided within organizational best practice, quality variation can be reduced, and patient health improved.

How does quality relate to cost?

Cost containment / management can be a direct result of an improvement in quality. It’s the by-product of striving for the “ideal situation” that Dr. Demming talked about. When quality management is examined as the ability to identify patients in transition and at-risk, these are some benefits:

  • Care interventions can be made in real-time
  • Leadership can now ensure best-practice care standards are enforced
  • Patients receive the appropriate care pathway at the appropriate time

By providing timely intervention with best-practice care pathways, patients outcome and experience is improved, care can be provided with greater efficiency, and at-risk populations can be better managed – all can contribute to lowering costs.

In order to manage quality, practices need specific tools. These tools, at their heart, should be based on solid technology and ease of use. From a practical standpoint, they need the ability to aggregate and validate clinical quality data with an analytics engine specifically tailored to quality management.

ReportingMD can help you reach your goals

Our team, tools and technology help uncover and create actionable insights, and coordinate information throughout the organization. By identifying at-risk populations and costly gaps in care, our Total Outcomes Management (TOM™) platform powers quality management for thousands of providers.

TOM™ is cloud-based, ONC Certified, and HIPAA-compliant. This powerful population health analytic platform is specially built with best-in-class technology to support the needs of healthcare organizations with high availability data ingestion, computation, and storage.

Merging clinical, claims and social data into a single platform, TOM™ is built on rock-solid technology. With the power to manage multiple TINs and drill-down to the individual patient encounter, TOM™ provides real-time actionable insight.

ReportingMD solutions provide a 360-degree view of your population. The flexible measure calculation-engine provides a clear view of performance against any payer measure, CQM, eCQM, Stars / HEDIS®, or custom measures and benchmarks.

Learn why thousands of providers rely on ReportingMD and our Total Outcomes Management (TOM™) Population health platform. Schedule a demo today.

– The W. Edwards Deming Center for Quality, Productivity, and Competitiveness at the Columbia Business School
https://www8.gsb.columbia.edu/deming/about/history