• Reducing patient falls
• Reducing pressure ulcers
• Reducing readmissions
• Decreasing hospital-acquired infections
• Decreasing inappropriate lengths of stay

The question becomes: should attention be paid to these outcome improvements or to cost savings? Then again, maybe that question is moot!

Hospital charges for patients who sustained a fall were more than $4,200 higher than patients with no fall (Bemis-Daugherty and Delaune 2008). Is the reimbursement rate at 100% for the fall-related changes? The Detroit Medical Center realized a cost savings of more than $4.5 million annually by improving the processes relating to pressure ulcers (Anonymous, Quality of Care; Electronic Recordkeeping Boosts Patient Safety, Saves DMC More Than $5 Million - For Second Straight Year 2010).

Recent changes in reimbursement for pressure ulcers make addressing this issue critical. Knapp Medical Center in Weslaco, Texas attributes approximately $2.8 million in savings through Performance Improvement. In one year, Knapp's reductions in average length of stay resulted in eliminating 1,304 days of care. The hospital also saved 98 days through eliminating readmissions, 27 deaths were prevented, and it avoided complications in 28 cases (Anonymous, Medicare and Medicaid; Texas Hospital Saves $2.8 Million in One Year with Help from Premier Healthcare Alliance's Performance Improvement Program 2010).

Another area that recent changes in reimbursement have impacted is hospital-acquired infections. In an article from Hospital Topics, the authors estimated that an incidence of hospital acquired infection increases the hospital care cost of a patient by $10,375 and it increases the length of stay by 3.30 days. These costs vary based on the nature of the infection, ranging from $600 for a urinary tract infection to $50,000 for prolonged bloodstream infection (Hassan, et al. 2010).

Overall, medical errors add huge costs to the delivery of care. An examination of Patient Safety Indicators (PSI) showed that 90-day expenditures likely attributable to PSIs ranged from $646 for technical problems (accidental laceration, pneumothorax, etc.) to $28,218 for acute respiratory failure, with up to 20 percent of these costs incurred post-discharge. With a third of all 90-day deaths occurring post-discharge, the excess death rate associated with PSIs ranged from 0 to 7 percent. The excess 90-day readmission rate associated with PSIs ranged from 0 to 8 percent. Overall, 11 percent of all deaths, 2 percent of readmissions, and 2 percent of expenditures were likely due to these PSIs. The authors further posit that medical error studies that focus only on the inpatient stay can underestimate the impact of patient safety events by up to 20-30 percent (Encinosa and Hellinger 2008).

Current emphasis in the literature on linking outcomes and patient safety to costs is bring findings like these to the forefront. What about the broader link between quality management and organizational performance—specifically financial performance. A recent study (Carter, Lonial and Raju 2010) clearly demonstrated the link. While the broader link between product or service quality across virtually all industries is widely accepted and supported in the literature, Carter, et al, have examined the link as it pertains directly to hospitals by examining the results submitted by 175 hospitals. In addition to examining the link itself, they also studied the possible moderating effects of environmental uncertainty and hospital size.

The quality management construct examined both quality context and quality practices. Quality context included four factors: Marketplace Environment, Manager's Knowledge, Role of Top Management and Quality Policy, and the Role of the Quality Department. The quality practices construct included five factors: Quality Training, Product/Service Design, Supplier Quality Management, Quality Data and Reporting, and Employee Relations. The organizational performance construct included Financial Performance, New Market/Service Development, and Quality Outcomes.

The study found that there was a relationship between organization performance and quality management. While that is not surprising—and supports findings across most industries—there were a couple of additional findings worth addressing.

The first is that the hospital size did make a difference in the strength of the relationship between quality management and organization performance. The relationship is not as strong for larger hospitals. The authors posit that this may be due to the need for smaller hospitals to pay attention to performance issues—both quality and financial. They further theorize that despite their limited resources, smaller hospitals take a more strategic approach to quality as opposed to relying on more ad hoc practices.

The second is that environmental uncertainty also has a moderating effect—although not the one that the authors originally hypothesized. In examining the effects that environmental uncertainty the authors included factors such as Government Regulations, Financial Market, General Economy, and Public Opinion. What they found was that there was a stronger relationship between quality management and organization performance during times of low environmental uncertainty. The authors posited that during times of high environmental uncertainty, leadership focus is diverted away from quality management to what they view as more pressing issues.


REFERENCES: