The cost(s) of quality

First things first.  I have a couple of confessions to make.  I love quality improvement and what it has done for health care.  Quality improvement changed my entire professional life.  There was a time in my early career that I stated rather emphatically that I would NEVER go into administration (in fact, one of the reasons that I left the Navy is that promotion, at least as a pediatrician, didn't seem very likely unless you had some significant administrative role).  One of my mentors encouraged me to give administration a try (he asked me to be the Associate Medical Director of our PICU) and convinced me to take one of our internal quality improvement training courses.  Nine weeks later, I was hooked!  And my career changed tacks, I found out that I really enjoy health care administration, and the rest as they say is history.


Okay, here's why I made my confession.  I recently came across a paper published in the Joint Commission Journal on Quality and Patient Safety entitled "The Cost of Quality: An Academic Health Center's Annual Costs for its Quality and Patient Safety Infrastructure".  Basically, one academic health center investigated how much money they spent on an annual basis to maintain its quality and safety infrastructure.  For the purposes of their analysis, they included all of the costs associated with regulatory compliance, hospital accreditation, licensing, credentialing and privileging, maintenance of certification, data collection and analysis for quality/benchmark measures and public reporting, and improvement (which included training clinical staff on improvement science).  What these investigators found is astounding (but in reality, not that surprising) - this particular academic health center spends $30 million on direct costs to maintain their quality infrastructure every year!  The majority of these costs (actually, 82%) were associated with mandates by regulatory bodies, accreditors (such as the Joint Commission), and payers.  Close to half of these costs supported efforts for public reporting on required measures.


I would add that all of these things - regulatory compliance, accreditation, licensing, public reporting, etc - have significantly contributed to the unbelievably rapid growth in the number of health care administrators (compared to the growth in the number of physicians, as a proxy for the actual providers of health care).  You've seen the graph, but here it is again:





There is no question that the administrative costs associated with billing, payer relations, utilization review, compliance have also contributed to the growth in the number of administrators (as well as the cost of health care in general).  However, there's more to this story.  There is an online search engine called Google Ngram Viewer that can chart the frequency of any set of search terms using a yearly count of N-grams (basically, think of n-gram as a string of words for this example).  Google Ngram Viewer searches all of the printed sources of text published between the year 1500 and 2008 and plots the frequency in which the designated N-gram appears.  I played around with the program and searched for the terms "metrics", "benchmarks", and "performance indicators":





Okay, that looks a little like the graph above.  But here is what I found when I searched for the string "quality improvement":



This particular graph looks eerily similar to the first graph above.  In other words, the growth in the number of health care administrators over time mirrors (fairly closely) the increase in frequency of the number of mentions for "quality improvement," and to some extent, "benchmark", "performance indicator", and "metric" in the available published literature!  It is tempting to speculate, then, that some of the costs of quality are attributed to the labor costs for having individuals to collect data and report it to regulatory and accreditation agencies, as well as building the quality infrastructure to try to improve care.  Again, in the aforementioned study, the salary and benefit costs for the number of FTE's engaged in quality and safety activities actually accounted for nearly 90% of the direct costs (i.e., the $30 million per year) for quality and safety activities paid every year by the academic health center.


I know what you are thinking - and you are right!  Holy cow! 


I would argue that some of this is our own fault.  Let me explain.  The United States spends far more on health care compared to countries such as Australia, Canada, France, Germany, Japan, and the United Kingdom (actually, we spend almost twice what these other countries spend).  Health care spending in the U.S. approached $3.3 trillion in 2016, which is roughly equivalent to $10,348 per person (see Hartman M et al. Health Affairs, 2018; 37:150-160).  At the current rate of growth, total spending on health care in the U.S. will reach 20% of the overall economy by the year 2026 (see Cuckler et al. Health Affairs, 2018; 37:482-492).  Unfortunately, despite spending almost twice the amount that other countries spend, the U.S. fares much worse on typical quality outcome measures, such as life expectancy and infant mortality (one argument is that we spend our money in the wrong place - for example, see the excellent book, The American Health Care Paradox: Why Spending More is Getting Us Less by Elizabeth Bradley and Lauren Taylor).  However, part of the impetus for the quality improvement, regulatory compliance, public reporting, etc (i.e. all of the things that the academic health center in the aforementioned study spends $30 million on per year) was the relatively poor performance of the U.S. health care system compared to other countries. 


So, what are we to conclude by all of this?  First, I think that investing in quality and safety is certainly an appropriate and (hopefully) worthwhile investment for a hospital.  The impetus is on us to demonstrate that this investment translates to improvements in quality and safety, and to some extent, I think we have done and are doing just that.  Second, I think we need to separate out or distinguish in some way the amount of money that is spent on actually improving quality and safety (for example, training clinical providers on quality improvement methodology) from all of the money spent on forced regulatory, accreditation, and public reporting requirements.  I get it - some of the regulatory and public reporting things theoretically could lead to improved outcomes, but I think we need to establish that link.  Third, if we are going to put a magnifying glass on health care expenses in general, we absolutely have to include the administrative costs in that analysis.  Do all of these regulatory requirements and administrative fees associated with insurance really make our health care system better, in terms of improved outcomes?


I am 100% in favor of quality and safety efforts.  I just think we need to be cognizant of the associated costs and make sure we are reaping the appropriate benefits.  We owe it to our patients to improve the care that we deliver, but we also owe it to them to do so at the lowest possible cost.  Right now, we are probably not accomplishing that objective.