The paradox of quality measures in healthcare


Apr 21, 2016

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One of the hot, emerging debates among physicians and insurers over the next 12 months will be the implementation of new, physician quality measures. Announced in February, 2016 by the Center for Medicare and Medicaid Service (CMS) and America’s Health Insurance Plans (AHIP), the new core metrics are intended to simplify and standardize the existing measures which have been viewed as convoluted, inconsistent, and ineffective. After replacing the existing Meaningful Use Program, the core metrics will  be implemented in seven sets of practice areas. While the metrics have been generally well received by the healthcare community, some physicians have already raised concerns about the new program, claiming that the simplified measures are still flawed, and will continue to stifle physicians from providing the best patient care possible. As the rollout of the Affordable Care Acts (ACA) continues, Medicare and Medicaid reimbursements will become more dependent on quality performance, making the debate over whether or not the new metrics are appropriate only more serious.

Based on the principles of disruptive innovation, we also foresee the future unfolding much closer to how the physicians who are skeptical of the new program do. Indeed, quality measures leading to quality improvements in patient care is a paradox, because there is no existing, standardized care process to measure. A process, or a repeatable sequence of activities, is one of the four main elements in a business model. These elements include a value proposition that fulfills a job for the customer, a profit formula that describes how a business can make money fulfilling that job, and resources and processes which deliver the proposition. The measurability of a process drives disruption, a phenomenon of lowering cost without compromising quality and performance. Because both quality and performance are process-driven, quality cannot be measured without a process, preventing it from improving. Since the patient care process is unique from individual to individual, a standardized process is typically unavailable. Unfortunately, the entire healthcare community is banking on improving the quality of patient care by measuring something that does not exist.

The concept of quality improvement was born out of the U.S. manufacturing industry in the 1950s. Advocated by innovative thinkers like Edward Deming, quality improvement based on measurable data transformed the global industry. In the 1990s, the U.S. healthcare sector also began applying these principles in an attempt to improve patient care outcomes. However, there was a major divergence between how the manufacturing sector and the healthcare sector embraced quality improvement processes.

The manufacturing industry’s approach to quality improvement began by closely studying how processes work in order to better understand them. The Toyota Manufacturing System, for instance, a hallmark of quality improvement, focuses on studying each product step before any action is taken. In doing so, pertinent measures emerge. In healthcare, such an opportunity has been largely unavailable. Once a patient is registered at the hospital or at a doctor’s office, that patient follows a unique path of care. This lack of repeatable steps has made healthcare virtually impossible to study. Instead, the healthcare sector has responded inappropriately by focusing on the metrics first, an approach which has been part of its quality improvement effort for over 25 years. Unfortunately, relying on metrics when there is no agreement on a standardized process causes some of the patient care decisions to be made based on reimbursability, while adding administrative responsibilities to track measures that are irrelevant to patient outcomes. Instead of improving efficiency and effectiveness, these metrics become extremely burdensome to the system.

The end of the Meaningful Use Program after less than six years in existence could be interpreted as the government being nimbler to deal with the rapidly changing healthcare landscape, or as an admission of fumbling its first attempt at an incentive-driven, quality program. Since there is little evidence of a defined process in patient care, we believe this new consolidation of measures is a byproduct of earlier mistakes. Unfortunately, simplifying the metrics is not the appropriate way to deal with the fundamental problem of not having standardized processes.

In order to address this paradox, standardized, patient care processes must first be developed. There are examples, albeit small in number, of process-focused healthcare institutions that have successfully reduced costs while improving quality. Geisinger Health, Intermountain Health and Shouldice Hospital are long-standing examples of institutions that employ process-driven care. Iora Health is another emerging model looking to transform the traditional primary care physician (PCP) model by introducing standardized patient management. It is important to recognize that each of these entities introduced process-driven models by aligning the interests of various stakeholders including patients, care professionals and hospital administrators.  Unlike the majority of hospitals, by unifying stakeholders they are able to develop streamlined approaches to patient care. Without such integrated management and focus, there are too many divergent interests in healthcare for standardized processes to develop.

When doctors say insurance companies cannot reimburse patients based on value, they are right in that we do not yet know how to measure value in patient care. For this reason, using outcome metrics to determine value will only leave doctors and hospitals frustrated, with no meaningful transformation. However, once process standardization is achieved, data can be collected, compared, and optimized, allowing for an improved quality, and reduced cost, of care. It’s time to develop a unified view on patient care processes.


Spencer Nam

Spencer researches disruptive innovation in the healthcare industry. He has over 15 years of professional experience working with U.S. and international healthcare enterprises, most recently as an equity research analyst covering medical technology companies.