The 'Quality' Equation


Tue Mar 29 13:00:28 CDT 2016

I recently wrote about the concept of "value" -- how it is being defined, and why a definition is so important to the healthcare supply chain. We will all be talking about the definition of value for some time, as everyone in healthcare navigates the new era of accountable care. 


A couple interesting angles have recently come up that may move the needle in this discussion. One is about a possible missing link in the quality equation, and the other is the supply chain's role in determining the definition.


The quality equation has often been defined as Quality = Outcomes/Costs, but that leaves out an extremely important factor, some are saying: service. Under the Affordable Care Act, outcomes and costs are major factors for reimbursement, but 30 percent of reimbursement will be tied to patient satisfaction scores. Hence, a new definition of quality is being discussed: Quality = Outcomes x Services / Costs. Service, of course, representing the patient's experience of care. 


In this equation, a provider can better control the result of its "quality." Patients that unfortunately don't get their desired outcome will still be evaluated for the quality of care they received. This is a definition more on par with how other industries operate: Sometimes the car repair shop brings bad news and the outcome is grim, but did the shop do everything it could to help you through the process and ensure you and your car received proper care? 


That's just one example, but factoring in service certainly makes sense when defining quality and value in healthcare. 


The other interesting angle is supply chain's role in establishing the definition of value. At HIMSS '14, a group of leaders told the Supply Chain pre-conference symposium that supply chain shouldn't just be a part of defining value, it should own the definition. That supply chain should take the lead and own the CQO process all the way through the healthcare hierarchy. 


Should supply chain be in charge of defining value? Is there a better organization within a provider system that can measure cost, quality and outcomes the way that supply chain can? How do you define quality? Share your thoughts below.