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Gates and Deming on what it takes for a successful cost reduction program
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Quantitative measures of success |
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Successful programs must balance cost and quality of care. Denying or limiting care to reduce costs should not be an acceptable option. Also, simply declaring a program successful does not make it so. Bill Gates (2), quotes William Rosen (3) in a speech delivered at his global foundation, that there must also be a way to measure success quantitatively, so as to either confirm progress or generate feedback for corrective actions. Edwards Deming, the management genius, claimed that every process has underlying metrics that can help measure both progress and success very efficiently. |
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One set of metrics relevant to healthcare resides in a seminal paper by Berwick et al. (4) that describes "Triple Aim", that identifies the three Deming-like general principles that characterize a successful healthcare program: patient satisfaction, improvements in the health of the population and lowered costs. Patient satisfaction is obtained through surveys and is set aside because it is beyond the scope of this paper. Measurement of improvements in the health of a population actually involves two metrics, the health of a population and the changes in the health of a population. But Berwick et al. do not tell us how the improvements in the health of a population can be measured. Even though there is no mention of this in the article, the third metric of costs also poses a challenge, since a population will have a mix of people with varying severity of diseases. That will require custom risk adjustments and that is always a non-trivial task. |
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What is noteworthy and subtle in the Triple Aim paper, is the converse message it conveys: Until we have a metric for the health of a population, and a risk adjusted way to measure costs, we are unable to infer the success of chronic prevention programs. It is then evident why the multibillion ACA efforts at reducing costs failed: it's the absence of metrics. Without metrics, as Gates observes, it is not possible "to determine which approaches work and which do not." |
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1) Bill Gates (2013) "Why does measurement matter?" Gates Foundation Lecture. |
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http://www.gatesfoundation.org/Who-We-Are/Resources-and-Media/Annual-Letters-List/Annual-Letter-2013 |
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2) William Rosen "The most powerful idea in the world: A story of steam industry and invention" Random House (2010). |
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