A Performance Improvement MaturityModel for the Healthcare Industry

Introduction

In the U.S. market, healthcare costs approach $2 trillion annually,2 outpacing growth inGDP.3 Quality and adherence to medical guidelines have the potential to save both moneyand lives. In 2000, the Institute of Medicine (IOM) revealed that as many as 98,000 deathsoccur annually from errors in hospitals.4 A year later, the IOM issued a report furtherdocumenting the failure of the healthcare system to translate medical knowledge intopractice and to apply new technologies safely and effectively.5 It is estimated that 30percent of U.S. healthcare expenditures are used to pay for ineffective, inappropriate orredundant care.6 Research suggests that less than half of acute and chronic care providedby physicians conforms to the medical literature or is evidence-based.7 Consumers also contribute to these growing healthcare costs through high-risk behavior and lowadherence to prescribed treatment.8

Healthcare quality management and operational performance improvement are nowfront-page news (see Figure 1). Regulators and payors (government, health plans andothers) currently require doctors and hospitals to measure and report quality. Pay-for-performance programs provide modest incentives for compliance with quality careguidelines. More threatening for many providers is that payors are starting to refuse to pay to remedy a wide range of errors, from wrong-side surgery to ventilator-acquiredpneumonia. Manufacturers are being asked to demonstrate that new drugs or devices willreduce cost or improve outcomes compared to current options. Products that add valuewill receive favorable access to both payor and provider formularies as well as higherreimbursement rates, particularly if they are associated with a money-back guarantee.

This CapabilityMaturity Modelenables industrystakeholders towork together to reduce cost,improve qualityand save lives.

Figure 1

By Lynette Ferrara; Dan Foltz; and Donald Bialek, MD, Master of Public Health

1

Provider organizations (hospitals and physician networks) share the commitment to quality improvement, but often lag behind government and health plans in their capabilities to measure and manage quality. In several regions of theUnited States, industry stakeholders have created collaborative programs to measure and manage the quality of care, andto improve the performance of healthcare systems as a whole. These efforts have been hampered by the absence of a commonlanguage that enables industry stakeholders to measure and manage quality.

The Capability Maturity Model for Performance Improvement that we introduce here will enable industry stakeholders towork together and, using an industry-validated roadmap, achieve organizational performance improvement.9 This maturitymodel provides a shared vision for what an organization needs to do to attain a specified level of quality. Organizations thatadopt this shared maturity model have a place to start when redesigning their processes, a common language and vision, andaccepted benchmarks against which to assess their progress. There are also six lessons learned from other industries that canreduce risk and accelerate implementation.

MethodsThis research was conducted through interviews and panel discussions with medical and pharmacy directors of 31 U.S.health plans, as well as 10 chief executive officers, medical directors and chief quality officers of provider institutions. Theparticipants in this research were asked to validate the Performance Improvement Maturity Model. They were then asked to use the model to assess their organizations’ maturity today and to describe their plans for enhancing their capabilitiesover the next three to five years. The interviews concluded with a discussion of the barriers they faced in achieving theirplans for performance improvement. Interviews were followed by a brief online survey, where respondents identified theirpriority quality initiatives and barriers to success.

The health plans provided the full range of health insurance programs, including privately funded health insurance, MedicareAdvantage and Medicaid HMO programs. They ranged in size from three of the largest national plans covering over 20 millionlives and large regional plans covering three to 20 million lives, to smaller regional plans covering 600,000 to three millioncovered lives and local plans covering less than 300,000 lives. The provider organizations were academic medical centersor the flagship research hospitals of national or regional hospital groups. These institutions are not representative of U.S.hospitals since they are likely to be better funded and have medical informatics teams on staff.

The information gathered through interviews and the survey was analyzed within health plan and provider groups. We thenidentified and applied lessons learned from manufacturing and service industries that have improved operational performancethrough process measurement and management.

The Healthcare Performance Improvement Maturity ModelHealthcare organizations that adopt performance improvement methodologies such as Six Sigma evolve through three distinctphases of organizational development (shown in Figure 2).

Figure 2

They begin at the Foundational level by measuring conformity with quality standards established by an accrediting organiza-tion, a regulatory body and/or a key customer. In this phase, they are defining how they will measure the quality and efficiencyof their processes, establishing process improvement objectives and determining the baseline measures of their operations.

At the Advanced level, organizations proactively manage quality improvement. They have well-articulated quality improvementgoals and a defined methodology for setting and achieving quality improvement objectives. Process redesign is embedded inthe organizational DNA through information-driven care processes and health information systems.

At the Distinctive level, organizations will have sufficiently rich and timely information to ensure that each individual receivespersonalized care based upon such factors as their genetic makeup, specific health history and specific environmental factors.This can take the form of personalized health coaching and/or highly tailored care management processes.

U.S. health plans are moving from measurement to managementU.S. health plans believe they have Foundational programs in place and that current investments in data integration andevidence-based processes will supported Advanced Programs within three to five years (see Figure 3). Ninety percent of allhealth plans report the Healthcare Effectiveness Data and Information Set (HEDIS) measures used to assess compliance withstandards for managing patients with common chronic diseases. Even the smallest and least well-funded plans provide themeasures demanded by their customers; however, the process is manual and rarely tied to process improvement initiatives.

Many plans provide their direct customers (employers and government) with assessments of the quality and efficiency oftheir networks. Plans attempt to reduce cost and improve outcomes by offering high-risk patients disease management orwellness programs. Today, large national plans, such as WellPoint and Aetna, and large regional plans have begun to activelymanage the quality of care. Their disease management programs select and monitor patient care using lab data, health riskassessments and information derived from medical claims. Their nurse call centers and their pharmacy systems are supportedby powerful rules engines that integrate standards of care from multiple disease sets. They are providing consumers withmore and richer information that can be used to select efficient and effective providers and treatments. The result is targetedmessages that have been proven effective in changing physician and consumer behavior.

In the next three to five years, health plans expect to enhance their ability to manage the quality of care provided through theirprovider networks. National and large regional plans will be harvesting their investments in data integration and process improve-ment to drive evidence-based decision-making in every aspect of their business. Medical technologies and new procedures will beassessed based on their ability to improve outcomes and to reduce cost of care. The goal is that their rules engines will provide timelyoversight notifying physicians and patients of lapses in quality and/or safety risks, or areas where lower cost alternatives can reducecost without any impact on patient outcomes. These plans will further implement personal health records, providing patients withthe tools and information they need to prevent disease and/or comply with treatment guidelines to better manage their illness.

Figure 3

Provider organizations, on the other hand, are struggling simply to measure quality

Provider organizations report that they have difficulty deploying foundational programs and are uncertain they wouldhave the resources to design and deploy an advanced program (see Figure 4). They struggle to gather the data they need to develop the many quality reports demanded by regulators, payors and governments. Less than 20 percent of hospitals and physicians in private practice have implemented electronic patient records or other electronic systems formanaging patient data. Provider organizations that have implemented electronic medical record (EMR) systems reportthat their data cannot be readily used to measure quality and manage performance improvement. As a result, providerswith robust process improvement programs report they spend vast sums of money for nurses to manually extract datafrom patient charts.

Providers are considerably less optimistic than health plans about the capabilities they expect to develop over the next threeto five years. While the leaders of the quality programs have ambitious goals for redesigning their processes to improveoutcomes and reduce cost, they believe progress will be slow due to a lack of resources, the difficulty of coordinating careacross organizational boundaries, and resistance from key stakeholders, such as physicians. They are also concerned thatexisting measures of quality focus on process, not outcomes. However, they recognize that measuring and tracking outcomeswould require methodologies to assess risk and the severity of the underlying medical conditions, and to information systems that would track patients across the full cycle of care. Outcomes measurement is viewed as a challenge since mostoutcomes measures would require tracking patients across organizational boundaries.

These research findings overstate the capability maturity of the provider market, since the provider organizations in this study are academic medical centers and/or the flagship research hospitals of proprietary hospital networks. Thesehospitals have at their disposal more resources to measure and manage quality than the average community hospital inthe U.S. market.

The barriers to performance improvement Health plans and providers identify similar barriers to performance improvement, but differ on the level of effort neededto overcome these barriers. Health plans are optimistic about their organizations’ abilities to improve quality and managecost, but they identify several barriers to performance improvement that would require system level innovation in howhealthcare is designed and delivered in the U.S. market. They are less optimistic about their ability to influence consumerand physician behavior and to design effective interventions. In interviews, medical directors express concern thathealth plans alone would be unable to forge a national consensus on how to resolve sensitive issues, such as the allocationof resources to expensive and aggressive treatments in the last few months of life. They are also pessimistic about theirability to encourage consumers to undertake the lifestyle changes needed to prevent disease and/or avoid life-threateningand expensive complications.

Figure 4

Providers’ top concern is developing efficient methods to get access to the information they need to meet the often conflicting and uncoordinated demands of payors and regulators. They express concern that conflicting and overlappingpayor quality mandates exacerbated the difficulty of developing effective information systems. Many also express dismaythat current quality programs focus on process rather than patient outcomes. They acknowledge that measuring outcomesmight require fundamental redesign of their business and operating models to allow them to follow patients long afterthey leave the hospital.

This research also identified a formidable barrier that was not cited explicitly by the study participants: poor alignmentbetween the maturity capabilities of health plans and those of provider organizations. Health plans are rapidly deployingprocesses to assess and reward providers and consumers for compliance with quality standards, and to penalize (not payfor) failure to follow certain guidelines. The provider organizations in this study believed they do not have the resourcesto build the capabilities they need to meet payor and regulator mandates or to support their quality and performanceimprovement initiatives within their institution. They are also uncertain that their organizations have the will or theresources to drive the cultural and organizational change needed to manage patient care throughout the lifecycle of disease.

Both health plans and providers believe these barriers will be overcome most effectively through system level initiativesat the regional or the national level. Suggested areas of collaboration included joint participation in the development ofquality measures where none exist, joint programs to establish priorities for implementing existing quality standards, andexploration of programs to promote sharing of medical information among physicians, hospitals and private practiceswithin regions and services areas.

Lessons learned from other industries The U.S. healthcare industry is adopting the process performance methods and technologies that have been vetted forover 20 years in other industries, ranging from heavy manufacturing and consumer goods to software development.While leaders of healthcare organizations tend to believe that the healthcare industry is unique, heeding the following six lessons learned in other industries will help to avoid common missteps that will delay the performance improvementof individual organizations and the healthcare system as a whole.

1. Invest the time and resources needed to define process performance objectives. IT organizations and technologyvendors can help, but only if they know an organization’s performance objectives, and the necessary time and energy areinvested to redesign processes. Core processes that impact cost and patient safety and well-being cut across departmentaland organizational boundaries. Creating patient-centric, efficient and effective care will require a change in roles andresponsibilities, rewards and management systems, as well as in processes and IT systems.

2. Getting Health Information Technology (HIT) right is everyone’s job. HIT provides the platform that reduces costby automating work that adds little value. It also improves quality by providing the information needed to ensure thathealth guidelines are followed. However, these benefits require an active partnership between clinicians and IT depart-ments throughout the software deployment lifecycle. Health plans report that many of their legacy systems were notdesigned to capture and store information contained on medical and pharmacy claims relevant for measuring qualityand efficiency. These systems must be retooled or replaced to avoid stripping valuable information when claims are adjudicated. Similarly, many provider organizations implement EMR, lab and diagnostic systems without first definingthe information that must be collected to measure quality or outcomes and to monitor and improve organizational performance.

3. Explore the use of innovative, service-based, business and IT architectures and business models. Hundreds of organizations now offer technology-enabled business services to support quality management. Health plans can buy dataintegration services from one or more vendors and then rapidly deploy organizational performance improvement initiatives.Provider organizations face a less mature market but can find service and technology partners to rapidly provide clinicaland analytic capabilities. However, these services are utilized best in the context of a health informatics framework thatorchestrates the integration of patient data and business processes. Without a well-articulated business and service archi-tecture, organizations risk squandering scarce resources on duplicative and overlapping services.

4. Invest in the analytic capabilities needed to measure and manage organizational performance improvement. Investin analytic capabilities at the same time you deploy electronic transaction systems. Transaction systems are optimized to support individual transactions, such as processing a medical claim or capturing and displaying information during a patient encounter; in short, they are optimized to support work flows. Their technical design rarely supports reportingor analysis. As importantly, much of the data needed to measure and manage quality is generated by other systems

within the organization and in partner organizations. Until recently, the only option was to develop a proprietary datawarehouse. Today, health services companies like CSC provide health informatics based on a common Health InformaticsFramework (see sidebar) — reducing the time and cost needed to develop process measurement and management capabilities.

5. Consider regional process improvement solutions that provide visibility and facilitate collaboration and processimprovement over the entire continuum of care. Few consumers receive healthcare from an integrated delivery networkthat establishes care guidelines and offers providers, patients and their families coordinated care. Instead, patients shuffleamong primary care physicians, specialists and other providers in both inpatient and outpatient settings. Without commonguidelines and shared information systems, duplicative services drive up costs and errors due to incomplete informationthat puts patients at risk. When health plans and providers form regional quality improvement collaboratives, they canfocus available resources on joint objectives and measures. For example, in Massachusetts (see Figure 5), the majorhealth plans and independent provider networks have adopted common standards for managing patients with five majorchronic diseases. These standards are used to provide patient care, helping to ensure continuity of treatment as patientsmove among providers.

6. Conserve your resources for the really difficult challenges: forging consensus on political and economic policy andchanging deep-seated behaviors of clinicians and patients. Be prepared to invest in change management. Healthcareperformance improvement requires industry stakeholders and consumers to develop a shared vision of how healthcaresystems will function. This touches the sensitive issue of what services will be covered and at what prices, where services willbe provided, how end-of-life decisions will be made and how healthcare professionals and consumers will be accountablefor outcomes and for choices and payment for treatment. Join organizations that encourage industry stakeholder collaboration at the regional and local level. Build processes and a culture that engage diverse community groups in discussions of best practices for maintaining health, preventing disease and seeking and complying with proven treatmentwhen sick.

Figure 5

CSC’s Health Intelligence FrameworkCSC’s Health Intelligence Framework is designed to allow customers to integrate and standardize their data once,and to orchestrate the transaction and analytic services needed to measure and manage performance improvement.

Examples of this framework in action include:

• Developing efficiency and effectiveness measures for doctors and hospitals serving six health plans and over 30 employer

• Enabling a multi-hospital chain to measure operational efficiency, quality and customer satisfaction despite wide variationin clinical systems and processes

• Enabling physicians and hospitals in a regional network to share information on quality and effectiveness

• Enabling a life sciences company to reduce the time and cost of clinical trials by refining patient selection criteria andselecting investigators in geographic areas rich in eligible patients

• Designing use cases to reduce the time and effort to track infection in a hospital setting – freeing infection controlmanagers to prevent rather than simply track infection.

Healthcare Planning

Optimization

Verification toSpecification

Metadata

Data Architecture

By Don Griffin, Lead Architect, CSC Health Informatics Practice

Strategy Process Intelligence Governance

OVERALL SOLUTION STEWARDSHIP

Quality and SafetyMeasures

ClinicalDecision Support

Resource Use

Queries

PROVIDER-CENTRIC HEALTH INFORMATICS

Primary Uses of Information Secondary Uses of Information

Credentialing Public Health Clinical Auditing

PersonalizedMedicine

Efficiency Measures

CustomerIntelligence

Benchmarking PerformanceImprovement

Epidemiology andResearch

Clinical Governance

Reports/Dashboards

OLAP, ROLAP,MOLAP, HOLAP

Process Models Statistical Analysisand Validation

Business Rules/Predictive Models

CORE BUSINESS INTELLIGENCE SERVICES

FOUNDATIONAL DATA SERVICES

Data Collection Data Integration Data Management

Reception and Profiling

Culling andCleansing

ProbabilisticMatching

AugmentationInventory and

TrackingPrivacy, Security,and Compliance

Master/ReferenceData Maintenance

Logging andAuditing

Master PersonIndexing

Controlled MedicalVocabularies

Staging forIntegration

Database Management Systems Data Models

TRANSACTIONAL SYSTEMS

Clinical Information Systems Administrative and Financial Systems

Claims Systems

Bus

ines

s In

tegr

atio

n S

ervi

ces

Pre

sent

atio

n an

d P

orta

l Ser

vice

s

Sys

tem

s M

anag

emen

t S

ervi

ces

SU

PP

OR

TIN

G S

ER

VIC

ES

Notes1 The frameworks in this document reflect the contributions of many members of the CSC Health Informatics practice,

including Lily Fink, Don Griffin and Abhay Nihalani.

2 Agency for Healthcare Research and Quality, “The High Concentration of U.S. Health Care Expenditures,” Research inAction, Issue 19 (June 2006): http://www.ahrq.gov/research/ria19/expendria.pdf.

3 Kaiser Family Foundation, “Comparing Projected Growth in Health Care Expenditures and the Economy,” May 2006,under “Snapshots: Health Care Costs,” http://www.kff.org/insurance/snapshot/chcm050206oth2.cfm.

4 Institute of Medicine, To Err Is Human — Building A Safer Health System, National Academy Press, 2000.

5 Idem. Crossing the Quality Chasm: A New Health System for the 21st Century. National Academy Press, 2001.

6 E. Fisher, D. Wennberg, et al., “The Implications of Regional Variations in Medicare Spending: Part 2, Health Outcomesand Satisfaction With Care,” Annals of Internal Medicine 138, no. 4 (2003): 288-298.

7 E.A. McGlynn and others, “The Quality of Health Care Delivered to Adults in the United States,” New England Journalof Medicine 348, no. 26 (2003): 2635-2645.

8 D.L. Sackett and J.C. Snow, “The Magnitude of Adherence and Non-adherence,” in Adherence in Health Care, ed. R.B. Haynes,D.W. Taylor, and D.L. Sackett, 11-22 (Baltimore, MD: Johns Hopkins University Press, 1979).

9 The value of a capability model in managing the evolution and value of data and analytic processes was identified byAlexander Black and Jacquelyn Thomas, in Analytics Rising: How Companies Are Responding to Demands for MoreMeaningful Customers Insights (CSC, 2006).