Cost of poor quality presentation5


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Cost of poor quality presentation5

  1. 1. This Presentation Will Address Cost of Poor Quality • History of Quality Costs in the Medical Laboratory • Definitions • Quality Cost Scales in the Medical Laboratory • Poor Quality Examples from the Medical Michael A Noble MD FRCPC Laboratory Professor – Department of Pathology and Laboratory Medine • Summary and Conclusion. Chair – UBC Program Office for Laboratory Quality Management LifeLabs BC – Medical Microbiology and Medical Director for Quality 2 Six Decades of Useful References History of Cost of Poor QualityMany Authors Many Titles• Joseph Juran • COQ• Phillip Crosby Cost of Quality• James Harrington• Jack Campanella • PQC Poor Quality Costs• Douglas C. Wood • CPQ Cost of Poor Quality 3 4 Total Quality Costs Definitions of Quality Costs The Juran Model• The sum of all costs for all activities associated • Prevention Costs: Costs for activities designed to prevent poor quality in with ensuring an accurate and timely product products or services. or service: • Appraisal Costs: Costs for activities associated with measuring, evaluating, or – Prevention Costs auditing to assure conformance to quality standards. – Appraisal Costs • Failure Costs: Internal – costs associated with detection of error before – Costs associated with Internal Failure product or service reaches the customer. – Costs associated with External Failure External – costs associated with detection of error after the product or service reaches the customer. 5 6
  2. 2. Quality Costs Quality CostsPREVENTION IND LAB APPRAISAL IND LAB INTERNAL FAIL IND LAB EXTERNAL FAIL IND LABProduct Needs Team Quality Control-receipt Scrap Customer complaintProduct Review Quality Control – in use Rework Customer ReturnsSupplier Review Calibration Re-inspection Warranty ClaimsProduct Evaluation Process audits Retesting Product RecallsQuality Awareness In-process inspection Corrective Actions Corrective ActionsSupplies , materials Final inspection Downgrading Remedial NotificationConfirmation retest Proficiency Testing Near miss time loss Remedial Testing LIABILITY COSTS 7 8 Juran: Crosby: The Quality Economic Model the cost of nonconformance Percent conformance and Costs “Take everything that would not have to be done if everything were done right the first time and count that as the price of nonconformance.” Quality Without Tears: The Art of Hassle-free Management 1984 9 10 Crosby and the four absolutes Cost Ratios The Measurement of Quality is the price of nonconformance. – Cost of quality has two components – cost of conformance and the cost of nonconformance, where the cost of nonconformance is the sum of all expenses in doing things wrong. – Cost of nonconformance can be 10X cost of conformance. – Identifying cost of conformance is easy. 3-4% of operating cost. 11 12
  3. 3. Costs of Quality Comparative Analysis Quality Costs Prevention is ALWAYS cheaper and Organization size N=63 S. Rodchua Jack Campanella ASQ, Quality Management Jour Principles of Quality Cost V16-1, 2009 3rd Edition -1999 - ASQ 13 14Cost of Poor Quality Cost of Poor Quality • More than what meets the eye! Scrap Scrap Rework Rework Warranty Warranty Investigation and report Management time Shop floor time Re-engineering time Increased inventory Decreased capacity Delivery delays Lost orders Litigation From Jack Campanella Principles of Quality Cost 15 3rd Edition -1999 - ASQ 16 Different Folks cause Different Costs Different Folks cause Different Costs White Collar Error Costs • Meetings that start late. • Prolonged meetings. • Computer down-time. • Recording errors. • Communication errors. • Delayed sign-offs. • Supply chain errors. • In-house training. • Dismissals for poor performance. • Non-business phone calls. • Phillip Crosby • Phillip Crosby • Missed commitments. • H. J. Harrington 17 18
  4. 4. Management’s View Yesterday and Today Cost of Poor Quality Make Money is NOT an Money Reduce Costs Image/Media Money Regulations Accounting Tool Money Money Customer Base Staff Management Money Be Green Douglas Wood ASQ 1984 2009 19 20 Why Industry and Medical Laboratory Dimensions of Poor Quality CPQ are different in the Medical Laboratory more than just money! • MoneyIndustry Medical Laboratory • Time 1. Largely Private sector 1. Largely Public sector 2. Customer choice 2. Customers less choice • Patient time and 3. Life choices inconvenience 3. Life saving 4. Warranty • Productivity 4. Liability 5. Money common 5. Money and Time are • Turn around Time denominator • Reputation separable issues. • Liability 21 22 Dimensions of Poor Quality in the Medical Laboratory When is “time” not “time” In the Medical Laboratory, time and money • Time are not the same. – When it can’t be used widely. Lab Staff Clinical – When it can’t be equated to Time Time • Different professional groups within the laboratory do money different things, and are paid on different scales, but all their tasks are essential to laboratory operation. • Clinicians are integral to the laboratory, but are not part of the financial structure. • Patients are integral to the laboratory, but are not part of the Patient Lab financial structure. Time Med/Sci Time 23 24
  5. 5. Time Sharing only within Impacts of Time Wasting its own Group Techno- Techno- logist Patient logist Patient Assistants Family Assistants Family Plebotomists Friends Plebotomists Friends Delays Turnaround Reputation Costs Inconvenience New hires Liability Medical Clinician Medical Clinician Locum Locum Scientific Partner Scientific Reputation Partner Staff New hires Reputation Staff Business Profit 25 26 In the blink of an eye CPQ and the Laboratory Cycle A few non-retrievable seconds slipby and translate into minutes, Pre-Pre Patient hours, days of consumed Examination Post-Post Test Ordering Examination consequence. Result Interpretation Pre-Exam Collection Pre-Exam Sample Examination Post-Examination Transport Report 27 28 Proposed revisit to CPQ for the medical laboratory CPQ and the laboratory (1)• Money A physician called to have patient information changed. Report Prevention + Appraisal + Failure supplies indicates mother was tested, but he was sure it was the child. Investigation indicates (a) requisition made out for mother, (b)• Staff time person tested was mother, (c ) report made out for mother. Investigation, Remediation, Correction• Clinician time – Direct Cost impact – trivial Notification, rework, re-interpretation –Staff time - Review and remediation ( 9 hours)• Patient time –Clinician time – brief Revisit, remediation, risk, liability –Patient time – 2 hours –Patient risk – incalculable –Reputation Damage and Liability Risk - incalculable 29 30
  6. 6. CPQ and the Laboratory (2) CPQ and the laboratory (3)Blood samples are drawn for multiple tests on the same analyzer, but Improperly collected Blood Culture volumes (either too low or too great)an insufficient volume of blood is collected. result in false negative cultures – 10%. Time to collect properly 2Usually these are “near-misses” because a laboratory worker runs minutes. Time to collect improperly 2 minutes.around and finds more blood from the patient drawn into a differenttube. Retrieves sample and increases tube volume. Time to drawsample correctly: 30 seconds, Time to draw sample with reduced •Direct Costs – Nilvolume: 30 seconds. •Staff time – Trivial •Clinician Time – Nil –Direct Costs – Trivial •Patient Time – Nil –Staff time – 3-4 hours per day. •Potential impact on reputation, liability, risk - substantial –Clinician time – nil –Patient time - nil 31 32CPQ and the Laboratory (4) CPQ and the laboratory (5)The patient goes to an laboratory for an ECG, but the ECG is performed A laboratory is made aware by physician complaint ofincorrectly. possible cross contamination of 100 tuberculosis samplesTime to record ECG correctly – 10-15 minutes. Time to record ECG within the laboratory testing process.incorrectly – 10 -15 minutes. One laboratory reports 3-5 per week. Direct costs: $20 per test Staff time: Review and Analysis 70 hours•Direct Costs – Trivial Contact 40 hours•Staff Time – review, contact, recall, retest – 1 hour Rework 20 hours Corrective Actions 40 hours•Clinical time – 1-2 hours Additional Monitoring 7 hours each week•Patient time – 3 hours Clinician time Patient recall and retests 100 hours•Reputation, Liability, Risk - substantial Patient time Retest 100 hours Reputation, Liability, and Risk: incalculable 33 34 CPQ and the laboratory (6) CPQ and the laboratory (7)A large community laboratory changed its method for measuring vitamin Improperly tested and interpreted breast tumor markers result inD in order to save both time and money, but did not adjust its reference false positive and negative information. Time to test and interpretrange to accommodate the new methodology. As a consequence, a properly 2 minutes, Time to test and interpret incorrectly 2 minutes.massive recall (one million tests) of patients and retests was required. – Direct Costs $100 per test – Direct costs: $3,000,000 – Staff time Review – 6 months – Staff time : New reference range – 5 days Remediation – 16 weeks Time to recall patients - 60 days – Clinician time hours per patient Time to retest patients - 120 days – Patient time 2-4 hours each – Clinician time 1-2 days for each clinician – Patient time 1-3 hours for each patient – Reputation, Liability, Risk $7,000,0000 plus – Reputation, Liability, Risk: incalculable. 35 36
  7. 7. Medical Laboratory Losses Cost of Poor QualityObservations multi-scale 1. Laboratory Errors result in time loss and costs throughout the laboratory testing cycle. 2. Laboratory Losses and costs involve all profession groups and all reasons. 3. Poor Quality Impacts are often felt downstream from the error and, 4. Poor Quality Impacts are usually borne by people who did not directly cause the problem. 5. Creating loss take trivial time compared to investigation, remediation, and correction. 6. Inconvenience, Reputational damage, Liability, and Risk are common consequences 37 38 Costs of Poor Quality Impact of Error on CPQ Scales Spidergrams Ideal Near Miss Patient Recall Complex 39 40 How to monitor About monitoring for medical laboratory CPQ medical laboratory CPQ • Index – Near-miss time – Sample repeat times – Patient complaints • It is probably unreasonable and inappropriate – Physician complaints to try to capture all costs at all times. – Opportunity For Improvement reports – Critical events reports • A sequence of point-in-time calculations can • Process equally monitor trends. – Investigate, capture time and finances losses – Compile – Internal targets until benchmarks become available. – Management Review leading to Action Plan. 41 42
  8. 8. Why Medical Laboratory Why Medical Laboratory Errors Happen Errors Happen Process Process Failure Distraction-Inattention Distraction-Inattention Training – Compliance – Competency Training – Compliance – Competency Equipment Failure Equipment Failure Knowledge - Interpretation All errors cost Knowledge - Interpretation But, some errors cost more than others, and some a lot more! 43 44 Why Medical Laboratory Errors Happen Recovering Poor Quality CostsProcessDistraction-Inattention • Be awareTraining – Compliance – Competency • Have an active OFI or continuousEquipment Failure improvement programKnowledge - Interpretation All errors cost • Develop and Measure a CPQ process But, some errors cost • Record more than others, • Monitor Money • Remediate and Correct Time and some a lot more! Inconvenience Reputation Risk 45 46 Costs of Poor Quality Conclusion… Regardless of one-scale or multi-scale It is still easier, faster, and cheaper to prevent errors than to have to find them and fix them. 47 48
  9. 9. Poor Quality Costs Techno- logist Patient More Than MoneyAssistants FamilyPlebotomists Friends Medical Scientific ClinicianLocumPartnerStaff 49 50