The document provides an outline and introduction to a lecture on quality improvement given by Donald Fetterolf, MD, MBA, FACP, President of the American College of Medical Quality. The lecture covers: 1) A historical perspective on the evolution of definitions and approaches to medical quality, from early definitions borrowing from business to more modern outcomes-focused analysis. 2) An overview of basic tools for continuous quality improvement (CQI), including techniques developed by Deming, and how they have been applied in healthcare settings. 3) Learning objectives of developing an appreciation for the history of medical quality management and becoming familiar with basic and advanced CQI tools and their application in healthcare.

1. ACMQ Annual Meeting 2010
Introduction to Quality Improvement
Donald Fetterolf, MD, MBA, FACP
President, American College of
Medical Quality

2. Abstract and Learning Objectives
Abstract:
The American College of Medical Quality is committed to furthering a basic understanding
of how to advance the quality of medicine using well established tools and techniques for
continuous quality improvement. In this lecture, we will present an overview of basic tools
used in the field, including an overview of the history of continuous quality improvement,
basic techniques piloted by Deming, and some more advanced tools and their use in a
medical management setting. The presentation would be a good introduction for
students, medical directors new to QI analysis and similar individuals.
Learning Objectives:
 The listener will develop an appreciation for the unfolding history of the field of medical
quality management.
 The listener will become familiar with basic tools used in creating an approach to
continuous quality improvement.
 The group will collectively consider application of more advanced tools in the medical
management setting.
 The group will generally discuss common issues and experiences in the use of these tools
and lessons learned.
1

3. Outline
 Introduction
 Historical perspective
 Designing a Framework for Strategies for
Quality Management
 Making the business case for medical quality
 References
2

4. Historical
Perspective

5. The Evolution -- Definitions of Medical Quality
 Many writers borrowed heavily from concurrent activities in
business, engineering and statistical quality control programs in
manufacturing.
 Shewhart - Bell Labs 1920’s & 30’s
 Deming/Juran - Industrial Quality Management Systems -
CQI/TQM and the movement from QA to QI.
 Crosby -- Conformance to requirements
 Donabedian – Early basic thinking in medical QI
 Couch – Quality = The attribute of a product, service, or outcome
that is the extent to which achievable value is actually achieved.
Value is usually defined in terms of consumer expectations,
whether explicit (i.e. wants), or implicit (i.e. needs)
 Eddy – Attributes of quality indicators and HEDIS
 Berwick – Institute for Healthcare Improvement (IHI) Provider
participation, continuous improvement. The IOM report.
 Six Sigma, Toyota Production System, ISO9000 and others
4
 ACMQ – Core Curriculum for Medical Quality Management

6. Historical Perspective
 Quality has had an evolutionary course that has paralleled similar
developments in the business world. The relationship to the
business world and business thinking is important:
 Stage 1: Quality Assurance, The Era of Inspection
 CPCs, sentinel event monitoring, outlier review, inspection
 Stage 2: Statistical Quality Control and CQI
 Deming tools, control charts, multivariate normal distributions
 Stage 3: Outcomes Focused Analysis
 Prevention, functional status, patients perceptions,
 Stage 4: Big Management
 Rise of the QI bureaucracy: NCQA, JCAHO, URAC, CMS
 Stage 5: Fluid Change, a Cacophony of Quality
5

7. First Generation CQI
The Era of Inspection
 Physician Credentialing
 Institutional Credentialing
 Procedure Specific Credentialing
 UM/QI Process Adequacy
 Technology Assessment Process Adequacy
 Adverse Occurrence Monitoring
 Sentinel Event Monitoring
 External Accreditation
Questions answered:
Did the horse get out of the barn?
Who left the barn door open?
6

8. "QA" Approach
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9. Second Generation CQI
The Era of Statistical Quality Control
 Diagnosis-Specific Admissions Variations
 Targeted Surgical Variations
 Targeted Ambulatory Surgery Variations
 Physician Statistical cost/mortality profiling
 Pharmaceutical Profiling
Questions Answered:
How many horses get out per year?
Can we make repeated door structural changes to reduce the
number of escapes over time?
8

10. "QI" Approach
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9

11. Third Generation CQI
The Era of True Outcomes Measures
 Selected Claims-Based Outcomes
 Member Satisfaction/Perception of Health
 Clinical Outcomes Measures
 Disease Specific Patient Perceptions
 Linkage to Disability/Absenteeism
 Life Event Risk Intervention Analysis
 Conventional Medical Outcomes
 Social - small area analysis Dartmouth Study
 Functional Status and Well Being
 Health Risk Appraisal
 Cost Effectiveness Analysis (CEA)
Questions Answered:
Can we reduce the reasons why the horse would want to leave the
barn and instead want to stay and work for me? 10

12. Fourth Generation CQI
The Era of Big Management
 Big Systems
 Integrated Care Management Delivery Systems
 Multispecialty Group Practice
 PHO, PHCO, IPA, CHIN, and Others
 New Methods, Tools, and Concepts
 “Data Driven” Information Systems
 Statistical Quality Control - Shifting the Bell Curve
 Comparing Across Plans, Hospitals, Companies and Individuals
 Best Practice Analysis
Questions Answered:
If we hire consultants and build big farm coops, will fewer horses escape?
Can data mining and predictive modeling reduce the number of horse escapes?
11

13. Fifth Generation CQI
The Era of Confusion and Cacophony
 Government Agency Participation
 CMS, AHRQ, State DOH, State DOI
 Pseudo-governmental Participation
 NQF, IOM, PROs, QIOs
 Accreditation Bureaucracies
 JCAHO, URAC, NCQA, AAAHC
 Integrated Care Management Delivery Systems
 PHO, PHCO, IPA, CHIN, and Others
 Health plans, HMOs, Group practice.
 Other Players
 Consultants
 Accenturisms -- Buzzwords and Buzzwords for The Next Big Thing
 P4P, Transparency, Accountable Networks, EMR, Medical Home
Question: Our system of evaluation for accountable providers transparently
creates acceptable deliverables to reduce equine elopement. 12

14. External Organizations Concerned about Health Care Quality
Governmental Business
 Centers for Medicare and Medicaid Services  Business Health Care and Purchasing Coalitions
(CMS)  Washington Business Group on Health
 Peer review organizations (“PROs”)  Pacific Business Group on Health
 Quality Improvement Organizations (“QIOs”)  Leapfrog Group
 State departments of health and insurance  Local business groups and councils
 State health care cost control councils  Regional employer coalitions
 Centers for Disease Control  Tech councils
 National Business Coalition on Health
Accreditation  Drug companies and their spin off organizations
 National Committee for Quality Assurance
(NCQA); includes use of Health Plan Employer Others
Data Information Set (HEDIS) and Consumer
Assessment of Health Plans Survey (CAHPS)  Americas Health Insurance Plans (AHIP)
tools  Blue/Cross Blue Shield Association (BCBSA) and
 Joint Commission for the Accreditation of the TEC
Healthcare Organizations (JCAHO)  American Board of XYZ
 American Accreditation Healthcare Commission  Council for Affordable Quality Healthcare (CAQH)
(“URAC”)  Doctors Office Quality Project (DOQ)
 Accreditation Association for Ambulatory  Institute of Medicine (IOM)
Health Care (AAAHC)  National Quality Forum (NQF)
 Organized medical associations (e.g. AMA)
 Professional organizations (e.g., American Heart
Association) and Specialty societies
 The BIG UNIVERSITY “experts”
 Benefit management consultant “experts”
Question: How much money is being spent on the development and delivery
of the medical quality initiatives that are present or being planned for the
future? How much will you need to know about business in quality? 13

15. Theories and Ideas Too!
 CQI
 Six Sigma
 Hoshin Planning
 ISO 9000
 Toyota Production System
 The Intergalactic Business Group on Health’s RFP
Analytic Quality Statistic
Takeaway point: The language of business is pervasive in
the language of medical quality.
14

17. Basic Tools in QI Management
16

18. Shewhart Cycle
Plan
 Plan
 Do
 Check/
Study Do Continuous Act
Improvement
 Act
Study
17

19. ACMQ Core Curriculum
18

20. Selection Grid
Reference: Morgenstern, p.3-3
19

21. Seven Helpful Charts
 Flow Chart
 Histograms
 Pareto Charts
 Run (Trend) Charts
 Control Charts
 Scatter Diagrams
 Cause and Effect
Diagrams
Reference: Walton
20

22. Histograms
21

23. Histograms
 “Bar Graphs”
 Show relative amounts of things in a group
 Can show trends over time
 Special forms: Pareto charts
22

24. Histogram
Reference: Core Curriculum
23

25. Histogram
Reference: Core Curriculum
24

26. 25

27. Results of the Study
Results of the Study Results of the Study
183 200
182
181 150
180
Result
Result
179 Series1 Series1
100
178 Series2 Series2
177
50
176
175
174 0
Result Result
Period Period
26

28. Pareto Charts
27

29. Pareto Charts
 Pareto charts are a type of histogram that
arranges the bars on the chart from highest to
lowest value.
 The focus then in QI processes is to
concentrate on the highest sources of an issue
first and eliminate them as problems.
 A concurrent line often shows an accumulated
total for each subsequent bar in the graph,
reflecting total cumulative impact.
28

30. Pareto Analysis
Reference: Core Curriculum
29

31. Pareto Chart
Reference: Morgenstern
30

32. 31

33. Process Flowcharts
32

34. Flow Charts
 Clarify the process
 Identify observation points
 Address
 logical inconsistencies
 redundancy
 timing
33

35. Process Flowchart
Reference: Core Curriculum
34

36. 35

37. Types of Flowcharts
 Process Flowchart
 Interrelationship Diagraphs
 CPM/PERT Charts
 Affinity Diagrams
 Activity Network Diagram
 Process Decision Program Chart
 Others
36 Reference: Brassard, and others

38. Interrelationship Diagraph
37 Reference: Brassard

39. Clean up the Mess!
 Look for redundant functions; create simpler models to
do the task.
 Measure each step for efficiency improvement and
possible error reduction.
 Redesign the program to reduce the number of nodes
and handoffs
38

40. CPM/PERT Charts
(Critical Path Method/Program Evaluation Review Technique)
39

41. Run Charts and Control Charts
40

42. Run Charts
 “Line charts”
 Used to measure relative changes in a value over time
 Specialized forms for more sophisticated analyses
41

43. Run Chart
80
70
60
50
Value
40
30
20
10
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Month
42

44. 43

45. Radar Chart
Radar Chart
1
60
12 2
40
11 3
20
10 0 4
9 5
8 6
7
44

46. Shewhart:
A phenomenon will be said to be controlled when,
through the use of past experience, we can
predict, at least within limits, how the phenomenon
may be expected to vary in the future. Here it is
understood that prediction within limits means that
we can state, at least approximately, the
probability that the observed phenomenon will fall
with the given limits…”
Reference: Montgomery
45

47. Control Chart
80
70
60
50
Value
40
30
20
10
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Month
46

48. Dynamic Chart Terms
 Median position = average; horizontal line
showing the average value
 Run = two or more consecutive data points
on the same side of the median
 Upper control limit, lower control limit =
limiting horizontal lines drawn above and
below the median, which show the limits of
where the system is “in control” or “out of
control”
47

49. Types of Control Charts
 X-R Average and Range
 XmR Average/Moving Range
 Control=x+/-2.66R
 p-Chart Control=p+/-3 √p(1-p)/n
 p=defects/total occurrences
 c-Chart Control=c+/-3 √c
 c=number of defects/total observations
 u-Chart Control=u+/-3 √u/n
 u=defects for all subgroups/total observations
in all subgroups
48 Reference: Carey and Lloyd

50. Control Chart Concerns
 Number of data points in a run
 Up to 8/5; 9 to 20/6; 21 to 100 /7
 Too few or too many runs?
 Run = 2+ data points on one side of median
 Trends
 Zig Zag or “sawtooth” patterns
 Normal vs special cause variations
 Bell curve on the side
 Divide control chart into zones of concern - action
limits vs warning limits
Reference: Carey and Lloyd.
49

51. Time Series Analysis Techniques
 Run Chart (Shewart Model)
 Running Average (>6 mo)
 CUSUM Plot (sensitive to small changes in σ
 Exponentially Weighted Moving Average
(EWMA) Current items weighted more.
 Autoregressive integrated moving average
model (ARIMA), when series are
autocorrelated.
50

52. Cusum Plot
A Cusum plot allows you to evaluate an important result before it reaches
51 statistical significance!

53. CUSUM Plot
 Calculate the target mean
 Create running sum of differences of each variable
from the mean
 Note upper and lower control limit formulas exist
C = Σ(xi-avg)
52

54. CUSUM Plot
$1,500.00
$1,250.00
$1,000.00
$750.00
$500.00
$250.00
CUSUM cf 12 Month Average
$0.00
-12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7 8 9
($250.00)
($500.00)
($750.00)
($1,000.00)
($1,250.00)
($1,500.00)
($1,750.00)
($2,000.00)
($2,250.00)
($2,500.00)
($2,750.00)
($3,000.00)
Month
53

55. Scatter Diagrams
54

56. Scatter Plots
 Plot two or more variables simultaneously (up to six!)
 Two by two plots usually
 Association testing
 Correlation coefficient calculations
55

57. Analysis of Variation
CV of Paid vs LOS for 90% Impact DRGs
2.50
I
2.00
1.50
III
C.V. LOS
Series1
1.00
0.50
IV II
0.00
0.00 0.50 1.00 1.50 2.00 2.50
C.V. Paid
56 Reference: ACPM Presentation 2/2003

58. Linear Regression
 Creates a line from a series of data in a scatter plot.
 The sum of the squared differences of each data point
from the line is minimized.
 It is possible to have more than two variables (multiple
regression)
 It is also possible not to be linear (nonlinear
regression)
57

59. Other Regression Things
 Correlation -- R2 or R value or Pearson Correlation
Coefficient. R2 close to 1 shows high correlation.
 Autocorrelation -- Durbin Watson Statistic -- 0 - 2 - 4
scale
 Forecasting by extrapolation
 lagged variables, cycles, etc.
 exponential smoothing
 software Forecast Pro for Windows
58

60. Cause and Effect Diagrams
59

61. Ishikawa (“Fishbone”) Cause and Effect
Diagram: PT Referral Costs
Environment Equipment
High Profit Equipment costs
Low prior control In house expenses
Benefit design
Medical policy
Elevated
Referral
Costs
Staff do referrals Specialists
Open ended referrals Physical therapists
No guidelines PCPs
No feedback Greed, personal gain
Procedures People
60 Reference: Carey and Lloyd

62. Wishbone Diagram
Reference:
Core
Curriculum
61 Reference: Core Curriculum

63. CQI: Closing the Loop
62

64. Is That Really All There is to It?
 Formal programs for organizing the use of quality tools
exist.
 “Continuout Quality Improvement”
 Six Sigma
 Lean Six Sigma
 Toyota Production System
 ISO 9000; ISO 9001
63

65. DMAIC Problem-Solving Model
DMAIC equals Define, Measure, Analyze, Improve and
Control.
 Step 1 - Define the problem.
 Step 2 - Measure.
 Step 3 - Analyze.
 Step 4 - Improve.
 Step 5 - Control.
64

66. Clinical Study Format
 Problem identification
 Determine the guidelines
 Establish the criteria
 Design the study
 (population, sample, data collection techniques)
 Data analysis
 Identify deficiencies
 Develop recommendations for problem resolution
 Feedback to appropriate providers, depts, committees,
individuals
 Reevaluate problem to determine if corrective actions have
been implemented/problem resolution occurred
Thanks to: NCQA
65

67. Six Sigma
 Six Sigma is a business management strategy, initially
implemented by Motorola, that today enjoys widespread application
in many sectors of industry.
 Six Sigma seeks to improve the quality of process outputs by
identifying and removing the causes of defects (errors) and
variation in manufacturing and business processes.[1] It uses a set
of quality management methods, including statistical methods, and
creates a special infrastructure of people within the organization
("Black Belts","Green Belts", etc.) who are experts in these
methods.[1] Each Six Sigma project carried out within an
organization follows a defined sequence of steps and has quantified
financial targets (cost reduction or profit increase).[1]
Reference: Wikipedia, accessed July, 2009
66

68. LEAN
 Lean manufacturing or lean production, which is often known
simply as "Lean", is a production practice that considers the
expenditure of resources for any goal other than the creation of
value for the end customer to be wasteful, and thus a target for
elimination. Working from the perspective of the customer who
consumes a product or service, "value" is defined as any action or
process that a customer would be willing to pay for. Basically, lean
is centered around creating more value with less work. Lean
manufacturing is a generic process management philosophy
derived mostly from the Toyota Production System (TPS) (hence
the term Toyotism is also prevalent) and identified as "Lean" only in
the 1990s.[
Reference: Wikipedia, accessed July, 2009
67

69. MAKING THE BUSINESS CASE FOR HEALTHCARE
QUALITY IMPROVEMENT
68

70. The Issue: Making the Business Case
Making the business case to someone or some entity that you
should be paid for your valuable services is difficult for anyone.
Money is tight everywhere.
You were trained as a clinician, not a business person. So, how
do you put a price on quality or clinical improvement? What is
the strategy to convince a potential nonclinical payer of diabetic
education services that they are worth it?
Do your services create a “value proposition” for your services?
How do you construct the approach and the arguments for the
government, health plans and clinics that create a compelling
case in your favor in the mind of a business person?
69

71. Introduction: Case Study
The CEO of your company has made friends with the Vice President of
marketing of a national company that claims that it can provide [what
your area does] effectively using a cool web based tool his company has
designed. The two have gone golfing, have had dinner together, and
have had several “high-level” discussions about having the vendor
replace your program staff with the vendor's web site. Two of your
organization’s senior vice presidents, in totally unrelated areas and who
have no knowledge of clinical issues, think the proposal might be a
viable option. The vendor claims that he can give your company an “8
to1 return on investment,” and will ”guarantee” it.
You are now approached by the CEO, who admits that he might
dissolve your area, but offers to give you 20 minutes to talk him out of
it. He is interested in the value/return that you get now.
What do you tell him? Your answer should address both an
analytic approach and recognition of the various political factors that
may influence your choices.
70
Paraphrased and restated from Fetterolf, AJMQ Jan/Feb 2003.

72. Wisdom from CMO’s:
Stay Focused on the Important Stuff
 Lower/maintain PMPM costs for your clients
 Reduce administrative overhead
 Generate more revenue
 Measurably improve patient care quality
 Improve relationships with business contacts – “co-
opetition”
 Have real impact, not inconsequential activities
71

73. The Business Case for Medical Quality
Components of the Business Case for a QI Unit
 Government mandates
 Basically, you have to…
 Demands by the payer/business/consultant community
 Financial effect
 Lower quality is more expensive
 Logical requirements for quality oversight
 Demands of business partners
 Trade off between value of accreditation and lower
costs
 Estimated economic impact from econometric attempts
 NCQA Quality dividend calculator
 Social goals
72

74. Conclusions and Summary
 The basic ingredients of a good quality program
have not changed much over 20 years.
 People still need to use them however.
 From simple charts to complex analyses, QI will
continue to make things better wherever it is
applied.
73

75. Questions?
References on Next Slides

76. References

77. Basic References on Medical Quality
 American Journal of Medical Quality
 Carey, R. and Lloyd, R.. Measuring Quality Improvement in
Healthcare. New York. Quality Resources. 1995. An old but great
reference. Lots of terms and a standardized approach.
 Couch, JB. Health Care Quality Management for the 21st Century. Tampa,
FL. Hillsboro Printing Co for the American College of Physician
Executives. 1991. The last really good book on the subject before the
ACMQ one.
 Dlugacz, Yosef. Measuring Health Care. Jossey Bass.2006
 Langley, G. et. al.. The Improvement Guide: A Practical Approach to
Enhancing Organizational Performance. Josey-Bass Publishers. 1996.
 McLaughlin, C. and Kaluzny, A. "Continuous Quality Improvement in
Healthcare." 1999. This is a college type textbook.
 Nash, D and Goldfarb, N (Ed) "The Quality Solution: The Stakeholder's
Guide to Improving Health Care." 2006. A solid reference also.
 Varkey, P. Ed.. Medical Quality Management: Theory and
Practice. Boston, MA. Jones and Bartlett Publishers. 2009. ACMQ just
published. 76

78. Bibliography – Additional Reading
--Baker, Judith. Activity-Based Costing and Activity-Based Management for Health Care.
Aspen Publishers. 1998.
--Berwick, D. Curing Health Care. New Strategies for Quality Improvement. San Francisco.
Jossey-Bass. 1990.
--Blissenbach, H. "Use of Cost-Consequence Models in Managed Care." Pharmacotherapy.
(15)5. 1995. pp. 59s-61s.
--Carey, R. and Lloyd, R. Measuring Quality Improvement in Healthcare. New York. Quality
Resources. 1995.
--Corrigan, J.; Greiner, A.; and Erickson, S. "Fostering Rapid Advances in Health Care:
Learning from System Demonstrations." 2002.
--Coddington, D. Making Integrated Health Care Work. Center for Research in Ambulatory
Health Care Administration. Englewood, CO. 1996.
--Couch, JB. Health Care Quality Management for the 21st Century. Tampa, FL. Hillsboro
Printing Co for the American College of Physician Executives. 1991.
--Crosby, P. Quality is Free. New York. New American Library. 1979.
--Crosby, P. Quality Without Tears. New York. McGraw Hill Book Company. 1984.
--Donabedian, A. Explorations in Quality Assessment and Monitoring. Volume II. The Criteria
and Standards of Quality. Health Administration Press. Ann Arbor. 1982.
--Drummond, M. and McGuire, A. Economic Evaluation in Health Care. Merging Theory with
Practice. Oxford University Press. 2001.
--Drummond, M., O'Brien, B., Stoddart, G. and Torrance, G. Methods for the Evaluation of
Health Care Programmes, 2nd Ed.. New York. Oxford Medical Publications. 1998.
--Fetterolf, D. "Commentary: Presenting the Value of Medical Quality to Nonclinical Senior
Management and Boards of Directors." American Journal of Medical Quality. (18)1. Jan/Feb
2003. pp. 10-14. 77

79. Bibliography
--Fetterolf, D. and West, R. “The Business Case for Quality: Combining Medical Literature
Research with Health Plan Data to Establish Value for Non-Clinical Managers.” American Journal
of Medical Quality. (19)2. March/April 2004. pp. 48-55.
--Gafni, A. "Willingness to Pay in the Context of an Economic Evaluation of Healthcare Programs:
Theory and Practice." Am. J. Man. Care. (3(suppl))S21-S32. 1997.
--Galvin, R. "The Business Case for Quality. Developing a business case for quality will require a
deliberate approach, with all economic parties at the table.." Health Affairs. Nov/Dec 2001. pp. 57-
58.
--Gladowski,P., Fetterolf, D, Beals, S., Holleran, MK, and Reich, S. “Analysis of a Large Cohort of
HMO Patients with Congestive Heart Failure.” American Journal of Medical Quality. (18)2 April
2003.
--Gold, M. et. al. Cost Effectiveness in Health and Medicine. (Report of the U.S. Public Health
Service Panel on Cost Effectiveness in Health and Medicine.). Oxford University Press. 1996.
--Haddix, A., Teutsch, S., Shaffer, P. et al. Prevention Effectiveness: A Guide to Decision Analysis
and Economic Evaluation. New York/Oxford. Oxford University Press. 1996.
--Hubbell, W. "Combining Economic Value Added and Activity Based Management." Journal of
Cost Management. Spring 1996. pp. 18-29.
--Kohn, L., Corrigan, J., and Donaldson, M.. To Err Is Human - Building a Safer Health System.
Washington, DC. National Academy Press. 1999. pp. 1-13.
78

80. Bibliography
--Luehrman, T. "What’s It Worth? A General Manager’s Guide to Valuation." Harvard
Business Review. May-June 1997. pp. 132-142.
--Millenson, M. America's Health Care Challenge: Rising Costs. A report commissioned by the
American Association of Health Plans. Washington, DC. AAHP. 1/22/2002.
--National Academy of Sciences "Priority Areas for National Action: Transforming Health Care
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81. Slide Set Information
 Author: Don Fetterolf, MD, MBA, FACP
 Fetterolf Healthcare Consulting
 Phone: 412-638-2891
 Email: donfetterolf@gmail.com
 filename: 100217 ACMQ QI v1.ppt
 date: February, 2010.
 date of this printout: February 21, 2010
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