Quality improvement in hospitals: how much does it reduce healthcare costs?

The philosophy of W.E. Deming suggests that continuous quality improvement efforts, when properly applied, ultimately will lead to financial dividends and will help ensure business longevity. Reducing hospital charges can be exciting for the participants and can provide an impetus for expanding quality improvement efforts. Americans, however, tend to demand almost instant gratification and have limited patience for longer-term results. This factor, coupled with minimal knowledge of actual operational costs and inaccurate charge accounting systems, may lead hospital managers to misinterpret the potential net long-term effects of their quality improvement efforts. In the approaching environment of capitated reimbursement, such mistakes may have serious consequences.