Selling high quality and low cost: market conditions and successful quality improvement projects

Many potentially useful health care improvement projects fail to achieve much improvement. Even a technically excellent project can fail because, under certain conditions, economic factors in the health care market do not support high quality and low cost. Most health care markets evolve from the traditional fee for service market through a consolidation phase into risk shared market. At each phase, payment mechanisms will support specific quality and productivity improvement projects and discourage others. For example, the implementation of critical paths/clinical protocols is not supported until the majority of payers pay a fixed cost per illness or covered life. Prior to that point, loss of income for the hospital and/or physicians will inhibit successful implementation. Maximum quality and productivity improvements outcomes can be achieved with minimum efforts when project leaders understand the maturity of their organization's market, and strategic needs. This paper will review the types of payment systems (fee for service, discounted fee for service, and risk shared payments) and identify the types of projects that maximize benefit to the stakeholders involved.