Tuesday, January 26, 2010

Quality First, Finances Follow

Quality first and finances follow. This is a long standing axiom in healthcare, but never has it had more meaning than it does today. There is of course the obvious connection created by the new Pay for Performance mandates, known more commonly as P4P. These have directly linked hospital's Medicare (and sometimes Managed Care) reimbursement to certain levels of performance on quality measures. Medicare has actually used the stick approach rather than the carrot by cutting reimbursement for hospitals that perform poorly. But these actions have had the benefit of forcing hospital to put a renewed emphasis on the quality of care they deliver, at least the activities covered by the Core Measures.

There is actually a much deeper reason to be focusing on quality if you are looking to improve financial performance. That is the fact that in order to become a top financial performer, you must already be providing a high level of quality in your hospital. Look at the criteria used in assessing the annual list of Top 100 hospitals. It is a combination of quality measures and financial indicators. Hospitals must rank very high in both to make this coveted list. It is no accident that that the list was developed in this fashion.

But this evokes the old chicken and egg argument. Which comes first, quality or finances? In this case there is clearly no argument; quality is first. Throughout my career I have worked in and studied many hospitals looking to improve their bottom line. Some have focused exclusively on cost cutting measures and maximizing revenue. These efforts are usually minimally helpful and definitely short lived. To have sustained financial success, you must first have your act together regarding the quality of care you deliver and the level of customer service that defines your institution.

Throughout upcoming blogs I will continue to address this subject citing specific ways that your institution can improve the quality of its services and give specific performance targets that you should be setting for your hospital.

More on this later.

Mark Brodeur

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