Deming’s Ideas Applied at Intermountain Healthcare Since 1988

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Guest post by John Hunter, founder of the

I like to share interesting articles (and other resources) that provide examples of organizations applying Deming’s ideas in practice. Here is another of those articles: How Intermountain Trimmed Health Care Costs Through Robust Quality Improvement Efforts by Brent James and Lucy Savitz (2011). Since 1988, Intermountain Healthcare has applied to healthcare-delivery the insights of W. Edwards Deming’s process management theory.

Intermountain Healthcare is an integrated delivery system based in Utah and Idaho. Its network of twenty-three hospitals and 160 clinics provides more than half of all health care delivered in the region.

Intermountain has been identified as a low-cost, high-quality provider. It has made demonstrated improvements in clinical quality that have lowered the cost of care delivery. Those successes come from two primary factors: First, Intermountain developed an ability to measure, understand, and feed back to clinicians and clinical leadership detailed clinical variation and outcome data. Second, the system created an administrative structure that uses its robust clinical information to oversee the performance of care delivery and to drive positive change.

W. Edwards Deming cautioned against clinging to examples, and for good reason. But many people like to learn about how others have applied Deming’s ideas. I think people can learn useful lessons this way, but they also must be careful to realize that specific examples are the result of many different influences.

the findings forced Intermountain to focus on the processes of care delivery that underlie particular treatments, rather than on the clinicians who executed those processes—the “measurement for improvement” approach discussed below. As the inquiry continued, the system was eventually able to document significant declines in physician variation. Physicians led almost all of the changes themselves. Declines in variation were associated with large declines in costs, while clinical outcomes remained at their original high levels. For example, Intermountain’s average internal cost for performing a total hip replacement fell from more than $12,000 in 1987 to about $8,000 per case in 1989.

The idea anyone can take from this is to learn from data, examine the process and let those doing the work use the data (with an understanding of variation) to experiment and improve processes. That is the kind of lesson to take, not to think the lesson is to see the exact actions taken by Intermountain and copy them. The lessons are not about how specific changes to treatments were made (limiting the value to those with only that type of need – a sub-set of those in healthcare). The lesson is about viewing the organization as a system, resisting the urge to blame some people and see others as heroes, giving those working on a process the tools (quality tools and the relevant education and training) and management freedom to learn and improve those processes.

We found that 104 clinical processes—roughly 7 percent of the 1,400—accounted for 95 percent of all of Intermountain’s care delivery. Individual clinical processes were markedly different in terms of the number of patients they served, the health risks associated with the clinical problem and its treatment, and the associated care delivery costs. For example, 11 percent of Intermountain’s care delivery costs are related to pregnancy, labor, and delivery; another 10 percent are related to ischemic heart disease. Thus, our first interventions were for clinical processes in those two areas.

Our focus on key clinical processes had a major secondary impact. These processes represent the entire care continuum that patients experience, without concern for the location of the care, such as home-based, clinic-based, or inpatient care delivery. Correctly managed, they lead naturally to patient-centered care. Instead of selling clinic visits, hospitalizations, or technologies to prospective patients, a health system organized around key clinical processes finds its business model driven toward population-level health. This means shifting the focus to modifying the factors that cause disease, with the goal of avoiding future costs for care, instead of responding to health problems only after they appear.

This article is an interesting read for anyone who wishes to learn about Deming’s ideas in practice. It may be of special interest to those in healthcare, but the lessons are not limited to those in healthcare.

The majority of the physicians involved in executing Intermountain’s key clinical processes are independent, community-based practitioners. This protected Intermountain from a classic blunder: We didn’t try to control physicians’ practice behavior by top-down command and control through an employment relationship. Instead, we relied on solid process and outcome data, professional values that focused on patients’ needs, and a shared culture of high quality.

I am sure many people face the challenge of not being able to “control” those they wish they could. Even in organizations where the command and control methods seem possible (giving the organization structure) those trying to enforce management practices find frustration if they try and control behavior. Sure to some extent this can be done, but one of the lessons managers learn is controlling people just because the organization chart says you should have authority isn’t as easy as the chart would lead you to believe. And this is before you even get to the issues with the very limited benefits of trying to control behavior instead of creating systems that allow people joy in work and allow the organization to benefit from the full value people can provide when they are engaged and proud of their work.

The idea of providing value and changing behavior by attracting people to choose to adopt new methods, ask for help on a PDSA project, ask for help understanding data etc. is a model I believe in. Rather than ordering people to change, provide value and help them learn and achieve using new management ideas. This idea may seem a bit abstract but I have found it useful, for example while I was working at the Office of Secretary of Defense Quality Management Office. We didn’t seek to dictate that people adopt management practices that we thought were wise. We offered help in adopting those methods and provided training and left it to those who were interested to seek out our help.

Unfortunately, health care providers today are paid for precisely those care delivery episodes that quality improvement seeks to reduce. As Intermountain teams implemented clinical management, clinical outcomes improved and costs fell. However, our payments also fell—often even further than our operating costs. For example, although improvement in Intermountain’s appropriate elective induction rates saved the citizens of Utah more than $50 million per year through reduced payments, Intermountain’s costs fell by only about $41 million. Intermountain thus lost more than $9 million per year in operating margins. Implementing better care required us to invest in education, work-flow redesign, and new data systems. As we improved, the resources to drive further change disappeared.

There are real challenges that different systems create. In systems where revenue is essentially cost-plus; when you improve, and reduce costs, the incentives to the organization may be backwards. The USA healthcare system is replete with incentives that drive dysfunction, unfortunately. Decades ago Dr. Deming called out excessive healthcare costs as a deadly disease and it is sadly no better today. That is due to systemic failures. Many tremendous improvements have been made by individuals and components of the USA healthcare system but at the overall system level it is still a huge problem for the economy of the USA and for millions of individuals forced to interact with that system in ways that are extremely harmful and frustrating.

Thankfully many organization are doing their best to improve. Still we need to focus on improvement at the systemic level (which requires our elected leaders to change how they have acted to keep the current system in place for decades without addressing the biggest systemic issues).

Clinical Quality Improvement – Intermountain’s philosophy (2015):

In the healthcare field, Intermountain is internationally recognized for its clinical excellence and as a pioneer in the application of continuous quality improvement principles to the delivery of care. Applying W. Edwards Deming’s process management theory, which asserts that the best way to reduce cost is to improve quality, Intermountain focuses on reducing variation and discovering, developing, and implementing best practices — which avoids costly errors, along with the overuse, underuse, or misuse of medical care.

Related: Using Dr. Deming’s Ideas at Baptist Memorial Health CareApplication of Deming’s System of Profound Knowledge in HealthcareQuality Improvement in Maternity Services: How Deming Can Help

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