Improve Quality Outcomes in Managed Care: Back to Basics

This article originally appeared in the January/February issue of PSQH.

By Richard Kaine, MD, CHCQM

“The more things change, the more they remain the same.”  Technology and pharmacology are advancing rapidly.  Reimbursement systems for healthcare services are in flux, and the sites for delivering healthcare are expanding to pharmacies and grocery stores.  What remains the same is that people need healthcare and healthcare professionals provide it.

No matter what environment is used to deliver the care, the care can always be improved.  In fact, the reimbursement strategies are now providing a combination of incentives and disincentives related to the quality of healthcare outcomes.

Healthcare providers can find some degree of security in the knowledge that the tools for achieving improvements remain grounded in stable fundamentals.  Quality assurance (improvements based upon adverse events), quality improvement (improvements enhancing already positive performance), continuous quality improvement (incrementally improving upon already successful improvement actions), and total quality management (improvements focused upon “customers’ expectations”) provide the foundations for identifying areas for improvement.

As the managed care environment develops, quality is being measured by patients, insurers, and the government.  The individual indicators for quality address the categories of: access to care, satisfaction with care, delivering preventive care, accuracy of diagnosis, plus the efficiency and effectiveness of care.

Fundamentally, any improvement begins with the identification of an opportunity for improvement.  The baseline level of performance must be determined; followed by the setting of the measurable-level-of-performance to be achieved by the actions being taken.

Next, it is critically important to determine the timeframe in which the improvement will be reached.   The timeframe determines the level of resources needed, how many people are needed, how often to meet, and the cycles for measurement.

Once the project is selected, goals are set, and the resources are determined; it is necessary to analyze the process that are producing the outcome being addressed.  Four key tools that can be used alone or in combination are:

  1. Discuss the systems with the participants who use the system, i.e., interviews
  2. Observe the performance directly, i.e., assign an observer who documents the flow of the system
  3. Review records that document the performance of the system, i.e., usually review patient records or checklists
  4. Examine data that measures the outcomes of the process/systems, e.g., coding and billing data

Depending on the process/system being analyzed, one can choose to investigate and analyze the process/system prospectively, concurrently, or retrospectively.  How long to measure, how many people to interview, how many observations to make, or how much data to process are always intriguing questions.

There is a statistical axiom that 30 events or 5% of the total occurrences, whichever is greater; will give you a statistically meaningful answer.  However, there is a possible shortcut.  Unless the project is being prepared for publication with peer review scrutiny, all that is needed is a sufficient sample to determine “how the process is performing”.

Assume you want a process to achieve an 80% success rate; the statistically-required sample size is 30.  As the sample is reviewed, data collection can be stopped as soon as seven non-compliant events are identified, i.e., 7/30 = 23% non-compliant or a maximum 77% compliance.  Even if all the remaining events meet your performance goal, the process/system needs improvement.  The reverse is true. When 24 compliant events are identified, 24/30 demonstrates 80% compliance, meeting your goal. Analyzing the last six records may make you feel proud, but are not needed to confirm your success.

Choosing the process/system to improve may seem confusing.  By reviewing your current success rates for insurer and government required indicators, it is easy to identify areas for improvement in patient care that will lead to enhanced reimbursement.

After identifying improvements that will benefit the patient and enhance reimbursement, select an improvement opportunity that you believe can be addressed successfully.  There are always more opportunities than can be addressed, so go for success.

Traditional quality process tools will facilitate enhanced quality in managed care as they have in every other aspect of healthcare.  The path to enhanced success and financial security is paved with the nationally-endorsed indicators.  Enhanced quality of care in managed care is achievable using the familiar, basic tools of the quality improvement process.


  • Richard Kaine, MD, CHCQM, Medical Director, Health Practice Management