FOR THE SECOND TIME THIS YEAR, an influential group of large employers has publicly declared its intent to push hospitals and physicians to do more to improve the cost and quality of healthcare.
On June 10, the Midwest Business Group declared that it was time for companies to “crack down on medical costs through the same quality control techniques they employ on the factory floor.” It is telling companies that they should “aggressively tell hospitals and doctors how to run their operations.”
Lab administrators and pathologists should carefully understand the ramifications of this development. The nation’s big corporations, which for almost two decades have relied on Deming-based quality management methods to reduce costs, improve quality and better serve customers, are ready to demand that providers adopt these same management methods.
This is no surprise to clients and regular readers of THE DARK REPORT. Since our inception almost eight years ago, we’ve been unwavering in our conviction that quality management principles have a preeminent place in clinical laboratories and pathology group practices. Throughout these years, THE DARK REPORT has told the stories of numerous early-adopter labs which successfully used these management principles to slash costs, boost lab quality, and increase net profits.
The Midwest Business Group, which includes Bank of America, Ford, General Motors, Kraft Foods, Sears, and 3M, is responding to the double-digit increases in annual healthcare expenses. With costs growing by 12% to 18% per year again, these companies are ready to place direct pressure on hospitals and physicians.
Employers Taking Action
The actions by this employer group are consistent with those taken by the Leapfrog Group in January. (See TDR, January 28, 2002). The theme is the same: employers, as buyers of healthcare, are ready to tell vendors (hospitals and physicians) how to manage their businesses.
It will be simple. If, for example, hospitals in Chicago want to provide care to employees of Sears, they will have to demonstrate to Sears that they are implementing quality management methods that: 1) accurately measure the quality and cost of care; and 2) allow them to deliberately and successfully reduce costs while boosting quality.
THE DARK REPORT believes this is a major trend. More importantly, it will have immediate impact. During the next 12 months, there will be specific examples of employer/provider collaborations designed to implement quality management methods.
Hospital labs and pathology groups seeking competitive advantage would be well-advised to closely track this trend and be ready to respond when local employers begin these types of discussions with health systems and hospital administrators.