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How much does poor quality cost your ED?
Techniques can quantify costs, savings opportunities
Every ED manager is concerned about maintaining high-quality standards in their department and recognizes the impact poor quality can have on outcomes and patient satisfaction. However, say the experts, only a small minority recognizes and calculates the impact poor quality can have on their bottom line.
Assessing the cost of poor quality (COPQ) is one of the concepts in Six Sigma and Lean methodologies that you can look at when quantifying your work, or assessing improvements you should make, explains Diana S. Contino, RN, MBA, CEN, FAEN, manager of public services-health care for Costa Mesa, CA-based BearingPoint, which provides consulting, application services, technology solutions, and managed services for health care clients and others. Six Sigma methodologies are focused on reducing errors and decreasing variability in processes, and Lean methodologies are focused on eliminating waste (extra or unnecessary steps) in processes.
"The actual terminology of the COPQ is something you may not hear real frequently, but the concept that there is an expense or a cost to having a poorly run business is widely held," she notes.
How does this play out in the ED environment? One example, says Contino, would be the entering of a wrong order. "Let's say you have four orders to be entered, and one is incorrect," she offers. "You have the cost of someone drawing the tests, then having to come and redraw it." The total cost would involve not only the time it takes, but, for example, the extra waiting time for the patient and extra staff time, Contino says.
Another example is impact on revenue cycle, she notes. "If somebody documents a wrong medication, you could kill somebody and end up in litigation, and the cost could be the entire income of the doctor who loses his malpractice insurance," Contino says.
Poor quality has such a widespread impact that it is virtually impossible to calculate its total cost, asserts Prentice Tom, MD, chief medical officer of California Emergency Physicians, an Emeryville, CA-based physician partnership that staffs about 60 hospitals. "When an incorrect lab is ordered or a wrong order is entered — which happens with frequency — you not only have the absolute cost of correcting the order and the wasted time of nurses, physicians, and patients, but you also have the cost, for example, of bed space that has to be utilized for that period of time," he notes.
You can quantify costs
Be that as it may, says Contino, Six Sigma methodologies offer a means of quantifying COPQ.
But this is more than just a mathematical exercise. "When you look at ED operations from a Six Sigma perspective, one of the good things about quantifying the problem is that you can look at the costs and statistically analyze where the biggest costs are," she explains.
At Bridgeport (CT) Hospital, for example, the ED determined about a year ago that their walkout rate was costing them $400 for each patient who left without being seen. "When you look at our raw charges, they are between $800 and $1,000," explains Peggie Parniawski, MSN, RN, director of emergency medicine and oncology services. "We usually recover about half of that."
As part of their Lean project, the entrance and triage areas were completely revamped to add more capacity and smoother flow, now providing two triage bays instead of one, and ensuring that equipment nurses commonly need (i.e., meds, blood pressure cuffs, ice machines) are always readily available, says Michael J. Pineau, MS, RN, performance management coordinator and a Six Sigma Master Black Belt. In addition, he says, color-coded visual cues now tell doctors and nurses when flow is falling behind so they can react in "real time" redundancies in triage nurse and charge nurse documentation were eliminated, and all documentation now is entered electronically and tied to a bed-tracking system.
Parniawski reports that in one year, the walkout rate has been reduced from nearly 5% to about 2.5%. "We've saved $297,600 by reducing and preventing those walkouts," she asserts.
Before you decide to take these types of actions, Contino warns, the data must be analyzed carefully — by someone who truly understands ED operations. "For example, if someone did not know that ED volumes crescendo in the middle of the day, they might look at the data and make assumptions that are incorrect," she notes. "The data alone can't speak for itself; you have to put it in context with ED operations."
Still, she notes, the savings can be substantial. "Within Six Sigma circles, they estimate that COPQ runs anywhere from 25%-40% of the cost of the product — which in our case is the ED visit."
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