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Sunday, July 25, 2010

Costs of Poor Quality - Revisited

Some (many?) of you may be members of the American Society for Clinical Pathology (ASCP).  For those of you that are, I strongly encourage you to read the article in the July 2010 edition of Lab Medicine by Elbireer, Gable, and Brooks Jackson entitled "Cost of Quality at a Clinical Laboratory in a Resource-Limited Country".
The article describes a study performed in a Kampala laboratory in 2007 in which the authors looked at the traditional Juran developed classification of quality costs (Prevention-Appraisal-Internal Failure-External Failure) and analyzed the laboratory's experience over 6 months.
The results are interesting in a number of ways.  The appraisal costs are astronomic (22% of budget) as compared to the Prevention (8%) and Failure costs (2.5%) are way out of line with every other industry that has looked at the issue.  But remember that this is a small laboratory in a resource limited country supported by international grants.  (note: Do NOT show these numbers to your hospital administrators.  They already believe that you are spending an arm and a leg on proficiency testing and accreditation!).
The discussion part of the paper puts all this in context.

What is important about this study is that it has been done and published in a journal that is widely available and widely read, and all laboratorians should be thinking about doing something similar in their own institution.
I can tell you that when done in the developed country context, the costs of poor quality will be a lot closer to the traditional  5-7 times prevention-appraisal costs, and that is your opportunity to shine because once established, you can start working at reducing those costs down.
My own experience tells me that the traditional Juran model is probably not the best model to use in the medical laboratory.  First since pathologists are paid more than technologists, a failure costs that consume pathologists' time are more costly than those that only consume technologist time.  This makes no sense from a quality or time consumption basis.  Second, the model does not address issues like clinician time and inconvenience and patient time and inconvenience.
But I digress, and importantly at this point all of that is irrelevant.
What is relevant is that every laboratory should be looking at their CPQ and developing strategies to lower their failure costs.

So congratulations to the authors on a really interesting and useful manuscript.

m

PS:  If you are not a member of ASCP, then borrow somebody's copy.  I don't think Lab Medicine is on medline.  You can find the article on the ASCP website for a SMALL charge.

PPS:  Don't be intimidated because 2 of the 3 authors have an MBA.  There is no hard arithmetic here.

more later

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