The Effects of Cost-Shifting in the U.S. Health Care System

The Effects of Cost-Shifting in the U.S. Health Care System

One of the biggest and most complex challenges facing the United States health care system is that of cost containment and reduction. The health care system is unlike any other industry in terms of its business infrastructure, community, employee, and customer involvement, and financial handlings.  Due to a long history of poor financial planning and policy-making, today’s health care system is unsustainable for long-term implementation and is in need of major reform.

One of the effects of poor financial planning and policy-making is that of cost shifting. Cost shifting is an economic circumstance in which a hospital or health care provider charges an insured patient more than it charges an uninsured patient for the same procedure or service. As a result, those with health insurance essentially pay for the financial loss that hospitals incur when they provide services to those without insurance (Miller, 2010).

Another major factor that is directly related to profit-losses absorbed by hospitals is that of charity care. According to the article Hospital Cost Shifting and Care for the Uninsured, many people believe that hospitals can compensate for government cutbacks and still provide more charity care by raising prices to charge-paying patients. Ultimately, government efforts to contain costs end up shifting costs to others, in which some call a “hidden tax”. However, if hospitals cannot shift costs, cost containment may threaten hospitals’ capacity to serve people who are uninsured or cannot pay (Hadley & Feder).

The cost shifting phenomena has increased dramatically since the implementation of Medicare. According to the article Increased Health Care Cost Shifting, “Cost shifting from Medicare to private payers and employers is seen as the number one impetus for higher medical costs in 2011” (Miller, 2010).

Cost shifting does not only occur at the patient billing level. Hospitals want to offer a variety of treatment options to their patients, such as mental health care and emergency care. However, as discussed in class, mental health care and emergency care are two departments that generate the least amount of revenue despite the high volume of patients that they treat. In many cases, hospitals actually lose money in these departments, therefore causing the costs associated with them to be shifted and shared throughout the hospital in terms of patient billing and budget cuts (Miller, 2010).

Recently, the notion of cost shifting has gained a lot of media attention due to introduction of Obamacare. Advocates of Obamacare use the cost shifting theory to leverage their position in support of the potential health insurance mandate. By law, health care providers cannot turn away critically injured patients because they do not have health care insurance. When these recipients do not pay for their care, the rest of us ultimately end up footing the bill in one way or another. Those in favor of the individual-insurance mandate contend that we should make these “free riders” pay for themselves (Whitman, 2007).

Despite the plausibility of the cost shifting theory, there are many skeptics who believe that cost shifting does not occur as frequently as one would think. Those opposing Obamacare use the cost shifting theory to leverage their argument as well. Author Glen Whitman states in his publication Hazards of the Individual Health Care Mandate: “So how much uncompensated care is received by the uninsured? [A study] puts the number at about $35 billion a year in 2001, or only 2.8 percent of total health care expenditures for that year. In other words… [the cost shifting effect accounts for] at best a mere 3 percent of health care expenditures” (2007).

In conclusion, cost shifting is a very prominent and frequent phenomenon in our health care system. There is no easy and straightforward solution to solving this issue without implementing a massive system-wide reform to our present health care industry. The profit losses that hospitals incur from providing care to Medicare, Medicaid, and charity case patients must be reconciled to at least a break-even point. While shifting the cost to private payers is not a positive or fair way to make up for these losses, how else are hospitals expected to stay in business in our health care system as it stands today?

References

Hadley, J., & Feder, J. (n.d.). Hospital cost shifting and care for the uninsured.

Retrieved from http://content.healthaffairs.org/content/4/3/67.full.pdf

Miller, S. (2010, June 18). Increased health care cost shifting. Retrieved from

http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/CostShifting2011.aspx

Whitman, G., (2007, October). Hazards of the individual health care mandate.

Retrieved from http://www.cato.org/pubs/policy_report/v29n5/cpr29n5-1.html

Accountable Care Organizations

Accountable Care Organizations

Accountable Care Organizations

By definition, an accountable care organization (ACO) is a group of health care providers that work together to coordinate and manage care for a specific patient population. As part of managing care for the population, the ACO takes responsibility for improving the quality of the care being provided while simultaneously reducing costs. ACOs can include different types of providers that are not part of a specific health network. For example, the ACO model provides incentive for two hospitals that were not previously affiliated to join forces to achieve the same goal: improve the quality of healthcare while reducing the cost (Swidey, 2011).

The ACO model differs from the current fee-for-service model that is widely used today. Fee-for-service arrangements reimburse doctors and hospitals based on the quantity and type of services that are rendered.  For example, if a blood test costs $5 to perform, and the doctor receives $7 compensation ($2 profit), there is an incentive for him to order more tests (even if they are not necessarily needed) just to increase his revenue. In the ACO model, physicians and hospitals will be given a pre-determined amount of money based on each patient’s medical history and diagnosis. With this type of prepaid funding, it is expected that there will be a dramatic decrease in unnecessary tests, treatments, consultations, and hospitalizations (Gold, 2011).

According to the article A New Health Care Model, the concept of an ACO is very different from the types of payment systems that are currently in place. ACOs are intended to focus on providers and influence their delivery of care rather than focusing solely on insurance companies. They are also aimed at the consumers of healthcare, or the patients, by making them more conscious of their own health and healthcare plan coverage. Ultimately, ACOs have been designed to impact the entire healthcare delivery system, not just the payment stream associated with it (Swidey, 2011).

There are several key elements of the ACO plan that will change the way health professionals interact and how care is delivered. One element that will facilitate change in the system is the utilization of shared electronic medical records (EMRs). This will dramatically improve communication between provider networks and allow access to critical patient information. Other elements of the ACO plan include setting up incentives for those who successfully reduce the cost of care delivery while improving quality, facilitating communication and joint decision-making between healthcare networks, and encouraging patients to make better decisions regarding their own health and to become more actively involved in the healthcare system (Domrose, 2011).

Personally, I am in support of many aspects associated with accountable care organizations. As previously mentioned, I believe that they will be able to dramatically reduce healthcare costs and eliminate an enormous amount of waste in the system. I am very much in favor of making patients more accountable for their own health and lifestyle choices as well as educating the public about how the healthcare system operates. I believe that if ACOs are utilized as intended, the quality of care will increase because it requires physicians to operate using evidence-based, “best practice” research and methods. I also believe that sharing information such as patients’ medical records between healthcare networks is a key factor in improving care and quality while reducing time and costs.

However, I am cautious about the extent to which hospitals will go in order to reduce costs and save money. While eliminating unnecessary tests and treatments is a positive objective, I fear that it may become difficult for some patients and/or physicians to have access to certain tests because a patient may not meet every requirement listed in order for the hospital to be reimbursed. In other words, I fear that some hospitals may ultimately end up placing too many restrictions on tests and treatments that would negatively affect some patients in order to save money.

References:

Domrose, C. (2011, November 11). Hello acos. Retrieved from

http://news.nurse.com/article/20111107/NATIONAL01/111070036/

Gold, J. (2011, October 21). Faq on acos: Accountable care organizations, 

explained. Retrieved from

http://www.kaiserhealthnews.org/stories/2011/january/13/aco-accountable-

care-organization-faq.aspx

Swidey, N. (2011, February 11). A new health care model.

Retrieved from http://www.boston.com/lifestyle/health/articles/2011/02/06/a_new_health_care_model_what_will_acos_look_like_and_how_will_they_operate/.

Review: Some Important Topics to Remember

Review Questions: Important Topics to Remember

Define policy, deductible, coinsurance, premium and claim.

A policy is the agreement or contract that describes all the terms and conditions of an insurance policy. A deductible is an amount that is specified in the policy that must be paid by the insured before the insurance company will start paying. Coinsurance, or copayment, is the payment made by the insured at the time services are received (example: paying $20 for an office visit to the primary care provider). A premium refers to the price an individual must pay to buy insurance coverage. A claim is a request for reimbursement for the services that have been provided.

Define self-insured plan, HMO, PPO, and EPO.

In a self-insured plan, the employer assumes the risk of loss for medical costs instead of an insurance company. The employer uses its own revenue to cover medical costs of employees as they arise. Self-insured plans appear no different than traditional insurance plans to the employee. HMOs (Health Maintenance Organizations) are a form of pre-paid health plans (PHP). Payments are made in advance to cover a certain dollar amount of services over a period of time. PPOs (Preferred Provider Organizations) are part of a special delivery network that negotiate and manage contracts on behalf of the providers. If a person chooses to use a preferred provider, services are provided at a lower cost. EPOs (Exclusive Provider Organizations) usually have features of both HMOs and PPOs, but patients must select their care providers from this network.

Health Insurance Policy: What is covered, what is not?

Personal Research: I went to www.yahoo.com and searched for some insurance plans. The following sample PPO plan is $105/month from Aetna for a 23 year old female college student who does not use tobacco products. I understand most of what the plan covers/does not cover, however that is partially due to my background in healthcare. I can see how many others would not understand many of the terms, conditions, and definitions of these policies.

Primary Doctor Office visits: Visit 1-5 $30 copay, deductible waived; Visit 6+ pays 100% Aetna Discount Applies;   Aetna pays 100% once out of pocket is met.

Coinsurance: 20% after deductible

Prescription Drugs: Generic: $20 Copay; Brand: Not Covered; Non-Formulary: Not Covered

Annual Out-of-Pocket limit: Individual – $3,000; includes deductible.

Lifetime Maximum: Unlimited.

Preventive Care Coverage: health exams, OB-GYN exam, and well-baby care no additional charge.

Hospital Services Coverage:

ER: $350 copay (waived if admitted): Outpatient lab/X-ray – 20% after deductible:

Outpatient Surgery – 20% after deductible: Hospitalization – 40% after deductible.

Maternity Coverage:  Not covered (except pregnancy complications)

Additional Coverage: Chiropractic Coverage: 20% Coinsurance after deductible. Aetna will pay $25 Max per visit; 24 visits/year. Mental Health/Substance Abuse Coverage: Inpatient and Outpatient: coverage is only provided for severe, biologically based mental or nervous disorders. Deductible and co-insurance/copay apply.

Out-of-Network Deductible: $3,000/$6,000

Out-of-Network Out-of-Pocket Limit: $10,000/$20,000 Includes deductible

Fine Print, Not Covered:

PRE-EXISTING CONDITIONS

For Applicants 19 and older: During the first 12 months* following your effective date of coverage, no coverage will be provided for the treatment of a pre-existing condition unless you have prior creditable coverage.

Medical

These medical plans do not cover all health care expenses and include exclusions and limitations. You should refer to your plan documents to determine which health care services are covered and to what extent. The following is a partial list of services and supplies that are generally not covered. However, your plan documents may contain exceptions to this list based on state mandates or the plan design or rider(s). Services and supplies that are generally not covered include, but are not limited to:

• All medical and hospital services not specifically covered in, or which are limited or excluded by your plan documents, including costs of services before coverage begins and after coverage terminates

• Cosmetic surgery

• Custodial care

• Donor egg retrieval

• Infertility services and other related reproductive services unless specifically listed as covered in your plan documents

• Over-the-counter medications and supplies

• Weight control services including surgical procedures for the treatment of obesity, medical treatment, and weight control/loss programs

• Experimental and investigational procedures, (except for coverage for medically necessary routine patient care costs for members participating in a cancer clinical trial)

• Charges in connection with pregnancy care other than for pregnancy complications (unless otherwise mandated by your state)

• Immunizations for travel or work

• Implantable drugs and certain injectable drugs including injectable infertility drugs

• Orthotics

• Radial keratotomy or related procedures

• Reversal of sterilization

• Services, supplies or counseling related to the treatment of sexual dysfunction

• Special or private duty nursing

• Therapy or rehabilitation other than those listed as covered in the plan documents

• Mental health and substance abuse coverage (unless otherwise mandated by your state)

Discussion 4: Do referral programs keep costs down?

Referral programs, aka gatekeeping, do keep healthcare costs down. Needing a referral forces a patient to see their primary physician first, who then decides if they can treat them in-office of if they need a specialist. Seeing a specialist is more costly to the patient and the system, especially if the patient could be treated by a primary care doctor.

Discussion 6: New insurance coverage policy.

The new insurance coverage policy has not directly affected me or my family yet. The one good piece of legislation that has made an impact in my life however is part of the health care reform act that allows college students to remain on their parents’ health insurance plan until age 26. Going to college is a long, time consuming, and costly process. It is difficult to maintain good grades when a student has to work all the time to pay for their food, books, housing, tuition, car, etc. I believe that most college students would simply choose to not have health insurance than have to pay another monthly bill.

Chapter 4

Review Question 2: Medicare: Part A versus Part B + Part D.

Part A of Medicare is hospital insurance. It covers inpatient hospital services, critical access hospitals, and skilled nursing facilities (not long term). Part B covers physician services, outpatient care, and some services/supplies. A person can choose to have Part B coverage but they must pay a monthly premium. Part D added new coverage for prescriptions and preventive care. It replaces Medicare Part C (Medicare+Choice) with Medicare Advantage. This added new Medi-gap plans and made changes for fee-for-service payments.

Review Question 3: Medicaid

Poverty-related and medically needy persons are eligible for Medicaid. When a person applies, they are usually evaluated by their income level. People who have large medical bills, such as the elderly, pregnant women, children, and those with disabilities, are considered “medically needy”  and can also qualify for Medicaid.

SCHIP

The State Children’s Health Insurance Program (SCHIP) covers targeted low-income children whose parents do not qualify for Medicaid but are still unable to afford private health insurance.

Worker’s Compensation

Worker’s Compensation is funded by employers. The employer either pays for worker’s compensation insurance or self-insures by making payments into a contingency fund.

Discussion Question 1:

The percentage of people who fall just above the poverty/welfare line are the ones not being represented in any of these government or employee sponsored health insurance plans. They are making just enough to pay for their basic needs such as food and housing, however they cannot afford extra expenses such as health care. I believe that they should work in conjunction with the government to pay for insurance. A possible scenario would be for that population to make a small payment (roughly $20, for example) every month to be covered under the government’s insurance plan. In order to keep their monthly rate from increasing, they would be required to attending some sort of annual health screening (either by visiting their primary care physician or attending a free hospital or government sponsored screening). The purpose of these types of screenings is to make the person aware of their current health status and hopefully prevent a serious health emergency from happening. Preventative measures cost a person, the insurance company, and the health care system a lot less money than complex, emergency procedures do.

Discussion Question 2:

Medicare Part D has not helped to lower costs. In turn, Medicare part D is actually extremely confusing and not well planned for the future. After researching the Medicare Part D on the web, I found that the government actually plans to “phase out” Part D by the year 2020.

Discussion Question 3:

The mechanisms for preventing fraud are not adequate. I believe that it is probably very easy for a person or health provider to commit fraud, and that it would take a long history of committing fraud until the person is caught and charged. I personally do not believe that committing fraud is right, or that it should not be dealt with as a serious offence; however I do understand why a person may commit fraud in our extremely inefficient health care system. The cost for some services in healthcare is outrageous and many of these costly services are non-justifiable. To have pity on a patient who falls just over the poverty line and cannot afford half of his medical expenses is human. To be afraid that one might not receive compensation for the costly services performed is also human. In many cases, our health system is not fair nor is it efficient, hence the number fraudulent cases. The system needs reform on many, many levels, and while I believe fraudulent cases are wrong and need to be addressed, there are other, more critical issues that need to be corrected first. I feel that if many of these other issues in health care are corrected, then it will be easier to tackle fraudulent cases and possibly even build into the system a way to prevent fraud from happening.

Discussion Question 4:

I think that employers can reduce the number of fraudulent claims by employees by possibly mandating or providing a history and physical screening before they are hired. An employer can also provide health screenings and/or incentives to become more physically fit, which would ultimately benefit the employee, the employer, and the insurance company. For example, a company could partner with a local gym to offer discounted or free memberships to the company’s employees. In turn, employees who take part in this program will be rewarded, possibly by lowering their health insurance premiums. The benefits for employees include improving their health and having lower insurance costs. Employers would have to pay less for insurance coverage due to having fewer claims. Their employees would also be more physically fit, which will cause them to become sick less often, have fewer hospital visits, fewer injury claims, and miss less work. The insurance company benefits because they now have less claims to pay for!

To prevent fraudulent cases, an employer can also offer some sort of bonus or incentive to maintain an injury-free work place. For example, a construction company can offer a bonus to its employees at the end of the year if there were no serious, preventable injuries during working hours or on a job site. This would cause the employees to be more cautious of themselves and others while working. It may also cause employees to discourage co-workers from making fraudulent claims as well.

The National Roundtable on Health Care Quality

The National Roundtable on Health Care Quality

The National Roundtable on Health Care Quality published the report “Statement on Quality of Care” in 1998 which highlighted the immediate need for health care reform in the United States. The report touches on issues such as defining and measuring quality in the health care system, the rising costs of health care services, variables affecting quality, costs, and delivery, and the challenges met while trying to implement reform.

One of the strengths of the article is that the authors cover a broad spectrum of problems and variables without going excessively in-depth with detail, which allows those without a medical degree to read and understand the material being presented. This is important because the authors are attempting to incorporate all those who are involved in the delivery of health care at every level, urging them to take action in making reform. One weakness of the article is that it was published over a decade ago and new advancements, legislation, and data collection has taken place over the years. The article also lacks future statistical predictions, the economic impact of health care costs, and how other countries compare with the U.S. in terms of health care delivery, quality, cost, and reform.

The authors raise an interesting and crucial point in the report regarding the definition of quality and how quality can be measured in the health care system. They state:

The definition [of quality] emphasizes that high-quality care increases the likelihood of beneficial outcomes. It reminds us that quality is not identical to positive outcomes. Poor outcomes occur despite the best possible health care, because disease often defeats our best efforts. Conversely, patients may do well despite poor quality care, because humans are resilient. Assessing quality thus requires attention to both processes and outcomes of care (1998).

The ongoing debate about how to measure quality in the medical system is an important topic that does not have one straightforward answer. Issues that arise when discussing measurement of quality in health care include “What is really important in terms of quality and how can we educate and encourage our clinicians to adapt these changes?”  “How do we account for the variation in each unique patient case and adjust accordingly so that they receive the optimal outcomes without increasing the costs?” and “How do we take all the extraneous variables into consideration and find an all-inclusive measurement scale to say how well a hospital/organization/staff member is performing?”

There are so many extraneous variables and exceptions that occur when talking about patient and family satisfaction and their own definitions of the word quality, patient outcomes

Health care quality problems may be classified into 3 categories, underuse, overuse, and misuse. Underuse is the failure to provide a health care service when it would have produced a favorable outcome for a patient. Missing a childhood immunization for measles or polio is an example of underuse. Overuse occurs when a health care service is provided under circumstances in which its potential for harm exceeds the possible benefit. Prescribing an antibiotic for a viral infection like a cold, for which antibiotics are ineffective constitutes overuse. Misuse occurs when an appropriate service has been selected but a preventable complication occurs and the patient does not receive the full potential benefit of the service. Avoidable complications of surgery or medication use are important misuse problems. A patient who suffers a rash after receiving penicillin for a strep throat despite having a known allergy to that antibiotic is an example of misuse. Evidence from careful research studies demonstrates a large number of serious problems in each of these categories. A recent review of quality research published from 1993 to 1997 reached the same conclusion^6,7 as did the report of the President’s Advisory Commission on Consumer Protection and Quality in the Health Care Industry.⁸

The Seven New Quality Tools used in Healthcare Project Management

The Seven New Quality Tools used in Healthcare Project Management

The affinity diagram is an effective technique used to handle large numbers of ideas, typically during a brainstorming session. It helps with organizing, prioritizing, and categorizing diverse views and opinions based on each team member’s knowledge of a particular subject. The team should consist of people with different backgrounds, knowledge, and skills. Diversifying the team members helps present new, out-of-the-box ideas and facilitates in melding opinions and perspectives. It also allows discovery of root causes, common themes, and unseen connections between ideas and information.

After choosing the appropriate team members and inviting them to the meeting, the key steps for hosting the group discussion using the affinity diagram are as follows:

• Introduction of self, team members, topic of discussion, and objectives.
• Invite all to participate in contributing ideas and opinions and write them down on large individual Post-It notes (or equivalent).
• Place the notes in the middle of the table and ask the members to re-arrange and organize the ideas into related groups silently. If an idea falls into more than one category, place another Post-It with the same idea in both groups.
• Participants can now discuss on the different grouping patterns and focus on controversial ideas. If a conflict arises, try and reach a general consensus and make any necessary changes in grouping.
• After the ideas have been arranged, select a short heading to categorize each group.
• Finally, move groups under each heading to view the affinity diagram.

Once the affinity diagram is complete, the prioritized ideas are now ready for further management decisions and approvals. A simplified example of the affinity diagram process is shown below in Figures (A) and (B)

Figure (A) – Example listing of all team members’ ideas to be categorized

Figure (B) – Example of a completed affinity diagram.

The affinity diagram could be used in reforming a specific area of a health care system that needs to become more efficient in terms of process flow and organization.  For example, the CEO of a hospital discovers that the most coding and billing errors are made in the outpatient center, specifically in the laboratory-draw station (aka blood testing center). Because of these coding errors, the hospital is not getting reimbursed for performing the tests and patients have to come back to have their blood drawn for a second time, which now has to be funded by the hospital since they are responsible for the mistake. The CEO has also been informed that many patients have been complaining about the excessive waiting time at the outpatient lab center. Upon first impression of the situation, the CEO concludes that the lab workers must be performing at a slow pace, don’t understand how to properly code, or they don’t realize the importance of coding and the severity of mistakes.

If the CEO decided to conduct a meeting using the process described for an affinity diagram, he would invite several key individuals from different departments to participate in resolving the issue. Key individuals would include one or two of the phlebotomists, receptionists, and medical laboratory technicians who work during the busiest hours at the lab as well as the outpatient lab supervisor. As they take the steps to create an affinity diagram, the CEO would discover that the true reasons for the problems at the outpatient lab center are described from each of the individuals as:

• Phlebotomists 
  • Constantly short staffed with high volumes of patients
  • Insufficient training on how to properly code
  • Doing the same type of coding as medical assistants 
  • Not paid to perform the level of coding required
  • Lack of communication when a code/procedure changes
  • Unfairness in scheduling/problems and favoritism among co-workers
  • Lack of proper supplies
  • STAT lab work from physicians 
  • Lengthy process to perform, label, and code specialized tests
  • Called from the outpatient center to fill in at the hospital when the hospital is short staffed
  • When requesting additional help during extremely busy hours, relief doesn’t actually arrive until hours after it was requested, if it comes at all.

• Receptionists 
  • High volume of paperwork associated with each patient
  • Must send patients ordered as STAT or who need special tests to be drawn first, even if another patient was waiting fifteen minutes before the STAT patient arrived. 
• Supervisor 
  • Not enough employees to staff
  • Do not want to over-staff
  • Scheduling conflicts, no one to work if employee calls in sick
  • Does not have control over certain policies or procedures
• Medical Lab Tech
  • Under staffed
  • Receiving blood work from both the outpatient center and the hospital, both of which use different codes
  • Certain tests need to be conducted before others
  • Contaminated blood samples
  • Lost, broken, or missing information on a test tube
  • Must perform all the blood testing, send away certain tests in proper packaging, lengthy coding and labeling processes
  • Sometimes called to draw a patient’s blood when the hospital is understaffed  

The team members would also suggest and write down solutions to all of these issues and then arrange them into groups of related areas under a common heading. These groups allow the CEO to be able to prioritize and organize the situation and make decisions based on the affinity diagram. The most re-occurring issue is lack of adequate staffing. The CEO can weigh the cost of hiring additional employees for the outpatient lab versus the total cost of the coding errors being made as well as the growing dissatisfaction among patients and employees.

The relations diagram is best used to illustrate cause-and-effect relationships and identifying an area of greatest need for improvement. It is also helpful in analyzing the links between different aspects of a complex situation, especially after generating an affinity diagram, tree diagram, or fishbone diagram.

After introducing the topic and setting the objectives of the discussion, the following steps should be taken to create an accurate relations diagram.

• Use ideas created from an affinity diagram, the most detailed row of a tree diagram, or the final branches on a fishbone diagram as starting points.
• Place one idea at a time on the table and ask the question “Is this idea related to any others?” If so, place that card near the group most relevant making sure to leave enough space for drawing arrows in step 3.
• Once the ideas are grouped together, take each individual card and ask “Does this idea cause or influence any other idea?” Then draw arrows from each idea to the ones that it causes or influences. After all cause-and-effect relationships are identified, the final product is known as the relations diagram.
• To analyze the relations diagram, count the arrows in and out of each idea and write the number in the bottom of each box. Those with the highest number of arrows are usually key issues.
• Draw bold boxes around ideas flagged as key issues.
• Ideas that have primarily outgoing arrows are basic causes. Similarly, ideas having primarily incoming arrows are final effects. Both cause and effect ideas with high numbers of arrows are typically the most critical issues needing to be addressed.
  • Note: Sometimes ideas with fewer arrows can also be key ideas.

Figure (C) illustrates an example relations diagram.

Figure (C) – Example of a Relations Diagram

The relations diagram would be an ideal tool for reducing ER wait times. For example, if the ER supervisor wanted to reduce patient wait times by 10 minutes, the diagram would be able to illustrate key issues currently affecting the wait times and which areas should be addressed first to achieve the largest reduction of waiting time. It can also highlight independent and dependent variables as well as expose previously unseen links and flaws in the system. The relations diagram can reveal each step that needs to be taken in order to implement a specific change.

The Tree Diagram is used to break down broad categories into smaller, more detailed, sub-categories. It begins as one general item which branches into two or more sections. Each section branches into two or more sub-sections, and so forth, ultimately resembling a tree-like shape. The purpose of this type of diagram is to help break down a large category and think about it step by step from generalities to specifics. The tree diagram is best used when analyzing the detail of a process, evaluating implementation issues for several possible solutions, developing actions to carry out a specific solution, or as a communication tool for explaining details to others.

Steps for developing a tree diagram are as follows.

• Develop an objective, goal, or problem and write it at the top (vertical tree) or far left (horizontal tree) of the designated work area.
• Ask a question for each branch that will lead you to the next level of detail.                Examples include: “How can this be accomplished?” “Why does this happen?” “What causes this?” “What are the components to this?”
• Perform a “necessary and sufficient” check, which indicates whether the items in the completed row are necessary for preceding level.
• Every new branch in the tree now becomes the subject. For each new branch, ask the question again to obtain the next level of detail.
• Repeat step 4 until the fundamental elements of the issue have been reached (a branch cannot be broken down any further, specific actions can actually be performed, root cause was discovered, etc.)
• Repeat step 3 for the entire diagram and determine if all the items are necessary and sufficient for the objective.

Figure (D) – Example of a Tree Diagram

The tree diagram would be ideal to use for breaking down complex health care problems and deciding on solutions for implementation. For example, say a hospital is making budget cuts and has to reduce the cost of employee wages on the clinical floor. The Safety and Occupational  may use a tree diagram to visualize, organize, and compare the benefits and risks of two feasible solutions. When looking solely at the nursing department in the hospital, the CEO could use “Reduction of Staff” as the main focus, or “tree trunk”, for this specific diagram. From this trunk, two possible solutions he is considering implementing are “Reduce number of LPNs” and “

A fourth component of the “Seven New Quality Tools” is the Process Decision Program Chart (PDPC). This chart identifies potential flaws or problems in a plan and helps develop countermeasures to prevent or offset them. The PDPC allows the plan to be revised to avoid an identified problem or at least anticipate and prepare for a problem if it should occur. It is extremely valuable before implementing a plan, especially if the plan is large and complex. It is also useful when the plan must be completed on a schedule or when the price of failure is high.

In order to use a PDPC, a tree diagram of the proposed plan must be obtained. It should contain a high-level diagram that indicates the objective, a second-level composed of the main activities, and a third level with broadly-defined tasks to accomplish the main activities. After obtaining a detailed tree-diagram, the following steps should be taken.

• Each task listed in the third level of the tree diagram should be analyzed for all possible errors, conflicts, and flaws.
• Review all the problems associated with each branch and eliminate any that are improbable or have consequences that are insignificant. Re-list the eliminated problems as a fourth level linked to the tasks.
• For each potential problem, brainstorm possible countermeasures. For example, actions or changes that would prevent the problem or remedy it once it has occurred. These countermeasures should be listed as a fifth level, outlined in clouds or jagged lines.
• Decide how practical each countermeasure is based on cost, time, and ease of implementation and effectiveness. Mark impractical ones with an X and practical ones with an O.

• Some questions that can be used to identify potential problems include: “Are there any undesirable consequences directly linked to good inputs?” “Is there something else that might happen instead or in addition to?” “Does this depend on any extraneous actions, conditions, or events?” “What is the margin for error?” “What assumptions have been made that could be wrong?” “How is this different than before?” “If we wanted this to fail, how could we accomplish that?”

Figure (E) – Example of a Process Decision Program Chart

Another component of the “Seven New Quality Tools” is the arrow diagram. This diagram illustrates the required order of tasks in a project or process. It highlights potential scheduling and resource problems as well as their possible solutions. It is helpful when calculating the critical path of a project, which is the flow of critical steps where delays will affect the timing and completion of the entire project and where additional resources can facilitate the project.

The arrow diagram is a valuable resource when scheduling and monitoring tasks in a complex project. It helps to demonstrate the sequence of steps in a process and the length of time each step may take to complete. The arrow diagram should be used whenever a project schedule is critical and has consequences for completing the task late.

The following steps are used to create a typical arrow diagram.

• Make a list of all necessary tasks in the project.
• Determine the correct sequencing of the tasks. Three questions that can assist is sequencing include “Which tasks must happen before this one can begin?” “Which can be performed at the same time as this one?” and “Which tasks should happen immediately after this one?”
• Diagram the tasks by arranging them in order from left to right.
• Between each task, draw a circle for “events”, which marks the beginning or end of a task. Look for three common-problem situations and draw them as “dummies”. A dummy is an arrow drawn with dotted lines which separates tasks that would otherwise start and stop with the same event.
• Determine task, critical path, and slack times and incorporate them into the diagram.

Figure (F) – Example of an Arrow Diagram

The final two components of the “Seven New Quality Tools” are Matrix Diagrams and Matrix Data Analysis. A Matrix Diagram is another useful diagramming tool which shows the relationship between two, three, or four groups of information. It can also provide information about the relationship of different groups to each other, such as the strength of the relationship and the roles played by various individuals or measurements. Matrix Data Analysis refers to a complex math technique used to analyzing matrices. The most challenging, careful, and time-consuming of the decision-making tools is a prioritization matrix. A prioritization matrix is an L-shaped matrix that makes comparisons of one set of options to a set of criteria in order to find the best option.

There are six different types of matrix shapes that are possible. These include L, T, Y, X, C, and “roof-shaped”. The American Society for Quality website describes which matrix is best suited for a particular situation:

• An L-shaped matrix relates two groups of items to each other (or one group to itself).
• A T-shaped matrix relates three groups of items: groups B and C are each related to A. Groups B and C are not related to each other.
• A Y-shaped matrix relates three groups of items. Each group is related to the other two in a circular fashion.
• A C-shaped matrix relates three groups of items all together simultaneously, in 3-D.
• An X-shaped matrix relates four groups of items. Each group is related to two others in a circular fashion.
• A roof-shaped matrix relates one group of items to itself. It is usually used along with an L- or T-shaped matrix.

L-shaped	2 groups	A B (or A A)
T-shaped	3 groups	B A C but not B C
Y-shaped	3 groups	A B C A
C-shaped	3 groups	All three simultaneously (3-D)
X-shaped	4 groups	A B C D A but not A C or B D
Roof-shaped	1 group	A A when also A B in L or T

. Table 1: When to use differently-shaped matrices