Another look at costing Quality-2016

So we have been talking about Costs of Quality in our course this past two weeks.  This has been a long time topic of interest in medical laboratories.  Most literature about Costs of Quality, while being informative, has been pretty generic, and a challenge to apply to the medical laboratory.  The most recent document by CLSI “QMS20-R: Understanding the Cost of Quality in the Laboratory; A Report”, now about 2 years old does a pretty good job.  After reviewing if for a year along with some other choices, we decided to add it to our course bibliography this year, which means we provide on-line access to it (with the assistance of CLSI) for the course participants.  

 

QMS20_R is pretty faithful to Juran, which is both good and bad; good because it provides some insights into how the traditional model can be translated into medical laboratory language.  Where it lets down is that it is limited only to direct laboratory costs, which is really only part of the picture.

 

For example, in the community based out-patient setting, when a wrong thing happens and a patient has to be recalled, the direct costs include the time to call the patient, the time to draw the sample, the associated reagents and supplies, and the IT costs to create an amended report.  

 

But in the modern western world,  all that represents perhaps as low as 30 percent of the total costs because it does not include those costs borne by the patient including their time, and potentially work losses, and travel costs to the laboratory.  While all this may seem to be pretty inexpensive for an able, mobile retired person who lives within a short walk or easy bus ride to the laboratory, the costs are a lot higher when a person has to take off work, and drive down to the laboratory or take a cab.  (In my city, the hospitals charge $3.50 per half hour for parking! With even a normal wait and processing that’s about 45 minutes and at least $7.00 just for parking, and can get to $10-15 in a real hurry.)  And what happens if the person is a parent taking care of a child at home who has to find a sitter.  All these costs are borne by the patient and family.  Without trying too hard, this can accumulate to over $200 very quickly.  The laboratory may have to pay the costs of the repeat test, so they cannot bill for the actual testing, but imagine if the patient also submitted a bill for their out-of-pocket costs. 

 

IF the average out-of-pocket expenses were closer to $25 per event, a large laboratory would be responsible for about $27,000 worth of patient-borne expenses a year.  And that is a lot more than the laboratory would save by cutting back Quality Control by 50 percent or cutting out all proficiency testing.

And supposing the physician seeing the first result, and believes it to be true, and arranges for more tests, or a consultation or a procedure.  Fine if the person has full insurance coverage (not really) but again there are more out-of-pocket expenses that don’t get counted, unless this all leads to litigation.

 

And QMS20_R doesn’t take into account its own in-house expenses associated with stress or strain (mild injury) that can be associated with error.  Staff related stress and strain are compounding factors that can (and often do) lead to more errors and more costs.

 

So the document is a good step in the right direction, but continues to leave hidden uncounted costs.

 

But why raise these external costs if no one is asking or demanding the laboratory to cover them.  Those are costs that fall under the category “not my problem”.  But they are the laboratory’s problem if they don’t trigger a problem solving solution as opposed to a cost-cutting solution, like reducing QC or Quality Assessment.   That may save money but it only makes the problem worse, and the costs never go away.  

 

And this is why the Juran approach will never be completely appropriate for the medical laboratory setting.  The Juran model works in industry and services where at a certain point customer intolerance for poor service kicks in and the customer goes away, and the business leans or fails.  

 

In our insurance leveraged healthcare industry, left to our own devices, medical laboratories can live in the blissful zone of indifference.  The death knell to Quality is having an endless supply of new patients, with no obvious consequence for bad behaviour and not apparent benefit for good.  

 

More on this later.