https://cost-impact.netlify.app
I have written about Costs of Poor Quality before (see: Tuesday, March 3, 2020CVP - The Coronavirus Vanity Project -or- Sunday, March 6, 2016 Another look at costing Quality-2016 -or- Saturday, June 7, 2014 Taking Charge - Taking Responsibility ) It is a favourite topic of mine.
While first introduced by Joseph Juran, it was best defined by Philip Crosby as the Measurement of Quality. “Take everything that would not have to be done if everything were done right the first time and count that as the price of non-conformance.”
Crosby made the point that all too often these non-conformance costs could add to more than 10 fold the costs of “doing it right the first time”.
My guess is that he didn’t just pick that number 10-fold of the air; my guess it was probably based on a ton of calculation, which must have been a megaton of work considering the state of computers (by reference that was the year that I bought my first Commodore 64 with its amazing 64K of RAM).
Today we can take a better measure of the Costs of Quality and Costs of Poor Quality. My estimate is that today the Costs of Poor Quality can run up to 100-1000 times the cost of doing it right the first time round.
When thinking about Quality Costs any organization, it becomes apparent that the Quality Costs are core or nuclear, but Poor Quality Costs are expansive, maybe explosive. Quality Costs can all be captured as a series of single line items in the laboratory’s budget. It is much harder to capture Poor Quality Costs because they not only affect the laboratory through extra reagent costs, extra staff work time, and repair and maintenance costs, but they also extent outside the laboratory hitting the budgets and pocketbooks of our customers.
Think about these as the Distributed Costs of Poor Laboratory Quality.
When a clinician is notified about an incorrect result, they will need to go into their files, find the patient, contact them and explain the problem and may have them go back to the laboratory for another test. They will need an additional note in the chart. That all takes time out of their day, maybe 20 minutes to an hour for each patient (more if contact requires a few phone calls) for which they probably cannot bill.
For the patient, their time and patience are consumed; they were notified and informed a test result may be in error causing stress and probably annoyance. They may need to have a retest; maybe they will need to get a sitter, or leave work early, or drive to the laboratory and park, all of which is money out of their pocket. Maybe they will lose work time and maybe lose income. Maybe they have already purchased medications based on the wrong information. Pretty sure the pharmacist is not going to take the pills back.
And what if the problem was a microbiological problem that got public health attention (an errant COVID-19 test, or stool pathogen test). The chase-down and corrections can consume many hours.
Worse, if the problem had some bad outcomes and lawyers got involved, there are going to be facility costs that could run into the thousands, if not millions of dollars.
And what if the error was not picked up right away and more than one patient was involved. Maybe it was 5, or maybe 10. I was involved in the investigation of one that involved over 100 patients.
So what starts as a simple “oops” can sometimes within the blink of an eye evolve into a very big deal.
Capturing these distributed costs can be an important part of your awareness and corrective action process. Taking ownership may be a bitter pill to swallow, , but learning about these distributed costs has to be a part of the nonconformance / OFI investigation, which certainly is an accreditation requirement, and far more importantly and Quality requirement.
If you want to visualize how much these distributed costs can climb, I have a tool that calculate the estimated costs and give you a graphic depiction in dollars and minutes. Let me know if you think it helpful.
