Continuous Quality Improvement of the Newland Hospital – Health System Example

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"Continuous Quality Improvement of the Newland Hospital" is a perfect example of a paper on the health system.   In purchasing the primary care clinics, Newland hospital created a distribution channel (Perner, 1999) for its inpatient services. The system provided by the primary clinics practically multiplied the geographic reach of Newland hospital by a factor equal to the number of primary clinics purchased. Making the inpatient service available to a wider market calls for optimization of its operation to handle the increased influx of patients to maintain its quality of service.   When Newland hospital optimized the operation of its functional support departments it ensured that they provide service not only to meet the requirement of the hospital but also to the requirements of the primary care clinics.

Central purchasing of essential supplies maximizes its purchasing power providing more value for its money. Manpower sharing would optimize the capacity of its manpower pool without affecting the bottom line since hiring temps or seasonal labor is not necessary anymore. Excess capacity of its technology infrastructure was also used to cater to the requirement of the primary clinics for a better synergy of both its operation.                   The economic value (Payant 2007) of the primary care clinics is their patient list that may avail of the inpatient services of Newland hospital.

The medical professionals and other support staff are specialized labor that increases the potential capacity of Newland hospital. Additional capacity in terms of space that can give health services and its geographic distribution provides a network of outlets for Newland hospital’ s services. Having achieved customer-first contact in a wider geographic area the potential impact for word-of-mouth marketing is higher and much more meaningful.

The non-economic value of the clinics is the increased customer loyalty because of the more intimate patient relationship created by the clinics that act as agents for Newland hospital. Marketing exposure to highlight the inpatient services of Newland hospital will also be distributed in a wider geographic area. In retrospect, the symbiotic relationship between Newland hospital and the primary care clinics should have yielded a mutually desirable outcome for both. The number of patients availing of the inpatient services of Newland hospital should have increased in direct relation to the number of patients retained by all the clinics. However, Newland hospital’ s purchase agreement with the clinics did not indicate any revenue streams from its local operation.

There was also no service agreement for each of Newland hospital’ s departments providing their services to the clinics that define the chargeback cost of the service. There was also no mention of standard mark-up for supplies sold through the clinics that were provided by Newland hospitals. When Newland Hospital purchased the clinics it not only bought the practice it also assumed its recurring expenses such as utilities, supplies, and its staff’ s payroll including its doctors.

Additional overhead was also incurred when Newland Hospital took over management of the clinics in the form of technology and other management expenses. The viability of the primary care practices before it was purchased by Newland was rooted in the adjustability of the owner/doctor’ s salary in relation to the expenses of the clinics. When Newland Hospital took over, the doctor’ s salary became fixed therefore it was not anymore dependent on the number of patients they retain, therefore the motivation to find or sign-up new patients is not a priority.

It would seem that the additional financial burden in the form of doctor salaries and the additional overhead brought about by Newland Hospital’ s management was not incorporated in the financial projections. To determine the actual economic value of the symbiotic relationships of the clinics with Newland hospital it would be best to itemize the total cost of the operation of each of the clinics. Then itemize the actual revenue each of the clinics generates for Newland hospital in terms of inpatient service referrals and other revenue-generating services.

Once the actual root causes of the losses are determined corrective measures can be provided. Continuous Quality Improvement Continuous quality improvement in health care also follows Deming’ s Shewhart cycle or Plan-Do-Check-Act this concept was later called the Plan-Do-Study-Act cycle (McLaughlin and Kaluzny p. 21). Detailed in the purchase contract executed between Newland and the Primary Care Clinics are the functional reporting line of the personnel from the clinics and their administrative reporting line. This is an essential relationship that establishes the reporting line of stakeholders that will execute the continuous quality improvement cycles.                       The first step is PLAN – this is where the objectives and processes will be defined in relation to the expected or desired output.

Policies will be created including its congruent procedures and work instructions to guide Newland hospital and primary care clinic’ s stakeholders. Strategic Areas of each of the processes will be monitored through specific performance indicators against the defined standards. The defined standard is the minimum expected performance of a strategic area to produce a quality outcome desirable to all stakeholders.                       To illustrate the step PLAN – Delivery of quality health care is a primary objective of both Newland and the clinics.

One of the processes that will provide evidence that quality health care is being given to patients is the completeness and timeliness of the immunizations of infant patients. To this effect, a policy to ensure that this objective is met will be communicated to all clinics from Newland. Procedures that will include reminding parents of their infant’ s schedule for immunization will be written.

The procedure will include the responsible party for the initial call and follow-up call. Work instruction on how to conduct follow-up to ensure that patient sensitivities are handled appropriately will also be written. Metrics that are reflective of the operational performance of the process as generated by the procedures and work instructions will be gathered.                       PLAN – also include the definition of measures to be taken once deviation from the policy occurs or in case the standards are not met as indicated by the metrics that will be gathered to monitor the compliance of the stakeholders to the policies, procedures, and work instructions.

To illustrate some sample metrics that can be gathered: 1. List of patients that have been called for follow-up visits and the list of patients who actually went to the clinic. 2. List of patients that have been immunized within the allowable period against those who were not.                       The second step is DO – this is the most important step that allows stakeholders to follow what has been discussed during the PLAN stage. This is the execution stage of all the procedures and works instructions as defined thereat.

It should be noted that deviation from the established and agreed policies, procedures, and work instruction is generally not allowed. However, this is not clad in stone, the slight deviation may occur but these deviations should be properly recorded to amend the parameters that were set-up in the PLAN stage.                       To illustrate the DO stage – as indicated in the PLAN stage immunization is given to infant patients at the right time. Outlier patients will be called by the clinic to ensure that they are aware of the schedule of their child’ s immunization schedules.

During the course of the implementation of the Policies, procedures and work instructions defined in the PLAN stage metrics will be gathered.                       The third step is to CHECK or STUDY – This is the regular examination of all the metrics that will be gathered during the DO step of the CQI. Root cause analysis base on the metrics gathered and other reports will be conducted if the performance as indicated by the report did not meet the expectations.

Regular consultation between the process owners and the decision-maker regarding failure or success as described by the metrics will be conducted.                       The fourth step is ACT – When the root cause analysis reveals the problem in the operation. The corrective measure shall be formulated to ensure the elimination of the problem if not the reduction of its occurrence.                       To illustrate the step ACT – when the root cause analysis was conducted on why the percentage of immunizing infant patients were low it was determined that the parents of the infant patients were very busy at work to bring their children to the clinics.

The corrective measure agreed upon by the clinic personnel and the management of Newland is to conduct house calls to parents who are very busy to go to the clinics to have their infant child immunized. The PDCA or PDSA cycle can repeat at regular intervals to correct any problems detected during the check stage until perfection in the execution has been achieved. The cycle will virtually ensure that perfect corrective measures are implemented when a problem is detected during the CHECK stage.

There may be some trial and error in terms of finding the right solution to correct a particular area of concern but the continuous implementation of the PDCA or PDSA model the correct one will reveal itself to solve the problem.


McLaughlin, Curtis and Kaluzny Arnold, (2006). Continuous Quality Improvement in Health Care, Theory, Implementation and Applications, United States, Jones and Bartlett Publishers,

Payant, Randy (2007), White Paper, Economic Value of equity the essentials. Finanacial Managers Society, Website Retrieved November 3, 2010 from

Perner, Lars (1999), Channels of Distribution, Firm Brand and Product Line Objectives. University of Southern California Marshall, Website Retrieved November 3, 2010 from

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