Health Care Costs and Financing

Quality improvement endeavors often fail to cover their costs

Health care organizations that undertake quality improvement (QI) efforts for chronic disease management may find that their costs often overshadow their revenue, a new study finds. Researchers examined the short-term financial impact of a QI initiative addressing diabetes care as part of the Health Disparities Collaboratives (HDC) program. The HDC is conducted in federally qualified community health centers that provide outpatient care for underinsured and uninsured patients.

The research team surveyed 74 chief executive officers (CEOs) of centers that participated in the HDC in the Midwest. Additionally, they collected data on five centers to examine their financial performance. Most of the CEOs (72 percent) said that participating in the HDC program for managing diabetes increased their cost per patient. These costs ranged from $6 to $22 in the first year, depending on the center.

Many of the centers received grants to implement the HDC program; however, these grants were not sufficient to cover the program's costs completely. In theory, QI efforts can boost revenues for health care organizations by requiring more visits and services that are reimbursed at a higher rate by insurers. This was not the case at the five centers. Only one center's revenues exceeded its costs for treating patients with diabetes. However, all five centers reported improvements in managing chronic diseases and enhanced staff morale because of those improvements.

Given the costs of QI programs, most outpatient health care facilities serving vulnerable patients will be reluctant to adopt them, the authors suggest. As solutions, they propose redesigning payment structures and creating new incentives for facilities to embark on QI initiatives. This study was funded in part by the Agency for Healthcare Research and Quality (HS13635).

See "The cost consequences of improving diabetes care: The community health center experience," by Elbert S. Huang, M.D., M.P.H., Sydney E.S. Brown, James X. Zhang, Ph.D., and others in the March 2008 The Joint Commission Journal on Quality and Patient Safety 34(3), pp. 138-146.

Return to Contents
Proceed to Next Article