A Myriad of Misleading Metrics

Last Sunday’s issue of Parade, that rather cheesy newspaper insert that predominantly deals with important news from the world of Britney Spears and Justin Timberlake, had an article listing various health care statistics.  One of them was "hospital beds per capita," where the U.S. "lagged behind" forty-nine other countries.  I’m glad we do.

Why is the number of beds important?  From the perception of the customer, does it really add true value?  If there’s a hospital with a hundred extra beds, or better yet a hospital with a hundred extra beds but no or lower tech support equipment, is it delivering better value to the customer… the patient?  Of course not.  In fact, it’s doing the opposite… there is excess capacity with excess infrastructure, thereby driving up waste and cost that must be directly or indirectly distributed to the patient.

The key metric from the customer’s perspective is whether high quality care is delivered when it is needed, and an example of that is "wait time."  This is of particular importance in health care where time is not only money, but could also mean life or death.  Many people look to Canada as an example of an effective health care system, but as Canada’s Fraser Institute points out each year, wait times continue to increase.  In the U.S., diagnostic tests occur within a couple days, critical surgery within a week, and even noncritical surgery within two or three weeks.  As the Fraser report points out, wait times in Canada average over 17 weeks for even critical procedures.

So the U.S. has fewer beds but virtually no wait time, and Canada has more beds per capita but longer wait times.  The "beds per capita" is not an effective measure of healthcare quality.  As an analogy to the lean enterprise world, beds are capacity and wait time is cycle time.  We always try to optimize capacity while reducing cycle time, as that creates value from the perspective of the customer.

Per capita healthcare spending is another such metric.  Traditional thought believes that more spending must be better, but lean, and data, show otherwise.  The U.S. spends more per capita on healthcare than any other country, but is that a good thing?  Of course not; we all know there’s a lot of administrative waste.  Would "single payer" reduce that?  Perhaps, but it would also eliminate most market forces that naturally work to depress costs and improve technology.  So somewhere there’s a balance between the complexity (and cost) of multi-payer but market-driven efficiency (reduced cost), and the simplicity (reduced cost) of single-payer but lack of inherent market-driven cost management (cost). No easy answer.

Mark at the Lean Blog has been doing quite a bit of work with lean healthcare.  Last month he had an interesting post on cost vs. quality that discussed a study in Denver showing that, on average, hospitals charging the least also provided the highest quality care.  The reasoning and data suggests that poor quality, aka poor care, creates the need for additional procedures and longer patient stays, thereby driving up full costs that need to be distributed directly or indirectly to patients.  Again, a nice analogy to the lean world where quality problems create defects that create increased cycle time and organization costs to resolve, thereby making the company less competitive.

This all creates an interesting dynamic.  On one hand you have price controls creating a brain drain of Canadian physicians moving to the U.S. so they can be compensated better, with better-off Canadian citizens also coming to the U.S. to escape the long wait times (at a price).  This in effect creates a dual class healthcare system in Canada, although a judge recently ruled that Canadians can spend more money to reduce the intangible cost of their system.  On the other hand you have a flawed system in the U.S., where taking the expensive route of going to the emergency room is the only option for the unacceptably large numbers of uninsured, preventive care is not effectively provided thereby leading to more expensive care later on, and navigating the convoluted web of providers (and the bills than come later) has an incredible waste of unnecessary complexity.  (How’s that for being fair and balanced?!)

Hopefully a satisfactory middle ground can be found that truly decreases tangible and intangible cost while preserving or improving quality.  However in the meantime, think about the underlying value of the myriad of metrics that are flying around from the perspective of the customer… the patient.

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UPDATE: Mark (Lean Blog) and I were having an e-conversation late last night, and he brought up the similar problem with "ratios."  Those ratio metrics like "students per teacher" and "patients per nurse."  If you think about it, those types of numbers almost codify waste.  In California, in fact, the ratio of patients per nurse is actually regulated at something like 6:1.  Mark estimates, via direct experience, that 70% of a nurse’s work is waste… unnecessary movement, trying to find equipment, filling out unnecessary forms, and the like.  If a hospital makes the effort to reduce waste, they should be able to increase the ratio without impacting patient care while also decreasing cost and adding value to the patient… but think about the reality of that. 

The public and regulatory perception doesn’t take waste reduction activities into account, therefore people would assume the hospital is "cutting corner" when in reality it is improving care.  Hospitals actually augment the problem by bragging about how many nurses they have.  A secondary problem we have in California is that nursing schools can’t keep up with the demand created by the mandated ratio, therefore they are getting "innovative" at recruiting and processing nursing students.  I wonder what the impact on quality is.  So is regulating the ratio actually reducing quality of care on multiple fronts?