The Wellness-Plus Solution can benefit all stakeholders through delivery of more efficient and effective care to more people. These benefits differ according the stakeholder group, however, and certain aspects of our current healthcare system are undermining the benefits different groups receive.

Patients/Consumers and Society Benefit

Numerous studies have shown that a knowledge-based approach, using and practice guidelines and health information technologies improve the quality and consistency of healthcare, benefits patients and society.[1,2,3,4,5,6]

For example, enabling providers and patients to access comprehensive patient health records (including comprehensive medical histories, prescriptions, laboratory results, imaging studies such as X-rays, and other diagnostic tests) and receive valid support in making diagnostic and treatment decisions, helps reduce inappropriate variations in practice, which improves healthcare efficiency and effectiveness.

For on thing, this helps overcome the problem of "practice variation," that is, the well researched finding that different providers, even major academic medical centers, treat similar patients in vastly different ways and for significantly different costs. This research shows that more care and higher spending are not associated with better outcomes, and may, in fact, result in worse outcomes.[7] A patient could be hospitalized for nine days in one part of the country and three in another for the same diagnosis, and those differences would have no impact on outcomes. No other industry handles the same situation in so many different ways when these differences don't yield better results, and even result in worse outcomes.[8] Using practice guidelines to reduce unwarranted variations produces clear benefits with no significant tradeoffs between benefits and harms.[9]

Guidelines are also key a component of disease management programs, which have demonstrated their effectiveness in improving health status, healthcare quality, patient and provider satisfaction, and financial outcomes for populations with congestive heart failure, diabetes, coronary artery disease, chronic obstructive pulmonary disease, end-stage renal, disease,asthma, obesity, and several other chronic illnesses.[10,11]
Ideally, guidelines are implemented in a "high-fidelity" healthcare system, which gives all patients access to cost-effective care when they need it, and gives providers the time, knowledge, awareness, and resources they need to deliver that care competently.
The benefits to consumers and society in terms of better care for lower cost are enormous.

Purchasers benefit

Purchasers - the consumers and institutions paying for the care - stand to gain $75 to$100 billion a year in estimated cost savings from delivery of more effective and efficient healthcare.[12]

Four additional financial benefits employers investing in programs that improve employees' health have been identified:
  • Reductions in unnecessary medical costs (for both workers and their families)
  • Reductions in work absences due to poor health
  • Improvements in on-the-job productivity
  • Reduced employee turnover.[13]
    Employers are, in fact, becoming increasingly interested in using their market power to demand improvements in cost and quality through transformations in the way providers paid for their services.[13a]

Providers benefit

In addition to supporting providers' ethical imperative to help their patients to the best of their ability, improving care quality is able to increase their competitive advantage and decrease malpractice premiums.

Increased Competitive Advantage

When the quality of care improves, the patient isn't the only one to benefit; so can providers.
Quality care, the crux of every provider's mission, is also a critical competitive advantage - for attracting staff, maintaining financial health, and sustaining long-term viability.[14] It is a major trend in healthcare and an opportunity; providers who adopt a quality improvement strategy are ahead of the curve.[15]
For example, competition between the urban and small rural community hospitals requires the rural hospitals offer a standard of care commensurate with the large urban hospitals in order to counter the perception "bigger is better" and compete effectively with the large hospitals. The rural hospitals that survive will be the ones that demonstrate that they provide high-quality care. A continuous quality improvement focus can also be used as part of a rural hospital's strategy to attract and retain healthcare professionals. And, of course, excellent quality of care can prevent sentinel events, which are adverse occurrences and other errors in medicine that could jeopardize the financial and clinical stability of any hospital. Rural hospitals have to take steps to ensure they are not left behind in the healthcare quality movement that is gaining momentum throughout the country.[16]

In addition, small rural hospitals can gain competitive advantage and reduce the risk of closure through differentiation, rather than engaging in direct price competition with other hospitals in the same market. Differentiation enables them to establish a viable market niche and reduce the actual number of competitors. Those that are not-for-profit, have a higher cash flow, are at greater distance from other hospitals, and offer more basic and high-tech services than the market average were at lower risk of closure than other rural hospitals in the same market area.[17] One way for a hospital to differentiate is promote itself as specializing in treating certain healthcare problems surrounding hospitals don't treat.

Establishing a QI program using practice guidelines focused on providing those healthcare problems effectively and efficient is an excellent way to gain competitive advantage because it would elevate the hospital in the minds of consumers[18] and positively influence service provider choice.[19]

Rural hospitals aren't the only providers to strengthen their competitiveness by focusing on continuous quality improvement. With the rising tide of consumerism, patients are increasingly choosing providers - both practitioners and hospitals - they believe offer top quality services; thus, quality improvement can bring them competitive advantage.[20]

While convenience, ease of obtaining appointments, shorter waiting time in the office, and a courteous respectful staff are all important to the consumers, those providers who can also demonstrate timely accurate diagnosis and appropriate treatment through their commitment to a well-run quality improvement program can differentiate themselves in a positive way for greater competitive advantage.

An example of marketing quality improvement to the public for competitive advantage is the Geisinger Health System has a similar quality-based vision, "…to bring quality healthcare … to translate our discoveries through research into actual patient care and to monitor and improve that care. Their vision is based on four "guiding themes":
  • Quality - providing superb care across the organization
  • Value - providing care where and when it is needed
  • Partnerships - working collaboratively with other providers, businesses, and educational institutions
  • Advocacy - championing causes for improving rural health."[21]

Another example is the Tenet Healthcare Corporation.[22]They claim a commitment to highly effective care at low cost because:
  • "It's the right thing to do
  • There is a demand for it
  • We must do better
  • Everything we do, every decision we make or initiative we launch, will be in the spirit of advancing our overall commitment to quality."

Some of the key components of their quality initiative involve:
  • Measuring and tracking key quality indicators and regularly communicate key performance indicators to external agencies and to key stakeholder groups
  • Developing standard policies and procedures for governing hospital medical staff.
  • Developing new approaches to nursing care delivery that will work to improve the practice, resourcing and leadership of nursing
  • Studying activities that make up the care delivery process and implement operational improvements and efficiencies to manage capacity and help prevent delays, promote enhanced patient, physician and staff satisfaction through a more uniform care experience.
  • Focusing on reducing medical errors, enhancing clinical outcomes and improving patient safety
  • Providing more accurate and timely information to support clinical decision-making
  • Promoting more precise, consistent execution in our patient flow and care delivery processes
  • Implementing precise care delivery processes
  • Developing cost-effective quality functions.

Of course, a provider organization must not only claim it focuses on quality care, but it must act accordingly. While Tenet's recent scandals[23] may make their claims suspect, if they stay true to their word, it would help overcome the bad press.

Lower Malpractice Premiums

By reducing errors and omissions, thereby increasing patient safety, practice guidelines can reduce the rate of successful malpractice suits.[24,25,26] This means providers engaged in quality improvement programs have ammunition with which to approach malpractice insurers and argue for lower premiums.

Payers Benefit

Payers benefit from quality improvement by reducing healthcare costs, which include the cost avoidance of prevented errors and adverse events, decreased incidence of complications, fewer unnecessary tests and duplication of efforts, reduced readmissions, decreased rendering of ineffective treatments, increased efficiencies, and improved wellness through prevention.[27,28,29,30,31]

In addition, payers would benefit from assistance in dealing with the challenges imposed by health savings accounts (HSAs) and pay-for-performance (P4P) initiatives. They will be able to gain knowledge about providers offering the most cost-effective care, which they can share with consumers. They will have tools they need to handle the increased complexity of payments mechanisms required to manage HSAs. And they will be able to document their benefit to skeptics using data describing providers' and enrollees' actions, costs, and health outcomes.

Furthermore, payers can gain competitive advantage by adopting a new business model that provides value to the consumer through new ways of using information payers currently collect and can access in the future. This new model would focus on healthcare quality-improvement through the use of advance information technologies and the dissemination of deep, rich, useful information that:
  • Helps consumers make better healthcare choices and more closely monitor their health, thereby reducing the demand for costly services
  • Helps employers provide the best wellness programs, thereby improving employee health and productivity
  • Encourages market competition among providers and suppliers by making quality and cost more transparent, thereby reducing expenditures and improving healthcare outcomes
  • Makes business processes, such as claims adjudication, more timely and efficient, thereby reducing receivables and bad debt while improving customer service.

Implementing this business model would:
  • Increase the value of payers' services and products, thus improving customer retention, protecting profit margins, and increasing brand recognition
  • Create new revenue streams by providing valuable information to different healthcare stakeholders.

The growth potential of such an information-focused model is currently being demonstrated by, for example, Kaiser Permanente with their HealthConnect system and WebMD.

Failure to implement this model puts payers at risk as the healthcare landscape changes because their current operating model - which has traditionally focused on actuarial analyses, creation of investment pools, and acceptance of cost risk - will become far less relevant as:
  • The healthcare industry becomes more consumer-focused and efficient
  • Employers are willing to take on more risk themselves to reduce expenditures, delegating payers to a less valued "administrative services only" role.

Technology challenges payers will have to conquer include:
  • Upgrading existing old, rigid information systems
  • Handling disconnected data silos
  • Moving from paper-based methods to electronic systems.

To overcome these challenges, payers can begin by:
  • Developing information systems that accurately capture, share, distribute, secure, and utilize data resources internally and externally
  • Helping enable industry-wide strategies for better data exchange, such as Regional Health Information Organizations (RHIO) enabling nationwide connectivity
  • Investing in building relationships with other healthcare stakeholders to enable payers to deliver consultative services that transform them from being solely transaction-focused organizations to advisory-focused organizations of consumer-centric teams.[32]

Next: Tactic - Focus on Consumer-Centered, Universal HealthCare

Footnotes and References

[1] McLaughlin TJ, et al. (1996) Adherence to national guideline for drug treatment of suspected acute myocardial infarction: evidence for undertreatment in women and the elderly. Archives of Internal Medicine 156: 799-805.
[2] Grimshaw JM, Russell IT. (1993) Effect of clinical guidelines on medical practice: a systematic review of rigorous evaluations. Lancet; 342: 1317-1322.
[3] Thomas L, et al. (2002) Guidelines in professions allied to medicine [Cochrane Review]. In: The Cochrane Library, Issue 2, 2002. Oxford: Update Software.
[4] Beaulieu, N. D., et al. (2003). The business case for diabetes disease management at two managed care organizations. Available at
[5] Kolata, G. (December/22/2005) Diabetes study verifies lifesaving tactic. NY Times
[6] Beaulieu, N.D., et al. (April 2003) The Business Case for Diabetes Disease Management at Two Managed Care Organizations: A Case Study of HealthPartners and Independent Health Association. The Commonwealth Fund. Available at
[7] Health Affairs. (October 7, 2004). Variations Revisited. Available at
[8] Bender, M. W. and Van Kuiken, S. J. (2005) IT remedies for US health care: An interview with WellPoint's Leonard Schaeffer. Available at
[9] Jencks SF, Huff ED, Cuerdon T. (January 15, 2003) Change in the quality of care delivered to Medicare beneficiaries, 1998-1999 to 2000-2001. JAMA;289(3):305-312.
10] The Benefits of Disease Management in Medicare And Medicaid. Available at,_2002.pdf
[11] For additional studies on Disease Management, see
[12] Bender, M.W., et al. What's holding back online medical data. McKinsy Quarterly. Available at
13] Sean Nicholson, S, et al. (2005). How to Present the Business Case for Healthcare Quality to Employers. Available at
[13a] Smerd, J. (Oct 24, 2006). Forum to Curb Medical Costs Is All Business. Workforce Management. Available at
[14] From the Siemens Medical Solutions web site at
[15] APA Practice Organization (2005) Staying Ahead of the Curve: Four Environmental Trends to Watch. Available at
[16] Kemp, K. (2002) Quality Improvement in Rural Hospitals: How Networking Can Help. Academy for Health Services Research and Health Policy.
[17] Succi, M.J., et al. (February 1997) ffects of market position and competition on rural hospital closures. Health Services Research 31(6), 679-699.
[18] Taylor, S.A. (1994) Distinguishing Service Quality from Patient Satisfaction in Developing Health Care Marketing Strategies. Hospital and Health Service Administration 39 221-36
[19] Woodside, A.G., Lisa L.F. and Daly, R.T. (1989) Linking Service Quality, Customer Satisfaction and Behavioral Intention. Journal of Health Care Marketing; 9, 4 5-17
[20] Tronolone, M.J. Are your patients also your customers? AAAAI Practice Management Resources. Available at
[21] Geisinger Health System web site at
[22] See the Tenent "Commitment to Quality" web page at
[23] BusinessWeek Online (March 1, 2006). Earnings Preview: Tenet Healthcare. Available at
[24] Financial Malpractice - A National Agenda for High Quality Health Care. Available at
[25] Tzeel, A. Clinical practice guidelines and medical malpractice: Guidelines gaining credibility in courtrooms, may eliminate expert testimony. Available at
[26] UW Clinical Laboratory Initiative News (August 2005). Available at
[27] Woolf, S. H., et al. (1999) Potential benefits, limitations, and harms of clinical guidelines. BMJ 318 (20). Available at
[28] JCAHO (December 2003). Joint Commission Journal on Quality and Safety: 29(12). Available at
[29] Shapiro DW, Lasker RD, Bindman AB, Lee PR. (1993). Containing costs while improving quality of care: the role of profiling and practice guidelines. Annual Review of Public Health; 14: 219-241
[30] Porter, M. E. and Teisberg, E. O. (Jun 1, 2004). Redefining Competition in Health Care. Harvard Business Online. Available at
[31] Dimick, J. B., et al. (2004) Hospital Costs Associated with Surgical Complications: A Report from the Private-Sector National Surgical Quality Improvement Program. Journal of the American College of Surgeons; 199, 531-7.
[32] Kauffman, V. and Smith, L. (January 26, 2006). Centering on the Consumer: The Health Insurer's Key to Unlocking the Healthcare Cost Crisis. DiamondCluster International press release of report available at

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