Using QI to deliver cost savings

Picture of Jason Williams

Published on 24 October 2023 at 12:12

by Jason Williams


The healthcare industry is constantly evolving, with providers facing the dual challenge of delivering high-quality care while managing costs effectively. One powerful strategy to address this challenge is the use of quality improvement projects. These initiatives not only improve patient outcomes but also contribute significantly to healthcare cost savings.


In this article, we will delve into how healthcare providers can leverage quality improvement projects to achieve financial efficiency.


Understanding QI in healthcare

For those new to this blog and the world of healthcare improvement; Quality Improvement (QI) projects in healthcare are structured, data-driven initiatives designed to enhance patient care and streamline operations. They typically follow established methodologies such as Lean, Six Sigma, or the Plan-Do-Study-Act (PDSA) cycle, emphasising continuous improvement through measurement and analysis.



Identifying Areas for Improvement

Reducing Hospital Readmissions

One key area for quality improvement is reducing hospital readmissions. By analysing the root causes of readmissions and implementing measures such as care coordination and patient education, providers can prevent costly readmissions to hospital. QI interventions have been shown to reduce readmissions by an average of 12.1% for heart failure patients and 6.3 % for older adults with diverse health issues. Under the US Medicare model, reducing a single readmission has been shown to increase hospital reimbursements by between $10,000 and $58,000.



Optimising clinical interventions

There are a plethora of clinical interventions/treatments being carried out in a hospital everyday. Within these there will nearly always be room for improvement. Balancing the cost and effectiveness of these treatments is an important balance to be struck but there are win-win changes that can be realised. For example, changes in the use of central catheters led to reduction in bloodstream infections and savings of $1.85 million over 3 years.


Streamlining Administrative Processes

Many healthcare costs are tied to administrative processes, which over time can often become inefficient. Quality improvement projects can focus on simplifying processes, reducing paperwork, and removing steps/processes that don’t add value or are no longer needed. The Electronic Health Record (EHR) is likely to be the first thing many people think of when it comes to reducing admin. Despite the high costs of implementation, analysis of 550 hospitals across the US show that patients treated in hospitals with advanced EHRs cost, on average, $731, or 9.66%, less than patients admitted to hospitals without advanced EHRs.



Enhancing patient flow

The flow of patients between staff, departments and organisations can be complex and often include many inefficiencies. Improvement projects to improve flow are likely to be large scale, multidisciplinary and can span multiple organisations. The impact can be huge – with annual savings of almost $6 million supporting a >25% increase in inpatients without increasing bed numbers.



Optimising Supply Chain Management

With medical supply chain accounting for 15%-40% of a hospital expenses, optimising this offers significant opportunity for cost savings. Healthcare organisations can reduce costs by improving supply chain management. This involves minimising wastage, optimising inventory, and negotiating better supplier contracts. Supply chain improvements at Birmingham Children’s Hospital led to savings of £10.6 million, without reducing the quality of frequency of its services



Maximising impact of proven savings

Why re-invent the wheel? Instead of searching for new opportunities to deliver savings, why not look at where savings have already been achieved and look for opportunities to deliver similar savings in other departments? The concept of 'spread and scale' is well used in improvement to capitalise on known solutions and seeking to maximise their impact by spreading or scaling them to other areas of the organisation.


How to run and manage cost saving projects in Life QI

Make the most of the tags

Tag them to allow all cost saving projects to be grouped together in reports and dashboards.



PDSAs are the powerhouse of marginal gains

You shouldn't rely on achieving your desired saving with one big change to your process. Often it is the cumulative impact of many small changes that together may deliver the level of saving you desire. So be sure to thoroughly brainstorm and test out PDSAs, carefully layering up successful changes to build towards your desired level of saving.



Ask around for PDSA cycle ideas

Despite all our best intentions there are all too often areas of waste, duplication and delays in processes. So ask as many as people as possible who are involved in your target process for their ideas on how to streamline it.



Track the cost of a process

Use the measures section of your project to track the regular (e.g. weekly or monthly) cost of the process you are trying to reduce. You will need to see how this running cost varies over time as you start to introduce your PDSA cycles. Ideally record the cost of the process as frequently as possible so you can begin to see the impact of your changes sooner, i.e. a weekly cost plotted over time will be more helpful than an annual cost. 


And don’t let perfection be the enemy of good enough. It won’t always be possible to record the exact cost of a process, but use the data you can get, as long as it is close enough to provide a complete picture or covers the aspect of the process where you expect to see savings.



Never forget the balancing measures

Whilst focusing on reducing the cost of delivering a process, it can be useful to keep track of the quality of the process' output so you don’t inadvertently diminish quality in order to deliver cost savings.



Essential for financial efficiency

Quality improvement projects are indispensable tools for healthcare organisations seeking to balance the delivery of high-quality care with cost savings. By pinpointing areas for improvement, engaging multidisciplinary teams, and rigorously analysing data, healthcare providers can achieve both financial efficiency and improved patient outcomes. 


In today's healthcare landscape, harnessing the power of quality improvement projects isn't just an option—it's a strategic imperative for delivering sustainable, cost-effective care.




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