IHI From the Bedside to the Balance Sheet Glossary
Actuarial value: a measure of a plan's "benefit generosity"- summary measure of the amount of covered medical costs that would be paid by the health plan as a percentage of the total medical claims incurred for a standard population. The remaining percent represents out of pocket expenses paid by beneficiaries in the form of co-pays, deductibles, and co-insurance. For example, Medicaid has an AV of 100%, the AV of a typical HMO is 93%
(Congressional Research Service)
Levels of plans in the HIE will be determined by actuarial value (Platinum 90% /gold 80%/silver 70%/bronze 60%/catastrophic HDHPs). Employers must offer at least a bronze plan, but are not required to make contribution (NY Times)(HIE: Key Issues for State Implementation)
Administrative Services Only (ASO): an arrangement in which an organization funds its own employee benefit plan such as a pension plan or health insurance program but hires an outside firm to perform specific administrative services. For example, an organization may hire an insurance company to evaluate and process claims under its employee health plan while maintaining the responsibility to pay the claims itself.
Aim: a written, measurable, and time-sensitive statement of the expected results of an improvement process.
Allowable costs: charges for healthcare services and supplies for which benefits are available in insurance plan, vary across insurance companies.
A3: A3 refers to an international-sized piece of paper, one that is approximately 11-by-17 inches. More than that, the A3 is a visual manifestation of a problem-solving thought process involving continual dialog between the owner of a problem and others in an organization.
Care design waste: is retrospectively identified as part of process redesign wherebythose eliminated steps in a process and their associated resources were waste. Through thoughtful experimentation and refinement steps initially thought to be essential shorten or disappear, producing efficiencies. (Roberts and Zangwill, 1993)
Consumer Price Index: measures prices of a selection of goods and services purchased by a "typical consumer," as measured by the US Bureau of Labor Statistics (BLS). The percent rate of change in CPI is the most commonly used method to calculate the inflation rate.
Cost tracking system:a measurement system designed to identify avoided costs and cost outlays attributable to a program/initiative
Change concept:a general idea for changing a process. Change concepts are usually at a high
level of abstraction, but evoke multiple ideas for specific processes. “Simplify,” “reduce handoffs,” and “consider all parties as part of the same system,” are all examples of change concepts.
Cycle or PDSA Cycle: a structured trial of a process change. Drawn from the Shewhart cycle, this effort includes:
Plan- a specific planning phase
Do- a time to try the change and observe what happens
Study- an analysis of the results of the trial
Act- devising next steps based on the analysis
Dark green dollars:savings or expense reductions that can be tracked to the organization’s bottom line in the financial reports.
Defect: (health care delivery) has been described in terms of three categories: 1. overuse (providing a treatment when its risk of harm exceeds its potential benefit), 2. underuse (failing to provide an effective treatment when it would have produced favorable outcomes), and 3. misuse (avoidable complications of appropriate care) to describe common classes of quality failures in health care delivery (Chassin, 1991; Chassin et al., 1998). More simply put, the design of goods that do not meet customer needs, such as medication errors, wrong side surgery, or poor clinical outcomes.
Delay:idle time spent waiting for something, such as utilization reviews, insurer payments, test results, patient bed assignments, OR prep, medical appointments.
Delivery system design:how care is provided to patients, including the types and roles of the provider team and the types of appointments and follow-up techniques used by the practice to ensure good care.
Direct costs:are those costs that are obviously related to and specifically traceable to a project. This will include such resource inputs as personnel salaries, materials, fees, etc.
Driver diagram:a variant of a tree diagram that graphically shows the key components or drivers of a desired result, including the relationships among them.The driver diagram can be a helpful tool for showing frameworks for improvement and theories for the key ingredients of success.
Efficiency: a measure (usually expressed as a percentage) of the actual output to the standard output expected. (APICS Dictionary, 1998)
Execution:with will and ideas, an essential component of successful change. At IHI we use this term to describe the best methods for successfully testing and implementing changes in a system.
Gemba: Japanese word for the place work is done or where value is created.
Gross Domestic Product: market value of all officially recognized final goods and services produced within a country in a given period. In the US, the Bureau of Economic Analysis (BEA) measures and calculates the GDP.
GDP deflator- measures changes in prices of all domestically produced goods and services in the economy. The GDP deflator shows how much a change in the base year's GDP relies upon changes in the price level. Used to adjust the GDP for a given year to the "real GDP" which can be compared across years.
GDP vs Inflation
Inefficiency: “…a wasteful use of resources for no (or very little) benefit, or a failure to use resources on clearly beneficial activities. Inefficiency may arise because of apparently inappropriate, irrational, or misinformed decisions by individuals or organizations (Severans, 2003, p. 366). Inefficiency waste is “any non-value adding work” (Roberts and Zangwill, 1993)
Inflation: rise in the general level of prices of goods and services in an economy related to an increase in the volume of currency and resulting in the loss of purchasing power.
Key Changes: The list of essential process changes that will help lead to breakthrough improvement.
Lean: the core idea is to maximize customer value while minimizing waste. Simply, lean means creating more value for customers withfewer resources. A lean organization understands customer value and focuses its key processes to continuously increase it. The ultimate goal is to provide perfect value to the customer through a perfect value creation process that has zero waste.
Measure:an indicator of change. Key measures should be focused, clarify your team’s aim, and be reportable. A measure is used to track the delivery of proven interventions to patients and to monitor progress over time.
- Balancing measures:to achieve an improvement in some measures while degrading performance in others is usually not acceptable. In making changes to improve outcome and process measures, we want to make sure any related measures are maintained or improved.
- Process measures:process measures are measures of whether an activity has been accomplished. For example, process measures could be whether inventory checks were made or whether patients received evidence-based interventions. Process measures are often used to determine if a PDSA Cycle was carried out as planned.
- Outcome measures:outcome measures are measures of the performance of the system under study. They relate directly to the aim of the project. Outcome measures offer evidence that changes are actually having an impact at the system level.
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Model for Improvement:an approach to process improvement, developed by Associates in Process Improvement (API), which helps teams accelerate the adoption of proven and effective changes.
Net present value (NPV): is a method for calculating the expected utility of a given project by discounting all expected future cash flows to the present using some agreed upon rate of return.
Organizational energy: the amount of time and resources that an organization has to apply toward improvement, change and innovation. Organizational energy is in limited supply since most energy is applied toward the actual work of the organization leaving a limited amount available for other things. It is also a renewable resource as waste and rework is taken out of the system additional capacity is created. The role of leaders is to manage the demand for improvement with the capacity of the organization to do the work.
Overproduction: manufacturing of products or information that is not needed, such as precautionary “defensive” medical tests, surplus medications, excessive levels of paperwork.
Percent of Medicare: price paid for inpatient hospital stay compared to Medicare payments
Premiums: the monthly amount charged by the insurance company for the benefit plan. Can be paid by employers, unions, employees, individuals, or shared.
Key Differences from AV: takes into account actual health of the beneficiaries, varying prices, utilization, cost of administration. In the HIE, premiums will be listed as well with an expected 50% or more variation in premiums within each tier.
Presenteeism: the act of attending work while sick. Generally used as a way to estimate productivity loss. On the job productivity losses are thought to account for 1/5 to 3/5 of health related expenses to businesses (Goetzel et al 2004).
Price: the amount charged by the provider for services and supplies. Varies significantly by payer and market.
Process change:a specific change in a process in the organization. More focused and detailed than a change concept, a process change describes what specific changes should occur. “Institute a pain management protocol for patients with moderate to severe pain” is an example of a process change.
Productivity: a measurement of output relative to a specific input, e.g. output/labor hour. (APICS Dictionary 1998)
Quality waste: when a step in a clinical process fails, some proportion of those process failures lead to outcome failures.
Rate of return: is the rate of interest at which the present value of expected cash inflows from a particular project equals the present value of expected cash outflow for the same project, also called internal rate of return.
Return on Investment (ROI): is an accounting metric that is a test of profitability and a useful common denominator such that it can be compared both inside and outside an organization. The metric compares the benefit of the investment relative to the cost of making the investment.
ROI is calculated as a percentage or ratio:
(gain from investment – cost of investment)
ROI = cost of investment
Rework: performing the same task a second time, such as re-testing, re-scheduling, re-filing of lost claim forms, re-writing of patient demographic data, multiple bed moves.
Run chart:a graphic representation of data over time, also known as a “time series graph” or “line graph.” This type of data display is particularly effective for process improvement activities.
Team:the group of individuals, usually from multiple disciplines, that drives and participates in the improvement process.
Test:a small-scale trial of a new approach or a new process. A test is designed to learn if the change results in improvement and to fine-tune the change to fit the organization and patients. Tests are carried out using one or more PDSA cycles.
True north metrics: true north defines an organization’s strategic and philosophical purpose. True north metrics are a balanced scorecard of key metrics tracked and cascaded to form alignment throughout an organization, to keep an organization focused on “true north”.
Utilization:(as related to employee/employer health benefits) how frequently a group uses the benefits associated with a particular plan
Waste: Examples of The Eight Wastes of Lean Health Care
- Defect: making errors, inspecting errors, inspecting work already done for errors
- Waiting: for test results to be released, for a bed, for an appointment, for release paperwork
- Motion: searching for supplies, fetching drugs from another room, looking for proper forms
- Transportation: taking patients through miles of corridors, from one test to the next unnecessarily, transferring patients to new rooms or units, carrying trays of tools between rooms
- Overproduction: excessive diagnostic treatment; unnecessary treatment
- Over processing: redundant questions to patients and families; unnecessary forms; nurses writing everything in a chart instead of noting exceptions
- Inventory (too much or too little): overstocked drugs expiring on the shelf; under stocked surgical supplies delaying care while staff goes in search of needed items
- Talent: failure to listen to employee ideas for improvement; failure to train emergency technicians and doctors in new diagnostic techniques
Waste of spirit and skill: failure to address the many hassles in our daily work, hunting and gathering, re-calling, the same things every day