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The Need for New Strategic Relationships Between Quality and Finance

July 5, 2023
July 5, 2023

With hospital reimbursements increasingly tied to performance on quality measures, some hospitals have faced financial penalties for lower quality scores. It is clearly time for deeper and more strategic relationships between Quality and Finance leaders in healthcare organizations. Joseph Fifer, the recently retired President and CEO of the Healthcare Financial Management Association and Stephanie Mercado, CEO and Executive Director of the National Association for Healthcare Quality authored an op-ed piece for Modern Healthcare that advocated for a bi-directional relationship between these two critical functions.


Historical Models of Healthcare Quality and Finance No Longer Work

Older models for healthcare quality and finance had siloed functions and primarily reactive approaches. Fifer and Mercado encouraged readers to collaborate to change the status quo.

The authors pointed out the critical financial, workforce, quality and safety issues facing today’s healthcare leaders and the importance of solutions that promote systemic and sustainable change. Those kinds of changes are most likely to emerge from new strategic relationships between quality and finance leaders. Going forward, quality will have an increasing impact on finance meaning that solutions that can enhance patient safety, reduce risk, and ensure competence matter more than ever in the current healthcare environment.


High-Quality Care Is More Cost-Effective Care 

Fifer and Mercado cited the May 2022 report from the Health and Human Services Department’s Office of the Inspector General which found that 1 in 4 hospitalized Medicare patients experienced some type of harm in October of 2018. Nearly a quarter of those events resulted in additional costs to Medicare. Perhaps most alarming was a finding from physician reviewers that found that 43% of those events were preventable. This example makes it clear that the perceived choice between delivering high quality patient care and cutting costs is actually a false one.


Protecting Quality Infrastructures

There are many potential obstacles to creating this kind of partnership, including a relatively regular phenomenon in healthcare – mergers and acquisitions. When mergers and acquisitions happen without sufficient thought to how to merge the quality and finance functions, the result can be an organization with highly variable processes for both quality and finance.

The National Association for Healthcare Quality has created a robust benchmarking tool. While peer-to-peer benchmarking can be useful, organizations like the Cleveland Clinic have used it to develop a better understanding of the organization’s investments across a large number of sites while measuring variability and then using that data to better allocate resources to quality.


Quality Improvement and the Social Determinants of Health

Recently healthcare organizations have begun to pay more attention to the social determinants of the health of the communities they serve.  The Healthcare Financial Management Association cited insights from Maryland’s Health Enterprise Zone which demonstrated that collaboration between healthcare providers, community service agencies and local governments can improve healthcare quality by working to mitigate certain social factors. In its’ final year, the project resulted in a 47% reduction in hospital visits and a 37% reduction in per-patient hospital charges. Partnerships such as this can change the health of the community and contribute to strong financial performance.

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