Promoting quality: the health-careorganization from a managementperspectiveSETH W. GLICKMAN1,2, KELVIN A. BAGGETT1,3, CHRISTOPHER G. KRUBERT2, ERIC D. PETERSON1

AND KEVIN A. SCHULMAN1

1Duke University, Durham, North Carolina, USA, and 2ApolloMD Emergency Services, Atlanta, Georgia, USA

Abstract

Background. Although agreement about the need for quality improvement in health care is almost universal, the means ofachieving effective improvement in overall care is not well understood. Avedis Donabedian developed the structureprocessoutcome framework in which to think about quality-improvement efforts.

Issue. There is now a robust evidence-base in the quality-improvement literature on process and outcomes, but structure hasreceived considerably less attention. The health-care eld would benet from expanding the current interpretation of structure toinclude broader perspectives on organizational attributes as primary determinants of process change and quality improvement.

Solutions. We highlight and discuss the following key elements of organizational attributes from a management perspective: (i)executive management, including senior leadership and board responsibilities (ii) culture, (iii) organizational design, (iv) incentivestructures and (v) information management and technology. We discuss the relevant contributions from the business and medicalliterature for each element, and provide this framework as a roadmap for future research in an effort to develop the optimal de-nition of structure for transforming quality-improvement initiatives.

Keywords: outcome and process assessment (health care), quality assurance (health care), quality indicators (health care)

Introduction

The Institute of Medicine has launched a concerted effortto improve quality of medical care, which they dened as thedegree to which health services for individuals and popu-lations increase the likelihood of desired health outcomesand are consistent with current professional knowledge.However, recent studies have demonstrated widespreaddeciencies in the quality of health care, and society isnow challenged by the task of effectively implementingquality-improvement programs [1]. Although agreementabout the need for quality improvement is almost universal,the means of achieving effective improvement in overall careis not well understood. To begin such a discussion, one musthave an appropriate framework for undertaking this effort.Avedis Donabedian was a pioneer in the eld of health-carequality, and he developed a basic framework in which tothink about quality-improvement efforts. Donabediandened the health-care triad of structure, process andoutcome (Fig. 1) [2]. Although there is now a robustevidence-base in the quality-improvement literature onprocess and outcomes, structure has received considerablyless attention [3].

Donabedian believed strongly in the importance of health-care structure, seeing it as a driving force for later care pro-cesses and ultimately for health outcomes. Donabedianscommentary on structure focussed on physical structure,facilities and provider qualications, and most modernaccreditation and quality organizations, such as the JointCommission on Accreditation of Health-care Organizationshave historically viewed the structure largely from this nutsand bolts perspective [4]. As the study of organizationalcharacteristics and behavior has evolved, our understandingof organizational characteristics and management capabilitiesthat drive quality improvement in health care remains under-developed. The eld of organizational behavior, a multidisci-plinary eld including contributions from psychology,sociology and economics studying individual and groupdynamics within an organization, has demonstrated that people(management and employees) and organizational arrangementsare key determinants of job performance and quality [5].

Effective organizational capabilities, such as leadership,human capital, information management systems andgroup dynamics (such as culture and incentive systems), areessential structural elements of quality improvement in a

Address reprint requests to: Kevin A. Schulman; E-mail: kevin.schulman@duke.edu3Present address: HCA Inc., Nashville, Tennessee, USA.

International Journal for Quality in Health Care vol. 19 no. 6

# The Author 2007. Published by Oxford University Press on behalf of International Society for Quality in Health Care; all rights reserved 341

International Journal for Quality in Health Care; Volume 19, Number 6: pp. 341348 10.1093/intqhc/mzm047Advance Access Publication: 18 October 2007

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health-care organization and serve as the primary catalystsfor process change. From a management perspective, theseorganizational attributes may provide a more operationaldenition of organizational structure than the elements ofDonabedians original classication. The health-care eldwould benet from expanding its current interpretation ofstructure to include broader perspectives on organizationalattributes as primary determinants of process change andquality improvement.

We highlight and discuss the following key elementsof organizational attributes from a management perspective:(i) executive management, including senior leadership andboard responsibilities, (ii) culture, (iii) organizational design,(iv) incentive structures and (v) information managementand technology (Fig. 1). We discuss the relevant contributionsfrom the business and medical literature for each element,and provide this framework as a roadmap for future researchin an effort to develop the optimal denition of structurefor transforming quality-improvement initiatives.

Executive management

Senior leadership

Quality management has become a priority for senior execu-tives and chief medical ofcers and a dening competencyfor successful organizations [6]. Senior executives sit at thetop of a rms organizational chart, and their leadershiphelps set the direction of the organization and guidequality-improvement efforts. These leaders produce ideas,convey new ideologies, and propagate them throughout theirorganization. Since the modern quality revolution began inthe 1980s, quality pioneers have repeatedly emphasized theimportance of leadership for achieving organizationaladvances in quality [7]. Organizational change is predicatedon managerial leadership and support, and these elements arecritical for successful implementation of quality improvement.

According to Juran, management commitment is pertinentto every successful quality revolution, no exceptions areknown!

Previous research from the organizational psychology lit-erature has identied personality characteristics that help dis-tinguish successful business leaders. These include personalmotivation, intelligence, action-oriented judgment, skill indealing with people and capacity to motivate others [5].Successful leaders are able to harness these qualities to revi-talize and transform their organizations. Transformationalleaders are thought to achieve these goals by providing intel-lectual stimulation, individualized consideration and inspi-ration motivation to clearly communicate the importance ofan organizations mission. Leadership is a complex process,and multiple theories have been developed to study the roleand effectiveness of different forms of leadership under avariety or organizational models and constraints [7].

The link between leadership and quality has been studiedin a number of business organizations implementing qualityimprovement, but existing studies in the management litera-ture are largely qualitative and limited in nature. In one suchstudy across multiple industries, Waldman et al. [8] found aninextricable link between leadership and commitment toquality-improvement processes. They found that top manage-ments physical presence, visibility and concern for qualityimprovement were associated with transformational leader-ship and demonstrated that leadership directly impactsculture and the commitment of an organization to qualityimprovement.

The Baldrige National Quality Program designated leader-ship as a key driver in quality improvement when it estab-lished its criteria for the Baldrige Award in 1987. When theorganization adopted its award criteria for health-care insti-tutions in 1989, leadership remained at the top of its list.Although leadership seems like a logical choice to head thelist, the medical literature is also limited in large studiesdemonstrating a connection between leadership and quality.Using survey data from 2193 community hospitals, Weiner

Figure 1 An updated framework for structure in quality improvement highlighting the importance of organizationalattributes. An updated framework of structure in the hospital setting should incorporate the key managerial elements we havehighlighted, which have evolved as crucial tools and management capabilities in successful businesses.

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et al. [9] found that active involvement of senior administrativeleadership, including hospital management and boards, as wellas physician clinical leadership, promoted clinical involvementin quality improvement. Other studies have suggested thatadministrative support and physician leadership are importantcorrelates of quality improvement for beta-blocker use inacute myocardial infarction [10]. However, despite the lack ofempirical evidence linking executive leadership and quality,there are notable examples of the profound, positive impactthat visionary hospital leaders can have on the quality of ahealth-care organization [11].

Board responsibilities

Momentum has built for several decades for hospital boardsto be involved in and accountable for the quality of caredelivered at their institutions [12]. In its 1999 report, To Erris Human, the Institute of Medicine described patient safetyas a necessary organizational goal, stating that this processbegins when boards of directors demonstrate their commit-ment to this objective by regular, close oversight of the safetyof the institutions they shepherd. Delivering high-qualitycare is becoming increasingly recognized as a corporateresponsibility, and others have suggested that hospitalsshould be held negligent and subject to malpractice litigationfor failing to deliver on this obligation [13]. However, numer-ous barriers, including lack of knowledge among trustees,poor communication between boards and physicians, frag-mented information exchange, inadequate investment anddisjointed committee structures, have made sustainable boardefforts to improve quality difcult [14].

Corporate and hospital boards are largely responsible foroverseeing an organizations nancial budget and agenda.Quality-improvement programs can be costly, especiallythose that use technologically sophisticated information man-agement tools. Several studies of US corporations providesome economic justication for quality-improvement efforts.For example, a study of 30 companies practicing total qualitymanagement showed that they had higher revenues and pro-ductivity than their peers [15], and studies of MalcolmBaldrige Award winners have shown better nancial per-formance, as measured by common stock return and oper-ational performance [16]. However, there is no evidencefrom the health sector that demonstrates a positive return oninvestment of capital for quality-improvement efforts.Misalignment of nancial incentives has created a formidablebarrier to the adoption of quality interventions, and manyhospital boards remain skeptical of the potential for nancialreturn from spending on quality improvement [14].Modication of existing payment structures and policies maymake a nancial argument for quality improvement morepalatable. Regardless, due to the burgeoning crisis of clinicalquality, hospital boards must become accountable for qualityat their institutions. They need to prioritize quality agendasand commit sufcient resources for the implementation ofquality-improvement programs.

There are numerous examples of board commitment toquality in other business sectors. High-risk industries such as

aviation and energy have achieved impressive safety records,considering the risky nature of their businesses. The factorsresponsible for these achievements have started with boardcommitment to quality management systems [17]. Large mul-tinational corporations such as Toyota and General Electrichave engendered quality as a core corporate responsibility.Despite these successes, however, there is little empirical evi-dence in the business or medical literature that conclusivelylinks board commitment to quality improvement.

Culture

Corporate culture is a relatively amorphous quality that exertspowerful inuence over an entire organization. The cultureof an organization should be a key consideration in a rmsoverall strategy and in the design and implementation ofquality-improvement initiatives. Corporate culture can bedened as the deeper level of basic values, assumptions andbeliefs, that are shared by members of an organization [18].Culture has a powerful effect on an organization and isrecognized by many as the glue that holds an organizationtogether and allows it to adapt to changing environments. Inthe management literature, culture has been shown to have adirect positive impact on quality, as well as operational andbusiness performance [19]. Corporate culture has beenshown to inuence an employees leadership style more thanany other aspect of the employees job, according to a recentanalysis of several thousand executive assessments for morethan 100 corporations [20]. Cultures of quality have beencreated at some of the largest business rms and have led tosignicant advances in quality management. Large multi-national corporations such as Motorola and General Electrichave successfully instituted quality cultures through the useof advanced industrial quality management programs, suchas Six Sigma Quality [21].

Several researchers have studied the impact of organiz-ational culture on quality in health-care settings [22], butthere is little empirical evidence that conclusively links organ-izational culture and performance. There is a clear need toexpand the evidence-base to determine which cultural factorsfacilitate quality performance. As leaders of health-care insti-tutions think about the design and implementation ofquality-improvement programs, it will be important for themto make accurate assessments of organizational culture bothbefore and after implementation of these initiatives. Anessential feature of organizational culture in health-care insti-tutions will be one that creates accountability for qualityimprovement at all levels, from top-level management toindividual caregivers. Another important element will beoptimizing communication and social networking in aneffort to break down hierarchies and divisions that limitinformation sharing. Clinical care is ultimately delivered topatients along relatively autonomous service lines (i.e. cardi-ology services, oncology services), and strategies need to bedeveloped to achieve t and synergy among these diversegroups.

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Although strong empirical evidence linking culture andquality in health-care settings may be lacking, there arenotable examples of high-performing health-care institutionsthat are rooted by a strong quality culture. For example,Baptist Health Care in Pensacola, Florida, has been nationallyrecognized for its excellence over the past decade. BaptistHospital, a 2-year nalist for the Baldrige National QualityAward and tenth on Fortunes 100 Best Companies to WorkFor, now ranks in the top 1% nationally for both patient sat-isfaction and employee morale. This success was achievedprimarily by developing an employee-driven organizationalculture based on teamwork and open communication. Theculture at Baptist is reinforced through multiple strategies,including employee-developed standards of performance.Intermountain Health care, a large nonprot health-caresystem in Salt Lake City, Utah, named the USAs top inte-grated health system for the fth time in 2005 by ModernHealthcare, has been successful in building a culture ofquality anchored by its excellent leadership, advanced infor-mation management and feedback, and commitment topatient safety.

Organizational design

Organizational design is a formal, guided process for inte-grating the people, information, and technology of an organ-ization, and serves as a key structural element that allowscorporations to maximize value by matching their corporatedesign to overall strategy [23]. From a strategy perspective,organizational design is an untapped variable that needs tobe addressed in the context of organizational strategy andchange. As attention to clinical quality becomes more ofa priority, it will be essential for health-care institutionsto evolve organizational and management structures thatsupport the design and implementation of quality-improvement initiatives and create mechanisms for account-ability for quality of care. Moreover, organizations in mostindustries are in constant evolution, so organizational designshould be considered a variable and evolving tool forimproving organizational performance.

As hospital-based care became the dominant system ofhealth-care delivery in the 20th century, most hospitalsadopted a functional model based on discipline-basedspecialization [24]. Each functional area (i.e. various clinicaldepartments, nursing, laboratory services) has a manager thatreports to higher management levels and eventually to thehospitals chief executive ofcer. Although this centralizeddesign has allowed for efciency based on scales ofeconomy, it limits integration across functions and the abilityto develop innovative, creative quality-improvement processesand solutions at the level of the service line. For example,most total quality management projects originate and areimplemented at the level of hospital management teamsthrough high-end administrative and support services.However, clinical care is administered at a service-line level

by clinicians and teams of complementary health-careprofessionals (i.e. nurses, therapists, pharmacists, etc). Theconict between central control and local autonomyand accountability is a key issue to resolve for mostorganizations.

The development of a less centralized, service-line orien-tation at hospitals should help support the development oftotal quality management processes at the clinical level.Organizational design by product and service line is becom-ing more common in health-care institutions and is likely togrow [25]. Innovative, high-quality health-care systems likeIntermountain Health care have attempted to implementnew quality efforts and allow more autonomy at the serviceline. However, because the current organizational structure ismore functional in nature, management has experienced dif-culty in crediting cost savings and improved quality tospecic service lines [26]. Modication of current manage-ment systems from a centralized to more decentralized struc-ture, in order to make service line units more accountableand autonomous for quality-improvement initiatives, mayhelp optimize the results of future efforts.

Hospital systems in the USA have historically evolvedsuch that physicians serve primarily as consultants and custo-mers of the hospital and are paid on a fee-for-service basis,whereas hospital resources (such as beds, operating rooms,and technologies) are managed by administrators and sharedby departments. A more recent trend has moved physiciansinto active roles as integral personnel within hospital manage-ment, but there has been little change in hospital structure toaccommodate their evolving role in quality management. Forexample, total quality management projects have traditionallyexisted within hospital management administrative teams,while clinical care was a guarded realm of health-care pro-fessionals. Future changes in organizational structure thatincorporate physicians into quality management roles at theservice level, as well as direct reporting to the hospital chiefexecutive ofcer, should help facilitate the involvement ofclinicians in total quality management.

Successful businesses have developed organizational andmanagement structures that engender corporate-level objec-tives while maximizing the ability of individual business unitsto address their local competitive environments [27]. Forexample, large corporations are successfully using corporatestrategy maps and balanced scorecards so that employeesboth belong to individual business units and are in tune withcorporate priorities. Individual unit managers make decisionsthat tie their activities to corporate values. This strategy hasallowed the company to realign local management goals anddecision making without having do endure the upheaval ofmajor organizational restructuring. Additionally, large compa-nies such as Johnson & Johnson and General Electric havesuccessfully used a multidivisional organizational structure tomaximize nancial performance and quality oversight withinlocal business units. Management and organizational struc-tures in health-care organizations should be developed toallow each member of product and service lines to improvethe quality of care they deliver to patients.

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Incentive structures

In an effort to narrow the well-documented gaps betweenhealth-care guidelines and clinical practice, a variety of mech-anisms have been developed to provide incentives to health-care institutions to improve their quality of care [28]. Theseefforts have been developed at multiple levels, includingfederal, commercial, and public watch efforts. Traditionalquality-improvement methods have focussed on education,but large quality gaps persist. Public reporting of processmeasures and outcomes has gained momentum, but evi-dence regarding their effectiveness is mixed [29]. Likewise,the use of nancial incentives to reward measured perform-ance has gained recent enthusiastic support. The results ofseveral recent studies examining the effectiveness of pay forperformance in comparison to other quality-improvementactivities (such as public reporting and quality-improvementregistries) are also mixed, and further studies are neededto determine their role in quality-improvement initiatives[30, 31].

Although external quality-improvement efforts such aspublic reporting and pay for performance target hospital per-formance, it will be imperative to develop incentive struc-tures within individual health-care institutions to inuenceorganizational strategy and individual decision making. Forexample, in 2003 the US Centers for Medicare and MedicaidServices launched the Hospital Quality IncentiveDemonstration (HQID), the largest pay-for-performanceproject to date in the USA. The HQID is a competitivebonus program in which reward is relative to performancemeasured on an ordinal basis across centers but does notprovide direct incentives to individual clinicians or otherservice line personnel who operate at the point of patientcare. In addition, the total bonus compensation from 2003to 2004 for the 260 hospitals participating in the HQIDtotaled $17.55 million, and many have questioned whetherthe bonus size is large enough to stimulate meaningfulquality improvement. New incentive structures need to bedeveloped at the hospital and physician levels to guide man-agerial and clinical quality efforts.

One of the tools most commonly used in businesses toalign corporate structure and strategy is the balanced score-card [32]. The balanced scorecard is a performancemeasurement framework that articulates corporate-level strat-egy and goals across all elements of an organization andrecognizes the creation of value beyond the capabilities ofindividual business units. It empowers managers to adoptbehaviors and implement actions to meet corporate-levelobjectives while continuing to address the units localenvironment and strategy. The scorecard allows managers tomanage their business units and create value from fourimportant perspectives: nancial, customer, process, andlearning and growth. Balanced scorecards should be adaptedto health-care institutions to engender a corporate commit-ment to quality and provide a framework so that service-levelteams of health-care professionals can optimize quality ofcare. There have been notable successes in health care, such

as the use of the balanced scorecard method at DukeUniversity Childrens Hospital in Durham, North Carolina,which resulted in signicant improvements in operatingmargin and quality of care [33]. This dual citizenshipapproach, a term coined by Ingersoll-Rand chief executiveHerb Henkel, would make health-care professionals not justmembers of clinical service lines, but members in corporatequality priorities. In accordance with this corporate-widevalue proposition, it may be reasonable to introduce hospitalbonus-based incentive systems that can be shared by allhealth-care staff when corporate quality goals are met. Thesemonetary incentives could then be complemented by offer-ings to top management and clinical service line managers(i.e. department chairs) for meeting quality targets.

Information management and technology

Information management is critical to improving quality.One study reported that 85% of errors across all industriescould be attributed to communication failures [34]. A secondstudy, looking specically at health-care delivery, reportedthat approximately one half of all serious medication errorsresulted from insufcient information [35]. Better infor-mation is needed to manage work processes at the level ofclinical care and to compile high-level reports that can be dis-seminated throughout institutions and across the health-caredelivery system. One means of improving the availability ofinformation at the point of care and across institutions isinformation technology (IT). Owing to its potential impacton quality, IT has garnered a great deal of attention andsupport. Although several institutions have demonstrated theefcacy of health-care IT in improving quality, there is con-siderable debate about the ability to implement widespreadadoption of IT solutions in a cost-efcient manner [36].However, given well-documented failures in informationmanagement in the clinical setting, it seems inevitable thatwidespread adoption of health-care IT will play a critical inaddressing the quality agenda.

There are several important considerations in creating theappropriate structure for information management. Expertshave advocated a national quality measurement and reportingsystem, and it will be essential to create standards for datacollection and reporting if such a goal is to be realized [37].At a hospital level, it will be important to reach consensuson the metrics to be processed. This will ensure accuracy,maximize efciency, and minimize the cost burden acrossindividual clinical service units. In rms, similar strategieshave been shown maximize quality while controlling costs[38]. The adoption of health-care IT has been theorized bymany to be very expensive, and it will be important to developstrategies to synergize and standardize quality-improvementefforts, thus spreading the xed-cost burden across multipleclinical service units and institutions.

Information management systems have played an essentialrole in the implementation of total quality management inbusiness. Empirical evidence exists for an association

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between IT and quality management in both the manufacturingand public sectors [39]. In addition, there are countlessanecdotal examples of large US corporations successfullyemploying advanced IT solutions in process control andimprovement and customer service. For example, FederalExpress has developed a sophisticated online computersystem for parcel tracking. This has led to signicantincreases in customer satisfaction by providing real-timeinformation, as well as an improved ability to monitor per-formance internally.

Future directions

The proposed framework examines key organizational attri-butes with regard to quality and provides an updated view of

Donabedians conception of structure. New strategies can bedeveloped to utilize this proposed framework to improvehealth-care quality from both management and research per-spectives. From this discussion, there are clearly action itemsthat can be implemented by hospital management today.These include an inventory of organizational attributes,assessment of hospital boards understanding and investmentin quality systems and personnel, creation of an organiz-ational strategy and accountability for quality, and dissemina-tion of quality objectives throughout the organization(Fig. 2).

Future health-care quality-improvement research wouldbenet from studying elements of the proposed frameworkand identifying how aspects of each of the organizationalattributes we have highlighted (and their relationships withone another) are related to hospital performance and quality.

Figure 2 Future directions for improving quality: action items for management and areas for further research. There areaction items that can be implemented by hospital management today to advance quality agendas. Suggested areas for furtherresearch include identication of how the organizational attributes that we have highlighted (and their relationships with oneanother) are related to hospital performance and quality.

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Future research should characterize the different phases oforganizational development for quality and help to determinethe needs and capabilities of a health-care organization toachieve quality-improvement goals at any given point in time.This will help structure research hypotheses related to organ-izational characteristics for future research. As the researchbase on the relationship of key organizational attributes andquality expands, health-care accreditation organizationsshould consider the use of these key organizational elementsin their accreditation processes.

Conclusion

In the wake of multiple studies documenting widespreaddeciencies in care, health-care institutions are coming underincreasing pressure to be accountable for the quality ofclinical care they deliver. The evidence-base remains under-developed, and hospitals face signicant challenges in imple-menting quality initiatives related to (i) identifying priorities,(ii) developing sustainable processes and (iii) identifying theappropriate framework for successful implementation ofquality-improvement initiatives. Avedis Donabedian provideda solid foundation with his structureprocessoutcomesframework in which to think about quality-improvementefforts, but his view of structure needs to be updated toaccount for current tools and management capabilities thatdrive quality improvement. We highlight ve key elements ofan organization that provide an operational denition ofstructure: executive management, culture, organizationaldesign, incentive structures, and information exchange andtechnology. Given that quality will be the cornerstone metricof organizational performance in the coming years for allhealth-care organizations, we must begin to develop organiz-ational structures that address this challenge from a manage-ment perspective.

Funding

Dr. Glickmans role in this work was made possible by a giftfrom the Douglas and Stefanie Kahn Charitable Gift Fund.

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Accepted for publication 17 August 2007

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