Case Analysis: Intermountain Healthcare
Key Factors Behind the Success of Intermountain Healthcare
Intermountain Healthcare ("Intermountain" or "IHC") is widely regarded as a successful model of low cost, high quality delivery. The Midwest-based integrated delivery system achieved this reputation by adopting an approach that emphasizes reducing healthcare costs through process-driven delivery quality improvement. The three most important elements of this approach are: 1) the focus on minimizing variation in key processes to enhance treatment quality; 2) a robust clinical information management system which enabled measurement for improvement; and 3) a responsive management structure that effectively seized improvement opportunities. These factors have led to dramatic delivery cost reductions and clinical outcomes that are the envy of other healthcare systems in the U.S. James and Savitz also note that Intermountain has been able to align financial incentives in a way such that "clinicians would not suffer financial harm for doing what was best for patients," but the writers provide few details on this accomplishment (in fact, they seem to indicate that this remains a struggle for the system when they discuss how payment cuts offset operational cost savings).
After reviewing the findings from an internal effort to analyze clinical quality, financial utilization, and hospital efficiency, the management team decided to embrace process management theory. The study revealed that there existed significant variation in physician practices within the IHC system. Moreover, Intermountain's physicians discovered that declines in variation were associated with large declines in costs without necessarily compromising delivery quality. This revelation was consistent with the insights of W. Edwards Deming, the champion of process management theory, which put forth that delivering better quality consistently led to lower costs. The management team incorporated them into...
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