Reducing the Cost of Poor Quality Health Care - The COPQ Report

Midwest Business Group on Health (MBGH), a non-profit coalition of major public and private employers in eleven states, believes that health care purchasers and government are central to improving the quality and cost effectiveness of health services. Acting upon this conviction, in 2003-04, MBGH  assembled a diverse panel of leading experts from the health care and business communities to probe the issue of poor-quality health care, with a particular focus on the financial and human costs of poor quality.

Through group and one-on-one discussions with these senior executives, MBGH and Juran Institute, Inc., began to identify the most pressing quality problems within health care, as well as data sources for further examination of these problems and potential strategies for addressing them.

The result was a report titled "Reducing the Cost of Poor Quality Health Care Through Responsible Purchasing Leadership" - the COPQ Report. The report explicitly focuses on purchasers both in terms of the costs that poor quality imposes on them and the role that they should play in solving performance problems.

The authors estimate that 30 percent of all direct health care outlays today are the result of poor-quality care, consisting primarily of overuse, misuse, and waste. (The impact of underuse on costs is not clear.) With national health expenditures of roughly $1.4 trillion in 2004 the 30- percent figure translates into $420 billion spent each year as a direct result of poor quality.

 Specifically, the report is intended to do the following:

• Provide further clarification of the costs of quality problems, both at a macro level and with respect to the care of specific diseases and other problem areas that are known to have a major financial and/or human impact.
• Explain how the current actions and decisions of purchasers contribute to poor-quality care in this country.
• Create a more compelling “business case” for purchasers to promote quality improvement among plans and providers.
• Advocate a Responsible Health Care Purchasing Policy for widespread adoption by public and private purchasers. 
• Identify a variety of potential strategies that private employers, public purchasers, and local purchasing coalitions can use to improve the performance of their plans and providers.

We hope these data and ideas will motivate employers and other purchasers to adopt a conscious purchasing policy and play an active role in designing, implementing, and measuring the results of strategies to address these problems.

To obtain a printed copy of the report for $25.00, contact the MBGH office. To obtain an electronic version, you may click here:

Reducing the Costs of Poor-Quality Health Care