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Healthcare Quality Improvement Programs and Cost Containment

Across the country, hospital systems tend to face a significant number of severe problems, including cash flow reduction, delays in patient discharge, hospital-acquired infections, preventable medical errors, and clinical variation. Moreover, some people cannot get quality medical care due to various reasons. Quality improvement projects and programs are created to help health systems innovate to tackle these issues and challenges (“Continuous quality improvement,” n.d.). The purpose of this paper is to explain healthcare quality improvement programs’ historical evolution and examine how the necessity of cost containment, healthcare reform efforts, and performance challenges contributed to this development. Moreover, those areas where the improvement of quality and the creation of performance targets is most important will be selected.

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Historical Evolution of Healthcare Quality Improvement Programs

The Centers for Medicare and Medicaid Services (CMS) is a special federal agency that controls the actions and performance of the Medicare and Medicaid programs. On July 30, 1965, these programs were created by President Lyndon B. Johnson (“CMS’ program history,” n.d.). They have been improving America’s economic security, saving people’s lives, and protecting the well-being and health of millions of U.S. families for fifty years. Medicaid and Medicare were established as primary insurance programs for those people who did not have health insurance, but since then, they have changed significantly, and their evolution is a great example of how such programs have to be improved.

In order to make this program’s performance better, several important changes to Medicare were made by Congress since 1965. First of all, “more people have become eligible” (“CMS’ program history,” n.d., para. 2). In other words, in 1972, the program was expanded and started covering people of sixty-five-years-old or older, persons with ESRD (end-stage renal disease) who require a kidney transplant or dialysis, and the disabled who choose Medicare coverage (“CMS’ program history,” n.d.). Moreover, the program started to offer many more benefits like coverage of the prescription drug.

When Medicaid was first created, it only provided medical insurance to those who were getting cash assistance. Nowadays, however, the program covers a larger group of people. It includes those who require long-term care, persons of all ages with disabilities, pregnant women, and low-income families (“CMS’ program history,” n.d.). Probably the most significant advantage of Medicaid programs is that there is a wide range of services because the states may moderate them so that they best serve the citizens.

In 1997, there was one of the most crucial improvements to these programs. In that year, the Children’s Health Insurance Program (CHIP) was finally established to provide approximately eleven million uninsured American children with preventive care and health insurance (“CMS’ program history,” n.d.). It is essential to mention that a number of these children “came from uninsured working families that earned too much to be eligible for Medicaid” (“CMS’ program history,” n.d.). CHIP plans are present in all fifty states and the District of Columbia.

There was a set of conditions established by Congress, including utilization review, twenty-four-hour nursing services, and staff credentials. In 1965, Utilization Review Committees were created to identify whether appropriate clinical services were provided by medical personnel and hospitals. After several years, in 1972, pilot organizations called “Experimental Medical Care Review Organizations” were introduced by Congress. These physician organizations were provided with the responsibility and authority of reviewing and evaluating the healthcare delivery’s appropriateness and quality. Later, a network of nonprofit organizations run by physicians was created and trusted with assessing the applicability, quality, and need for the provision of medical services.

Performance Challenges, Healthcare Reform Efforts, and the Need for Cost Containment

The programs and organizations listed above were not as successful as Congress expected them to be. Several performance difficulties, efforts of healthcare reform, and the necessity of cost containment influenced their effectiveness and development. For example, the success of the Utilization Review Committees was limited, and the lack of its effectiveness was due to an absent connection between defining care improvement methods and the screening process (Marjoua & Bozic, 2012). What is more, “there was an absence of formal evaluation criteria to guide providers’ decision making, and to adjust payment based on the quality of care” (Marjoua & Bozic, 2012, p. 269). These performance challenges did not let the committees’ work become successful.

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As for Experimental Medical Care Review Organizations, they were rather successful as they linked the quality control process’s results with efforts of health reform and related improvement strategies. However, the need for cost containment did not let these programs continue. Another performance challenge was faced by a network of nonprofit organizations. Apparently, they were “viewed as a form of governmental interposition into the practice of medicine, one that was sternly resisted by the AMA and state medical societies” (Marjoua & Bozic, 2012, p. 269). Thereby, this network was considered unsuccessful in both containing costs and improving quality. As the first condition is important for the healthcare system, it contributed to the further development of healthcare quality improvement programs.

Improvement Areas

There are some areas in the healthcare system that require innovation more than others. For example, it is essential to improve the supply chain, which includes easier purchasing (integrated ordering system, catalog management, and electronic ordering). It will make the process easier for healthcare clients and increase their number. Another area that needs improvement is transparency, where differential prices have to be stopped, pricing strategy should become clear and concise, and costs need to be reduced. Health is everyone’s priority, but not all people are able to afford to visit a doctor or have an observation. Hence, healthcare services need to be affordable for all and less expensive.


CMS’ program history. (n.d.). 2020, Web.

Continuous Quality Improvement. (n.d.). Office of Adolescent Health. 2020, Web.

Marjoua, Y., & Bozic, K. J. (2012). Brief history of quality movement in US healthcare. Current Reviews in Musculoskeletal Medicine, 5(4), 265–273.

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