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National Academy of Engineering (US) and Institute of Medicine (US) Committee on Engineering and the Health Care System; Reid PP, Compton WD, Grossman JH, et al., editors. Building a Better Delivery System: A New Engineering/Health Care Partnership. Washington (DC): National Academies Press (US); 2005.

Cover of Building a Better Delivery System

Building a Better Delivery System: A New Engineering/Health Care Partnership.

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Engineering and the Health Care Organization

Vinod K. Sahney

Henry Ford Health System

Even though as an industry the U.S. health care system spends more than $2 trillion every year, a number of barriers at the organizational level have impeded the performance improvements we are all seeking. Certainly, one should not assume that the leaders who run this industry are incompetent; they invest in whatever is in the best interests of their particular institutions. Because of the environment, the payment systems, and the way things are structured, health care leaders have not invested in engineering approaches that could have a positive impact on quality and productivity.

The Henry Ford Health System is a very large integrated health care system with three major components: hospitals, a medical group, and a health plan with 600,000 enrollees. The system has $2.6 billion dollars in annual revenue, six hospitals, and a medical group with 900 physicians and 16,000 employees in the metropolitan Detroit area.

Changing practices in an environment like Henry Ford or the Mayo Clinic or Kaiser Permanente, where the medical staffs are highly motivated, well paid, and academically oriented, is not the same as changing practices in a community hospital system, where physicians come for part of their time and are independent business people. In a community hospital environment, it can be extremely difficult to change clinical practice. It can be all but impossible to get six orthopedic surgeons to standardize the use of supplies (e.g., to agree on which implant they will use). If they are pressured, they can walk out and go to the hospital across the street. So far, most of the work on quality improvement and engineering solutions is being done in a few leading-edge organizations.

Anyone who thinks the problems of the world can be solved by rational discussion among highly educated people has never attended a faculty meeting. The problem is not intelligence, but self-interest. Every organization that tries to introduce change faces cultural issues that work against the implementation of new solutions. For instance, the Institute for Healthcare Improvement has learned that current best practices are not even implemented consistently by single institutions, much less by institutions around the country (Sahney, 2003). An institution may implement best practices in its prostate cancer unit, but other groups in the same institution may completely ignore those practices. Problems occur both within institutions and among multiple institutions.

There are four major barriers to improving quality. The first barrier is a lack of metrics for comparison. What do we mean by improving a system's performance? Often, large numbers of patients select one delivery system over another based on their specific needs. For instance, if a patient is getting diabetic care in one system and prostate care in another, comparing quality of health care and productivity becomes a difficult issue. It may be possible to determine that, at a microlevel, a system has improved care for a particular disease. But at a macrolevel, comparison is nearly impossible. It is very hard to evaluate whether any innovations make a difference in cost or productivity.

In the United States, the problem is further complicated because the acute-care sector is highly organized, but the chronic-care system is very disorganized, with large numbers of independent physicians providing care. Another aspect of the metrics problem is the indigent-care sector. Fifty percent of the population within a 10-mile radius of Henry Ford Hospital is either underinsured (Medicaid) or uninsured. The hospital must treat all of these patients for free, which puts an enormous burden on the hospital's services. Before solutions can be proposed for improving organization, it is essential that we agree on the metrics to be used for comparison. As an example of the confusion surrounding rating systems, the ratings issued by U.S. News and World Report, AARP, and Solucient are all based on different criteria; as a result, each has rated a different institution as the best in providing care.

The second barrier is a lack of alignment in the reimbursement system. In general, under the fee-for-service system, institutions are paid for procedures and visits but not for improvements in health status. The Advisory Board, a health care industry organization in Washington, D.C., subscribed to by almost all of the major institutions in this country, recently recommended that institutions that want to be successful should focus not on caring for medical patients, but on procedural care (The Advisory Board Company, 2001). In other words, if an institution wants to maximize revenue and profitability, it should keep all of the procedural-based patients and send all of the medical-care patients to the hospital across the street. Here's another problem (or misalignment) in the current system. The reimbursement rate is higher when patients develop complications; this is obviously a perverse incentive. Instead of paying for quality care, the current system pays more generously if patients develop complications.

The third barrier is industry structure. Innovations are made by large hospitals and academic centers, which account for only about 25 percent of total expenditures in health care. A large proportion of care is provided by small community hospitals. For health care to improve nationally, innovations must be implemented in community hospitals. Therefore, improvement protocols should also be tested in these institutions.

A fourth barrier to improvement is that many people, including physicians, think quality health care is synonymous with the use of the latest technology. It is important to understand that there can be enormous gaps between quality of design and quality of conformance. Take an example from the automotive industry. Ford Motor Company spent millions to develop the Jaguar Lemans racing car, a vehicle that will only be used in races. Ford justified the expenditure by claiming the technology developed would also be used in the manufacture of new cars for consumers (e.g., the Ford Focus). But when the Focus was introduced, it was a mess. It was recalled six times in its first year. The engine compartment would catch on fire, the air bag would catch on fire or deploy spontaneously, the car would stall on the freeway, the front suspension would collapse. Otherwise, it was a good car.

In The Machine That Changed the World, the Toyota production system, which is considered the world's best production system, was described in detail (Womack et al., 1990). But when other companies tried to copy that system, they found that they could not convert their production systems without developing the accompanying organizational culture. This is a problem in health care too. American surgeons can do wonderful things; but can they do them every time, consistently? Can quality care be delivered every time? This is a quality-of-conformance issue and not a quality-of-design issue. Making sure every patient gets the same quality of care every time is a serious issue. There are huge gaps here, major problems of conformance in the health care industry.

Across the country, a huge number of projects have been undertaken to improve the experience of patients at the care-delivery level (the microlevel). But at the macrolevel, little has been done to create an organizational environment that will make an overall impact and enable the transfer of knowledge from one microproject to another. In addition, as I mentioned earlier, the current payment system may not generate the will for senior leaders to improve quality. It's not that we can't improve or that we lack ideas—there are plenty of ideas. It's just that we don't have the will to work on improvements.

What would generate the will? If there were enough payment incentives, senior leaders would pay attention to what needs to be done. When clinical service chiefs at major institutions were asked how their senior leaders evaluate them, they all said by financial performance. They said they were never asked about the quality of health care they provide. In the prevailing culture, these questions are simply not asked. The will for improvement is not there.

To change this environment, the first thing we must change is the goals for health care delivery; the goals must be in alignment with population health status goals. To begin with, health care systems must define the populations they serve. If a health care system cannot define the population for which it is responsible, it is extremely difficult to set goals for improving people's health status. If no goals are set, the system cannot be held accountable for failing to meet them.

Next, we should create macro-organizational models to test alternative reimbursement policies for delivery systems. Models that demonstrate the “cost of poor quality” must also be created. A major barrier to investments in quality improvement is the belief on the part of physicians and senior leaders that the investments do not pay back. Models could prove that investing in improvements would actually generate a reasonable rate of return.

Another important step would be to create organizational decision simulators—practical operational tools that would show nurses what to do, if, for instance, the OR or ER is backed up.

And finally, it is important to improve employee and team skills for evidence-based care. It is very difficult to give staff time for training, but it is also important that institutions keep on training care teams. New, cost-effective methods of training must be developed.

In conclusion, major improvements in the health care industry will require not only engineering solutions, but also cultural changes in health care delivery organizations.


  1. Advisory Board Company. Washington, D.C: The Advisory Board Company; 2001. The New Economics of Care.
  2. Sahney VK. Generating Management Research on Improving Quality. 2003 Accepted for publication in Health Care Management Review. [PubMed: 14682675]
  3. Womack JP, Jones DT, Roos D. New York: Maxwell MacMillan International; 1990. The Machine That Changed the World.
Copyright © 2005, National Academy of Sciences.
Bookshelf ID: NBK22858


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