This passage prefaces a landmark report on the application to health care of quality improvement methods used successfully in other industries.

During the last year, the proposal of “enterprise” liability for medical malpractice became a major issue in debates about health care and malpractice reform. The idea, however, was not new. In scholarly work over an extended period, we have been developing the systematic case for the concept of enterprise — or, as we originally termed it, “organizational” — liability for medical malpractice. After several years of debating the critics of our proposal to shift the focus of liability for medical injury from individual physicians to the organizations that deliver health care, we were naturally gratified that the idea was now on the national agenda.

In particular, we recommended adoption of enterprise liability to President Clinton's Health Care Task Force. The Task Force did embrace a version of the idea as its own, but then encountered stiff resistance from a number of special interests.

If the fundamental goals of the health care reform effort are to ensure universal access to an acceptable quality of health care at an affordable cost, then the threshold question for reform is: What health care services should be provided in an efficient, equitable system?

Answering this question requires weighing a complex mix of medical and social policy factors, a process not attempted in this article. But the starting point for that process should be determining what health care services “work” and what they cost. Outcomes assessment holds considerable promise in finding answers to these subsidiary questions, because it is intended to assess the effectiveness of health care services, that is, what works and what does not work for patients. It holds promise, not only for improving the quality of care, but also for identifying unnecessary or wasteful practices that increase health care costs.

Community-based, long-term care has become an increasingly popular and needed service for the aged and disabled populations in recent years. These services witnessed a major expansion in 1981 when Congress created the Home and Community-Based Waiver authority for the Medicaid program. Currently, all states offer some complement of community-based, long-term care services to their elderly and disabled populations and nearly all states have Medicaid Home and Community-Based Services waivers which extend these services to their Medicaid eligible clients.

An ever increasing proportion of the population is in need of community-based, long-term care services. Between nine and eleven million Americans of all ages are chronically disabled and require some help with tasks of daily living. In 1990, thirty percent of the elderly with at least one impaired activity of daily living used a community-based, long-term care service. Not surprisingly, expenditures for community-based, long-term care have increased.

Implicit in any discussion of quality in health care are ideas about responsibility: who is responsible to define quality, who is responsible to deliver it, and who is responsible when the quality of care is unsatisfactory. The thesis of this article is that due to economics, ethics, and law, we have placed these responsibilities almost exclusively on physicians, but that powerful economic changes now require a reallocation of the responsibilities of providers, patients, and payers in defining and delivering quality in health care.

In the past half-century an extraordinarily generous, uncritical reimbursement system has empowered physicians to define and deliver quality that is interventionist and highly technological. Longstanding ethical precepts hold that physicians are responsible for their patients, and modern economic arrangements have encouraged physicians to focus on their patients’ welfare, virtually to the exclusion of costs or other competing considerations.

Writing in 1988, Arnold Relman heralded the dawning of the “third revolution“ in medical care. The first revolution, at the end of World War II, had inaugurated an Era of Expansion, with an explosion of hospitals, physicians, and research. Medicare and Medicaid were passed, and medicine experienced a golden age of growth. Inevitably, according to Relman, this yielded to an Era of Cost Containment starting in the 1970s. The federal government and private employers revolted against soaring costs, brandishing the weapons of prospective payment, managed care, and global budgeting. Yet these blunt instruments of cost-cutting eventually produced concern over how to evaluate the quality of health care, to promote the good while trimming the bad. Thus Relman announced the arrival of the Era of Assessment and Accountability.

This chronology helps explain the current importance of quality. Quality assessment and more recently, quality improvement techniques, occupy a central place in this new era.

In the twenty-year-long debate over medical malpractice reform, obstetrics is unique. No other area of specialty medical practice has managed to argue successfully that its malpractice victims should be singled out and barred from obtaining relief through the tort system. Yet, following a well-organized lobbying effort by OB/GYNs, the state legislatures in Virginia and Florida have enacted so-called “bad baby bills” that create workers-compensation-type programs for victims of birth-related injuries. Such statutes provide the exclusive remedy for this and only this class of plaintiffs. Other states are considering following suit: bills have been introduced in North Carolina, Illinois and New York.

What justifies this extraordinary legislative action? Proponents of the reforms admit that the effect of these statutes is to reduce the malpractice burden on OB/GYNs. But they are careful to portray patients rather than physicians as the primary beneficiaries of their efforts.

This article contrasts the prevailing model for assessing and improving medical care—the quality of care paradigm—with an alternative approach—the patient accountability paradigm. The first approach is technocratic: it measures and promotes the quality of medical care through technical and objective means. It relies on outside experts, analysis of data and protocols, and impersonal judgements of professionals to guide decisions. The second approach guides physicians and providers and subjects them to patient control. It enlists the participation of patients and consumers to evaluate and change the medical care system and to promote the rights and choices of patients and consumers. The strengths and limitations of the patient accountability approach are illustrated by four movements: 1) the patients’ rights movement; 2) medical consumerism; 3) the women’s health movement; and 4) the disability rights movement.

Since the advent of Medicare in 1966, a major focus of federal policy and legislation has revolved around the purchase of health care. Although initial programmatic content demonstrated some concern for both cost containment and basic quality assurance, by the late 1970's congressional cost control anxiety had reached a fever pitch, culminating in a completely revamped Medicare hospital reimbursement methodology enacted in 1982, combined with a retooled utilization control mechanism in the form of the Peer Review Organization (“PRO”) program.

At the same time, in the private sector, as the cost of health care increased, major corporate purchasers of health care services became increasingly concerned about the “value” of the health care benefits they were making available to their employees. In response to perceived consumer demand, these same corporations eventually, for reasons unrelated to health care, began to incorporate quality improvement into their core manufacturing and service missions.

Proposals for managed competition present the following question: what are health insurers to compete over? If the competition managers allow insurers to offer truly minimal benefit packages, then competition might focus on enhancements to that minimal package. However, most current proposals require a relatively generous minimal benefit package that includes nearly everything that any consumer is willing to pay for, eliminating this arena of competition. Uniform benefit packages would presumably encourage price competition, not only because it is then the insurers’ only remaining arena of competition, but also because uniform benefits facilitate consumers making price comparisons. However, if government sets global spending caps, adopts mandatory fee schedules, and requires community rating for health insurance premiums, as President Clinton proposes to do, there will be little room left for price competition either. With uniform benefit packages and regulated prices, the managed competition plan ends up with an abundance of management and precious little competition.

National economies worldwide are in disarray, evidenced by escalating debts and growing deficits. As countries struggle with their faltering economies they are hard pressed to fulfill commitments of social programs made in more prosperous times, much less take on new government initiatives. The current experiences in health reform in the United States present an interesting example of the dilemmas governments now face when they embark on new ventures. While great political pressures have been launched and high expectations abound, the reality of American health reform quickly reveals that expanded access will come at a high price that won't be offset easily by conventional cost containment or market forces.

In the search for an acceptable model for health reform, it was popular for policy makers and academics to turn their attentions to the health systems of other nations. Recommendations were made that the US should adopt a German or Canadian solution for our health problems.