Clinical Practice Guidelines and Organizational Adaptation: A Framework For Analyzing Economic Effects
Clinical Practice Guidelines and Organizational Adaptation: A Framework For Analyzing Economic Effects
Copyright
c 2006 Cambridge University Press. Printed in the U.S.A.
Objectives: The overall objective of this article was to review the theoretical and
conceptual dimensions of how the implementation of clinical practice guidelines (CPGs) is
likely to affect treatment costs.
Methods: An important limitation of the extant literature on the cost effects of CPGs is
that the main focus has been on clinical adaptation. We submit that the process
innovation aspects of CPGs require changes in both clinical and organizational
dimensions. We identify five organizational factors that are likely to affect the relationship
between CPGs and total treatment costs: implementation, coordination, learning, human
resources, and information. We review the literature supporting each of these factors.
Results: The net organizational effects of CPGs on costs depends on whether the
cost-reducing properties of coordination, learning, and human resource management
offset potential cost increases due to implementation and information management.
Conclusions: Studies of the cost effects of clinical practice guidelines should attempt to
measure, to the extent possible, the effects of each of these clinical and organizational
factors.
Dr. Schneider is supported by a Merit Review Entry Program Award (MRP 020111) and an Investigator Initiated Award (IIR 020111) from the Health
Services Research and Development Service, Veterans Health Administration, Department of Veterans Affairs. Dr. Doebbeling was supported by Investigator
Initiated Research grants (IIR 020111, CPI 99126, and CPI 01141), an Epidemiology Merit Review, and a Health Services Research and Development Center
Grant (HFP 04-148) from the Veterans Health Administration, Department of Veterans Affairs. Dr. Doebbeling was also supported by a National Institutes
of Health K-award (K30 HL04117-01A1). Very helpful comments on this manuscript were provided by Marcia Ward, Gary Rosenthal, Stephen Flach, and
Valerie Foreman. We also like thank Kyle Kingsley and Bobbi Buckner for excellent research assistance. The views expressed in this article are those of the
author(s) and do not necessarily represent the views of the funding agencies and affiliated institutions.
58
Clinical practice guidelines and organizational adaptation
Health care organizations in the past several years have de- queried MEDLINE, PubMed, Cochrane Database of System-
voted a substantial level of effort and resources to the devel- atic Reviews, ABI/INFORM Global, Academic Search Elite,
opment, adoption, and implementation of clinical practice EBSCOhost, and EconLit with the following search terms:
guidelines (CPGs). The primary goal of CPGs has been to clinical practice guidelines, effects of clinical practice guide-
improve clinical outcomes, and the literature suggests that lines, and economic/cost effects of clinical practice guide-
the use of guidelines is helping make progress toward that lines. We conducted separate queries of the same databases
end (27;47;70). For example, Grimshaw and Russell (27) using search terms related to process change, including
found that, of fifty-nine rigorous scientific studies reviewed, health care business process reengineering, total quality
all but four studies “detected significant change in the pro- management, change initiatives, and evidence-based man-
cess of care in the direction proposed by the guidelines.” agement. The searches identified several key review arti-
Similarly, nine of the eleven studies on patient outcomes cles on the clinical effectiveness of various clinical practice
found significant improvement. A secondary and often im- guidelines. Those reviews form the basis for our review of
plicit goal of CPGs has been to improve the management of clinical effects, but we also supplement that discussion with
medical-care resources. For example, the Practice Guideline additional literature that confirmed, updated, or added to the
Study Committee of the Institute of Medicine (IOM) iden- findings of the key review articles. The primary goals of our
tified six criteria for guideline development, two of which review of the literature were to (i) assess the overall findings
were directly related to cost: cost per person of managing the related to the potential economic and cost effects of clinical
problem and potential of a guideline or assessment to reduce practice guidelines, and (ii) assess the extent to which studies
costs (38). In addition, many of the medical societies that take into consideration clinical and organizational effects.
create clinical practice guidelines have emphasized the role To summarize, our review of the literature identified
of guidelines in controlling medical-care costs (3). four primary clinical effects of guidelines on costs: substitu-
The potential contribution of clinical practice guidelines tion, appropriate utilization, length of stay, and prevention.
to the management of health care costs is particularly rele- We also found, consistent with our hypothesis, that many
vant today, as the resurgence in health expenditure inflation researchers observed important organizational changes con-
has markedly increased pressure on payers and providers current with clinical changes. However, even in cases where
to seek new ways to control cost inflation while maintain- organizational effects were observed, researchers typically
ing the gains in quality and safety achieved during the past did not attempt to include those effects in their economic
decade. The literature on the cost effects of clinical practice evaluations. Our review identified five organizational factors
guidelines, however, is relatively underdeveloped, focusing that are likely to affect the relationship between CPGs and
chiefly on the primary clinical effects of a guideline, such total treatment costs: implementation, coordination of care,
as changes in lengths of stay or the substitution of one in- learning-by-doing, human resource management, and infor-
tervention for another (28). But as clinical practice becomes mation management. The following section defines clinical
increasingly managed and integrated, the economic effects practice guidelines and briefly reviews the literature on the
of process changes in general and CPGs in particular are economic effects of guidelines associated with changes in
likely to extend to other components of the care process. In clinical practice. A discussion of the economic effects of
addition to the direct clinical effects of CPGs, adoption and guidelines associated with organizational changes follows.
implementation are likely to result in changes in many of
the organizational structures and routines that support clini- BACKGROUND
cal decision making, including human resources, information
systems, and other aspects of clinical management. Clinical practice guidelines have been defined by the IOM
The overall objective of this article is to review the theo- as “systematically developed statements to assist practitioner
retical and conceptual dimensions of how the implementation and patient decisions about appropriate health care for spe-
of CPGs—a component of health care process innovation— cific clinical circumstances” (37). The wide range of ini-
is likely to affect treatment costs. An important limitation of tiatives that can be classified as clinical practice guidelines
the extant literature on the cost effects of CPGs is that the complicates the task of reaching any general conclusions
main focus has been the effect of CPGs on clinical adaptation; about the effects of guidelines. To address this issue, several
that is, changes in the clinical process attributable to the CPG researchers have put forth guideline classification schemes,
intervention. We submit that the process innovation aspects with groupings generally corresponding to similarities in
of CPGs require changes in both clinical and organizational guideline objectives. Rolnick and O’Connor (66), for ex-
dimensions. Thus, an accurate assessment of the economic ample, suggest that the majority of guidelines fall into one of
and cost effects of clinical practice guidelines should include four clinical domains: preventive care, chronic disease care,
consideration of clinical and organizational effects. acute care, and symptom-driven care.
To put forth a framework that includes organizational At a sufficient level of abstraction, clinical practice
dimensions, we conducted an extensive review of the lit- guidelines can be considered an integral part of innova-
erature on the effects of clinical practice guidelines. We tion and adaptation of health-processes. Process innovation
consists of a family of adaptive strategies that encompass process improvement, the process of implementation is one
“the envisioning of new work strategies, the actual process that involves changes in coordination, human resources, and
design activity, and the implementation of change in all its information management. Guideline implementation costs
complex technological, human, and organizational dimen- are likely to be offset to some degree by gains from orga-
sions” (17). Process innovations aimed chiefly at improv- nizational learning and related effects, and there are likely
ing quality often have a close secondary goal of decreas- to be ongoing savings as the organization applies modified
ing operating costs; for example, according to Hackman and production processes, learns, and masters the improved pro-
Wageman (31), “the costs of poor quality (such as inspection, cesses. As the organization makes these changes, the clini-
rework, lost customers, and so on) are far greater than the cal effects of CPGs are attained. These effects include sub-
costs of developing processes that produce high-quality prod- stitution, appropriate utilization, changes in length of stay,
ucts and services.” Process innovation typically cuts across and prevention. Accordingly, guidelines are likely to involve
multiple departments and multiple service and product lines. simultaneous adaptation in both the structure of the adopt-
This finding is particularly relevant in the case of large-scale ing organization and the process of clinical decision mak-
process change referred to variously as total quality manage- ing therein. Both of these factors—organizational and clin-
ment, continuous quality improvement, or business process ical adaptation—are likely to affect the costs of providing
reengineering (31;80). care.
To capture the total cost effects of practice guidelines, Clinical adaptation is the most commonly reported eco-
each element of process innovation should be considered nomic effect of guidelines. Adaptation in clinical decision
(Figure 1). Once a health care facility has identified a need for making is analogous to what the IOM refers to as changes
in “microsystems of care” (39). Microsystems are the “small
units of work that actually give the care that the patient expe-
riences” (4). The IOM report identified several areas in which
Motivation for process
the effectiveness of microsystems of care can be enhanced
improvement
through redesign. Many of the microsystem redesign efforts
identified by the IOM report—including improvements in
consumer focus, information sharing, evidence-based deci-
Process innovation: sion making, and economic efficiency—have also been iden-
CPG implementation tified as explicit goals of clinical practice guidelines.
The most commonly reported cost effect of CPGs per-
tains to clinical standardization. In most cases, practice
guidelines are designed to move care toward standardiza-
Organizational Change tion by combining elements of evidence-based medicine and
• Implementation (+)
cost-effectiveness analysis. Evidence-based medicine refers
• Coordination (-)
to treatment decisions guided by prevailing biomedical and
• Learning (-)
scientific knowledge. Cost-effectiveness analyses allow dis-
• Human resources (+/-)
• Information (+/-) tinctions to be made among prevailing treatment options ac-
cording to costs per added benefit (i.e., value). Clinical stan-
dardization is a goal of all four types of practice guidelines.
Several studies have found that, in general, clinical stan-
Clinical Change dardization results in decreased treatment costs. The most-
• Substitution (+/-) common cost-reducing standardization effect identified in
• Appropriate utilization (-) the literature is the substitution of one treatment protocol
• Length of stay (-) for a different (guideline-recommended) treatment protocol,
• Prevention (+/-) where the guideline intervention is either less expensive,
more effective, or both (19;36;54;56;60;61;63;64). The next
most commonly cited effect of standardization is reducing
the rate of inappropriate inpatient hospital admissions, typi-
Desired change in cally by substituting outpatient services for inpatient services
patient care process (11;58). Finally, clinical standardization often results in re-
and/or outcome ductions in length of inpatient stays, due either to explicit
length of stay targets specified by the guideline or more-
effective treatment during the stay (9;14;78).
Figure 1. The economic effects of clinical practice guidelines
(CPG). Source: Authors’ review of the literature. (+) indicates Although standardization is often touted as a cost-saving
that the hypothesized effect on costs is positive; (−) indicates tool, it does not always result in lower costs. For exam-
that the hypothesized effect on costs is negative. ple, Suarez-Almazor et al. (71) found that low back pain
guidelines led to a threefold increase in lumbar radiography, lated to implementation, coordination, learning, human res-
compared with a standard care that infrequently included ource management, and information management (Figure 1).
imaging procedures of the lower back. Similarly, Browman
(8) reported that an oncology guideline initiative resulted in Implementation
a $16 million expenditure increase attributable to higher uti- The first component is straightforward: organizations incur
lization of new cancer drugs. Hu et al. found that, for hip non-trivial implementation costs as clinical practice guide-
fracture patients at high risk for pressure ulcers, guideline lines are adopted and diffused. Implementation costs can be
implementation costs and current practice costs were nearly substantial and non-recoverable due to rigid pricing mech-
equal overall (36). However, treatment of paraplegic patients anisms and imprecise linkages between price and quality
was associated with a 19 percent lower implementation cost, (23;29;68). From a societal perspective, the operating costs
and treatment in intensive-care units and skilled nursing of guideline implementation also must take into account
facilities (relative to acute care) was associated with 22– the fixed costs of guideline development, dissemination, and
24 percent higher implementation costs, relative to non- maintenance across institutions (23;47).
guideline practice (36).
An important aspect of clinical standardization is the Coordination and Learning
application of evidence-based medicine to the management One of the most direct linkages between CPGs and business
of chronic diseases. Some have argued that, for certain kinds process reengineering is the role of coordination. Guidelines
of chronic conditions and behavioral risk factors, societal have the potential to reduce treatment variation, which can
cost-effectiveness is maximized when prevention is a prior- lead to two different kinds of managerial efficiencies. Reduc-
ity (52). Smoking cessation guidelines, for example, consis- tion in treatment variation is likely to lead to improvements in
tently have been shown to lower treatment costs. Cromwell coordination of inventory and supply chain management, uti-
et al. found that, in general, the cost per life-year saved and lization of shared resources, and coordination and integration
the cost per quality-adjusted life-year decreased as the adop- with pharmacy services (e.g., 6;35). Clinical standardization
tion and intensity of smoking cessation guidelines adher- is also likely to enhance the learning process. Learning occurs
ence increased. Furthermore, the number of people quitting as the experience of production in one time period influences
smoking increased as the intensity of the smoking-cessation the production in a later time period; that is, the production
intervention increased (15). process is assumed to have some degree of flexibility and can
Whereas it is generally assumed that many prevention change over the relevant range of production (26;53;59). The
guidelines exhibit cost-saving properties, there is inconsis- implication is that the costs of producing the first batch of out-
tent evidence to support such a claim. Some types of preven- put are greater than the costs of the producing a subsequent
tive care results in cost savings for individual patients but not batch, due to the learning that occurred during the production
larger populations of patients (24), and the cost-effectiveness of the first batch. Assuming that experiences of producing the
ratios of many preventive interventions have been found to first batch can be applied to the second batch (and other subse-
be extraordinarily high (41;74). Similarly, increased utiliza- quent batches), the average costs of production are expected
tion of screening may lead to increased diagnostic discov- to decline as output increases. Clinical standardization al-
ery, thereby increasing the probability of future medical-care lows health care organizations to focus on a limited range of
utilization. This sequence of events may be relevant partic- production processes, which are likely to enhance the learn-
ularly in cases where there is no clear benefit to screening ing process by ensuring that decision-making situations are
(51;55). repeated in sufficiently large numbers (69;72;73).
decision making to migrate to the most appropriate level appropriate use of several vaccines (21). Similarly, Casalino
(80). CPGs have the potential to empower caregivers at all et al. (12) found that, among several key factors, clinical
levels to make treatment decisions provided that guideline information technology was the variable most strongly as-
protocol is followed within an acceptable range of variation sociated with greater use of care management processes, of
(32;44;75). Moreover, guidelines potentially provide greater which CPGs are part. Hence, there is a bilateral relationship
clarity to the division of tasks, in addition to providing tangi- between guidelines and information. Guidelines to some ex-
ble goals for those tasks. Role clarification has the potential to tent may foster greater investment in and use of information
improve the coordination and scheduling of human resources and information technology, and implementation of CPGs is
and to more effectively use knowledge, skills, and training enhanced through the application of automated management
(46;65). Role clarification is likely to offer decision-making information systems.
assistance to clinical managers faced with having to make fre-
quent resource allocation decisions (2;65). Decentralization DISCUSSION
does not necessarily suggest diminished control. Decentral-
ization allows decision making to occur at the optimal level, Analyses of cost effects of CPGs are likely to be more
in effect triaging decision making to eliminate bottlenecks accurate if they take into account the effects of concomitant
and other obstacles. Decentralization is feasible when deci- organizational effects. Our review of the theory and pub-
sion criteria have been codified; hence, decentralization may lished evidence identified five organizational factors relevant
be accompanied by increased bureaucratic controls. to the assessment of the effect of CPGs on the costs of care:
Third, guidelines have the potential to encourage em- implementation, coordination, learning, human resource
ployees to internalize the overall objectives of the organiza- management, and information management (Figure 1). The
tion, thereby increasing the degree to which employees iden- hypothesized direction of the effects of clinical and organi-
tify with the organization. Employees who have higher levels zational factors is mixed. The net effect of CPGs on costs in
of identity with the organization, in some cases, may exert organizational dimensions will depend on whether the cost-
greater effort on the job, which in turn has the potential to reducing properties of coordination and learning and human
lower production costs (1). CPGs offer discrete performance resource management offset potential cost increases due to
targets (e.g., number of diabetics receiving a foot exam), and implementation and information management. Studies of the
the attainment of these goals has the potential to increase cost effects of CPGs should attempt, to the extent possible,
employee pride and motivation (50), as has been found to be to measure the effects of each of these organizational factors.
the case with related change initiatives (1). In the course of reviewing the literature, we observed
five important methodological and measurement issues in
studies of guidelines and costs: heterogeneity in guideline
Information Management composition, potential endogeneity of guideline adoption, in-
As CPGs diffuse among providers, it is likely that the de- sufficiently long study time frames, measurement problems,
mand for information systems to implement guidelines will and difficulty assessing guideline adherence. In addition, as
grow. Consequently, CPGs may have the indirect effect of we have argued here, a common limitation is lack of identi-
initially raising the costs of information management, but fication of concomitant organizational effects. Each of these
then lowering the costs of information management as sys- limitations is likely to impact the relationship between CPG
tems improve and are applied to broader ranges of patients. implementation and costs.
The health industry trade press is replete with examples of Perhaps the most challenging aspect of the literature
provider investment in information and information technol- review was the “apples and oranges” problem: what appears
ogy that can be traced, in part, to health care organizations’ to be a trend for one type of guideline does not necessarily
decisions to adopt and implement clinical protocols, guide- hold true for a different guideline, even if guidelines address
lines, and evidence-based medicine (13;18;22;40;48;49;75). similar issues (e.g., evidence-based substitution). Hence, an
To effectively implement CPGs, particularly those aimed alternate review strategy would have been to limit the review
at chronic disease management, detailed information must be to, for example, all cost studies of the same set of diabetes
maintained on patients, treatments, staffing, inventories, and guidelines. Unfortunately, we were not able to find more than
resource use. It is also likely that the ability of the health care one or two cost-related articles pertaining to the exact same
organization to take advantage of economies from learning set of guidelines.
will depend on the ability of the firm to process information Second, the potential endogeneity of guideline adoption
during the production process and then apply that informa- is a problem in many studies of the cost effects of guidelines.
tion appropriately (30). Such information is most useful if it is Adoption of CPGs may be a function of financial perfor-
available at the time that it is needed, as patients are undergo- mance. Efficient firms may be more likely to adopt because
ing treatment and as clinical decisions need to be made (42). they have innovative management, whereas inefficient firms
For example, the use of automated decision support tools for also may be more likely to adopt because they would have
immunization increased appropriate use and decreased in- the most to gain. In either case, the adoption of CPGs is
endogenous to financial performance. The problem of en- the attitudes of providers as to the usefulness and relevance
dogeneity can be mitigated through the use of a two-stage of the guideline, and patient acceptance of the guideline
instrumental variable modeling of adoption (stage one) and (5;8;10;25;33;43;66;67;76).
the effect of adoption on financial performance (stage two). Provider adherence has also been shown to depend on
We were unable to identify any study that explicitly acknowl- financial incentives (16;25;34), as well as other external in-
edged this problem. centives, such as performance reports to outside organiza-
Another persistent issue throughout the literature is the tions and patient satisfaction reports (12). Physicians reim-
issue of time frame. Most studies reviewed do not consider bursed on a fee-for-service basis (or a fee schedule where
the cumulative costs or savings over time of future medi- administered prices are higher than average costs) face fi-
cal interventions attributable to guideline adherence. Discov- nancial incentives to adhere to CPGs aimed at increasing
ery associated with screening- and population-based disease the volume and intensity of billable services. In contrast,
management has the potential to decrease or increase costs. physicians reimbursed on a capitated basis (or a fee sched-
However, it is not clear from the literature whether a suffi- ule where administered prices are lower than average costs)
ciently long time frame would reveal whether discovery costs face financial incentives to adhere to guidelines aimed at de-
are offset or augmented by future treatment costs. In cases creasing the volume and intensity of billable services (66).
where CPGs result in increased resource use, it is often the Malpractice litigation has also affected physician adherence
case that improved outcomes, over a sufficiently long period as some malpractice insurers have required physicians to
of time, may result in net savings and improved economic comply with guidelines (7). Finally, patient adherence to
efficiency. There is relatively little literature directly support- guidelines—a key component in assessing the costs and
ing this conjecture. An additional problem associated with benefits of guidelines—has been shown to vary by age, race,
time frame is that process change is expected to have a lagged education, comorbidities, and income (62;76).
effect on financial performance. This effect may be less im-
portant in studies where the primary outcome is changes in CONCLUSIONS
utilization rates from one period to the next but may be more
Clinical practice guidelines have the potential to improve
of a problem in studies attempting to measure organizational
economic efficiency by reducing treatment and operational
spillovers from adoption.
costs while improving outcomes. Most of the studies we
In addition to observed methodological issues, studies of
reviewed found a cost-reducing guideline effect. However,
the effect of practice guidelines on costs are likely to face sev-
most studies fail to adequately address key issues concerning
eral important measurement issues. These issues include im-
study design (mainly perspective and time frame) and related
precise measures of processes (i.e., difficulty in some cases in
organizational adaptation attributable to guideline adoption
determining the extent to which practice guidelines had been
and adherence. In addition, there appears to be large variation
followed), difficulty measuring outcomes, and difficulty ac-
in the magnitude of cost effects according to the content and
counting for differences in the patient population under study
design of the guideline in question, thereby limiting the extent
(e.g., age, sex, socioeconomic status, and comorbidities).
to which broad generalizations can be made. Our review rep-
Finally, health care firms’ reporting of guideline adop-
resents an initial step in conceptualizing these issues. Clearly,
tion may suggest operationally different actions (10;76).
more work needs to be done to improve methods to calculate
Given the relatively large menu of activities falling under
the economic impact of innovations in the process of care.
the process change umbrella, measurement of the existence
and intensity of process change is often a judgment call on CONTACT INFORMATION
the part of the researcher. The degree of guideline adherence
is directly measurable in some studies, either through ex- John E. Schneider, PhD ([email protected]), As-
amination of medical records, administrative data, or direct sistant Professor, Department of Health Management and
survey of practitioners. However, in many cases the direct Policy, College of Public Health, University of Iowa, 200
measurement of guideline adherence is difficult (33;43). Hawkins Drive, E204 GH, Iowa City, IA 52242; Core Inves-
One of the chief reasons for the difficulty in assessing tigator, Center for Research in the Implementation of Innova-
adherence is the wide variety of factors associated with ad- tive Strategies in Practice (CRIISP), Veterans Administration
herence. For example, demonstrating the linkage between Medical Center, Iowa City, IA 52246
organizational adaptation and clinical adaptation, Vaughn N. Andrew Peterson, PhD ([email protected]),
et al. (76) found that adherence to alcohol, depression, and Assistant Professor, Department of Community and Behav-
tobacco screening guidelines in the Veterans Administra- ioral Health, College of Public Health, University of Iowa,
tion health system varied according to mission, capacity, 200 Hawkins Drive, E238 GH; Director for Research &
degree of professionalism, and patient population character- Deputy Director, Iowa Prevention Research Center, Univer-
istics. Physician and hospital adherence to guidelines also sity of Iowa, 1215 Westlawn Building, Iowa City, IA 52242
depends on the quality of evidence of the guideline, the Thomas E. Vaughn, PhD ([email protected]), As-
strength of the evidence used in formulating the guideline, sociate Professor, Department of Health Management and
Policy, College of Public Health, University of Iowa, 200 15. Cromwell J, Bartosch WJ, Fiore MC, et al. Cost effective-
Hawkins Drive, E230 GH, Iowa City, IA 52242; Senior Sci- ness of the clinical practice recommendations in the AHCPR
entist, Center for Research in the Implementation of Innova- guideline for smoking cessation. JAMA. 1997;278:1759-
tive Strategies in Practice (CRIISP), Veterans Administration 1766.
Medical Center, Iowa City, IA 52246 16. Cruz-Correa M, Gross CP, Canto MI, et al. The impact of
practice guidelines in the management of Barrett esophagus.
Eric N. Mooss, MHA ([email protected]), Operations
Arch Intern Med. 2001;161:2588-2595.
Director, Radiation Oncology, Alegent Health, 7500 Mercy
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Road, Omaha, NE 68124 through information technology. Boston, MA: Harvard Busi-
Bradley N. Doebbeling, MD, MSc ([email protected]), ness School Press; 1993.
Director, Indiana University Center for Health Services 18. Devaraj S, Kohli R. Information technology payoff in the health
and Outcomes Research, Professor of Health Services Re- care industry: A longitudinal study. J Manage Inform Syst.
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