The high cost of health care places a great burden on the competitiveness of many major American manufacturing and other businesses. In response to cost-reduction pressures from corporate leaders, health care managers often respond in ways that negatively impact quality of care. Such responses fail to recognize a source of great waste in the health care delivery system: excessive variability in the processes used to provide care.

There is a great deal of "natural" variability that is largely outside the control of health care managers: "clinical" variability (patients differ in the type and severity of their diseases, and similar patients respond differently to treatment), "patient demand" variability (patients arrive for treatment randomly over time), and "professional" variability (different providers treat similar patients in different ways), which has given rise to the development of approaches like practice guidelines and clinical pathways. Although these sources of “natural” variability cannot be eliminated, they can be managed through OM tools and techniques (e.g. queuing theory).

In addition, there are "artificial" sources of variability that can be reduced and managed, if not eliminated. A very important but often unrecognized and understudied source of artificial variability is that which arises because of poor management of the processes used to provide care. The Program for the Management of Variability in Health Care Delivery (referred to as "Management of Variability Program [MVP]") has developed, implemented, and evaluated methods 1) to reduce this type of artificial management variability, and 2) to better manage "natural" variability.

The tools of operations management and operations research have been successfully used by many industries over the last 30 years to better understand and manage process flows in complex systems, often resulting in multi-million dollar annual savings. However, such techniques have attracted little interest in the health care industry, in part because of the historic lack of pressure to reduce costs. As cost-reduction pressures have increased, the tendency of managers has been to seek cost savings in those areas that are most transparent: the nature of the product delivered. This often has resulted in approaches that reduce the quality of the product delivered, e.g., shortened physician appointment times; or the substitution of effective but expensive drug A with inexpensive drug B, even when the latter leads to increased side effects.

But what has not been recognized are the large savings possible by reducing variability in the processes used to deliver care. It is only once these sources of variability have been eliminated or effectively reduced or managed that the threshold at which further cost savings would negatively impact quality of care becomes apparent.

Process variability not only adds unnecessarily to costs, but also reduces quality. The emerging literature on medical errors suggests that errors are much more likely when systems become stressed. If variability is reduced, peaks in demand, which stress delivery systems and often lead to medical errors and poor quality of care, will be reduced. For example, in Boston and other US cities, peaks in surgical and emergency room demand have led to the diversion of ambulances and the “boarding” of patients waiting for an inpatient bed. Reductions in variability in other parts of the system can allow emergency rooms to more adequately respond to "natural" variability in patient demand and thus reduce the need for ambulance diversions and avoid boarding or transfer of patients needing inpatient services.

Experience in other industries suggests the cost and quality benefits of variability reduction are large. But for the most part, these benefits are unexplored and untapped in the health care area. To a large extent, governmental and private organizations have not supported studies to improve health care management through approaches like variability reduction, probably under the assumption that such efforts are the responsibility of individual institutions and systems.

However, the same logic would suggest that competitive pressures would create incentives for individual health care systems to, for example, perform cost-effectiveness analyses of new technologies, develop practice guidelines, and develop methods to risk adjust and profile providers. Unfortunately, the costs are too high and the benefits too diffuse for individual health care systems to undertake these studies. As a result, government and private foundations have poured millions into research studies of approaches to reduce costs and improve quality.

The premise behind the creation of MVP is that researching the reduction of process variability has as much potential for reducing costs and improving quality as approaches like cost-effectiveness analyses of new technologies, practice guidelines, and provider profiling. Its importance lies in the fact that individual institutions alone cannot support this type of research, even though its results will be of great benefit to individual institutions and the health care system as a whole.

Beyond research, the cost and quality benefits of reducing variability can only be realized through the implementation of operational improvements at the point of delivery of health care services. Hospitals and other health care providers need to be able to accurately assess where variability exists and to institute the appropriate operational changes. The MVP is committed to both working with individual providers as well as disseminating knowledge and best practices, through education, training and publications that spread the understanding of the benefits of reducing variability throughout the health care system.

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