Is there a cost to establishing and maintaining a
Quality Management System?
In
answering this question many people will readily recognize that we have to
spend money on preventing 'bad' things from happening, such as defective parts
in manufacturing or an avoidable critical incident in a nursing home. We also
have to lay out money in what are known as 'appraisal costs' such as quality
control on the production line or double-checking that the correct medication
was given to the correct patient/resident at the correct time or covering the
costs of auditors or accreditation surveyors.
But to be
fair and accurate, whenever we have to calculate and report the cost of quality
we should also identify and add in the Cost Of Poor Quality (COPQ) also called
PONC - Price of Non-Compliance or Non-Conformance.
For
example: time spent 'fixing' problems, retooling, speaking to unhappy family
members in a Long-Term Care Home, covering staff absences because of stress and
demotivation and, of course, time spent with inspectors for reported complaints
or critical incidents should all be seen as “waste” and added to the cost of
poor quality.
Of
course, there is also the cost of lost reputation when our failures become
public knowledge, which also adds to staff stress and demotivation. Inspection
reports are really dirty laundry hanging on a very public clothes line.
To the
extent that our preventive and appraisal efforts are reducing the incidence of
poor quality and non-conformance and the associated costs, we are receiving a
return on investment in our Quality Management System.
There is
a tax benefit to reporting money spent on quality as a cost of doing business,
but in our minds and hearts we would do better to see that money as a capital
investment that produces a return. Then we are more inclined to ask, How can we
get the best ROI, Return On Investment? This question is not limited to for-profit
organizations.
An efficient and effective QMS is really an asset, not
a cost:
- Ask: How can we get a return
on investment? (Note. This question applies equally to NFPs as
For-Profits)
- It’s a shame and a waste to
use accreditation or certification mainly for ‘window dressing’
- Time and resource spent on
preventable complaints and inspections for reportable events should be
cost out as ‘waste’ (COPQ, PONC). Any reduction is ROI.
- Other ROI: reduced staff
turnover; reduced absenteeism; prevention of recurring non-compliance or
defects; fewer follow-up and other inspections
- Intangible ROI includes:
fewer preventable critical incidents and reportable events; increased
satisfaction both for residents or patients and their families; happier
Government regulators; Improved, reality based, public recognition and reputation
