Developing the VoluntaryHealthcare Standard

by R. Dan Reid

The new Automotive Industry Action Group (AIAG) voluntary standard for healthcare delivery is now is its second review, with an anticipated launch no later than early 2008. AIAG also is pursuing potential partners for the publication from the healthcare sector.

Medical errors in the United States are now well documented.1,2,3,4 There is growing evidence of the applicability of automotive process methodologies to healthcare.

In its “Crossing the Quality Chasm” report, the Institute of Medicine (IOM) indicates the first critical step to effect change in healthcare delivery is the application of engineering principles used in other industries.5

The first principle mentioned is to redesign the system using the 80/20 rule, also known as the Pareto principle, to exploit the existence of routine work. The more predictable the work, the more sense it makes to standardize it.

The IOM reports that between 15 and 25 common chronic conditions account for the majority of the health services delivered. These would lend themselves to standardization of common sets of services, which is another of the engineering principles mentioned in the report.

First There Was IWA 1

In 1998, work groups from the ASQ Healthcare Division and the AIAG separately began work on ISO 9000 based guidance documents for healthcare that were similar. This led to the release of a common document, HC 1, in January 2001. International interest in the project then led to the subsequent release of the first International Organization for Standardization (ISO) international workshop agreement (IWA 1), based on HC 1.

While ISO 9000 and related documents for healthcare have been well received elsewhere, ISO 9000 and ISO IWA 1 have been slow to take off in the United States. The original thought for using ISO 9000 as the base for the IWA 1 was that it would be recognized and embraced by American healthcare practitioners. As it turned out, “ISO speak” is not easily translated into “healthcare speak,” and in the United States, healthcare accreditation, rather than international standards, is king.

Traditionally, healthcare accreditation based on specified criteria, such as publications of the Joint Commission for Accreditation of Healthcare Organizations, is required for healthcare organizations to be reimbursed by the Centers for Medicare and Medicaid Services (CMS). Just recently CMS has shown interest in also recognizing some ISO 9000 based criteria. However, the royalty for use of the ISO 9000 text drives up the cost of any end publications using it.

Plotting a New Course

ISO requires IWA documents to be reviewed after three years, and IWAs can be published only for a maximum of six years without being upgraded to a higher level of consensus document, such as technical report, technical specification or standard, or withdrawn.

This consensus process can take up to five years to complete depending on the type of document. Facing a 2007 expiration of ISO IWA 1, the AIAG approved the development of a new voluntary replacement standard, code named BOS 2008, based on the 2006 Baldrige National Quality Program Healthcare Criteria for Performance Excellence.6

Why Baldrige?

The Baldrige criteria have resonated well in the U.S. healthcare sector. Based on automotive industry experience with QS-9000, a similar document, the cost-benefit ratio of implementation should be up to 17:1 for out-of-pocket costs.

The Baldrige healthcare criteria are written in “healthcare speak” to communicate effectively with the target audience. Several healthcare organizations have received the coveted Baldrige award. As a result, healthcare practitioners in the United States are showing more interest in Baldrige than in ISO 9000 so far, and recognition appears to be growing.

The Baldrige healthcare criteria also have several points of distinction that can be helpful at this time. There is a focus on performance excellence and results, which in healthcare speak mean outcomes.

However, the term “quality” continues to be ambiguous to many in the healthcare sector. Healthcare practitioners are well educated, and when asked, they all believe they are doing quality work. So the issue of medical errors does not seem to relate personally to them.

Healthcare practitioners can embrace a push for excellence, which Baldrige requires, and this should improve patient safety over time as more organizations adopt a Baldrige based standard.

Also, like the Baldrige business criteria, there is a healthcare category dedicated to results. Cost is the other runaway concern in the U.S. healthcare delivery system. Not only do the Baldrige healthcare criteria call for results in healthcare delivery outcomes, but they also address financial and market outcomes (item 7.3).

The criteria call for key measures of financial performance, including aggregate measures of financial return and economic value or budgetary measures.

These measures could include return on investment, asset utilization, operating margins and profitability. Cost management is also an AIAG focus in its draft document.

One concern with the Baldrige criteria as a basis for the new AIAG standard is that they are primarily award criteria written in a generic descriptive style. They list areas to address but do not have requirements per se.

To make implementation more verifiable, the Baldrige healthcare text has been modified slightly in the AIAG document to state the areas to be addressed as requirements for the organization. This means instead of stating, “Describe your process for … ,” the new AIAG standard will state, “The organization shall have a process for … .”

This requirement feature will still provide organizations with the flexibility to implement processes that are applicable as long as they meet the intent of the AIAG standard, which is characteristic of Baldrige.

Another advantage is that training in the Baldrige healthcare criteria is readily available. Current IWA 1 training will need to be adapted to fit the new document, but the majority of content in the new document is Baldrige based.

Then there is the royalty issue. Using Baldrige criteria as the base text solves that concern because the Baldrige criteria are in the public domain and the developers actually encourage others to use them. The end users will profit because the new document will be much more affordable than any national or international standard.

Baldrige Details

For those not familiar with the outline of the 2006 Baldrige healthcare criteria, they include a preface and glossary of key terms plus seven categories:

  1. Leadership.
  2. Strategic planning.
  3. Focus on patients, other customers and markets.
  4. Measurement, analysis and knowledge management.
  5. Human resource focus.
  6. Process management.
  7. Results.

The 2006 criteria are built on the following set of interrelated core values and concepts:

  • Visionary leadership.
  • Patient focused excellence.
  • Organizational and personal learning.
  • Valuing staff and partners.
  • Agility.
  • Focus on the future.
  • Managing for innovation.
  • Management by fact.
  • Social responsibility and community health.
  • Focus on results and creating value.
  • Systems perspective.

Preview of Coming Attraction

The objectives of the new AIAG standard are to:

  • Provide process improvements to increase the value added to the organization, customers and stakeholders.
  • Improve delivered healthcare quality and safety to complement existing accreditation; aid in achieving accreditation or in receiving any state, national or international quality awards.
  • Improve the image of the organization, increase customer confidence and have a tool to reward quality results.
  • Develop or incorporate a process that is actionable.
  • Minimize burden on healthcare organizations.
  • Align with the Baldrige healthcare criteria to help organizations prepare for award programs based on the criteria.

The new standard is not expected to replace healthcare accreditation but to improve an organization’s readiness for accreditation visits and help organizations achieve performance excellence beyond accreditation requirements. By design, this includes improving patient safety and reducing cost.

The new AIAG standard will add content and align the additions with the previously mentioned Baldrige outline. In the draft document, the additional text now appears in italicized blue type, while Baldrige text is in a black nonitalic font. Glossary terms are in a different font for easy recognition.

AIAG also plans for the new document to have appendixes that provide a cross reference between Baldrige and the ISO 9001 standard and vice versa.

Why Baldrige Is Not Enough

Areas addressed in IWA 1 that are not adequately covered in the Baldrige criteria include:

  • Enhanced strategic business planning.
  • Management system documentation.
  • Change management.
  • Enhanced training and competency requirements.
  • Enhanced lean Six Sigma problem solving.
  • Purchased product quality.
  • Product identification and traceability.
  • Inventory management.
  • Measurement system analysis.
  • Internal auditing.
  • Error proofing.
  • Enhanced risk mitigation and failure mode effects analysis.
  • Cost monitoring and reduction.
  • Corrective and preventive action.

Requirements for these areas are included in the new AIAG standard draft at this time. Despite the additions, the new standard is expected to have fewer pages than both the 2006 Baldrige criteria and the ISO IWA 1. This is being accomplished by deleting some extra Baldrige materials, including an application self-analysis worksheet, category and item descriptions, information on the Baldrige scoring system and guidelines, and award application information.

What They Are Saying

Forward focused healthcare leaders spot Baldrige and ISO 9001 on their radar and lock in to find out why other industries find these frameworks successful. They learn that benefits to multiple stakeholders accrue not from a list of to-do’s or the flavor of the month but from a common sense approach to operations: understanding what role the organization aims to play in the lives of customers, and ensuring the resources to fulfill that role flawlessly.

… Critical elements include alignment, integration and synchronization of all services and data; communication excellence; regularized use of process and outcome metrics; internal audit programs; real-time feedback and process improvement; extensive use of error proofing in the design of all processes; investment of assets brought by all staff to the delivery of health services; systematic use of best practices, resulting in improved health status; decreased waste, rework and delays.

… Organizations embracing such a standard will signal to all stakeholders that excellence in service delivery can be expected there: reliable, measurable, transparent; respectful, patient centered; effective, efficient, timely; equitable, safe and ever improving services. Whether a caregiver or a care seeker, this is the place everyone should be.

Rita Ratcliffe, M.D.
Principal, Medical Excellence

After trying for about six years to get various healthcare organizations to implement a system based on the international ISO 9000 standards and the ISO guideline IWA-1 it became apparent healthcare people in the United States are not very familiar with ISO 9000 standards. The use of the Malcolm Baldrige National Quality Award criteria seems to be better understood and used here. That is one of the driving forces for developing the BOS 2008 document. Aiding healthcare to improve is good for all of us because the hurt we save may be our own.

Mickey Christensen
President, TQM Systems
2006 Chair of the ASQ Healthcare Division

Healthcare costs in the United States will exceed $2 trillion this year and are expected to double by 2015. We are dealing with an aging population that has a high need for medical technology, such as imaging procedures, and for pharmaceuticals, both of which push costs higher. For these reasons, providers will need to adopt best practice treatments and disease management programs. Such concepts and programs require clinical practice systems that reduce variation and ensure quality while reducing costs. The ISO 9001 quality management system and the Baldrige criteria are two such systems that have clearly demonstrated value in other sectors and warrant study by healthcare providers.

James M. Levett, M.D.
Chief medical officer
Physicians’ Clinic of Iowa, Cedar Rapids

Next Steps

The launch of BOS 2008 is planned for early 2008, but it could be introduced earlier if it is available. As of now, there are plans to develop and offer auditor and examiner training on the new standard and provide awareness training for any interested organizations.

Because it will be a voluntary standard, BOS 2008 will be available for adoption by any interested organizations for internal use or for their suppliers.

The new AIAG standard, instead of IWA 1, will be used as the criteria for the joint ASQ Healthcare Division-AIAG Quality Award.


  1. Sharon Terlep, “U-M Hospital Takes Page From Toyota,” Detroit News, June 26, 2006.
  2. William A. Levinson, “Taking the QMS Cure: The U.S. Healthcare Industry Needs a Dose of ISO 9001 Accountability,” Quality Digest, December 2005.
  3. Mark Taylor, “Quality as Gospel,” Modern Healthcare, May 2, 2005.
  4. Bernard Wysocki, “To Fix Healthcare,” Wall Street Journal, April 9, 2004.
  5. “Crossing the Quality Chasm,” Institute of Medicine, pp. 29 and 119ff.
  6. Baldrige National Quality Program, Healthcare Criteria for Performance Excellence, www.quality.nist.gov/HealthCare_Criteria.htm (case sensitive).

R. DAN REID, an ASQ fellow and certified quality engineer, is a purchasing manager at General Motors Powertrain. He is co-author of the three editions of QS-9000 and ISO/TS 16949; the Chrysler, Ford, GM Advanced Product Quality Planning With Control Plan; Production Part Approval Process and Potential Failure Modes and Effects Analysis manuals; ISO 9001:2000; and ISO IWA 1. Reid also was the first delegation leader of the International Automotive Task Force.

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