ISO 9000 White Paper
Barry K. Hall, CPA, Partner
Stephen H. Trexler, J.D.,
Introduction to ISO 9000 (Recommended viewing for both general business and industry and health care providers.)
ISO 9000 and Health Care (Recommended viewing for health care providers.)
The Roster Network ISO 9000 Facilitation Process (Recommended viewing for both general business and industry and health care providers.)
Introduction to ISO 9000, a management tool for overall business excellence in your organization.
ISO 9000, a brief introduction to the basic concepts.
The term “ISO” is derived from the Greek word "isos", meaning equal. ISO standards are developed and administered by the International Standards Organization, an international organization to which approximately one hundred countries belong. The US representative is the American National Standards Institute.
The general purpose of ISO is to provide standards for the development, implementation and management of a quality management system. ISO 9000 registration is best viewed as a management tool that reaches far beyond the province of "quality control" in a manufacturing environment, the application that first comes to mind to many business people. For ISO 9000 purposes, the term "quality" should be viewed as being synonymous with "excellence" and as applying to all segments of a company's operations, even those administrative functions that are sometimes not viewed as being part of the overall goals of the company in meeting its customers needs. When used properly, ISO 9000 is a great management tool to promote excellence throughout all functions or all enterprises in all sectors of the economy, from manufacturing companies to service businesses to health care providers.
The innovation friendly ISO standards for systems and procedures documentation have received nearly universal acceptance in business and industry and is a virtual necessity for companies of all kinds doing business in or with European countries. In recent years, adoption of ISO 9000 or the related automotive industry focused QS 9000 standards for documenting quality systems has become very wide spread in the US.
"Document what you do and do what you document," the essence of ISO 9000.
The essence of ISO 9000 is for a company to "document what it does and do what it documents." The documentation is developed through the facilitation process and consists essentially of work instructions and quality and operational procedures designed to assure that goods and services are developed, created and delivered in a consistent manner that reflects the quality goals of the organization.
This built-in consistency not only promotes the interest of the customers of the organization (they get what they have been promised or expect), it promotes the efficiency and thus the profitability of the organization! When properly facilitated and used, the documentation developed in the facilitation process and the ISO 9000 registration and audit process itself becomes a management tool to promote excellence throughout the business.
Some business executives have looked at ISO merely as a registration needed to do business. Consequently, they take short cuts to achieve registration with "canned" documentation and using a registrar who focuses on whether the forms are filled out and not auditing the business' documentation to see if they really "document what they do and do what they document." This is a very short sighted and ill-informed approach and can result in registrations that are essentially fraudulent; i.e., they misrepresent to their customers or others what is actually going on in the company.
Just as financial audits of a company by its CPA serve to provide an independent third-party assurance as to the financial status of a company, audits of a company's quality systems and procedures serve to assure the customers that the company continues to implement the procedures and quality systems necessary to maintain the consistency of the company's products or services and that these procedures and systems are properly and timely documented."
An essential feature of ISO 9000 is that it does not prescribe quality standards. The registered companies are free to define the quality standards or "best practices" that are sufficient to meet the needs of their customers and market within which they operate. All that ISO 9000 requires is that the applicable standards are documented in a certain way. This innovation friendly aspect of ISO 9000 assures that companies are not locked in to stagnant, expensive and bureaucratic systems and procedures that may or may not meet the needs of their customers.
Preparation for Registration and the Facilitation Process
Companies that have knowledgeable and experienced internal staff members will prepare for the registration process on their own. However, most companies work with an outside firm, such as a Roster Network Member to facilitate the preparation for registration. The steps involved in preparation for registration are as follows. Although the process may seem intimidating at first glance, it can be accomplished very efficiently if the facilitator (whether internal or external) takes his or her own advice and conducts the facilitation in a systematic and efficient manner.
The first step is to identify and document existing work instructions, processes and procedures throughout the organization. For the process to have any validity and effectiveness as a management tool, the company must document the existing realities in the workplace. Although this process can be laborious, time consuming and expensive, the Roster Network facilitation systems avoid these problems and are unparalleled in the ease and convenience with which this information is gathered and documented.
This initial process of identification and documentation often reveals opportunities for improvement and the documentation is amended to take advantage of these opportunities. Of course, it is essential that the actual process and procedures be changed to coincide with the documentation, otherwise the company is taking the first dangerous steps towards a fraudulent registration!
Drafts of quality and procedure manuals are then prepared from the documentation created in the prior steps.
At this point, a review of the quality manual by the registrar must take place.
Once the corrective action directed by the registrar is implemented, systems and procedures and the documentation, the revised documentation is submitted to the registrar for review.
Some companies may choose at this time to have their work quality system reviewed by the ISO registrar in a "pre-assessment" to identify areas where the quality system needs improvement. This is in essence a rehearsal for the "real" audit, which will follow.
If the pre-assessment reveals the need for corrective action, the needed changes are implemented.
If the process has been facilitated with systems that actually capture the work done and the systems and procedures used, all employees in the company, from executive management through hourly staff, should be thoroughly familiar with how their work is done and the documentation of their work. Every employee should have access to, and be familiar with, the information to do his or her job. This is essential as the registrar should interview a random sample of all employees to determine whether the documentation does indeed reflect what the company does and how they do it. No amount of rehearsals for an audit will replace accuracy and understanding of the documentation.
The Audit Process
The registration audit or assessment is the essential step to evaluate the quality system documentation and whether it in fact reflects the reality of the workplace.
The registrar will review the documentation that has been created and then review selected operations to assure they conform to the documentation.
If the registrar finds any inconsistencies or discrepancies, or if the quality system does not meet ISO requirements the company will be advised of these and directed to take corrective action.
The company then submits evidence of the corrective action(s) to the registrar.
If the corrective action(s) are sufficient, a certificate of registration is awarded, completing the initial registration process.
Assuring Continuous Improvement
The initial facilitation and registration processes are only the starting point for improving the excellence of the company's operations. The Roster Network systems are ideally suited to promote continuous improvement throughout the organization.
To assure continued excellence and improvement, executive management needs to strongly promote compliance with the documented systems and procedures and hold all employees accountable for meeting the quality and excellence goals of the organization.
It is essential for continuous improvement that the documentation does not become chiseled in stone and stifle innovation. That is not its purpose. As new innovations and efficiencies are developed and implemented, the documentation needs to be updated to reflect them.
The company must conduct internal audits and management reviews to assure that innovation is proceeding and that the innovations are properly documented.
The registrar will also conduct continuing surveillance audits to assure the company is continuing to "document what they do and do what they document" and to provide the essential third party verification of this continuing commitment to quality.
Return to ISO 9000 Executive Summary contents.
ISO 9000 and Health Care, an efficient accreditation alternative that meets other essential needs.
While ISO is generally thought of in terms of the manufacturing segment of the economy, it is equally applicable to service firms, as we will illustrate with respect to health care.
Many hospitals, especially those in the UK, Australia, New Zealand and other Pacific Rim countries rely on ISO registration to document their quality systems and procedures. ISO registration will provide a standard easily recognized and respected by business and industry leaders in the communities served by health care institutions adopting it. This will provide added credibility to the institution to those persons and companies that are the ultimate source of health care funding for nearly all non-governmental insurance and self-funded benefit plans.
Institutions adopting ISO in lieu of Joint Commission on Accreditation of Healthcare Organizations ("JCAHO") need not fear loss of Medicare approved status as governmental regulations require either JCAHO accreditation or surveys by the Health Care Finance Administration ("HCFA") designated state agency, the avenue to approval relied upon by the 20% of hospitals not JCAHO accredited.
Additional Challenges for Health Care Providers
Approved payee status for federal health care programs is not the only challenge facing health care providers, however. Additional issues confronting health care providers are as follows. Providers should keep in mind that all of these issues are inter-related. Problems in all of these areas have the same root causes.
Maintaining compliance with federal regulations regarding the coding and billing of health care services to both public and private payors is a substantial challenge for many providers. The sanctions for violations can be substantial and criminal penalties may be invoked.
Often well founded concerns over the quality of health care and the frequency of medical mistakes are becoming more prevalent in the media and are causing concern among providers, payors and the public. Recent articles in the media have drawn very unfavorable analogies comparing health care with high risk industries such as aviation and nuclear power. A recent report from the Institute of Medicine indicates an estimated 44,000 to 88,000 people die in hospitals each year as a result of preventable mistakes. This is the equivalent of an airliner crashing every day.
The current managed care operating environment has put a severe squeeze on the revenue of health care providers. Many providers have seen their profitability evaporate and some are faced with either selling out to larger concerns that are more financially viable for the moment or ceasing operation entirely. Cuts in revenue are often tied to a decline in the quality of health care, further exacerbating the overall problems faced by health care.
An additional quality and cost related issue is the focus of many large employers (the ultimate payors under private payment plans) on current health care financing and delivery systems. Employers are concerned about both the quality and cost of health care. The Big 3 automakers are reviewing whether all of the health care providers furnishing care to their employees and those of their suppliers (a significant segment of the consumers of health care services in many eastern and mid-western communities) need to be ISO 9000 registered as is required of the suppliers themselves.
Liability insurance premiums are expected to increase dramatically over the next several months as property and casualty insurers raise rates in an effort to improve their profitability and make up for past losses. Given the underwriting process used by insurers, the providers with the worst track record in terms of quality (the highest loss costs for settlements, judgments, litigation and other expenses) will have their premiums increase the most, but all providers will be looking at an increase. Property and casualty premiums for all commercial concerns are expected to increase by a minimum of 25%. This additional cost increase will put even more pressure on providers' bottom line.
Several Issues, One Solution
When facilitated with the proper systems and procedures and with the review of a dedicated registrar, ISO 9000 can become the tool for managing all of these issues. Why? The root cause of problems in all of these areas is the lack of systems and procedures that drive the organization to quality and continuous improvement.
Health care has historically relied upon intensive training of professionals and administrative staff and then punishing them when mistakes are made. Problems with this approach are as follows.
There is an over reliance on personal behavior and not on systems. Aviation, nuclear energy and other high risk endeavors are all driven by systems and procedures that provide a check and balance on individual efforts.
It is much easier to change a system than it is to change individual behaviors.
Since reprimands are the end results with this system, the natural tendency is to fail to report problems and mistakes so that corrective action can be implemented to avoid their repetition in the future. It is impossible to construct systems and procedures to avoid mistakes in the future when no one will admit they occurred in the first place. Providers often tend to fear documenting problems or failures in that it will create legal liabilities for them. However, peer review statutes in all states provide a vehicle for creating an environment of continuous improvement in a privileged context so the process will not be admissible in evidence.
It fails to recognize that many mistakes are not the failure of one person making a large mistake, but a convergence of small mistakes not readily foreseeable by any one person. Only systems and procedures which facilitate continuous improvement can avoid these types of problems. The majority of airliner crashes are the result of several small failures or one major failure in highly unusual circumstances. To avoid these problems, modern aircraft have redundancies in their design and construction and the pilots and maintenance crews rely on documented systems and procedures, checklists and manuals to assure a safe flight.
As will be noted from the general discussion of ISO 9000, above, the whole thrust of the facilitation, registration and surveillance processes are to promote quality and excellence through defined, documented and communicated systems and procedures to reach the quality goals of the organization. In the context of a health care provider, ISO standards would require a provider to have documented systems and procedures to address its needs with respect to:
Admission and registration of patients;
Diagnosis, treatment and care, including the documentation thereof;
Acquisition, storage and administration of pharmaceuticals and medical devices;
Maintenance, storage, control and access to medical records, including maintenance of medical confidentiality;
Handling, storage and disposal of medical or hazardous wastes;
Patient emergency procedures; and,
General health and safety for staff and patients, including infection control and immunizations.
The process shouldn't stop there, however. Systems and procedures should be documented for all of the organization's activities, even those considered "administrative." All of these activities will have either a direct or indirect impact on a provider's quality and profitability. Examples are:
Hiring, discipline, termination and related human resources functions;
Licensing of professionals, including continuing education;
Public and private payor coding and billing;
Building, systems and equipment acquisition and maintenance;
External or natural emergency or disaster procedures, including disaster recovery;
Acquisition, storage and use of non-medical supplies; and,
Executive and financial management, including risk management and legal compliance.
These are but a few examples of the systems and procedures that need to be defined, documented, communicated, enforced and continuously improved. An additional review of how these issues inter-relate can be found in the Risk Management Techniques for Health Care page and the Risk Management Chart following it.
The documentation process for ISO 9000 registration is essentially the same as that used for Medicare-Medicaid compliance plan development and implementation.
Additional Benefits of ISO 9000 Registration for Health Care Providers.
In addition to the ability to improve quality and profitability as noted above, additional benefits of ISO 9000 as an alternative to JCAHO for health care providers are as follows:
The ISO 9000 continuing internal and registrar surveillance audits are far less time consuming and intrusive than the traditional months of preparation for a JCAHO review.
It is non-prescriptive, allowing providers to innovate and develop new best practices for the industry.
Return to ISO 9000 Executive Summary contents.
The Roster Network ISO 9000 Facilitation Process, the most efficient and economical way to achieve registration and promote continuous improvement.
It is essential that facilitation for ISO 9000 meet the following criteria if the value of the process is to be maximized.
It should be efficient and cause the least amount of disruption to the regular work of the company seeking registration. Everyone is busy enough as it is.
It should be reasonably priced to increase the cost/benefit outcomes of the project.
It is essential that the facilitation capture and reflect what is actually done in the workplace. Adoption of canned documentation that does not capture this reality is a waste of time at best and fraudulent at worst.
The Roster Network process of facilitation is uniquely suited to meet all of these needs.
Information relative to individual goals, activities, tools and processes used, levels of responsibility, impacts on others and position challenges is gathered in a series of Position Matrix Communication System Workshops. There are generally 25 employees in each workshop. This process: (1) is vastly more efficient than interviewing employees on an individual basis; (2) develops the information needed to promote quality and continuous improvement throughout the organization; and, (3) generates individual job descriptions with a multiplicity of uses, not the least of which is objectively and fairly holding employees accountable to their use of the quality and performance management system.
A database is created from the individual Position Matrices that identifies all tools, processes and procedures used. A Document Team is then created for each major tool or process identified. This team is charged with developing the documentation for that tool or process in quality and procedure manuals. This process assures the accuracy and efficiency of quality and procedure documentation and that it reflects the reality of what the employees actually do and how they do it.
The Document Team starts the process of generating needed documentation by reviewing all of the tools and processes identified. This provides a forum to review the sufficiency of existing tools and processes; and, if the company is implementing Activity Based Management, to review the costs and benefits of these tools and processes. Needed improvements can then be implemented.
One or more member(s) of each document team is then delegated the responsibility of developing the necessary documentation. This would consist of identifying and gathering existing documentation and writing new documentation as is necessary. The facilitating Roster Network member will assist in this process by reviewing and commenting upon drafts of documentation. However, it is essential that each Document Team develop its own documentation. Unlike other facilitators who see writing the documentation as an opportunity to bill more time to the project, the Roster Network facilitator will not write the documentation for the client. There are two reasons for this in addition to the obvious cost savings. First of all, the persons using the tools and processes are the real experts. Secondly, if they don't write the documentation, they don't "own" it and will neither be motivated to use it nor be able to explain its use to an ISO Registrar.
The whole focus of the Roster Network system for facilitation is company wide and is not limited to a particular service or product line. This concept is expanded upon in the risk management pages: Risk Management Techniques for Health Care Providers and Risk Management Techniques applicable to general business and industry.
The effect of the Roster Network facilitation processes is build documentation up from the bottom, based on the reality of what the employees actually do in their jobs. This is in contrast to theory driven business improvement processes that attempt to drive documentation down from the top, whether or not it is consistent with the reality of the workplace. Pursuing the latter course of action generally has one of two results. Either there is tremendous dislocation and lost productivity as everyone tries to adapt to the "new reality;" or, more commonly, everyone simply ignores the "paperwork" and goes about their business as they have been doing. Obviously, neither of these is an acceptable alternative.
What are driven down from the top, however, are the goals of the organization. The Position Matrix Communication System excels at implementing and tracking goals throughout the organization. Setting the organization's goals and implementing them is one of the key functions of the organization's executive management. If they don't know where they're going with the company, who does?
It is the convergence of the goals flowing down from the top and the systems and procedures documentation flowing up from the bottom that makes the Roster Network system so effective in meeting all of a company's business needs!
As business conditions change and new systems and procedures are innovated, the Document Team is responsible for updating the documentation for those systems and procedures. Document Teams are to meet at least quarterly to review the documentation and suggested changes or improvements in systems and procedures. When any person using a system or procedure develops an idea as to an improvement, the Document Team is the ideal forum for reviewing and either approving or rejecting innovations. This system captures innovation and allows it to be reviewed in a systematic manner. This truly empowers the employees while maintaining a check and balance from supervisors and others impacted by changes to systems and procedures.
Return to ISO 9000 Executive Summary contents.