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  1. Eve A Kerr, associate director1,
  2. Barbara Fleming, chief officer, quality and performance2
  1. 1Center for Practice Management Research, Veterans Affairs Ann Arbor Healthcare System, PO Box 130170, Ann Arbor, MI 48113-0170, USA
  2. 2Veterans Health Administration, Washington, DC 20420, USA
  1. Correspondence to: E A Kerr ekerr{at}umich.edu

    Eve Kerr and Barbara Fleming explain how measuring performance helped transform a failing healthcare system

    Many healthcare organisations are having to confront the challenge of how to provide high quality care within a fixed (or sometimes shrinking) budget.1 The Veterans Health Administration, which provides care for over 5 million veterans within the largest integrated healthcare system in the United States, faced this problem in the early 1990s, when it was struggling to overcome a reputation for providing inferior and inefficient health care. In 1995 it began a programme to simultaneously improve the organisation and quality of its care, with performance monitoring having a key role.2 3 Within 10 years, it was lauded as providing the best care in the US.4

    The turnaround shows the value of monitoring performance and providing appropriate incentives to improve care. We explain how the organisation brought about the changes and look at some of the remaining challenges.

    Foundation for change

    The administration made several organisational changes as a foundation for the quality improvements.3 5 Firstly, it reorganised care into regional networks (veterans integrated service networks), which were provided with fixed resources and held accountable for managing all care within their facilities. Secondly, it shifted care to ambulatory settings, opening new outpatient clinics and closing many inpatient beds. Thirdly, the capacity of the administration's automated information system was improved to allow providers to access and enter all patient information within a unified electronic medical record, thus enhancing coordination of care.6

    A cornerstone of the efforts to transform care was the systematic use of data driven measures to monitor performance across several domains, including technical quality of care, access, functional status, and patient satisfaction.3 Many of the measures paralleled those developed by other US quality assessment organisations, but the administration also included measures to …

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