Cost of Quality at a Clinical Laboratory in a Resource-Limited Country

Health care decision makers often have a limited understanding of the costs associated with quality improvement efforts. However, such information is vital for managers to make appropriate operational and financial decisions to ensure high quality health care services. We used the Cost of Quality (COO) model to estimate the cost of quality-related activities at the Makerere University-Johns Hopkins University (MU-JHU) Laboratory in Uganda. Using data collected from January 1, 2007 December 31, 2007, we allocated the direct costs associated with quality-related activities in the laboratory across COO's cost categories: prevention, appraisal, internal failures, and external failures. We found that approximately 94% of total COQ was spent on costs of good quality (prevention and appraisal), while 6% was spent on costs of poor quality (internal and external failures). The high percentage of COQ spent on prevention and appraisal activities is consistent with efforts to ensure high quality laboratory results. Future studies should try to link COO to health outcomes and quantify hidden failure costs. This CE update introduces the Cost of Quality (COO) model and illustrates how it can be applied to a clinical laboratory setting to help managers and executives make more informed decisions about spending on quality-related activities. We begin with an overview of the COO concept and its 4 main cost categories, followed by an illustration of how the model can be applied in a medical laboratory setting. We then discuss some of the advantages and limitations of this methodology and provide suggestions for future research. After reading this article, readers should be able to describe the COQ concept and its 4 major cost categories, understand how it can be applied in a clinical laboratory setting, identify specific clinical laboratory costs that fall under each cost category, and discuss some of the advantages and limitations of this model. Management exam 91001 questions and the corresponding answer form are located after this CE Update on page 434