The Costs of Quality: An Interactive Model of Appraisal, Prevention and Failures

Abstract

The control of spending on health care while improving or maintaining quality is one of the most difficult problems confronting policy analysts. In this paper hypothetical data and an Excel spreadsheet are used to develop a model that estimates the costs of quality management. The focus is on the interaction between appraisal costs, prevention costs and the costs of failures. This approach enables the health service organization to estimate the costs associated with each of the three components and to assess the influence of appraisal and prevention on failure costs. The article concludes with a discussion of methods that might be used to assemble the required data and the benefits that might be derived by adopting the model.