‘In the eye of the storm’
Funding cuts threaten noted Baldrige program
Tight budgets and eager congressional cost cutting could spell disaster for the Baldrige Performance Excellence Program, a program credited with increasing quality and efficiency at hundreds of U.S. organizations, including many hospitals.
The first bad news for the program came last fall, when the National Commission on Fiscal Responsibility and Reform released its proposal with a recommendation that the Baldrige program be eliminated. “Businesses should have enough incentives to maintain the quality of their products” without the program, the commission argued.
Then in February, President Barack Obama released his proposed budget for 2012, which included a nearly 20% cut in federal funding—from $9.6 million to $7.7 million— for the program.
“When I saw that, I knew we were in trouble,” said Thomas Schamberger, executive director of the Foundation for the Malcolm Baldrige Quality Award, a private, not-for-profit organization that partners with the U.S. Commerce Department’s National Institute of Standards and Technology for the program. “We knew we were in the eye of the storm at that point.”
The proposed funding reduction would have made operations difficult but still feasible, Schamberger said. But in July, the Budget and Appropriations committees of the U.S. House of Representatives voted to eliminate all federal funding for the Baldrige program. Two months later, despite pleas by past Baldrige participants and several meetings with senators, the U.S. Senate Appropriations Commerce, Justice, Science, and Related Agencies Subcommittee also voted to cut funding to the program entirely.
With the government currently operating under a continuing resolution, the program’s funds are still in place. But that could change as soon as a new budget is approved, Schamberger said.
One obstacle, said Thomas Dolan, president and CEO of the American College of Healthcare Executives, is that many in Congress are not familiar with the program, and if they are, they are familiar only with the award and not the larger educational and assessment program.
“In some ways, it’s too small to really get people’s attention,” Dolan said. “When I talk to senators about it, I really have to start at ground zero, explaining what it is and the contributions it has made.”
The program, which uses set criteria and shared best practices, is well-known among healthcare organizations, however. Established in 1987, the program first began allowing healthcare applicants in 1998. Since then the percentage of healthcare applicants has grown to more than 60%, Schamberger said.
And those healthcare organizations that use the Baldrige process are more likely to outperform their peers, Dolan said. He cited a recent study from Thomson Reuters, which concluded that Baldrige hospitals were six times more likely than non-participating organizations to make its list of Top 100 Hospitals.
Under the public-private partnership, NIST oversees the program and uses the federal funding to maintain staff, run examiner training, conduct educational programs and work with state-level Baldrige organizations.
The foundation, on the other hand, has a yearly budget of $1.8 million allocated to fund the Malcolm Baldrige National Quality Award, a presidential award that honors top-performing organizations.
That federal involvement and the funding that goes along with it are critical to maintaining the program’s affordability and integrity, Schamberger argued. He cautioned against privatizing the program and aligning it with a university, as some have suggested. “This award is given by the president to businesses, and we’re frightened that if it’s privatized, it could lose that prestige,” he said.
“There’s a real value in the legitimacy and objectivity of the government saying, ‘These are our best organizations,’” said Paul Borawski, CEO of ASQ, the Milwaukee-based organization that serves as a contractor to NIST under the program. “If it’s forced to go into the private sector, it will have to operate in a way that is financially viable. That will mean that prices will go up and it will be less available to organizations that need it.”
The looming funding cut has galvanized past participants, who credit the Baldrige program with big improvements at their organizations.
Pattie Skriba, vice president of learning and organizational effectiveness at 319-bed Advocate Good Samaritan Hospital, Downers Grove, Ill., called the program transformative. The hospital began participating in the Baldrige program in 2006, and in November 2010, it was one of seven organizations, chosen from a field of 83 applicants, that received the top award for performance excellence.
The program’s improvement process could be a lifeline for many organizations that are struggling in a faltering economy, Skriba said, and she urged past winners to speak up about their successes. “Our role right now is to communicate the value of this program to any and all who will listen,” she said.
San Diego-based Sharp Healthcare, a fivehospital health system, won the top award in 2007 after a five-year Baldrige process. During that time, the system saw improvements in employee satisfaction and retention, financial performance, and clinical quality outcomes, said Michael Murphy, Sharp Healthcare’s president and CEO, and a member of the Baldrige Foundation’s board of directors.
Cutting the Baldrige program’s funding in a time of economic stress is counterintuitive, said Rulon Stacey, president and CEO of two-hospital Poudre Valley Health System, Fort Collins, Colo.
“We believe there are a hundred people who stay alive each year because we use” the Baldrige program criteria, Stacey says.