Total quality management in non-profit secondary health care

The management of non-profit secondary health care is significantly influenced by the cost/price signals of key components within the casemix process. The total quality management (TQM) of health care requires an understanding of the nature of these costs. This paper demonstrates that the historic view of the allocation of costs in the case of joint products, such as those in transfusion manufacturing, is that they can only be solved in an arbitrary manner. In contrast, this paper describes a quality-based rationale for the allocation of joint costs to plasma, red cells and platelets, as routinely manufactured from whole blood. The key element is first to trace joint-process costs to product specification elements, rather than directly to products. By this means, final product costs become valid for cost-benefit analysis. This should significantly affect many cost-benefit decisions in the practice of transfusion medicine. It should also retrieve the current probable misallocation of secondary health care resources, estimated at approximately 200,000,000 per annum for Western Europe on the basis of historically determined cost models. Quality-driven blood product costing is shown to be central to the achievement of the TQM of secondary health care.