Variance Management Systems

Variance management systems could provide the healthcare process data necessary to make sense of outcomes measures and drive an effective performance improvement process.

Instead variance management systems, often, are onerous paper consuming monsters that provide little in the way of timely and important data.

This Short Takes presents some of the issues that limit variance systems performance and provides alternative strategies for addressing these issues.

Frequently Asked Questions (FAQ’s)

What is a variance?

Technically, any deviation from the pathway is a variance. At RLA we distinguish between compliance variances (where an activity was not performed or an outcome not achieved as planned) and effectiveness variances (where the desired outcomes and performance measures – such as planned LOS – were not attained).

That is too much data, isn’t there and easier way to collect and analyze variance data?

Yes. Two methods for reducing variance data woes are possible. One, is to identify key, or critical, variances; those activities or outcomes deemed essential to the patient population’s care. Another method, our Gateway method, identifies key milestones – “gateways” – in the care process and collects data on why patients are delayed passing through the gateway. The following model illustrates a two gateway model, such as a post-op stay with an ICU phase and a step-down unit phase.


At each gateway the patient can take one of three pathways: continue as planned, delay their progress for at least a day, or fall-off the pathway. Those delayed at the gateway continue their pathway using an insert – or add on – day document which duplicates the pathway document with the addition of a box to collect the reason for the delay. This is the gateway variance which, for this pathway, reduces the data collection to two data points. Add some critical variances and a powerful database is created with little effort. The detail variances, all those activities and outcomes on the pathway, have their variances recorded in the documentation, where it is available for process improvement efforts.

It is the insert day that provides the increased robustness of the Gateway system’s documentation. The care team no longer must switch from ‘regular’ to pathway documentation as the patient’s progress changes.

How do Gateway variances relate to other variances?

Gateway variances tell the care team where in the process problems are occurring and what is driving those problems. This points the way to more focused and controlled follow-up studies and evaluations. Other variances data is necessary to effectively analyze and address Gateway variances. Some are vital to quality patient care in their own right (critical variances), others provides documentation on the care provided to patients. Recording these variances for future analysis is critical.

Our Variance Pyramid shows the relationship between these variance types and to variance reporting and analysis.


How can I use variance data to improve outcomes?

We believe that variances from expected or planned outcomes are also variances; whether financial, clinical, patient satisfaction, or quality. Including these effectiveness variances in variance analysis is possible through the Gateway system, critical variances, and balanced scorecards. The following matrix provides a model for process improvements based on both compliance and effectiveness variances.

compliance effect matrix

Good Compliance / Good Effectiveness – Your pathway is working well and the care team is providing effective care using the pathway. While you can congratulate yourself and the care team for its success future competitive changes, practice changes, and other vagaries may require a change. You might also proactively improve the pathway to create competitive advantage. Take a look at patients with better than expected outcomes for opportunities to further improve care.
Good Compliance / Bad Effectiveness – The care team is following the pathway, yet outcomes are poor. This implies that the pathway itself is bad or being improperly applied to segment of the patient population. A review of the pathway is suggested.
Poor Compliance / Good Effectiveness – The care team is providing good care despite the pathway, not because of it. Reviewing the pathway and actual practice is recommended in order to align pathway and practice.
Poor Compliance / Poor Effectiveness – The care team is not providing good care and are not using the pathway. A thorough review of current practice is recommended; when effective care processes are in place then – and only then – can you design a reliable and useful pathway.

How do variance management systems fit into an overall process improvement strategy?

Clinical pathways define a care process for a patient population. Processes are the essence of any improvement strategy. So is data, which pathways – through the variance management system – can provide in abundance.

As we discuss in our Clinical Pathways Short Takes, an effective pathways system enables a ‘double loop’ improvement process. At the heart of this improvement model is variance management system: providing the essential data for the decisions made in the ACT step. Do we modify the clinical and operational processes? Do we modify the pathway? What do we change” Where are our problems?

management loop

Two loops, two opportunities to improve care. Both driven by the variance management system.

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