A NON-PROFIT'S QUEST FOR PROFITABILITY
The National Initiative for Child Health Care Quality's First Year

INTRODUCTION

At the end of their organization's first year, the leaders of the non-profit National Initiative for Children's Healthcare Quality (NICHQ) were just beginning to get a sense of the scope of the challenge that lay before them. Their mission had been clear, if far-reaching, from the start--to improve healthcare for children across the country, particularly those who were poor and poorly served. Equally clear was their sense of how to get there: not by lobbying for new regulations or by issuing "report cards" about the performance of health plans but by directly influencing what went on where children most often received health care--in the thousands of pediatric and family practices throughout the country.

The timing, they believed, was right for the launch of their non-profit. In the public sector, a new federal program that aimed to give states the wherewithal to provide universal coverage for children promised to bring new focus to the quality of care rather than issues of access alone. On the private side, concern about quality appeared poised to be a major concern--second only to cost--in discriminating among health plans. At the same time, academic research—some of which had been carried out by those who came together to create NICHQ—pinpointed the most significant gaps in children’s health care.

This research had led NICHQ leaders to search for novel ways of reaching into doctors' offices and shaping how caregivers went about their work. Based on evidence from small, pilot projects, they became convinced that they had found approaches that held the potential for wide-scale success in changing the behavior of doctors and nurses in two key areas: that of treating children with asthma, by far the most prevalent chronic condition among children; and that of providing "preventive services", such as immunizations and screening for lead. Moreover, anecdotal evidence in the pilot projects suggested broader effects on the overall quality of care within a practice that went beyond the immediate focus. Wide adoption of these approaches to help practices address an array of difficult clinical topics--ranging from other chronic illnesses to behavioral problems to appropriate antibiotic use--held the promise of delivering "dramatic, measurable" improvements in the care children received on a national scale according to NICHQ's founders. Through a focus on these critical areas, they believed they would have the means of fostering a "culture of improvement" not only within practices but among practices and throughout their profession as a whole.

To make their dream a reality, the two leaders of the initiative, pediatricians Charles Homer and Peter Margolis, had been encouraged to take an unusual tack for a non-profit. NICHQ, as the new organization was known, was to earn its way to recognition through the sales of its products and services. NICHQ had the strong backing of one of the world's largest philanthropies, the David and Lucile Packard Foundation. But the Foundation was to act as investor not patron, promising close to $7 million for the organization's first five years, after which Foundation officials expected that NICHQ would be largely self-sufficient.

The leaders of NICHQ were all experienced academic researchers who had spent years in their respective universities carrying out innovative studies that lay the groundwork for what they hoped would be "dramatic" improvements. But they were neither entrepreneurs nor managers and realized they had much to learn about their new non-profit "business". To ensure the organization's success, the fledgling NICHQ would prepare for autonomy by growing within the nest of an established non-profit, the Institute for Healthcare Improvement, which had followed a similar entrepreneurial trajectory in the closely related field of improving the quality of healthcare for adults.

With the first of their start-up grant's five years completed and independence looming, they were still convinced that they had the right approach to deliver on the "measurable" changes they had promised. But they were less and less certain about who their "customers" might be and what kinds of services and products they might create for them to ensure both meaningful improvement in care and financial success for the enterprise.