Deming's 14 Points

W. Edwards Deming's 14 Points transformed post-war Japanese industry from low-quality producer to quality leader. His insight? Quality problems stem from system design, not worker failures (Deming, 2000). OptumRx's crisis validates this, that is, the problem isn't bad employees, it's misaligned operational models. Deming emphasized constancy of purpose, fear elimination, continuous improvement, and leadership commitment (Evans & Lindsay, 2023).

Figure 1: Three-Year Implementation Roadmap

The circular diagram shows "Transparent PBM Transformation" at center, surrounded by 14 satellite nodes. Blue points (1-5) mark Year 1 foundation, green points (6-10) mark Year 2 integration, orange points (11-14) mark Year 3 sustainability. Curved arrows show dependencies, status icons track progress.

 

Year 1: Foundation (Points 1-5)

Point 1 - Create Constancy of Purpose

CEO commits publicly to full transparency within 24 months, backed by $1.2B technology investment. Executive compensation ties to transparency metrics, not revenue targets (Garvin, 2023).

Point 2 - Adopt the New Philosophy

Replace spread-based compensation with value-based models. Transition account management from defending pricing to collaboratively identifying cost reductions. Require client materials to proactively disclose margins.

Point 3 - Cease Dependence on Inspection

Deploy blockchain-enabled verification giving clients real-time validation of manufacturer payments, pharmacy reimbursements, and margins. Eliminate quarterly reconciliation through continuous automation (ASQ Quality Press, 2023).

Point 4 - End Lowest Price Selection

Restructure pharmacy contracting from pure cost minimization to quality-adjusted reimbursement incorporating therapy management, adherence support, and clinical consultation (Evans & Lindsay, 2023).

Point 5 - Improve Constantly and Forever

Create quarterly innovation cycles where frontline teams propose, pilot, and scale enhancements. Allocate 10% of IT resources to continuous improvement separate from maintenance (Deming, 2000).

 

Year 2: Integration (Points 6-10)

Point 6 - Institute Training

Mandatory 40-hour transparency certification for all client-facing roles covering value-based pricing principles, cost-structure explanation, and collaborative problem-solving.

Point 7 - Adopt Leadership

Restructure performance from individual metrics to team outcomes. Implement skip-level sessions where executives directly engage frontline staff.

Point 8 - Drive Out Fear

Implement no-fault problem reporting with executive recognition for transparency gap identification. Publicly reward teams acknowledging discrepancies and developing solutions (Garvin, 2023).

Point 9 - Break Down Barriers

Create cross-functional client success pods managing complete relationships from contracting through renewal. Co-locate pharmacy operations, clinical, and analytics personnel.

Point 10 - Eliminate Slogans

Drop vague marketing. Replace with specific commitments: "100% rebate pass-through," "72-hour dispute resolution," "real-time pricing validation" (Deming, 2000).

 

Year 3: Sustainability (Points 11-14)

Point 11 - Eliminate Quotas

Remove script volume targets from sales compensation. Replace with client Net Promoter Score, renewal rates, and documented savings.

Point 12 - Remove Barriers to Pride

Authorize client service representatives to proactively disclose pricing errors and initiate refunds without management approval up to $100,000 per incident (Evans & Lindsay, 2023).

Point 13 - Institute Education

Quarterly industry symposia where external experts, competitors, and critics present perspectives. Annual executive immersion in transparent PBM operations at competitors.

Point 14 - Engage Everyone

Allocate 5% of every employee's time to transparency initiatives. Create internal innovation marketplace where employees propose and fund enhancements (Deming, 2000).

Success Metrics

Track leading indicators beyond traditional financials: client transparency satisfaction (target: 90th percentile), pricing dispute resolution time (target: 72 hours), rebate pass-through percentage (target: 100%), regulatory compliance scores (target: zero findings), employee engagement (target: 80% participation).