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there is a great deal of variability in medical practice and, oftentimes, a lack of adherence to medical standards based on scientific evidence.1

The third domain exemplifies the ability to meet customer-specific values and expectations, permitting the greatest responsiveness to individual values and preferences and maximum personalization or customization of care. Strong policy directives are difficult to implement in this area because of the variety of individual needs and preferences.

Previous work by the IOM categorized quality problems into misuse (avoidable complications that prevent patients from receiving full potential benefit of a service), overuse (potential for harm from the provision of a service exceeds the possible benefit) and underuse (failure to provide a service that would have produced a favorable outcome for the patient).2 Within this framework, issues of misuse are most likely to be addressed under safety concerns. Issues of overuse and underuse are most likely to be addressed under the domain of practice consistent with current medical knowledge.

Activities in the external environment are grouped under two general categories: (1) regulation and legislative action and (2) economic and other incentives (or barriers). Regulation and legislation include any form of public policy or legal influence, such as licensing or the liability system. Economic and other incentives constitute a broad category that includes the collective and individual actions of purchasers and consumers, the norms and values of health professionals, and the social values of the nation and local communities.

Regulation and legislative action can influence quality in health care organizations in two ways. First, it can empower the chief executive officer and governance of health care organizations to take action internally to improve quality. It provides a call to action from the external environment that requires a response inside the organization, and lack of an appropriate response generally results in certain sanctions. Second, it requires all health care organizations to make minimum investments in systems for quality, thus creating a more level playing field throughout the industry. It should also be noted, however, that regulation and legislation can also create disincentives for quality, such as lax or conflicting standards.

Marketplace incentives direct the values, culture, and priorities of health care organizations and reward performance beyond the minimum. One way this can happen is by purchasers and consumers requesting and using information to direct their business to the best organizations and providers in a community. Both public and private purchasers can be a strong influence, although public purchasers (especially the Health Care Financing Adminis-



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