The effectiveness of laboratory procedures is directly linked to the q
uality of the total medical complex. Therefore, quality management of
laboratories must cross into the total quality management of the integ
rated medical practice. This paper describes the Mayo Foundation appro
ach to continuous improvement (CI) for highest quality medical care. W
ith the assistance of the Juran Institute, large numbers of medical an
d paramedical leaders at Mayo were trained in the principles of CI. Ei
ght CI pilot projects were initiated at Foundation level involving cro
ss-disciplinary teams. It is hoped that the success of these projects
will spontaneously spread enthusiasm for this technique to many other
projects. One specific project undertaken was an analysis of the cost
variability of five high-volume disease-related groups (DRGs). The com
ponents of the resource utilization were analyzed to classify the vari
ous provider groups according to the cost of resources utilized. Also,
a ''best case'' composite was projected using the smallest components
observed for each resource across all the services. Similarly, the la
boratory utilization was analyzed to characterize the typical patterns
of use and the variation across groups. Practice guidelines are anoth
er tool for continuous practice improvement used by the Mayo Foundatio
n. Implementation of guidelines has resulted in more uniform practice
patterns and increased compliance with consensus-derived standards of
care.