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Apple

Supplier Responsibility

2013 Progress Report

2Apple Supplier Responsibility
2013 Progress Report

Contents

Page 3 Supplier Responsibility at Apple
Our commitment to transparency
Highlights from our 2013 Report

Page 7

Accountability

The Apple Supplier Code of Conduct
Apple and the Fair Labor Association
How an Apple audit works
Audits around the world
Core violations and corrective action
Workplace ethics and protection for whistle-blowers

Page 12 Empowering Workers
Worker and manager training
Free educational opportunities for workers
Making sure workers’ voices are hea

Page 16

Labor and Human Rights

Ending excessive work hours
Addressing underage labor
How dishonest third-party labor agents conspire to corrupt the system
Providing tools to enable responsible hiring
Setting standards for hiring students
Stopping excessive recruitment fees and bonded labor
Sourcing conflict-free materials

Page 22

Health and Safety

Making working conditions safer
Occupational and process safety
Training to identify hazards
Worker well-being
Working with the academic community

Page 25

Environment

Apple’s commitment to environmental responsibility
Expecting the highest standards
What happens in a focused environmental audit

Page 28 Audit Results

3Apple Supplier Responsibility
2013 Progress Report

Accountability |

Empowering Workers

| Labor and Human Rights | Health and Safety | Environment | Audit Results

Supplier Responsibility at Apple
Workers everywhere should have the right to safe and ethical
working conditions. They should also have access to educational
opportunities to improve their lives. Through a continual cycle
of inspections, improvement plans, and verification, we work
with our suppliers to make sure they comply with our Code of
Conduct and live up to these ideals.

What we do to empower workers.
Because education is a great equalizer, we’re working with suppliers to provide
training and free onsite classes in a wide range of areas, including:

• Labor laws and our Supplier Code of Conduct
• Technical and language skills
• Worker-management communication

What we do to protect workers’ rights.
We constantly look for problems, and when we find them, we investigate the
causes and work to fix them. Here are just some of the topics we’re focused on:

• Ending excessive work hours
• Stopping underage and bonded labor
• Sourcing conflict-free minerals

What we do to safeguard workers’ health and well-being.
Ensuring safe work environments is only the beginning. Here are some other
ways we’re helping prevent problems and improve worker satisfaction:

• Establishing new safety standards
• Training workers on health and safety
• Improving ergonomics and worker well-being

What we do to reduce our environmental impact.
To make sure suppliers are acting in environmentally responsible ways, we’re
working with industry experts in these areas:

• Managing our carbon footprint
• Identifying high-risk facilities
• Conducting focused audits

Supplier Responsibility

4Apple Supplier Responsibility
2013 Progress Report

How we hold ourselves and our suppliers accountable.
Apple is the first technology company to open its supply chain to the Fair Labor
Association (FLA). We ensure compliance with our Supplier Code of Conduct by
conducting hundreds of audits per year worldwide. And we work with suppliers
to make sure any problems we find are corrected.

Our commitment to transparency.
This year—as we have for the past seven years—we’re reporting extensively on
the problems we’ve found in our supply chain. That includes the tough issues
like underage labor, excessive work hours, and environmental violations. We’ve
opened our supply chain to outside organizations to conduct their own audits.
We’re joining industry groups to gather and share ideas. We’re even partnering
with some of our most vocal critics. And we do all this because we believe
candidness and transparency are critical to improving conditions for workers
around the world.

5Apple Supplier Responsibility
2013 Progress Report

Supplier Responsibility Progress
Report
Our Supplier Responsibility Progress Report provides the results
of our

2012

audits, including the work we’re doing to correct
issues and improve our suppliers’ performance.

Our commitment to transparency.
For the past seven years, Apple has been publishing reports on the audits we
perform in our supply chain. We do this because we believe in honestly sharing
our findings—the good and the bad. We’re fixing problems and tackling issues
that our entire industry faces, such as excessive work hours and underage labor.
We’re going deeper into the supply chain than any other company we know of,
and we’re reporting at a level of detail that is unparalleled in our industry.

To end the practice of excessive overtime, we now track weekly work hours for
1 million workers across our supply chain and publish the results on our website
every month. And we share our work-hour strategy and tools with others inside
and outside our industry. Although underage labor is rare in our supply chain, we
report any incident we find, as well as the actions taken to correct problems and
prevent future occurrences. We also give our suppliers the names of labor agents
known to recruit underage workers. In addition, we are publishing the names and
addresses of our top 200 production suppliers.

We have long-standing relationships with many industry groups—and we look
for new ways to address important issues in our industry by collaborating with
experts around the world. In 2012, we became the first technology company
to join the Fair Labor Association (FLA). At our request, the FLA launched an
unprecedented audit of our largest final assembly supplier, Foxconn. The FLA’s
independent findings and progress reports have been published on its website.

We’ve invited the Institute of Public and Environmental (IPE) Affairs and other
environmental groups to work with us on specialized audits. We’re also continuing
our work with Verité, a non-governmental organization (NGO) focused on ensuring
fair working conditions, to develop new strategies for worker-management
communication. We participate in the Electronic Industry Citizenship Coalition
(EICC) and the Global e-Sustainability Initiative (GeSI) to promote the use of
conflict-free minerals.

At Apple, we care just as much about how our products are made as we do
about how they’re designed. We know people have very high expectations of us.
We have even higher expectations of ourselves.

Supplier Responsibility

6Apple Supplier Responsibility
2013 Progress Report

Highlights from our 2013 Report.
• We conducted 393 audits at all levels of our supply chain—a 72 percent

increase over 2011—covering facilities where more than 1.5 million workers
make Apple products. This total includes 55 focused environmental audits
and 40 specialized process safety assessments to evaluate suppliers’ operations
and business practices. In addition, we conducted 27 targeted bonded labor
audits to protect workers from excessive recruitment fees.

• Taking on the industrywide problem of excessive work hours, we achieved an
average of 92 percent compliance with a maximum 60-hour work week. We are
now tracking more than 1 million workers weekly and publishing the results
monthly on our website.

• In 2012, Apple became the first technology company to join the Fair Labor
Association (FLA). At our request, the FLA conducted the largest-scale indepen-
dent audit in its history, covering an estimated 178,000 workers at our largest
final assembly supplier, Foxconn. The FLA’s independent findings and progress
reports have been published on its website.

• We extended our worker empowerment training programs to more workers
and more managers. In 2012, 1.3 million workers and managers received
Apple-designed training about local laws, their rights as workers, occupational
health and safety, and Apple’s Supplier Code of Conduct. That’s nearly double
the number of workers trained by this program since 2008.

• We increased our investment in our Supplier Employee Education and
Development program—which offers workers the opportunity to study business,
computer skills, languages, and other subjects at no charge—expanding
from four facilities to nine. More than 200,000 workers have now participated
in the program.

• Continuing our efforts to protect the rights of workers who move from their
home country to work in our suppliers’ factories, we required suppliers to
reimburse US$6.4 million in excess foreign contract worker fees in 2012. That
brings the total repaid to workers to US$13.1 million since 2008.

7Apple Supplier Responsibility
2013 Progress Report

We believe in accountability—for our
suppliers and ourselves.
By vigorously enforcing our Supplier Code of Conduct, we ensure
that our suppliers follow the same principles and values we hold
true. We collaborate with experts in areas such as human rights
and the environment to conduct comprehensive, in-person audits
deep into our supply chain. When we uncover problems, we work
with our suppliers to fix them.

A third-party auditor and an Apple auditor meet with the facility manager for an environmental,
health, and safety audit in Shanghai. An Apple auditor leads every onsite audit, supported by local
third-party auditors who are experts in their fields.

Accountability

8Apple Supplier Responsibility
2013 Progress Report

The Apple Supplier Code of Conduct.
The Apple Supplier Code of Conduct is based on standards created by the
International Labor Organization, the United Nations, and the Electronic Industry
Citizenship Coalition (EICC). It requires suppliers to provide safe and healthy
working conditions, to use fair hiring practices, to treat their workers with
dignity and respect, and to adhere to environmentally responsible practices
in manufacturing. But our Code goes beyond industry standards in a number
of areas, including ending involuntary labor practices and eliminating underage
labor. To make sure suppliers adhere to the Code, we have an aggressive
compliance-monitoring program that includes Apple-led factory audits and
corrective action plans, and confirmation that these plans have been carried out.

Apple and the Fair Labor Association.
In 2012, Apple became the first electronics company to be admitted to the
Fair Labor Association (FLA), a coalition of universities, non-governmental
organizations (NGOs), and businesses committed to improving the well-being,
safety, fair treatment, and respect of workers.

In February 2012, we asked the FLA to conduct special voluntary audits of our
biggest final assembly suppliers, including Foxconn factories in Shenzhen and
Chengdu, China. With unrestricted access to our operations, the FLA completed
one of the most comprehensive and detailed assessments in the history of
manufacturing—in scale, in scope, and in transparency. This independent
assessment covered an estimated 178,000 workers and included interviews
with 35,000 workers.

On March 28, the FLA published detailed reports on what it found with
recommendations for improving conditions for workers. Apple and Foxconn
accepted the FLA’s findings and recommendations and created a robust
15-month action plan with defined target dates of completion.

Since then, Apple and the FLA have been monitoring the progress of corrective
actions, and at their last checkpoint, they found that Foxconn has implemented
many changes ahead of schedule and the rest are on schedule for completion by
July 1, 2013. Among the recommendations, Foxconn has engaged consultants to
provide health and safety training for employees, improved its internship program,
and increased access to unemployment insurance for its migrant workers, as well
as for all workers in Shenzhen.

9Apple Supplier Responsibility
2013 Progress Report

How an Apple audit works.
An Apple auditor leads every onsite audit, supported by local third-party
auditors who are experts in their fields. Each expert is trained to use Apple’s
detailed auditing protocol. At each audited facility, the teams conduct physical
inspections, interview workers and managers, and observe and grade suppliers
based on more than 100 data points corresponding to each category of our
Supplier Code of Conduct. We use this data not only to ensure compliance and
sustainable improvement over time, but also to consider new programs that will
meet the changing needs of our suppliers and their workers.

In addition to regularly scheduled audits, we conduct a number of surprise audits,
during which our team visits a supplier unannounced and insists on inspecting
the facility within an hour of arrival. We conducted 28 of these surprise audits in
2012. During our regular audits, we may also ask a supplier to immediately show
us portions of a facility that are not scheduled for review.

A supervisor shows Apple and third-party auditors around a final assembly facility in Jundiaí, Brazil,
near São Paulo. All final assembly manufacturers are audited annually.

The Supply Chain

Apple’s supply chain consists of a broad
network of suppliers, including:
• Final assembly manufacturers that

assemble Mac, iPad, iPod, and iPhone.
• Component suppliers that manufacture

parts and components, such as LCDs,
hard drives, and printed circuit boards
from which finished Apple products are
assembled.

• Nonproduction suppliers, such as office
supply vendors and call centers, that pro-
vide products and services that are not
part of the Apple manufacturing process.

10Apple Supplier Responsibility
2013 Progress Report

Audits around the world.
Since our first audits in 2006, we’ve expanded to more countries and more
supplier categories. We’ve conducted audits in 14 countries, and in 2012, our
audits covered nearly 1.5 million workers. We also perform audits in select
nonproduction facilities, including call centers and warehouses. In addition, we
conduct specialized audits focusing on areas such as the environment and safety.

We audit our final assembly manufacturers annually, and we audit other
facilities based on certain risk factors, including location and geographic
sensitivities, past audit performance, and the nature of the facility’s work. Since
many smaller suppliers have never been exposed to auditing, our audits often
identify ways to enable operations to comply with our standards. This effort
not only improves working conditions at these suppliers, it also helps improve
conditions industrywide, since many of our peers use the same companies.

Core violations and corrective action.
Apple considers the most serious breaches of compliance to be core violations.
These include physical abuse; underage, debt-bonded, or forced labor; falsification
of information or obstruction of audit; coaching workers for audits or retaliating
against them if they provide information; bribery; significant pollution and
environmental impacts; and issues posing immediate threat to workers’ lives
or safety. All core violations must be stopped and corrected immediately. Our
preference is to fix problems so they don’t happen again rather than just fire the
supplier—which would likely let these violations continue for other customers.
However, if a violation is particularly egregious, or if we believe a supplier is not
fully committed to stopping the behavior, we terminate our relationship with that
supplier and, when appropriate, report the behavior to the proper authorities.

Audited facilities

First-time audits

Repeat audits

Process safety assessments

Specialized environmental audits

2012 Apple Audits

In 2012, Apple conducted 393 audits—a 72 percent
increase over the previous year:
• 123 first-time audits
• 175 repeat audits
• 40 process safety assessments
• 55 specialized environmental audits

2007

2008

102

2009

127

2010

229

2011

393

2012

11Apple Supplier Responsibility
2013 Progress Report

Workplace ethics and protection for whistle-blowers.
To conduct a thorough audit, suppliers must give our auditors access to factories
and provide them with accurate documents and record-keeping processes for
review. Our auditors are skilled in identifying circumstances where a supplier may
be providing false information or preventing access to critical documents—both
of which are core violations of our Supplier Code of Conduct. Coaching workers
on what to say during an interview and retaliation against workers for participat-
ing in an audit interview are also core violations.

After an audit interview, each worker receives a hotline card with case numbers to
identify the facility and audit date. This gives the worker a private opportunity to
provide additional information to our team or report any unethical consequences
as a result of the interview—an action for which we have zero tolerance. When we
receive calls, we follow up with the suppliers to make sure each issue is properly
addressed. In addition, our authorized third-party partner made more than 8000
phone calls in 2012 to workers interviewed by auditors to find out if retaliation or
other negative consequences had resulted from the interview.

An auditor interviews a worker at a facility in Vishay, China. At these confidential interviews, auditors
verify identification and legal status, and they ask workers about conditions at the facility.

12Apple Supplier Responsibility
2013 Progress Report

When people gain new skills
and knowledge, they can improve
their lives.
We provide educational resources for workers throughout our
supply chain—from training on their rights under the law to free
college classes in language skills, computers, and other subjects.
Many workers even have the opportunity to earn an associate’s
or bachelor’s degree.

A worker uses the computer lab at a final assembly facility in Shanghai. Apple and suppliers have
invested millions of dollars for computer equipment at facilities throughout the supply chain.

Empowering Workers

13Apple Supplier Responsibility
2013 Progress Report

Worker and manager training.
We know that finding and correcting problems is not enough. We also require
suppliers to implement Apple-designed training programs to educate workers
about local laws, their rights as workers, occupational health and safety, and
Apple’s Supplier Code of Conduct. Supervisors and managers are also trained on
effective management practices, including worker-management communication,
antiharassment policies, and worker protections. Since 2007, more than 2.3 million
workers and managers in our supply chain have received this training, carrying
this knowledge with them in their current role or any future job.

We also train workers and managers on specialized topics that require deeper
learning. In 2012, for example, we held focused training on the prevention of
underage labor as well as a variety of health and safety topics.

Audited facilities Training Participation

Apple and suppliers have trained more than 2.3 million workers and managers since 2007.

2007

103K

2009

27K2K

2008

167K

2010

670K

2011

1.32M

2012

14Apple Supplier Responsibility
2013 Progress Report

Free educational opportunities for workers.
Apple continues to expand professional and personal development opportunities
for workers through our Supplier Employee Education and Development (SEED)
program. This Apple-designed program offers workers classes in technical and
software skills, life skills, social and environmental responsibility, language skills,
management skills, and engineering. In addition, we partner with universities to
give workers quality education and access to advanced degrees.

Since its beginnings in 2008, over 200,000 workers have participated in the SEED
program. To reach even more workers, we’re expanding the program. We have
now funded classrooms and degree programs in nine final assembly factories,
and we have agreements in place for expansion with three second-tier suppliers.
In addition, we have invested millions of dollars for computer equipment and
tuition support since the program began.

Here’s what some Foxconn workers are saying about what they’re getting out
of the degree programs.

Niu Depo, Human Resources: “Entering the factory straight after finishing high
school, I always dreamed about advanced education. I actually passed the
National College Entrance Examination, but both my older brother and younger
sister needed the chance at that time, so I decided to start working to support
the family. SEED provides me resources and knowledge of different subjects, and
I keep taking courses that are relevant to my job posts. I have taken courses in
project management and am now on my way to finishing a degree in human
resources, which is what I want to do for a living.”

Zhang Taowei, Quality Control: “I didn’t get to finish high school. SEED gives
people like me a second chance in life, a chance to study. The courses and
schedule are really well designed. All you need to do is just walk into the
classroom after work. I hope I can get my high school degree soon. It would
be great if I can go to the next level and get the vocational degree as well.”

Tian Kailan, Supply Chain Management: “I joined Foxconn roughly two years ago
when I was 17. When they first placed me as the procurement/logistics officer, I
didn’t have a clue what the job meant. I spent most of the time trying to figure
out the jargon people were using. Then a coworker told me about this course
taught by SEED on logistics and I started taking it. In the long run, I hope I can go
back to my hometown in Hunan and open my own logistics company.”

Audited facilities

Number of cumulative participants

Number of participants per year

Participation in Education and Development Programs

Our education and development programs began in 2008 and are now available to workers in nine locations.

4K4K

2008

19K15K

2009

35K
16K

2010

60K

25K

2011

201K

141K

2012

Popular Education and Development
Courses

• History
• Technical and software skills
• Personal financial management
• Social and environmental responsibility

training
• Language skills
• Management skills
• Business and entrepreneurship
• Engineering

15Apple Supplier Responsibility
2013 Progress Report

Making sure workers’ voices are heard.
Workers have a right to be in an environment where they can voice their
concerns freely—and where managers and supervisors act on those concerns.
That’s why our manager training offers guidance on fostering worker-manager
communication. But we know that’s not enough. So in 2012, we began work
on two separate initiatives aimed at finding the most effective ways for workers
to communicate with their managers and ensure that their feedback is heard
and addressed.

First, we developed the Sustainable Workforce Program in consultation with Verité,
an internationally recognized NGO whose mission is to ensure that people around
the world work under safe, fair, and legal conditions. Second, we’re participating in
the IDH Sustainable Trade Initiative, a public-private working group, which allows
us to collaborate with other companies in our industry on this topic.

With both initiatives, we’re exploring a range of solutions for encouraging
more open communication, including hotlines and committees in which worker
representatives address concerns with managers. To date, suppliers representing
nearly 47,000 workers in our supply chain are participating in these programs.
And when we identify the most effective solutions, we’ll roll them out to others
in our supply chain.

A plant supervisor and line worker have a
discussion at a facility in Harrodsburg, Kentucky.

16Apple Supplier Responsibility
2013 Progress Report

Labor and Human Rights

If companies want to do business
with us, they must act fairly and
ethically at all times.
We don’t allow suppliers to act unethically or in ways that
threaten the rights of workers—even when local laws and
customs permit such practices. We’re working to end excessive
work hours, prohibit unethical hiring policies, and prevent the
hiring of underage workers.

A worker performs a quality control check on panes of glass to be used in Apple devices.

17Apple Supplier Responsibility
2013 Progress Report

Ending excessive work hours.
Ending the industrywide practice of excessive overtime is a top priority for Apple.
Our Supplier Code of Conduct limits work weeks to 60 hours except in unusual
circumstances, and all overtime must be voluntary. Unfortunately, work weeks in
excess of 60 hours have historically been standard rather than exceptional, and
little has changed for many years in our industry. In the past, we tried different
ways to fix the problem, but we weren’t seeing results. So in 2011, we took a more
basic approach: We tracked work hours weekly at a handful of suppliers, and when
we found excessive hours, we were able to address the problems quickly with
the supplier.

For 2012, we expanded that program and now track work hours weekly for over
1 million employees, publishing the data every month. As a result of this effort,
our suppliers have achieved an average of 92 percent compliance across all work
weeks, and the average hours worked per week was under 50.

Supplier Work-Hour Compliance

60%

80%

100%

Jan

Co
m

pl
ia

nc
e

w
it

h
60

-H
ou

r
W

or
k

W
ee

k
St

an
da

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2012, by Month 2012 Compliance Average

The number of workers we track has increased from over 500,000 in January to more than
1 million in December.

Addressing underage labor.
Our approach to underage labor is clear: We don’t tolerate it, and we’re working
to eradicate it from our industry. When we discover suppliers with underage
workers or find out about historical cases—where workers had either left or
reached legal working age by the time of the audit—we demand immediate
corrective action as part of our Underage Labor Remediation Program. Suppliers
must return underage workers to school and finance their education at a school
chosen by the family. In addition, the children must continue to receive income
matching what they received when they were employed. We also follow up
regularly to ensure that the children remain in school and that the suppliers
continue to uphold their financial commitment.

In 2012, we found no cases of underage labor at any of our final assembly
suppliers. While we are encouraged by these results, we will continue regular
audits and go deeper into our supply chain to ensure that there are no underage
workers at any Apple supplier. Many suppliers tell us that we are the only
company performing these audits, so when we do find and correct problems,
the impact goes far beyond our own suppliers.

18Apple Supplier Responsibility
2013 Progress Report

How dishonest third-party labor agents conspire to corrupt
the system.
In many of the cases of underage labor we’ve discovered, the culprit behind
the violation was a third-party labor agent that willfully and illegally recruited
young workers. In January 2012, for example, we audited a supplier, Guangdong
Real Faith Pingzhou Electronics Co., Ltd. (PZ) that
produces a standard circuit board component used by many other companies
in many industries. Our auditors were dismayed to discover 74 cases of workers
under age 16—a core violation of our Code of Conduct. As a result, we terminated
our business relationship with PZ.

But we didn’t stop there. We also learned that one of the region’s largest
labor agencies, Shenzhen Quanshun Human Resources Co., Ltd. (Quanshun)

, which is registered in both the Shenzhen and
Henan provinces, was responsible for knowingly providing the children to PZ.
In fact, to obtain the workers, this agency conspired with families to forge age
verification documents and make the workers seem older than they were.

We also alerted the provincial governments to the actions of Quanshun. The
agency had its business license suspended and was fined. The children were
returned to their families, and PZ was required to pay expenses to facilitate their
successful return. In addition, the company that subcontracted its work to PZ
was prompted by our findings to audit its other subcontractors for underage
labor violations—proving that one discovery can have far-reaching impact.

“In our experience, Apple is a leader in the field of responsible child
labor remediation. The issues found by Apple are indicative of the
tightening labor market in China and a changing social landscape.
Apple is working hard with suppliers to support them to develop
responsible recruitment systems. When it finds child labor, Apple acts
swiftly to protect the best interests of the child and support children
to return to their families and education. We are now starting to see
these children’s achievements and the improved life choices now
available to them.”

Dionne Harrison, Business and Capability Director, Impactt Limited

19Apple Supplier Responsibility
2013 Progress Report

Providing tools to enable responsible hiring.
Last year marked the third year of our Prevention of Underage Labor training
program, an initiative to help suppliers identify and prevent underage labor. We
conducted training for 84 suppliers that were chosen because their facilities are
located in provinces at high risk for underage labor. The training outlines methods
and provides tools for implementing and sustaining effective age verification
processes. It also specifies the steps suppliers must follow if underage labor is
found during an audit.

New in 2012, we provided a guidebook to help with identifying legal IDs and
assessing recruitment practices of third-party labor agents. We also added a
layer of support beyond the classroom. After the training, suppliers now assess
their internal and external risks and create action plans to revise policies for
preventing underage labor. Then we follow up to review their new systems.
For suppliers that need additional help, industry consultants provide onsite
support in implementing action plans and improving management practices.

In addition, we give at-risk suppliers the names of labor agents that have been
associated with the recruitment of underage workers. We also offer guidance
on working with other agents, including ensuring that the agent has appropriate
licenses and permits, conducting regular audits of the agent’s recruitment
practices, and reporting violations to Apple and the local government.

Setting standards for hiring students.
In China, many students are required by their school programs to complete
fieldwork (internships) as part of their curriculum. Our suppliers must follow strict
standards when hiring students as interns or apprentices. For example, student
working hours must comply with legal restrictions and not conflict with school
attendance. Suppliers must also ensure that the education program requirements
adhere to laws and regulations. We’ve discovered that some elements of these
programs are poorly run, and the cyclical nature of internship work makes it
difficult to catch problems. In 2013, we will require suppliers to provide the
number of student workers along with school affiliations so we can monitor this
issue more carefully. We’ve begun to partner with industry consultants to help
our suppliers improve their policies, procedures, and management of internship
programs to go beyond what the law requires.

An independent auditor checks identification
and other documents to verify the age and
status of workers at a facility in Shanghai.
Suppliers are required to maintain all relevant
documentation and to produce it during audits.

20Apple Supplier Responsibility
2013 Progress Report

Stopping excessive recruitment fees and bonded labor.
Third-party labor agencies help many suppliers recruit contract workers from
other countries. The agencies often use multiple subagencies, which in turn do
business through smaller local agencies in the workers’ home countries. Workers
are often required to pay fees to each of these agencies to gain employment.
And many find that they have taken on huge debt even before they start the
work. As a result, they must hand over a high proportion of their wages to
recruiters to pay this debt, and they have to remain at the job until the debt is
paid. We consider this a form of bonded labor, and it is strictly prohibited by our
Supplier Code of Conduct.

When we find violations, suppliers must reimburse excessive recruitment fees—
anything higher than the equivalent of one month’s net wages—for any eligible
contract worker found working on Apple projects. Knowing that factories in
certain countries are more likely to employ foreign contract labor, we target these
factories for bonded labor audits, and we help them modify their management
systems and practices to comply with our standards. Apple is the only company
in the electronics industry to mandate these reimbursements, and our suppliers
have reimbursed a total of US$13.1 million to contract workers since 2008, includ-
ing US$6.4 million in 2012.

“Apple’s approach to addressing the enormous vulnerability faced by
migrant workers makes it one of the leading companies tackling this
issue. Critically, the company has extended its efforts to a root cause of
the problem, namely abusive recruitment practices in workers’ home
countries. The result is tangible, financial benefit to migrant workers.”

Dan Viederman, CEO, Verité

21Apple Supplier Responsibility
2013 Progress Report

Sourcing conflict-free materials.
Apple is committed to using conflict-free minerals, and we’ve joined the
Public-Private Alliance for Responsible Minerals Trade, a joint initiative among
governments, companies, and civil society to support supply chain solutions to
conflict minerals challenges in the Democratic Republic of Congo. As one of
the first electronics companies to map its supply chain for conflict minerals, we
actively survey suppliers to confirm their smelter sources. As of December 2012,
we have identified 211 smelters and refiners from which our suppliers source tin,
tantalum, tungsten, or gold.

Apple suppliers are using conflict-free sources of tantalum, are certifying their
tantalum smelters, or are transitioning their sourcing to already certified tantalum
smelters. We will continue to work to certify qualified smelters, and we’ll require
our suppliers to move their sourcing of tin, tungsten, and gold to certified
conflict-free sources as smelters become certified.

In an industrywide effort to help suppliers source conflict-free materials, we
continue to align our program with Organisation for Economic Co-operation
and Development (OECD) guidelines, and we are working with the Electronic
Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative
(GeSI). The primary focus of the EICC and GeSI Conflict-Free Smelter programs
is to certify qualified smelters as conflict-free through an independent third-party
audit process.

Materials Providers

Tantalum (Ta) Tin (Sn) Tungsten (W) Gold (Au)

Suppliers using metal
in components of
Apple products*

81 249 107 225

Smelters used by these
Apple suppliers**

17 64 31 99

*Many of our suppliers use more than one metal.

**The smelter names on this list have been verified according to the EICC Standard Smelter names. More smelters
continue to be added to the list.

22Apple Supplier Responsibility
2013 Progress Report

Health and Safety

Every worker has the right to a safe
and healthy workplace.
We don’t let anyone cut corners on safety. We constantly
seek out ideas—from our own employees and from outside
experts—to make production processes safer, and we apply
them to our entire supply chain. We’re also working with
suppliers to improve worker well-being in factories and beyond.

A worker prepares an iPhone for final assembly. Suppliers are required to provide workers with
protective gear and ensure that they are properly trained on safety standards.

23Apple Supplier Responsibility
2013 Progress Report

Making working conditions safer.
To reduce the risk of hazards in the workplace, suppliers must provide proper
protective gear, guardrails, safety harnesses, and other safety equipment, as well
as comprehensive, up-to-date training for workers. And we go even further. In
many cases, we review new materials and manufacturing processes to assess
potential risks and take appropriate action before they are introduced to the
supply chain. When we discover a problem—during an audit or through one of
Apple’s many onsite employees—we require immediate correction, and we look
for ways to expand safety procedures and practices in all similar facilities.

Occupational and process safety.
With the help of industry experts, we conduct specialized process safety
assessments at certain supplier facilities to look deeply into potential hazards
of manufacturing processes. In 2012, we conducted these assessments at
40 facilities. If we discover a problem, we share it with the facility and discuss
actions the supplier must take, then return to the facility to ensure that
corrective measures have been taken. We also offer training to suppliers to
identify hazards and make positive changes in their manufacturing facilities.

Training to identify hazards.
It is critical that both suppliers and Apple employees are prepared to identify
hazards. Since 2011, we have trained more than 350 Apple employees who spend
time in suppliers’ facilities on process safety topics such as flammable vapors,
combustible dust, toxins, and reactive materials. In 2012, we trained another
261 supplier personnel on personal protection equipment. Other health and
safety training topics have included chemical safety and lockout tagout (LOTO)—
a procedure related to isolation of hazardous materials and energy during
maintenance and modifications. We trained 95 suppliers on chemical safety
and 77 on LOTO.

Pairing specialized process safety assessments and training allows us to identify
hazards, educate suppliers, and empower them to make changes to improve
safety at their manufacturing facilities. Furthermore, we continue to develop
broader health and safety standards and requirements for supplier facilities.
For example, we are creating auditable standards for chemical hazard manage-
ment. We started working with key suppliers on these requirements in 2012,
and we will conduct training for these standards in 2013.

A worker wearing protective gear inspects an
Apple display in a cleanroom at a manufacturing
facility in Shanghai.

24Apple Supplier Responsibility
2013 Progress Report

Worker well-being.
To help improve workers’ health and well-being, we are conducting a detailed
study of job roles in factories in diverse areas of our supply chain to identify
ergonomic risks. For each of these roles, ergonomic experts will carefully
analyze tasks and workstations. We are using the results of these assessments
to strengthen our standards for both workstation design and job performance
guidelines, including task, training, and job rotation requirements.

Our worker well-being efforts don’t stop there. Expanding our investment in
employee assistance, we conducted extensive research at four final assembly
facilities to understand the areas workers would like to see improved. Using a
combination of roundtable discussions and written surveys, we got to the heart
of what matters most to the 70,000 workers at these sites. Our research results
suggest opportunities for improvement in areas including social support networks,
quality of sleep and dining, worker-supervisor relationships, and counseling and
advisory services. As a result of our worker surveys at all of the facilities in this
pilot, suppliers have taken specific actions, such as changing food vendors, track-
ing cafeteria food purchases to provide feedback to food vendors, evaluating
the impact of room-darkening window shades in dormitories, assigning workers
to dormitory rooms based on shift times, and changing security providers for
increased coverage.

Working with the academic community.
Apple’s Supplier Responsibility team continues to collaborate with the academic
community to explore ways to enhance our worker programs. In 2012, we formed
an advisory board including leading experts from Stanford, Columbia, Cornell,
MIT, the University of Michigan, the University of Washington, and the University
of California, Berkeley. The board will have access to Apple’s audit data, program
results, and supply chain information so its members can independently develop
and research projects that will be incorporated into our Supplier Responsibility
program and made available to the broader academic community.

25Apple Supplier Responsibility
2013 Progress Report

Environment

We’re working to reduce our
environmental impact. And we expect
the same from our suppliers.
We take great care to design environmentally sound products.
And we work with suppliers to make sure they’re using
environmentally responsible manufacturing processes wherever
those products are made.

Waste air is bio-filtered through a bed of tree bark on the roof of a supplier facility. This is the final
stage in the plant’s comprehensive system for managing air emissions.

26Apple Supplier Responsibility
2013 Progress Report

Apple’s commitment to environmental responsibility.
At Apple, we take responsibility for minimizing the environmental impact of our
operations and products, and our suppliers must take responsibility for their
operations as well. They must comply with local laws and regulations and use
environmentally responsible manufacturing processes wherever Apple products
are made.

We report on our total carbon footprint—and we’re one of very few companies
to do so. We manage our overall footprint by comprehensively measuring and
reporting the impact of our own operations and our products.

Expecting the highest standards.
We do not tolerate environmental violations of any kind. We hold suppliers
accountable to the environmental standards of our Supplier Code of Conduct—
standards that are some of the strictest in our industry and many others. We
look for environmental issues at many supplier levels, often confronting serious
issues deep within our supply chain. But we know that risks are not the same for
all suppliers. So we target high-risk suppliers for an additional layer of scrutiny
with our focused environmental audits, and we work with them to lessen their
impacts. To ensure our standards and our approach reflect material environmental
issues, we work with independent organizations such as the Natural Resources
Defense Council (NRDC), the Environmental Protection Agency (EPA), and the
Institute of Public and Environmental Affairs (IPE).

“Apple pushes suppliers through the whole corrective action process,
which includes third-party audits under the supervision of local
NGOs. This approach requires a high level of transparency and public
participation and can be viewed as a sign that Apple is serious.”

Ma Jun, Director, Institute of Public and Environmental Affairs

27Apple Supplier Responsibility
2013 Progress Report

What happens in a focused environmental audit.
We perform focused environmental audits at both suppliers with processes that
have higher potential for environmental impact and suppliers that have been
identified in the past as violators of local regulations or Apple’s environmental
standards. During these audits, we work alongside outside experts to examine
equipment, documentation, permits, and maintenance records, as well as factory
workers’ knowledge of processes and control systems. We also look beyond the
factory—for example, sometimes inspecting adjacent properties.

When we discover serious impact to the environment, we require processes to be
shut down until they can be remedied. We give the facility 90 days to meet our
requirements. Once they fix the problem, we follow up with the supplier to verify
everything. In addition, we have third-party experts—such as the IPE or local
NGOs—validate these findings and completed corrective actions. By opening our
supply chain to outside organizations, we increase transparency and make sure
our suppliers’ environmental impact is carefully reviewed.

To hold ourselves accountable, we reference a variety of external sources includ-
ing the IPE pollution database, which highlights suppliers with environmental
citations by local regulatory agencies in China. This is an additional resource
to assess the risk of our suppliers and target our focused environmental audits.
In 2012, we completed 55 focused environmental audits—a 293 percent increase
over 2011. Of the 55 sites, 26 were cited in the IPE database.

“Apple’s bold decision to open its supply chain to third-party audits is
another great example of the leadership and sense of adventure that
we associate with the company’s product lines. In this area as in so
many others, the company has a clear lead in innovation that few
if any other companies can match. Apple recognizes there is more
to be done, and they are committed to building on the progress
they’ve already made.”

Linda Greer, Director, Health Program, Natural Resources Defense Council

28Apple Supplier Responsibility
2013 Progress Report

Our suppliers are required to uphold the rigorous standards of Apple’s Supplier
Code of Conduct, and every year we raise the bar on what we expect. Our audits,
as well as feedback from the local community and external experts, often make us
aware of new opportunities to improve working conditions and further strengthen
our Code. As a result, when we return to suppliers that have been audited in
the past, we often find new areas for improvement. We audit all final assembly
suppliers every year. And we audit additional suppliers based on risk factors,
including conditions in the country in which a facility is located or a facility’s past
audit performance. Many of the suppliers we evaluate for the first time tell us they
have never been audited—which gives Apple the opportunity and responsibility
to work with them to improve their social and environmental performance.

An Apple auditor leads every onsite audit, supported by local third-party auditors
who are experts in their fields. Each of these experts is trained to use Apple’s
detailed auditing protocol and to assess requirements specified in our Supplier
Code of Conduct. During a typical audit, Apple’s auditing team reviews hundreds
of records, conducts physical inspections of manufacturing facilities—including
factory-managed dormitories and dining areas—and conducts interviews with the
workers themselves. At the same time, we evaluate the facility’s senior managers,
including their policies and procedures, their roles and responsibilities, and the
training programs they provide for workers, line supervisors, and managers. Our
auditors then grade each facility on its level of compliance with our Supplier Code
of Conduct.

When we complete an audit, we review its findings with the facility’s senior
management team. And when an audit reveals violations of our Code, we require
the facility not only to address those specific violations, but also to change any
underlying management systems to prevent problems from recurring. Apple
tracks the progress of all corrective and preventive action plans, with the expecta-
tion that all issues will be closed within 90 days of the audit. We then verify that
action has been taken.

Apple considers the most serious breach of compliance to be a core violation.
Core violations include instances of underage or involuntary labor, falsifications
of audit materials, worker endangerment, intimidation of or retaliation against
workers participating in an audit, and significant environmental threats. All core
violations must be remedied immediately. If a violation is particularly egregious,
or we determine that a supplier is unwilling or incapable of preventing recurrence
of a violation, we terminate the relationship. When appropriate, we also report
the violation to the proper authorities.

Each year, Apple audits suppliers in five broad categories: labor and human rights,
health and safety, environment, ethics, and management systems.

Audit Results

29Apple Supplier Responsibility
2013 Progress Report

Category Practices in Management
Compliance Systems Compliance

Antidiscrimination 79% 69%

Fair treatment of workers 96% 91%

Prevention of involuntary labor
and human trafficking

85% 81%

Prevention of underage labor 95% 83%

Working hours 92%* *

Juvenile worker protection 62% 52%

Wages and benefits 72% 68%

Freedom of association 98% 95%

Overall compliance 77% 73%

Significant Findings and Actions Taken

Antidiscrimination

Apple’s Code protects against discrimination
on the basis of race, color, age, gender,
sexual orientation, ethnicity, disability,
religion, political affiliation, union member-
ship, national origin, and marital status,
and prohibits pregnancy tests or medical
tests for discriminatory use.

34 facilities required pregnancy testing and
25 facilities conducted medical testing such as
Hepatitis B tests. We classified these practices
as discrimination—even if permissible under
local laws. At our direction, the suppliers have
stopped discriminatory screenings for medical
conditions or pregnancy. We also required them
to establish clear policies and procedures to
prevent recurrence.

Working hours

Apple’s Code sets a maximum of 60 work
hours per week and requires at least one
day of rest per seven days of work, while
allowing exceptions in unusual or emergency
circumstances. All overtime must be voluntary.

*In 2012 we changed our measurement on
working hours to one that is more meaningful
and effective. We gauge our progress by
tracking real-time work hours weekly for over
1 million employees in our supply chain,
publishing the data every month. As a result
of this effort, in 2012 our suppliers have
achieved an average of 92 percent compliance
across all work weeks, and the average hours
worked per week was under 50.

As part of our audit program, we continue
to audit facilities on their compliance to this
metric, measuring sample data from the
previous year. Where we find gaps in our audit,
we require facilities to ensure workers’ weekly
working hours are no more than 60 hours
and to analyze work-hour data and conduct
in-depth investigations on the root causes
of excessive working hours. In addition,
we continue enrolling facilities in our work-
hour program.

30Apple Supplier Responsibility
2013 Progress Report

Juvenile worker protection

Apple’s Code states suppliers may employ
juveniles who are older than the applicable
legal minimum age for employment but are
younger than 18 years of age, provided they
do not perform work likely to jeopardize
their health, safety, or morals, consistent with
ILO Minimum Age Convention No. 138.

Our code requires our suppliers to provide
special treatment to juvenile workers. 63
facilities did not provide free health examina-
tions to juvenile workers. At 29 facilities, juvenile
workers were assigned to work in positions
that are not suitable, such as a job involving
heavy lifting. Facilities were required to develop
corrective action plans and preventive measures
such as providing free health exams to juvenile
workers, developing standard procedures for
hiring and managing juvenile workers, and
not permitting overtime work.

Wages and benefits

Apple’s Code requires suppliers to pay
wages and benefits adequately and timely as
required by applicable laws and regulations,
and prohibits using deductions from wages
as a disciplinary measure.

102 facilities did not pay night-shift workers
the appropriate pay for legal holidays due
to an incorrect interpretation of the law. For
example, if Wednesday is a national holiday, a
night-shift on Tuesday that starts at 6 p.m. and
ends at 2 a.m. should have the final 2 hours paid
at holiday rates rather than normal night-shift
overtime rates. At 21 facilities, overtime pay
was incorrect and at 15 facilities the base wage
used to calculate overtime was insufficient. We
required facilities to pay overtime premium
strictly following the national law and update
these requirements in their internal system
to avoid recurrence. We also required these
facilities to repay workers for past inaccuracies.
90 facilities used deductions from wages as
a disciplinary measure. While disciplinary pay
deductions are legal in some countries, they are
a violation of Apple’s Supplier Code of Conduct.
We require all of our suppliers to compensate
workers for any illegal deductions and wage
deficiencies, including base wage, overtime
wage, disciplinary fines, downtime payment, and
any other legal benefits or illegal deductions.
In 2012, our suppliers repaid a total of more than
US$2.3 million to their workers.

Core Violations Found and Actions Taken

Prevention of involuntary labor and
human trafficking

Apple’s Code protects workers who are
required to pay a fee in connection with
obtaining employment through third-party
labor agencies. Suppliers are responsible
for repayment of all fees and expenses in
excess of the amount of one month of the
worker’s anticipated net wages.

8 facilities were found with bonded labor.
Suppliers were required to pay back any
excess foreign contract worker fees, totaling
US$6.4 million in 2012. We also required
suppliers to implement robust procedures
to prevent recurrence. We conducted 27
bonded labor focused investigations in 2012.

31Apple Supplier Responsibility
2013 Progress Report

Prevention of underage labor

Apple’s Code states child labor is strictly pro-
hibited. The minimum age for employment
or work is 15 years of age, the minimum age
for employment in that country, or the age
for completing compulsory education in that
country, whichever is higher.

11 facilities were found with underage
labor, with a total of 106 active cases and
70 historical cases. In all but one case, the
facilities had insufficient controls to verify
age or to detect false documentation, but
there was no intentional hiring of under-
age labor. In one case, our detailed audit
concluded that the extent of the violation was
pervasive, finding 74 cases at one facility, so
we terminated business with the supplier.
All facilities were required to attend our
Prevention of Underage Labor Training and
follow our Underage Labor Remediation
Program. We require suppliers to return
underage workers to school and finance their
education at a school chosen by the family.
In addition, the children must continue to
receive income matching what they received
when they were employed. We also follow up
regularly to ensure that the children remain
in school and that the suppliers continue to
uphold their financial commitment.

32Apple Supplier Responsibility
2013 Progress Report

Occupational injury prevention 70% 63%

Prevention of chemical exposure 81% 76%

Emergency prevention, preparedness,
and response

75% 68%

Occupational safety procedures and systems 79% 75%

Ergonomics 59% 55%

Dormitory and dining 80% 77%

Health and safety communication 81% 72%

Overall compliance 76% 70%

Significant Findings and Actions Taken

Occupational injury prevention

Apple’s Code requires suppliers to provide a
safe work environment, to eliminate physical
hazards wherever possible, and to establish
administrative controls that reduce risk.

At 88 facilities, there were instances where
appropriate PPE (personal protective equip-
ment), such as safety shoes, gloves, masks,
goggles, and earplugs, was not provided to
workers. At 53 facilities, PPE provided to the
workers did not meet relevant standards.
For example, regular cotton masks were
provided at workstations where respirators
were more appropriate. We required facilities
to conduct an evaluation to assess what PPE
is needed in which workstations and provide
appropriate PPE to workers immediately.
Facilities were also required to provide
sufficient training to both supervisors and
workers on how to properly wear the provided
PPE, and hold supervisors accountable for
ensuring that workers made proper use of PPE.

Emergency prevention, preparedness,
and response

Apple’s Code requires facilities to anticipate,
identify, and assess emergency situations and
to minimize their impact by implementing
emergency plans and response procedures.

177 facilities did not have proper emergency
exit safety procedures or did not adequately
implement them to ensure compliance. For
example, 74 facilities excluded some night-shift
workers in the emergency fire drill; 34 facili-
ties did not conduct emergency evacuation
drills. At 20 of the facilities, fire alarms were
not installed in some parts of the facilities.
We required facilities to provide appropriate
programs to ensure egress safety, such as easy
evacuation in the event of an emergency,
legible signs, and clear evacuation plans.

38 facilities had at least one emergency exit
locked. When we find this situation, Apple
requires all doors to be immediately unlocked
while the audit team is onsite, and we follow
up to verify they remain unlocked after the
audit. We required facilities to make improve-
ments to their fire detection and suppression
systems and check them regularly to ensure
their readiness.

33Apple Supplier Responsibility
2013 Progress Report

Occupational safety procedures and systems

Apple’s Code requires suppliers to establish
procedures and systems to manage, track, and
report occupational injury and illness, as well
as provide necessary medical treatment and
facilitate the workers’ return to work.

72 facilities were found without appropriate
in-house occupational hazards monitoring.
For example, dosimeters for X-ray machine
operators were not provided. We required
facilities to contact qualified third-party
experts to conduct the in-house occupational
hazards monitoring and to ensure the inspec-
tion includes all elements as required by laws
and regulations. Facilities were required to
notify all workers of the monitoring result.
We required facilities to provide dosimeters
to X-ray operators immediately and submit
the dosimeters to qualified third parties for
periodic testing.

Core Violations Found and Actions Taken

None.

34Apple Supplier Responsibility
2013 Progress Report

Hazardous substance management and
restrictions

71% 66%

Wastewater and stormwater management 80% 71%

Air emissions management 66% 58%

Solid waste management 88% 81%

Environmental permits and reporting 71% 64%

Pollution prevention and resource reduction 94% 91%

Overall compliance 78% 72%

Significant Findings and Actions Taken
Hazardous substance management and
restrictions

Apple’s Code requires suppliers to comply
with the most recent version of Apple’s
Regulated Substances Specification, 069-0135,
and with any applicable laws and regulations
prohibiting or restricting the use or handling
of specific substances. To ensure safe handling,
movement, storage, recycling, reuse, and
disposal, suppliers shall identify and manage
substances that pose a hazard if released to
the environment, and comply with applicable
labeling laws and regulations for recycling
and disposal.

147 facilities were not properly storing,
moving, or handling chemicals. For example,
some facilities did not provide antileakage
protection or provide separate storage for
incompatible chemicals. We required facilities
to store, move, or handle hazardous chemicals
properly; for example, providing antileakage
devices for hazardous chemicals, or providing
separate storage for incompatible chemicals.
Also, we required facilities to establish adequate
management procedures for handling, move-
ment, and storage of hazardous chemicals.

85 facilities failed to label hazardous waste
storage locations and chemical containers,
while 119 facilities lacked management
procedures for labeling hazardous waste. We
required facilities to label hazardous waste
storage locations and chemical containers, and
establish adequate management procedures
for hazardous-waste-related labeling.

106 facilities were not recycling or disposing
of hazardous waste as required by law,
while 129 facilities lacked management
procedures for recycling or disposing of
hazardous waste. We required facilities to
correct their hazardous waste disposal
practices, such as using qualified vendors to
dispose of hazardous waste and maintaining
waste disposal documentation in compliance
with Apple requirements and applicable laws.

35Apple Supplier Responsibility
2013 Progress Report

Wastewater and stormwater management

Apple’s Code requires suppliers to monitor,
control, and treat wastewater generated
from operations as required by applicable
laws and regulations before discharge. This
covers stormwater as well as sanitary and
industrial water.

35 facilities did not have proper measures
to prevent stormwater contamination. At
10 facilities, the domestic wastewater was
incorrectly discharged to a stormwater drain,
and we required them to immediately stop
the discharge. We also required facilities to
develop corrective action plans and preventive
measures. Other actions included requiring
proper treatment of wastewater prior to
discharge, collection and segregation of
hazardous waste into specialized storage
areas, and development of hazardous waste
procedures.

Air emissions management

Apple’s Code requires suppliers to character-
ize, monitor, control, and treat air emissions of
volatile organic chemicals, aerosols, corrosives,
particulates, ozone-depleting chemicals, and
combustion by-products generated from
operations, as required by applicable laws and
regulations, before discharge.

96 facilities failed to adequately monitor and
control air emissions. Also, 120 facilities lacked
air emission monitoring and control manage-
ment procedures. We required facilities to treat
air emissions, conduct regular inspections,
monitor to ensure compliance with the law,
and identify air emission outlets in accordance
with regulations. We also required facilities to
establish management procedures on air
emission monitoring and control.

Environmental permits and reporting

Apple’s Code requires suppliers to obtain,
maintain, and keep current all required
environmental permits (for example, discharge
monitoring) and registrations, and follow the
operational and reporting requirements of
such permits.

65 facilities did not have Environmental Impact
Assessment documentation, or the Impact
Assessment Report did not cover the new
manufacturing processes. 63 facilities did not
obtain final environmental approval from the
local government. 45 facilities did not obtain
the legally required pollutant discharge
permits, or were waiting approval from officials
on their submissions. We required these
suppliers to immediately engage local
government agencies to obtain approvals
and permits.

Core Violations Found and Actions Taken
Hazardous substance management and
restrictions
Apple’s Code requires suppliers to comply
with the most recent version of Apple’s
Regulated Substances Specification, 069-0135,
and with any applicable laws and regulations
prohibiting or restricting the use or handling
of specific substances. To ensure safe handling,
movement, storage, recycling, reuse, and
disposal, suppliers shall identify and manage
substances that pose a hazard if released to
the environment, and comply with applicable
labeling laws and regulations for recycling
and disposal.

One supplier was found intentionally
dumping waste cutting oil into the restroom
receptacle. We were alerted to this issue
through an internal system that allows any
Apple employee to raise concerns about
conditions at our suppliers. We required the
supplier to immediately stop this activity
and hire an external expert to help the
supplier develop a corrective action plan
and address the issue. This supplier was
placed on probation.

36Apple Supplier Responsibility
2013 Progress Report

Ethics

Category Practices in Management
Compliance Systems Compliance

Business integrity 98% 92%

Disclosure of information 98% 95%

Protection of whistle-blowers and anonymous
complaints

93% 85%

Protection of intellectual property 98% 93%

Overall compliance 97% 90%

Significant Findings and Actions Taken
None.
Core Violations Found and Actions Taken

Disclosure of Information

Suppliers must accurately record and disclose
information regarding their business activities,
structure, financial situation, and performance
in accordance with applicable laws and
regulations and prevailing industry practices.

4 facilities provided falsified payroll or
attendance records to Apple’s audit team.
The facilities ultimately provided the
authentic records to our auditors. All facilities
subsequently conducted review of their
ethics management systems and instructed
all management staff to provide correct
documents. These suppliers were placed
on probation.

37Apple Supplier Responsibility
2013 Progress Report

For More Information
For more information about Apple’s Supplier Responsibility Program, visit
www.apple.com/supplierresponsibility.

© 2013 Apple Inc. All rights reserved. Apple, the Apple logo, iPad, iPhone, iPod, and Mac are trademarks of Apple Inc., registered
in the U.S. and other countries. Other product and company names mentioned herein may be trademarks of their respective
companies. January 2013

Management Systems

Category Practices in Management
Compliance Systems Compliance

Company statement 70% 70%

Management accountability and
responsibility

55% 55%

Documentation and records 80% 80%

Training and communication 78% 78%

Worker feedback and participation 87% 87%

Corrective action process 66% 65%

Overall compliance 69% 68%

Significant Findings and Actions Taken
Management accountability and
responsibility

Apple’s Code requires facilities to clearly
identify company representatives responsible
for ensuring implementation and periodic
review of the status of the suppliers’
management systems.

158 facilities lacked procedures for auditing
their suppliers or did not perform adequate
supplier audits. We required facilities to
establish procedures for auditing their suppliers
and to conduct adequate audits.

154 facilities had not conducted internal audits
to cover all areas of Apple’s Supplier Code of
Conduct, and 138 facilities had not conducted
management review. We required the facilities
to perform periodic self-evaluations to ensure
facility and internal audit compliance with
Apple’s Supplier Code of Conduct and
applicable laws and regulations.

Core Violations Found and Actions Taken
None.

Group Health

2009 – 2012 Quality Plan and Program Description

2012 Update

Approval Schedule

Quality Oversight Team (QOT): February 1, 201

Executive Leadership Team (ELT): February 7, 20

Quality Committee of the Board (QCOB): February 22, 2012

Table of Contents

Introduction………………………………………………………………………………..

Vision for Quality…………………………………………………………..…………….

Alignment with Group Health’s Strategic Plan……………………….…………….

Reflections Regarding Achievement of 2011 Quality Goals……….…………….

2012 Quality Hypothesis and Goals…………………………………….…………….

2012 Quality Framework and Action Plan…………………………….…………….

Quality Program Description

……………………………………………..……………

Quality Improvement Planning Process

……………………………….……………..

Quality Program Implementation

…………………………………………………………..

Evaluation of the Quality Program

………………………………………………………..

Confidentiality

……………………………………………………………….……………

Quality Program Structure and Accountability……………………………………..

Attachment 1

: Quality Assessment and Improvement Structure………………..

Attachment 2: Group Practice Division Quality Committees…………………………

Attachment 3: Health Plan Division Performance Management System………

Attachment 4

: Credentialing Committee Membership……………………………

Attachment 5: Enterprise Quality Department…………………………………….

Attachment 6

: Quality Resources at Group Health………………………………..

Attachment 7

: Quality Improvement Focus – Medicaid Population…………… 31

2012 Quality Plan version, January 4, 201

Introduction
The 2009 – 2012 Quality Plan summarizes the history of quality improvement at Group Health Cooperative that is
fueled with the spirit of innovation in service to our members. We continue to lead our improvement work on the basis
of evidence-based medicine. We do this by leveraging information technology to improve the patient care process and
experience and applying research to clinical practice. This assists us in defining the ideal model for care delivery for the
range of patient health status, from wellness to chronic disease management.

As highlighted in the 2011 Quality Program Evaluation, Group Health continued its position as one of the best and most
innovative health care organizations in the country. This was demonstrated by retaining our highest level of
accreditation for NCQA, retaining the top rating on quality care measures in the Puget Sound Health Alliance, being
one of nine Medicare plans in the nation that received the highest 5 star rating and numerous other clinical quality and
service recognition awards.

Looking forward in this ever-changing health care environment, we continue to remain confident of our ability to meet
the coming challenges. Group Health members are experiencing the results of our focused efforts to provide care that is
high quality, safe, and easy to access. In 2011 we maintained our emphasis on assuring consistent processes were in
place to meet critical quality, care experience and affordability goals but met with significant challenges. The lack of
reliable and consistently available clinical data negatively impacted our ability to successfully improve some of our
processes and tools for optimal success. While our underlying financial state is strong, losses during 2011 require a
disciplined examination of root causes and a continued focus on making our care processes efficient and effective to
make our excellence affordable for all members.

Vision for Quality
Our vision for quality remains unchanged and predicated on our continued belief that Group Health’s approach to care
delivery means better clinical outcomes for our members. Our integrated approach to care delivery and financing
continues to distinguish us from other health care providers and health plans in this market.

While our medical group remains central to our ability to provide quality care and service at a lower cost, we continue
to work toward a future that ensures high quality care for our members regardless of where they receive it. Our future
means that all our members will consistently say that Group Health provides:

 The best care, information, expert advice, and support

 Outstanding service every time

 Value that exceeds needs and expectations

We believe in using the best available scientific evidence in our decision-making, tools, and practices. We believe in
the importance of providing consistent care in our processes, reducing unwarranted variation and building reliable
clinical information systems to support care delivery. We believe that care ought to be patient centered, providing
timely, expert information to patients that allows them to make better care decisions.

We also believe that a productive relationship between physician, practice team, and patient is key to better health care
outcomes, safer care, and a better care experience for the patient. These beliefs are the key components of the Planned
Care Model (Wagner, et. al., MacColl Institute for Healthcare Innovation), Group Health’s model for care delivery that
guides the implementation of our vision for quality. We know that when the key components of the model are

supported by leaders and organized around a patient-centered, integrated system of care, we will achieve health
outcomes that out-perform our competitors.

Group Health is uniquely positioned to achieve our quality vision thanks to the excellence of our providers, our ability
to efficiently and effectively organize care around patient populations, and our use of technology to support
personalized care. We continue to leverage our investments in Epic and MyGroupHealth and other clinical information
systems to make the right thing the easy thing to do, with activated patients and clinicians.

Three major tactics support patient centered care

1. Opportunistic Care: The most efficient approach toward delivering comprehensive care is to anticipate all of a
patient needs and deliver them at the time of scheduled services. We will continue to build point of service
tools, including those for patients, with information that allows clinical teams the ability to address needed
preventive and scheduled chronic care services for the patient at the time of the visit. Our goal is that the
majority of our patients finish their visit with us with all their clinical needs having been recognized.

2. Patient Activation and Outreach: We will continue to invest in improving and developing tools to activate

patients to act to improve their health through reminder systems (birthday letters, IVR, MyGroupHealth
reminders) and our Health Profile (health assessment tool) that identify all of the opportunities to improve both
preventive and chronic illness care. We will continue to support opportunities for patient self management
including the use of specific tools for shared decision making for preference based care interventions.

3. Feedback: Performance improves only when metrics are well defined and available for ongoing visual

inspection. We will continue to improve the completeness and timeliness of performance reporting, including
the use of tools that support patient-centered rather than disease oriented performance. We will continue to
evolve the incentive system in primary care across the Enterprise to support clinical excellence by moving away
from an emphasis on productivity towards service and clinical quality (patient centered) outcomes among
provider panels and clinic populations.

Alignment with Group Health’s Strategic Plan refresh
The five-year strategic plan introduced in early 2008 set forth a compelling map to attain our vision of “affordable
excellence” for our patients. The executive leadership team has completed the refresh of the 2008-2012 plan that
extends to 2015. The plan calls for continued deployment of the four interrelated focus areas and associated goals with
a slight change in emphasis from affordable excellence to “making excellence affordable”. The current plan outlines
the path to achieve the following goals by 2015:

Quality

 Rank among the top 25 national NCQA-accredited plans for both Group Health Cooperative (GHC) and Group
Health Options (GHO) commercial plan performance.

 Maintain Centers for Medicare and Medicaid Services (CMS) quality rating of at least 5 stars for Medicare
Advantage HMO plan and improve rating for PPO plan.

 Maintain Centers for Medicare and Medicaid Services (CMS) quality rating of at least 5 stars for Medicare
Advantage.

 Maintain position as the highest-ranked group practice in the Puget Sounds Health Alliance “Community
Check-Up”

Affordability
 Achieve a 3 percent net margin each year
 Maintain 120 days cash on hand

Profitable growth:
 Grow enrollment to 932,000 insured members by year-end 2015
 Target profitable lines of business

People
 Achieve 90th percentile Gallup grand mean score for health care organizations.

Reflections Regarding Achievement of 2011 Quality Goals
The Quality goal set for 2011 was to reduce defects, defined as deviations from the standard, by 50 percent. Customer
requirements determine which standards are deemed critical. The hypothesis stated that by reducing defects, quality and
performance would improve. In the last few years, this practical application with an emphasis on improving processes
to improving quality has been widely accepted and utilized throughout Group Health. In addition to defect reduction for
processes that support clinical care outcomes, numerous other processes in areas such as marketing, membership,
customer service responses, claims administration, and contracting had the same goal of reducing defects by 50 percent
resulting in process improvements throughout all areas of the organization.

Using this framework, a key Quality goal was to reduce the NNAT clinical quality defects by 50% to assure our
continued progression in NCQA rankings as well as achievement of Medicare 5 Star performance for our Medicare
Advantage population. Reflections of our experience including root causes for our failure to improve our clinical
performance as defined by HEDIS NNAT include the following:

Measurement limitations:
We have had an absence of relevant performance data that has seriously impeded our ability to proceed with key
interventions. Without reliable data, key clinical tools, new tool development, timely and accurate reporting/feedback
to teams, improvement in performance was significantly impacted.

The enterprise quality dashboard was improved in 2011 with fewer measures. However, while we made progress in the
use of monitoring and breakthrough metrics with use of control charts, there remains lack of a consistent understanding
of how to think of goals and targets. While checking is occurring, we do not have a reliable process for escalating
issues where performance is below target that leads to sufficient countermeasures to meet our targets. This has resulted
in a loss of consistent operational excellence throughout the Enterprise wide Delivery Systems.

Lean as the quality improvement process:
While we recognize the importance of both standardizing and improving our key processes, we may have lost some
consistency in 2011 for the application of defect metrics as applied to key processes. More focus is needed to define
the key improvement processes and work to reduce the defects that contribute towards the achievement of the quality
goals outlined in the strategic plan. We have continued to be challenged with too much work in progress that impedes
our ability to be effective and focused. While reducing defects of key processes has been widely adopted and will
assure our ability to achieve the quality goals, reducing defects by fifty percent is felt to have less meaning as a quality
goal itself.

Provider Activation Across the Enterprise:
Our ability to fully realize the work of our practitioners and clinical teams has been impacted by both the lack of reliable
measurement systems and tools as well as multiple priorities for clinical teams. In the Group Practice, standard work
within the Medical Home Model lost ground and was not followed consistently. In the Network, the strategy for
activating contracted providers and teams has been started but not yet fully realized or robust to be effective and
incentives are still in development but not yet implemented.

Patient Activation and Outreach
There were successful improvements in the area of outreach and activation of patients across the Enterprise while
recognizing this is insufficient. Opportunities exist to optimize our current efforts with letters and IVR (interactive

voice recognition), coordinating activation with standard work, analyzing outreach efforts to nimbly respond to targeted
populations and leveraging other methods such as optimal use of My GroupHealth.

Successes in 2011
We made progress and had some key successes in the following:
Care Management (EDHI work)

 Continued improvement of care management transition work with improvements in use of urgent and
emergency care and reduction of admission rates

Deployment of two key improvement initiatives:
 Successful implementation of new “Meaningful Use” requirements
 Successful implementation of the Medicare 5 Star project team and interventions to improve metrics using

established goals, clear accountabilities, definition of roles and a cross functional team with consistent
checking, monitoring and adjustment of workplan to achieve a 5 Star rating.

Patient Safety
 Gains in patient safety with leadership alignment in goals, consistent messaging for patient safety across

operational areas, improved reporting, and integration into standard work with identification of system-wide
improvement efforts in process.

Reducing Clinical Variation
 Improvement in work on shared decision making and high end imaging with integration of both into standard

work across several Consultative Specialties.
Expanding Capacity in the Contracted Network

 Development and beginning implementation of a Practice Consultancy model to drive improvement in the
contracted Network.

2012 Quality Hypothesis and Goals
Reflections and adjustments by the Executive Leadership Team through the Strategic Deployment Process have
reiterated the imperative that we increase our focus on integrating and coordinating multiple improvements and deploy
the work through the eyes of the patient to ensure their care needs and experience exceed their expectations. The goals
for 2012 and hypothesis for achieving these are:

2012 Quality Goals:

 Maintain 5 Star performance for Medicare 5 Star quality program for GHC (based on 2012 quality
performance)

 Achieve the top 40 in NCQA in 2013 (based on 2012 quality performance)
 Achieve the top 15 in NCQA for GHC Medicare in 2013 (based on 2012 quality performance)

Hypotheses for achieving these goals are:

 The clinical NNAT gap can be closed by increasing patient and provider activation, opportunistically
addressing the identified care gaps during each touch and by giving timely feedback to an engaged
provider/care team showing performance and results.

 By focusing on the four critical areas identified as root causes, we have confidence that this will reduce the
HEDIS NNAT and improve the perception of the member experienced as measured by the CAHPS survey.

 By decreasing defects by 50% in the relevant key processes, we will achieve the 2012 HEDIS goals and
maintain Medicare 5 Star rating for GHC.

 The implementation of the key strategies outlined in the Quality Workplan will meet the 2012 Quality goals and
“lift” performance for clinical and service quality in GHO.

2012 Quality Framework and Action Plan

Per our 2011 Quality Plan, we will continue our work to ensure that key characteristics to improve quality are being
pursued throughout all of our operations. The attributes of a successful, sustainable quality improvement program that
we will continue to pursue and monitor include:

 Identification of customer requirements and the key processes that support meeting them
 Development of standard work that is sufficient to meet all of the requirements
 Measurement of adherence to standards (defects in standard work processes)
 Establishment of in-process and outcome metrics, and a regular tracking of performance
 Use of visual controls to make the work and gaps visible
 Evidence that progress towards goals are checked
 Adjustments to a plan that are supported by data
 Implementation of countermeasures

Building upon the successes and reflections from 2011, it will be critical that we continue to drive improvement within
the current work while extending improvement efforts into new areas that leverage learnings and increase the rate of
improvement. Fundamental to this work is the ability to continue to build reliable, consistent processes of care which
include:

Drive Operational Excellence:

Drive operational excellence by re-establishment of basic components of the Management System and further
implementation of these;
 Continue to concentrate efforts on the stabilization and continuous improvement of Medical Home and care

management transition work
 Continue implementation of the consultative specialty improvement work
 Integrate improvements across the spectrum of care including services such as Home Care, Consulting Nurse

Services, Anticoagulation Management Services, Urgent Care, etc.

Increase execution of patient centric strategies for prevention and chronic disease management:
 Re-establishment of a reliable and consistent measurement feedback system for clinical and service

performance and process for monitoring timely data production.
 Sustain and improve accomplishments to implement use of shared decision-making tools for preference

sensitive conditions in the Group Practice and spread use of methods within the Contracted Network.
 Continued development and deployment of patient-centered information technology tools and reminder systems

to improve opportunistic care and outreach, and increase patient activation across the enterprise (e.g., Health
Profile, outreach letters and targeted reminders, use of MyGroupHealth, optimal use of Epic and potential use of
Enterprise wide clinical system)

Continue to expand our capacity to intervene in our contracted network

 Further execution of a clinical integration strategy that would provide an innovative solution to how Group
Health relates to external provider groups

 Fully implement the use of incentives to improve quality in our contracted Network.
 Ensure appropriate quality monitoring and feedback with our contracted hospitals

Enhance our culture of Patient Safety:

 Continue to engage operational leaders in leading improvement work to increase the reliability of clinical
processes and foster a just culture.

 Re-design our reporting processes including a consistent approach for analysis and problem solving to generate
timely system improvements

 Promote transparent communication amongst team members that promotes safe care
 Engage in efforts to activate patients in roles that facilitate a patient safety culture.

In 2012, we will continue to monitor progress toward our goals using measures that are relevant to our customers and
that can be benchmarked against other health care systems both locally and nationally. The HEDIS (Healthcare
Effectiveness Data Information Set), CAHPS (Consumer Assessment of Healthcare Providers and Systems) and
Medicare 5 Star quality measures are a core part of that performance measurement, target-setting, and monitoring
process. Attention to the purchaser’s expectations, through eValue8, supported by the National Business Coalition on
Health (NBCH), and interactions with our key purchaser groups will continue to carry Group Health forward in
demonstrating its leadership in value-based purchasing.

These measures are comprehensive, covering a broad set of domains in clinical quality, care experience, and
affordability. They allow us to continue to measure our progress and compare our results against other local and
national health plans.

All quality improvement metrics in support of the Quality Plan goal will be monitored by the Quality Dashboard as
approved by the Executive Leadership Team (ELT). The Group Health management system includes periodic reviews
and adjustment processes to ensure achievement of goals and results. When planned actions are not executed, as
scheduled or expected outcomes are not achieved, countermeasures will be developed and activated.

Quality goals and progress toward those goals remain the accountability of the Quality Oversight Team and Executive
Leadership Team, and ultimately, the Board of Trustees, who have delegated responsibility for oversight to the Quality
Committee of the Board. The membership and accountabilities of these groups are described in the Quality Program
Description.

QUALITY PROGRAM DESCRIPTION

Program Objective and Scope
A comprehensive Quality Program1 is essential to meeting organizational goals, carrying out its vision and
promoting our approach to care delivery. The process for monitoring, evaluating and improving quality is
designed in concert with the purpose and strategic plan of Group Health Cooperative. Two key components
of the process include:

 Involvement of medical and behavioral health care professionals in the analysis of data to identify
opportunities for improvement, and

 The use of data2 to assist with the delivery of high quality healthcare, ongoing monitoring and

evaluation of important aspects of care and service, and continuous improvement of systems and
processes.

Under the direction of the Group Health Cooperative Medical Director and GHC President/CEO, the Quality
Program is designed to promote high quality, safe medical and behavioral health care, and superior service to
Group Health (GH) and Group Health Options, Inc. (GHO) enrollees and other patients who receive services
within Group Health in a caring, personalized manner that is respectful of member and individual member
values and choices. The Group Health Medical Director and GHC President/CEO delegate substantial
responsibility for the quality program to the Associate Medical Director for Quality & Informatics and VP
Clinical Excellence who co-chair the Quality Oversight Team (QOT), the QI Committee for the organization.
They are the designated leaders with substantial involvement in the QI program and is responsible for quality
management and improvement activities. The quality assessment and improvement programs and outcomes
are reviewed and approved annually by the Executive Leadership Team (ELT) and the Quality Committee of
the Board (QCOB), as delegated by the GH Board of Trustees.

Group Health assumes accountability, through its Quality Program, for continuous quality improvement for
all of our members for all product and plans, including Group Health Cooperative and Group Health Options
Commercial, Medicare, and Medicaid lines of business. Using the principles of population-based care for
organizing our improvement activities, Group Health addresses member needs in a patient-centered manner
while simultaneously acknowledging special needs of our members, in particular, our culturally and
linguistically diverse members and those with complex health needs. A key approach in building our ongoing
capacity to serve our culturally and linguistically diverse members is the collection and analysis of race,
ethnicity, and language data and linking this data to clinical and patient satisfaction metrics to identify and
reduce health care disparities. Group Health’s complex case management program, as described in the Care
Management Program Description, is designed to help members with multiple chronic conditions by
providing resources and support to address these complex health needs. Special attention is paid to our
obligations for oversight and monitoring of the Behavioral Health Care quality improvement program and for
specific vulnerable populations of our membership such as those in our Healthy Options program.

1 The scope of the Group Health Cooperative quality program includes medical and behavioral health care, service, and care
management in the owned and operated facilities and the contracted network, as well as patient safety and staff effectiveness.
2 Data sources include claims, encounter data, enrollment data, complaints and inquiries, utilization management data, and HEDIS
data.

The scope of our Quality Program includes oversight, monitoring and improvement of behavioral health care
for members. The medical director for Behavioral Health Services (BHS), a PhD psychologist, is the
designated behavioral health care practitioner most involved in the behavioral health aspects of the QI
program. He is a member of the Quality Oversight Team (QOT), BHS Leadership Team (BHSLT) and
Primary Care Leadership Team, assuring accountability and ongoing engagement in the Quality Improvement
Program. The BHSLT is the organization’s committee for improving quality for behavioral health services.
Key tasks for BHSLT include setting the department’s quality agenda and providing input into organization
and divisional quality plans. This oversight includes monitoring, planning, and taking actions to improve key
aspects of quality including HEDIS performance, access, continuity and coordination of care, confidentiality,
patient satisfaction, referral and triage functions, under/over utilization, use of new technology, and patient
safety. (see BHSLT committee description). Behavioral health representation or input is solicited for multiple
quality committees to ensure these important aspects of care are considered; e.g., Patient Safety, Care
Management Committee, MTAC, Pharmacy and Therapeutics, and relevant clinical practice guideline teams.

The scope of Group Health’s Quality Program also includes specific quality improvement activities and
measurements directed at Group Health’s Healthy Options population to ensure that the clinical and service
performance standards set by the State of Washington Health and Recovery Services Administration (HRSA)
and the Centers for Medicare and Medicaid Services (CMS) are met or exceeded for this important and
vulnerable population. (see Attachment 7)

The organization, with oversight by ELT and QOT, provides a number of structures to address the monitoring
and improvement work of clinical quality, service quality, patient safety, and utilization/ care management in
both medical and behavioral health care provided to Group Health and Group Health Options enrollees.

Quality Improvement Planning Process
Group Health sees its commitment to improving the performance of our health care system performance as a
key strategy—contributing to overall organizational success and viability. The diagram below illustrates the
quality improvement planning process relies heavily on ongoing performance monitoring and assessment to
identify potential organizational quality improvement priorities.

Sources for Potential Quality Improvement Activities:

 Strategic Goal Deployment (organizational priorities)
 Quality Plan/Quality Performance Measures
 Local gaps/improvement opportunities that support system wide priorities
 Legal/Regulatory Requirements and feedback regarding opportunities identified
 New Customer/Market requirements or expectations (to incorporate in quality planning)

Care Delivery System
Leadership & Quality

Councils

 Performance monitoring and analysis of QI
activities/quality performance; identify potential
gaps/ concerns.

 Identify improvement opportunities and plan
strategies/toolkits to use.

 Coordinate with centralized quality support
resources.

 Provide status reports to QOT (linked checking).
 Share best practices.

QOT

(Quality Oversight Team)

Quality Department

 Inform the strategic plan re: recommended
organizational Quality priorities and
performance goals and targets.

 Oversee the Quality Program, including the
Care Management Program and Group Health
Options, to assure it meets regulatory and
accreditation requirements/standards; provide
regular reports to ELT.

 Monitor performance indicators.
 Identify areas without systems to support

continuous improvement or gaps in
performance.

 Ensure reconciliation of
issues as needed for quality
issues/ recommendations
that have operational and/or
dollar impact.

 Approve the Quality Program (Quality Program
Description, Plan, and Evaluation).

 Oversight of Quality program and performance
(i.e., Quality A3 and dashboard measures).

 Make resource decisions for strategic priorities,
including the Quality Program.

 Set the Quality Agenda (Quality Vision,
Priorities, and Performance Targets).

Board of Trustees and
Quality Committee of

the Board

 Approval of Quality source documents.
 High level oversight of Quality program and

performance.
 Advise the Board of Trustees on strategic

planning and resource allocation issues related
to achieving and maintaining quality goals.

(*Arrows indicate opportunities for
interaction)

ELT

(Executive Leadership
Team)

Quality Program Implementation
Implementation of our quality program now emphasizes lean principles in quality improvement. We have
historically focused on outcomes alone – meeting our customer requirements for clinical quality and safety,
care experience and affordability without regard to how we achieved those results. This model has left us
with significant limitations in our ability to accelerate sustainable improvements – while heroism has
produced some important gains, it is not a sustainable model for the organization, and does not spread from
site to site reliably. In 2012 we will continue to augment our work to ensure that key characteristics to
improve quality are present in all of our operations. The attributes of successful, sustainable quality
improvement that we will monitor include:

 Identification of customer requirements and the key processes that support meeting them.
 Development of standard work that is sufficient to meet all of the requirements.
 Measurement of adherence to standards (defects in standard work processes).
 Establishment of in-process and outcome metrics, and regular tracking of performance.
 Use of visual controls to make the work and gaps visible.
 Evidence that progress towards goals is checked.
 Adjustments to plan that are supported by data.
 Implementation of counter measures.

Professionals from a variety of expert groups, including medical directors, front line physicians, consultant
specialists, nursing staff, quality improvement staff, operational managers and others come together as a team
that works with a high level of objectivity and integrity and utilizes sophisticated quality management tools
and approaches. They analyze data to identify improvement opportunities, understand and identify variation
in the care and service provided to members, and establish and develop system-wide approaches to meet
agreed-upon quality outcomes.

To the greatest extent possible, quality improvement efforts are encouraged and supported at the local level.
Health care and administrative teams are charged with reviewing performance according to the agreed-upon
measures and goals, analyzing and agreeing upon the areas that require the most improvement and designing
strategies to close performance gaps. These teams are supported in performing rapid-cycle continuous
improvement activities. Performance data and expert consulting resources are available to assist local teams.
This local level work is directly linked with the organizational goals that are agreed upon by the Executive
Leadership Team. The teams are asked to share their progress on a quarterly basis to the Quality Oversight
Team and to each other so that cross-organizational learning can take place. The expected results are to
provide high quality care and service that is patient-centered and supports to practitioners with the tools and
support needed to provide excellent care and service.

Group Health continues to focus on providing high quality care and service to members while controlling
costs through proven medical management strategies. This focus requires continued emphasis on ensuring
that each activity of our business adds value to the delivery of care and service. Central to this effort are: the
development and implementation of evidence-based guidelines, medical management strategies, and
population –based care programs; support for physicians with information about their patients; centralized
systems, where applicable, that provide patient-centered reminder systems; and information systems that
provide valid and reliable data for ongoing assessment and feedback.

Evaluation of the Quality Program
The Quality Program at GH is formally evaluated annually by the Executive Leadership Team (ELT) and the
Quality Committee of the Board (QCOB), as delegated by the GH Board of Trustees. The intent of the
evaluation process is to determine whether areas identified as needing improvement have been appropriately
addressed, established indicators adequately assess the performance of the organization’s quality of care and
service, and objectives are being effectively and efficiently accomplished. The evaluation includes an
assessment of the overall effectiveness of the QI program, including progress toward influencing safe clinical
practices throughout the delivery system, as well as monitoring other aspects of the program, such as
practitioner availability, over and under utilization, and complaints and appeals.

Confidentiality
Respect and recognition of the sensitivity of quality assessment and improvement information is of primary
importance. Quality assessment information is available only to duly authorized personnel. Quality
assessment information is considered confidential and is protected from discovery/disclosure based on local,
state, and federal statutes. Group Health operates a State of Washington Department of Health approved
Coordinated Quality Improvement Program (RCW 43.70.510). This voluntary program provides protection
of information and documents created through quality assessment and improvement efforts.

Quality Program Structure and Accountability
The overall organizational structure is depicted in Attachment 1. Attachments 2-5 represent the
organization’s quality structures.

The Quality Division provides oversight for the enterprise Quality function by supporting processes,
practices, and improvements. Quality is one of the four focus areas of Group Health’s Business Plan
and is led by the Executive Vice President of the Group Practice Division who is the Quality
pacesetter. The Quality pacesetter sets the tempo for Quality as a business strategy and engages
managers and staff in meeting the targets established. The Quality pacesetter is responsible for
removing barriers that stand in the way of continuous improvement, breaking down silos between
functions, resolving conflicts, representing customers, and ensuring that Group Health is making
progress toward goals.

The delivery system is accountable for quality improvement. Two divisions represent the delivery
system: the Group Practice Division and the Health Plan Division. The Group Practice Division
encompasses the majority of Group Health’s owned and operated clinical services. These include a
hospital, 25 primary care medical centers, 6 specialty care units, 7 behavioral health clinics, and
numerous other clinical sites providing vision, speech, hearing, and retail services. The Health Plan
Division has oversight of all contracted network care and many care management functions.

The following serves as a description of the various committee and leadership structures at GH which
are designed to promote and support excellent quality of care and service.

The following committees and groups provide oversight of the quality improvement work throughout
GH:

COMMITTEE OR GROUP DESCRIPTION COMPOSITION OF GROUP
Quality Committee of the Board (QCOB meets at least 4 times per year)

Purpose: The Quality Committee of the Group Health Cooperative
Board of Trustees is established by action of the Board of Trustees for
the primary purpose of acting on behalf of the Board in overseeing
implementation of Group Health’s Quality Plan and Program, and
monitoring the organization’s performance to ensure goals and
standards established for the delivery of care and services to Group
Health members and patients are met.

Tasks:
 Approve the Group Health Cooperative Quality Plan and Program

Description and the annual Quality Program Evaluation.
 Review the annual professional liability report and make

recommendations regarding the functioning of the system to increase
the rate of improvement.

 Annually review and approve the Group Health Central Hospital
Quality Management Plan and Patient Safety and Quality of Care
report.

 Perform the functions of the governing body of Central Hospital,
under the delegated authority of the Board of Trustees.

 Perform the functions of the governing body of Group Health
Cooperative-owned ambulatory surgery centers, under the delegated
authority of the Board of Trustees.

 Oversee and review the activities of the credentialing and privileging
processes for practitioners and providers.

 5 members of the

Board of Trustees

 Group Health Management

Representatives (non-voting
members of QCOB; attend as
requested by QCOB)

COMMITTEE OR GROUP DESCRIPTION COMPOSITION OF GROUP
Quality Committee of the Board (con’t)

 Monitor defined performance measures to gauge success in achieving

and maintaining targeted standards of quality care and service.
 Monitor patient, member, and employee satisfaction with Group

Health’s care delivery system, the health plan, and business
operations.

 Ensure that management has identified and is taking corrective or
improvement actions to address performance deficiencies.

 Provide policy oversight for those policies designated and assigned by
the Board.

 Regularly report to the Board regarding the execution of the
committee’s duties and responsibilities.

Executive Leadership Team (ELT– meets weekly)

Purpose: Sets organizational strategy and provides senior leadership
oversight to organizational performance and improvement activities.

ELT is responsible for overseeing the development and implementation
of a system-wide quality agenda that supports achievement of the
organization’s strategies, and for monitoring performance and progress
of the quality program.

Group Health Options, Inc. (GHO) delegates to Group Health
Cooperative responsibility for its quality program, including the
responsibility for overseeing the implementation and monitoring the
performance of its quality program. Group Health Cooperative
performs that delegated responsibility through the work of the
Executive Leadership Team and Quality Oversight Team and is
accountable to GHO executive management for assuring the quality
program meets all the necessary requirements as outlined in the GHO-
GHC delegation agreements.

Tasks:
 Set the quality agenda (quality vision, priorities, and performance

targets) and approve the GH Quality Plan and Program Description.
 Monitor performance indicators.
 Make recommendations to the Quality Committee of the Board

regarding:
a. resource allocation for strategic performance improvement

support;
b. annual assessment of the success of the quality program;
c. approval of quality indicators for regular review by the

Quality Committee; and
d. sponsorship of the Quality Plan.

 GHC President and CEO
 GHP President and Chief Medical

Executive
 Exec. VP, Group Practice Division
 Exec. VP, Health Plan Division
 Exec. VP and Chief Financial and

Administrative Officer
 Exec. VP, Public Affairs and

Governance
 Exec. VP and General Counsel
 Exec. VP, Human Resources
 Exec. Medical Director, Group

Practice Division
 Exec. Medical Director, Health Plan

Division
 Exec. VP, Group Health Permanente
 Vice President, Strategic Planning

and Deployment and Chief of Staff

Quality Oversight Team (QOT – meets quarterly)

Purpose: QOT is charged by ELT to serve as the QI Committee for the
organization. QOT evaluates and monitors organization-wide efforts
designed to improve the value of the health care delivered to Group
Health patients, considering issues of clinical excellence, care
experience and affordability.

 Assoc. Medical Director, Quality &
Informatics, chair

 Exec. Medical Director,

Health Plan

Division

 Exec. Medical Director, Group
Practice Division

COMMITTEE OR GROUP DESCRIPTION COMPOSITION OF GROUP
Quality Oversight Team (con’t)

The charge of the group is to oversee ELT- established goals for quality
performance and support the care delivery system in attaining those
goals. The delivery system is responsible for the outcomes, with
operating divisions deciding local tactics to meet their goals. The
Enterprise Quality department informs decisions for improving quality,
providing expertise in population management strategies, quality
improvement, improving patient safety, supplying timely measurement,
and leveraging our informatics infrastructure to support local teams.

QOT will provide regular reports to ELT regarding the oversight and
evaluation activities conducted by QOT at ELT direction, and regarding
any recommendations for the quality agenda.

Tasks:
 Oversee the broad integrity of the Quality Program for the enterprise.
 Incorporate GHO and other lines of business into the GHC oversight

model.
 Recommend goals and targets to ELT.
 Define and communicate standards, metrics, and targets for assessing

performance.
 Require regular reporting of performance, including quantitative and

qualitative analysis.
 Identify systemic themes and barriers.
 Assess and leverage relational aspects of quality (clinical, safety,

service/access, care management) to ensure both balance and
opportunity.

 Escalate issues that require ELT action.

 Exec. Vice President, Group
Practice Division
 Vice President, Network Svcs. and

Care Management, Health Plan
Division

 Medical Director, Group Practice
 Vice President, Clinical Excellence,

Quality and Nursing Practice
 Vice President, Group Health

Options
 Exec. Director, Behavioral Health

Services

The following committees report through the Quality Oversight Team (QOT) and/or ELT:

COMMITTEE OR GROUP DESCRIPTION COMPOSITION OF GROUP
Professional Liability Committee (meets monthly)

Purpose: The Professional Liability Committee has responsibility for
reviewing medical and legal issues that result in litigation against Group
Health Cooperative. The Committee authorizes settlements and reviews
system issues for quality improvement.

Tasks:
 Review professional liability claims and litigation.
 Authorize settlement amounts.
 Research Risk Management issues.
 Recommend system changes to improve the quality and safety of care

provided.

 Exec. VP and General Counsel, or
Designee

 Exec. Director, Risk Management
 Three GHP physicians and one

family practice physician
 Medical Director, or Designee
 Representation of medical centers in

Spokane, North Idaho, and Puget
Sound region

 Vice President, Clinical Excellence,
Quality, and Nursing Practice (PhD,
RN), or Designee

COMMITTEE OR GROUP DESCRIPTION COMPOSITION OF GROUP
Confidentiality and Security Council (meets monthly)

Purpose: The Confidentiality and Security Council has a primary role
in advising regarding development and ongoing maintenance of privacy
policies, the implementation and compliance with privacy policies, and
privacy training. The Council serves as an advisor and as an
informational body with limited decision making.

Tasks:
 Review and advise regarding policies, procedures, and training

addressing privacy, confidentiality, security, and collection, use, and
disclosure of member/patient information, administrative safeguards,
business information, and other Group health information assets.

 Review of summary report information about breaches and breach
remediation indentifying trends and actionable items.

 Provide input and review of privacy, confidentiality, and security
education, training, awareness content; review effectiveness of
training programs.

 Provide a forum for the discussion of issues related to information,
use and disclosure, confidentiality, privacy, and security.

 Co-chair – Privacy Officer
 Physician co-chair – appointed by

the Medical Director

Council members include
representatives from:
 Risk Management
 Human Resources
 Medical Staff
 Privacy Office
 Information Security
 Group Health Research Institute
 Network Services and Care

Management
 Health Information Management
 Group Practice

Credentialing and Privileging Committees (C&PCs – meets at least
10 times annually)

Purpose: To select, evaluate, and monitor the practitioners and
providers (healthcare delivery organizations) who care for GH
enrollees.

Tasks:
 Establish standards/criteria regarding qualifications for GH providers

and practitioners.
 Approve/deny the credentials of practitioners and make

recommendations to the Quality Committee regarding appointments,
reappointments, privileging, and re-privileging within the GH
delivery

system.

 Provide oversight of delegated credentialing activities.
 Recommend credentialing/privileging policies and procedures to

QCOB.

 Western Washington Credentialing
& Privileging Committee

 Eastern WA/North Idaho
Credentialing & Privileging

Committee

 Central WA Credentialing
Committee

*(See Attachment #4 for complete
membership)

Care Management Oversight Team (CMOT – meets quarterly)

Purpose: The Care Management Oversight Team (CMOT) is delegated
by Group Health’s Quality Oversight Team (QOT) to oversee the
statewide Care Management program. CMOT specifically:
 Acts as the approval body for organizational care management work

plans and policies, including UM policies for denials and appeals,
Medical Technology and Assessment Committee (MTAC), and
Pharmacy & Therapeutics Committee (P&T).

 Develops the Care Management Program Description and Annual
Work Plan.

 Conducts an annual evaluation of the Care Management Work Plan in
meeting organizational goals and objectives.

 Monitors the operational status of care management activities across

Core Membership includes:
 Exec. Director, Care Management
 Exec. Medical Director, Health Plan

Division (or Designee), chair
 Exec. Director, Health Plan

Operations
 Director of Medical Operations,

Behavioral Health Services
 Manager, Quality Performance

Review
 Exec. Director, Government

Programs

Additional representatives may attend
on an ad hoc basis

COMMITTEE OR GROUP DESCRIPTION COMPOSITION OF GROUP
Care Management Oversight Team (con’t)

the organization to ensure a cross-functional, integrated approach to
delivering high-quality care to members.
 Oversees and monitors compliance with regulatory and accrediting

bodies.
 Provides monitoring for, and recommends direction to, the Clinical

Expense Group (CEG).

Tasks:
CMOT’s scope is primarily related to improvement and monitoring
work, including:
 Approval body for organizational care management work plans, such

as case management, pharmacy, etc.
 Oversight and approval of systems and programs to ensure

compliance with regulatory and accrediting bodies such as NCQA,
TeaMonitor, etc.

 Sponsor of PDCA/improvement work in support of Care
Management core work, once stabilized and ready for hand-off by
CDOG (Care Delivery Oversight Group).

Patient Safety Committee (PSC – meets approximatel monthly)

Purpose: To evaluate patient safety risks and make prioritized
recommendations to the enterprise to improve safety; to support the
Patient Safety Office in execution of the Patient Safety Work Plan; and,
to enhance alignment with patient safety initiatives throughout the
enterprise.

Tasks:
 Review, approve and monitor the Patient Safety Work Plan.
 Ensure that Group Health’s improvement activities focus on

nationally agreed upon safety priorities.
 Analyze Unusual Occurrence database to identify risk and develop

countermeasures to system issues that impact patient safety.
 Synthesize information from feedback systems (e.g. Unusual

Occurrences, Patient Safety WalkRounds, Member Quality of Care
Concerns, etc) to identify potential risk and opportunity for
improvement.

 Promote the spread of patient safety improvement and lessons learned
from Unusual Occurrences across the system.

 Recommend to the delivery system and GHC and GHP Boards
appropriate patient safety dashboard measures.

 Ensure that Group Health’s policies and procedures are consistent
with Just Culture.

 Recommend safety improvements with both internal and contracted
delivery system leaders.

 Ensure alignment of Group Health’s patient safety initiatives with
regulatory requirements.

 Develop a member engagement strategy.
 Survey Group Health providers and staff perceptions of patient safety

culture.
 Provide expert consultation on patient safety science.

 Medical Director, Patient Safety,
chair

 Patient Safety Officer
 Exec. Director, Risk Management
 Chief, Hospital Medical Staff
 Director, Hospital Quality &

Compliance
 MD, Consultative Specialty

Services
 MD, Primary Care
 MD, Surgical Services
 Director, Infection Control,

Employee Health

(RN)
 Manager, Medication Safety
 Assoc. Director, Lab Services
 Nursing Operations Clinical Practice

Specialist (RN)
 MCA/Administrator, Group Practice

Division
 Director, Clinical Operations,

Behavioral Health (ad hoc member)

COMMITTEE OR GROUP DESCRIPTION COMPOSITION OF GROUP
Patient Safety Committee (con’t)

 Conduct annual self evaluation: The committee will annually

determine whether it is functioning effectively and plan
improvements based on that assessment.

Medication Safety Committee (MSC – meets quarterly)

Purpose: To support quality patient care by using a systems-oriented
approach in evaluating and promoting the safety of the medication use
process.

Tasks:
 Help build and foster a safety culture within the organization.
 Improve and maintain an effective medication unusual occurrence

reporting system.
 Review and prioritize the level of patient risk based on trends

identified in the Unusual Occurrence data, Institute of Safe
Medication Practice (ISMP), and other external sources.

 Make recommendations towards medication safety improvement
efforts with both internal and contracted delivery system leaders.

 Provide expert consultation as it relates to medication safety
concerns.

 Review, approve and monitor the Medication Safety work plan.
 Ensure alignment with regulatory compliance as it relates to

Medication Safety.

 Physician, Medication Safety (co-
chair)

 Manager, Medication Safety (co-
chair)

 Medical Center Pharmacy
Manager(s)

 Clinical Pharmacist
Representative(s)

 Associate Director, Pharmacy
Operations

 Manager, Pharmacy Informatics
 Pharmacy Technician Ananyst
 Manager, Nursing Operations
 Patient Safety Officer
 Manager, AMB Pharmacy Contact

Center
 Coordinator, Transitions of Care
 Manager, Specialty Pharmacy

Services
 Member from Central Hospital

(vacant)

 Consultant Sub-group from Clinical

and Operational areas as determined

Clinical Information Systems Safety Committee (CISSC – meets
monthly to quarterly)

Purpose: To develop and implement a comprehensive organizational
Clinical Information Systems patient safety program under the
leadership of the Chief Medical Information Officer (CMIO).

Tasks:
 Assess and prioritize patient safety risks through monitoring and

analysis of:
a. Unusual Occurrences
b. ERT incidences
c. EPIC patient safety alerts and concerns
d. Liaison activities with Medication Safety and Lab
committees.
 Make recommendations and coordinate improvement activities in CIS

applications.
 Identify and evaluate opportunities for proactive system

developments to improve patient safety in clinical information
systems.

 Build and foster a culture of patient safety within the CIS
organization.

 Chief Medical Information Officer,
chair

 Manager, Pharmacy Informatics
 Nursing Operations Clinical Practice

Specialist, RN Director Clinical
Services

 Director, EPIC Team
 Director, Epic Technical Services
 Patient Safety Officer
 Medical Director, Clinical

Informatics
 Medical Director, Patient Safety
 Director, Care Delivery Information

Services
 Manager, Clinical Departmental

Systems

Consultant members from technical,
clinical and operational areas as needed

COMMITTEE OR GROUP DESCRIPTION COMPOSITION OF GROUP
Prevention Population Teams (meet either monthly, bi-monthly or
quarterly – varies by team)

Purpose: These are prevention-based population teams whose overall
goal is to promote healthy behaviors, reduce risk of disease, and detect
early onset of disease among GH enrollees. The prevention teams
include: Tobacco and Alcohol Prevention; Immunizations; Cancer
Screening (breast, cervical, colorectal); and, Well Visits.

Tasks:
 Develop the long-term vision for prevention needs and aims in the

domain of the prevention team.
 Develop an annual workplan to evaluate the quality of preventive care

within the scope of the prevention team.
 Review and recommend measures for evaluating performance.
 Develop a set of options and toolkits for delivery system and clinic

leaders to use to improve uptake of prevention services.
 Share accountability for performance improvement in the delivery

system.

 Delivery System Administrator, co-
chair

 Delivery System MD, co-chair
 Clinical Improvement & Prevention

staff
 Other members from Quality,

Delivery System, and Health Plan,
depending on unique function of the
specific team

Oversight provided by:
 Medical Dir., Preventive Care
 Director, Clinical Improvement and

Prevention (RN)

Guideline Oversight Group (meets once per month)

Purpose: Oversee the development and updating of clinical guidelines
to ensure high quality products, efficient use of GHC/GHP
resources and timeliness of project completion. Act as a liaison
between guideline teams and the Quality Oversight Team (QOT).

Tasks:
 Evaluate requests for new guidelines and prioritize based on clinical,

business, and customer service factors.
 Oversee creation of processes related to clinical guidelines, such as

system for deciding whether to adopt or adapt material from outside
source or develop product internally.

 Monitor the progress of guideline projects and problem-solve any
barriers to continued progress.

 Review completed projects submitted by guideline teams to ensure
high quality of products and consistency of key recommendations
with the evidence.

 Oversee preparation of materials on guideline projects to be reviewed
by QOT.

 Medical Director, Quality
Improvement

 Medical Director, Preventive Care
 Medical Director, Clinical

Knowledge Development
and Support

 Assistant Medical Director,
Preventive Care

 Director, Clinical Improvement and
Prevention (RN)
 Manager, Clinical Knowledge

Development and Support
 Coordinator, Clinical Guideline

Development
 Clinical Epidemiologist
 Supervisor, Clinical Publication

Behavioral Health Services Leadership Team (BHSLT- meets 2 – 3
times per month)

Purpose: Provides senior leadership oversight for behavioral health
(BH) care across the GH delivery system and is responsible for all
business and quality improvement functions. As the department’s
approving quality body, is responsible for orchestrating the
department’s quality agenda to support organizational strategies,
implementing the quality program, monitoring performance, and
making changes as needed.

Tasks:
 Set the department’s quality agenda and provide input into

organization and divisional quality plans.

 Director, Behavioral Health
Services

 Director, Medical Operations
 Director, Clinical Operations

COMMITTEE OR GROUP DESCRIPTION COMPOSITION OF GROUP
Behavioral Health Services Leadership Team (con’t)

 Monitor, plan and take actions to improve:
– HEDIS performance on BH measures
– Patient experience of BH care
– Access to care
– Coordination of care
– Patient Safety

 Ensure compliance with accreditation and regulatory standards for
BH (e.g., NCQA, State, Medicare).

 Oversee BHS systems and infrastructure (e.g., referral and triage
functions, new technology).

 Oversee training and professional development for staff.
 Liaison with other departments in the organization to connect

departmental efforts with organizational work (e.g., patient
confidentiality, unusual occurrence monitoring).

 Oversee utilization management functions for BHS.
 Quality of Care reviews are delegated to the Quality of Care Review

Committee who report findings through the Unusual Occurrences
reporting system. This committee meets monthly and results are
reported on a quarterly basis to the BHS LT.

The following groups provide support for and promote communication and execution of quality
improvement opportunities and initiatives throughout GHC:

COMMITTEE OR GROUP DESCRIPTION COMPOSITION OF GROUP
Division Leadership Teams/Quality Councils (meets at least monthly
to quarterly)

Purpose: Provide division-specific and/or function-specific
organizational direction and oversight for quality improvement
initiatives. Facilitate and provide direct support for the quality
improvement initiatives based on directions derived from the strategic
plan A3 deployment, the Quality Committee of the Board and/or the
QOT.

Tasks:
 Monitor the quality indicators [process measures/standards] and

identify and present trends to the attention of QOT when they cross
pre-established thresholds, or otherwise warrant attention or action by
ELT or the Quality Committee.

 Identify opportunities for improvement and provide direction
regarding which issues to target for intervention.

 Review and approve policies that impact quality.
 Approve, support/guide performance improvement teams.
 Recognize and celebrate performance improvement efforts.

Varies by site, includes key physician
and administrative leadership through
the following structures:

 Group Practice Division Leadership

Team/Quality Council (Attachment
#1, 2)

 Network Services and Care
Management Leadership Team/
Quality Council (Attachment 1, 3)

 Health Plan Division (Attachment
#3)

COMMITTEE OR GROUP DESCRIPTION COMPOSITION OF GROUP
Enterprise Quality

Purpose: To support executive leaders in driving process, practice and
quality/service improvements across the enterprise while ensuring that
initiatives are integrated and coordinated in order to fully leverage our
integrated system.

Tasks:
 Assist with the planning and development of strategies for service

and clinical quality improvement.
 Support implementation of quality improvement strategies and

initiatives.
 Provide internal expertise through the application of Lean tools to

meet strategic, service line, and local improvement needs.
 Provide quality improvement support in the delivery systems.
 Support the care management strategy development and

implementation.
 Support clinical guideline development and implementation.
 Provide organizational health information and education.
 Provide training and consultation for service and practice

improvement strategies.
 Support the implementation and management of the Group Health

Options quality program.

 See Attachment 5

GH Quality Assessment and Improvement Accountability Structure
The key feature of Group Health’s quality assessment and improvement process is the ability to view
sub-optimal quality from a broad, systems perspective. We believe that most quality problems are the
result of poorly designed systems and processes. An essential activity that is built in to the quality
assessment process is to “drill down” to determine whether an individual provider’s apparent problem
may be related to an underlying system issue. Performance measures and reporting of progress against
targeted measures is widely available to all Group Health staff through the internal web site
Connections.

Group Health conveys quality information to those who are accountable for assessing and improving
care in one of two forms:

1. In the aggregate form. This information is used for population or geographic area assessments

and identification of system problems.
2. In the practitioner-specific form. This information is used for credentialing and performance

evaluation.

The structure diagrams on the following pages describe linkages among responsible groups. These
linkages are the communication conduits for performance information. Attachment 6 describes the
data sources and analytical resources that support the quality program.

ATTACHMENT 1

GHC Quality Assessment and Improvement Structure

Board of Trustees

Quality Committee
of the Board

Executive
Leadership Team

Quality Oversight
Team

Professional
Liability

Committee

Confidentiality
& Security

Council

Credentialing &
Privileging
Committees

*Behavioral
Health Services

Leadership Team

*Patient
Safety Committee

Group Practice
Division

[LT/Quality
Council]

Health Plan
Division
[LT/Quality
Council]

 Medical Directors
Clinical Review &
Policy Cmte.
(MDCRP)

 Medical Technology
Assessment Cmte.
(MTAC)

 Pharmacy &
Therapeutics Cmte.
(P&T)

 *Care Planning and
Improvement
Committees
(CPICs)

*also has links to Divisional
Leadership Teams/Quality
Councils

Legend:

GHC

Division

 Privacy Office  Quality of Care
Review Cmte.

 Medication
Safety
Committee

 CIS Safety
Committee

 Quality of
Care Case
Review

*Care
Management

Oversight
Team.

 Clinical Support
Service Line
Quality
Committees

 Consultative
Specialty
Quality
Committees

 Primary Care/
Behavioral
Health
Leadership Team

 Network Services
and Care
Management
Leadership Team
(NSCMLT)

 Network Services
and Care
Management
Quality Council
(NSCM-QC)

ATTACHMENT 2
Group Practice Division Quality Committees

Quality Oversight
Team (QOT)

Group Practice
Division

Quality Council

Clinical Service Line
Committees

Lab/Pathology

(Quality)

Pharmacy (Quality)

Hospice (Quality)

Quality of Care
Case Review
(Patient Safety)

Consultative Specialty
Leadership Team/

Quality Council

Radiology QA

Committee

Radiation Oncology
QA Committee

Olympic View
Dyalysis Center QA

Committee

Consultative Specialty
Section meetings

Hospital (Quality)

Ambulatory Surgery
Centers (Quality)

Primary Care/
Behavioral Health

Leadership Team

Home Health
(Quality)

Emergency Services/
Urgent Care

(Quality)

Nursing Home Services
(Quality)

ATTACHMENT 3
Health Plan Division Performance Management System

< F

u
n
ct

io
n
>

at
ch

ba
ll/

C
ap

ac
ity

c
he

MEDICAL
DIRECTOR CLINICAL
REVIEW AND POLICY

COMMITTEE

Assures consistent and uniform set of
medical policies

Assures and maintains balance between
medical policy,

medical efficacy and market/environment
Considers new technologies

Maintains, revises and creates medical
necessity policy to use
in making coverage

decisions

GPD OWNED & OPERATED

1° Care 2° Care 3° Care

NON-OWNED & OPERATED

Provider Relations DA/DMD’s

MEDICAL
TECHNOLOGY
ASSESSMENT
COMMITTEE

Assess the evidence for new and
existing technologies and provide

the assessment outcome to
MDCRPC

UTILIZATION
IMPROVEMENT

GROUP

Utilization management
oversight

Assess feasibility of clinical cost
initiatives

CARE
MANAGEMENT
Design Team

Logic Cell Oversight
CM Model Oversight

CMIS oversight and standards
CM strategy deployment

Content of Care
Oversight of CM work & system
Improvement & coordination

of CM

GPDLT
Group Practice Division

Leadership Team

NSCMLT
Network Services/Care

Management Leadership Team

Care Delivery Design and Improvement Structure

ORGANIZE AND DESIGN
Determine feasibility of new initiatives

Determine disposition of new initiatives

Develop tactics, strategies, and
designs to close performance gaps

Eliminate redundant improvement
efforts

Request analytics

DEPLOY AND IMPROVE
Run

Operations

Operationalize improvement
initiatives
Drive ongoing improvement
Strategic input to design teams/
CDOG

QCOB

Q & P

ELT
Strategic direction

CMOT
Annual organizational

monitoring

Set Quality Agenda

Prioritization of quality
initiatives

QOT

Includes regulatory
oversight, monitoring of

ongoing operational
programs throughout

system, and
identification of new

opportunities

CAT
Capital

Allocation Team

CEG
Clinical Executive

Group

Monitoring
Dashboard

Establish Metrics for
Care Delivery System
Cost, Quality, Access,
Member/Pt.
Satisfaction, Business
Alignment, Purchaser
SatisfactionLOAD

Prioritizing enterprise work

Setting strategies

Monitoring performance
outcomes

Contracting oversight

Strategic positioning in service
delivery markets

PHARMACY &
THERAPEUTICS

COMMITTEE

Identify the most cost effective
pharmaceutical treatment and

recommend changes to the
formulary and prior auth criteria

Evaluate use of new

pharmaceuticals

or new
application of existing

pharmaceuticals

ATTACHMENT 4
Credentialing Committees Membership

Member Specialty Status Member Specialty Status

Central Washington
Pope, Brad, MD, chair Family Practice GHP
Chou, Valiant, MD Obstetrics/Gynecology Contracted Western Washington

(Seattle C&P)

Thiel, Arthur, MD Orthopaedic Surgery Contracted Bailey, Desiray, MD, chair Anesthesiology

GHP

Mayuga, Lorena, MD Family Medicine Contracted Dimer, Jane, MD, Obstetrics &

Gynecology
GHP

Gibson, Lori, LICSW Behavioral Health Staff Paros, Philip, OD Optometry GHP
McLaughlin, Pat Manager, Provider Services Staff Shewey, Linda, Midwifery/ARNP’s GHP
Pittman, Michelle Credentialing Specialist Staff Lowe, Marc, MD Urology GHP
Runyan, Candice Supervisor, Credentialing Staff Duncan, Stephen, MD Family Practice GHP
Ahart, Sharon, MD Pediatrics Contracted Wanderer, Michael, MD, co-chair Family Practice GHP
Eastern Washington/North
Idaho

Feller, Steve, DPM Podiatry Contracted

Pope, Brad, MD, chair Family Practice GHP Steinfeld, Bradley, PhD Psychology/Behavioral
Health

GHP

Barrong, Shawn, MD Obstetrics/Gynecology Contracted Erickson, Michael, PA-C Physician Assistant GHP
Gibson, Lori, LICSW Behavioral Health Staff Hsia, Raymond, MD Gastroenterology GHP
Schaaf, Tom, MD Family Practice GHP Quality Committee Oversight of

Credentialing & Privileging:

Bergum, Mary, MD Family Practice Contracted Bob Margulis N/A Trustee
Juliver, Adam, MD General Surgery Contracted Susan Byington N/A Trustee
Brooks, Maureen Manager, Provider Services Staff Harry Harrison, MD N/A Trustee
Kenning, Kimberly Credentialing Specialist Staff Dorothy Ruzicki, RN N/A Trustee
Runyan, Candice Supervisor, Credentialing Staff Leo Greenawalt N/A Trustee
Savres, William, MD Family Practice GHP

ATTACHMENT 5
Enterprise Quality

Vice President of Clinical

Excellence,
Quality, and Nursing

Practice

Associate Medical
Director, Quality and

Informatics

Director of
Nursing

Operations

Clinical
Practice

Specialist

Director,
Professional
Practice &

Development

Clinical Practice & Education
Specialist

Clinical Practice &
Nursing Education

Specialist

Manager, Nursing
Operations Clinical

Information Systems

Administrative
Coordinator

Population

Management
Coordinator

Quality Performance
Review

Manager

Clinical Knowledge
Development &

Support
Manager

Patient Safety
Manager

Screening
Programs
Manager

Health Information &
Promotion
Manager

Expert Wound Care
Team

(2)

Project Manager

Clinical Practice
Specialists

(2)

Director, Clinical
Improvement &

Prevention

Director, Content of
Care

Content of CareClinical Improvement & Prevention
Nursing

Operations

Vice President of Clinical
Excellence,

Quality, and Nursing Practice

Program
Manager

Administrative
Coordinator

Administrative
Assistant

Infection
Preventionist, BVU

Infection
Preventionist, CMB

Infection
Preventionist, TAD

Employee Health &
Infection Control

Coordinator,
EW/NI

Infection Control
Analytical Analyst

Infection Control
Admin C

Employee Health
Administrative
Coordinator

Infection Control &
Employee Health

Admin B

Employee Health
Coordinator

Infection Prevention &
Employee Health

Director, Infection
Prevention &

Employee Health

ATTACHMENT 6
Quality Resources at Group Health Cooperative

Quality Improvement Activity Resources
The resources that Group Health devotes to the Quality Improvement Program and
specific quality improvement activities are broad and include staff (employees and
consultant staff), data sources, and analytical resources such as statistical expertise and
programs. Evaluation of adequate quality resources is determined through evidence that
the organization is completing quality improvement activities in a competent and timely
manner. This is done through the annual Quality Program Evaluation, as well as ongoing
monitoring of performance and progress on the quality workplan by the Quality
Oversight Team (QOT) throughout the year.

Oversight for Enterprise Quality is provided by a Vice President and an Associate
Medical Director, and a total of six medical directors, one in each of the following areas:
Informatics, Clinical Improvement, Preventive Care, Clinical Knowledge Support,
Continuing Medical Education, and Senior Services. The Preventive Care Department
also has an Associate Medical Director and an Assistant Medical Director.

Staff (over 200 positions), including 51 in the Clinical Improvement and Prevention
department, dedicated to quality improvement activities are present in the following
areas:

 Patient Safety
 Clinical Knowledge Support
 Continuing Medical Education
 Clinical Improvement and Prevention
 Quality Performance Review
 Consulting Services
 Credentialing
 Member Appeals
 Clinical Review Unit
 Member Quality of Care Grievances
 Behavioral Health Services
 Care Management
 Pharmacy Administration

In addition, external consultant staff arrangements are made as needed.

Data Sources
Group Health uses a number of different sources and systems to collect data and generate
results for quality indicators, including the following:
 Premier membership and billing system – enrollment data
 Enterprise Master Files (EMF) – additional consumer and practitioner demographics

 EPIC clinical information system – clinical data from the electronic medical record
 EPIC practice management suite – encounter, appointment, admit/discharge/transfer,

and billing information for inpatient and outpatient services received at Group Health
facilities on or after 11/1/2009

 LastWord – encounter, appointment, admit/discharge/transfer, and billing information
for inpatient and outpatient services received at Group Health facilities prior to
11/1/2009

 Premier claims system – data for institutional and professional services received
inside and outside Group Health clinics

 Coop Rx – internal pharmacy claims system
 MedImpact – external pharmacy claims system
 Laboratory Information System (LIS) – internal laboratory services and results
 PAML – selected external laboratory services and results for some members treated

in Spokane area Group Health clinics
 CareTracker – care coordination tracking tool
 eWatson – customer relationship management tracking system (including complaint

and appeals data)
 Patient Experience Survey Results database – results from Group Health’s survey of

patient satisfaction
 Cancer Screening Exclusions – Supplemental source of data, identifying members

with valid exclusions from selected screening procedures

Data from most of these systems are stored in Group Health’s Data Warehouse, a
repository for current and historical clinical, service, financial, utilization, and
administrative data. Programmers in Enterprise Information Management (EIM) create
programs to extract the data and produce results for key clinical, utilization, and service
quality indicators.

Data Warehouse and Reporting Resources
Group Health maintains a data warehouse repository usable by staff across the
organization for analysis and reporting. Part of that maintenance requires pulling data
from original source systems such as claims and Epic into warehouse tables “scrubbed”
and enhanced with value-added attributes. In addition, for various applications or
reporting needs, datamarts are developed with specific information needed for that
reporting or by those applications. This team includes the following staff:

 Analyst, Application Systems Programmer III (8 positions) – develop, maintain,
and administer data integration (ETL) processes and tools; develop, maintain, and
administer ad-hoc and standard reporting applications, dashboards and tools;
manage the ongoing loading and optimization of the Data Warehouse

 Manager, Data Integration (1 position) – responsible for the day-to-day load
operations of the Data Warehouse; ensures that all data are loaded as required;
manages resources for data integration development projects within EIM

 Business Intelligence Analyst (8 positions) – responsible for gathering
requirements and source-to-target mapping of data; manage the daily workflow of
work by the individual teams

 Analyst, Business Programming I; Analyst, Data Quality (6 positions) – quality
assurance/validation of all data loads from the source systems into the data
warehouse.

 Data Consultant (2 positions) – logical and physical design of database/data mart
structures

 Business Data Analyst (1 position) – staffs a help desk to provide support for
reports and resources and completes data warehouse queries and other ad hoc
requests for analysis

 Analytical Assistants (2 positions) – provide general support for analytical work
and help desk, perform data validation, schedule medical record review visits to
non-owned/operated facilities, manage compilation of materials for and staffs the
annual HEDIS compliance audit.

 Analyst, Application Systems, Programmer III (1 position) – develop technical
infrastructure to produce reports, develop measures, and datamart to support
clinical measurement reporting

Measurement and Analytical Resources
Group Health dedicates significant staff and information systems to analyzing and
reporting the large volume of clinical and service quality data available. This team
includes the following staff:

 Senior Measurement Consultants (2 positions) – work with organization leaders to
understand issues, questions being asked, and data needed to support decision-
making; provide leadership to teams doing the analysis

 Manager (1 position) – as part of support services, that manager leads the annual
medical record review process that is part of HEDIS reporting, including hiring of
7-9 temporary reviewers, training, and performing reviews

 Measurement Analyst (4 positions) – perform deep analysis including data
profiling, hypothesis testing and statistical analysis for quality related initiatives;
provide support analysis to drive clinical and process improvements; provide ad
hoc analysis using standard statistical methods; evaluate effectiveness of new
programs

In addition, EIM utilizes high-level technical staff from other EIM departments to
support new and ongoing work:

 System Architect (1 position) – design, build, and maintain stand-alone
application to collect medical record review data

 Database Consultant (1 position) – design complex data mart structures

These programmers use a number of applications to produce results and reports for
clinical and service quality indicators including:

 VIPS certified HEDIS measure calculation
 Informatica PowerCenter (Extract, Translate, & Load “ETL” software

application)

 SAS
 Sybase Adaptive Server Enterprise
 Microsoft Visual Basic
 Microsoft SQL Server
 Microsoft Access
 Microsoft Excel
 Business Objects reporting tools, including Crystal Reports

The Enterprise Information Management department includes a PhD level statistician and
three Masters level statistical analysts to provide consultation regarding the statistical
relevance of changes in clinical and service performance.

ATTACHMENT 7
Quality Improvement Focus for the Medicaid Population

As stated in the Quality Program Description, the scope of Group Health’s quality
program includes specific quality improvement activities and measurements directed at
Group Health’s Healthy Options (Medicaid) population. These activities ensure that the
clinical, service, and care management performance standards set by the State of
Washington Health and Recovery Services Administration (HRSA) and the Centers for
Medicare and Medicaid Services (CMS) are met or exceeded for this important and
vulnerable population.

Group Health provides coverage for Medicaid members in four counties in Washington,
serving approximately four percent of Healthy Options enrollees. More than 87 percent
of Group Health’s Medicaid members receive care in Group Health owned and operated
medical centers. About three percent of Group Health’s membership are Medicaid
members, of which more than 80 percent are aged 18 or younger.

A process for identification, review, prioritization, and development of performance
improvement projects (PIPS) through ongoing monitoring and reporting of clinical
measures is in place. Staff in Quality and Planning develops and monitors monthly
Healthy Options and Basic Health specific line of business performance on clinical and
service measures to identify improvement opportunities.

As part of the ongoing quality monitoring process multiple dimensions of quality are
assessed for the care and service provided to the Healthy Options members specifically.
This comprehensive performance monitoring and assessment includes:

Purchaser feedback:
The TEAMonitor review is an annual assessment by State agencies (DSHS/HRSA and
Healthcare Authority, HCA) reviewing Group Health’s performance for State programs –
Medicaid Healthy Options and Basic Health. Ongoing monitoring of corrective action
plan items, including those related to the Quality Program, are reviewed and discussed
regularly at the TEAMonitor Oversight Group, comprised of representatives from
Quality, Health Plan Administration Compliance, Government Programs, and Marketing.
The TEAMonitor Oversight Group’s work reports up to the Government Programs
Oversight Committee who has broad responsibility for ensuring that government
sponsored contract requirements are met.

Clinical performance:
As previously mentioned, clinical and service measures for Healthy Options and Basic
Health specific lines of business are monitored on a monthly basis by Quality and
Planning staff to identify improvement opportunities.

Current quality improvement activities focused on this population include:
 Children with Special Health Care Needs
 Preventive Well Visits
 Childhood Immunizations

Service performance:
Healthy Options member satisfaction performance through the PES survey is monitored
monthly; however, the small denominator sizes of 50-70 make it difficult to identify
trends or actionable information. Complaint data provides more useful member feedback
related to service performance. Complaints and Appeals are both monitored on a
quarterly basis.

Care management performance:
Components of care management performance that are monitored regularly, either
quarterly or annually as appropriate, include: denials; over/under utilization; the Patient
Review and Coordination program; and, care coordination/complex case management
programs.

In addition to the regular and ongoing monitoring of quality performance, the formal
annual Quality Program Evaluation includes a specific assessment of performance for the
Healthy Option’s (Medicaid) population, and the findings and recommendations are used
to inform the Quality Plan for improvement activities for the following year.

2012 Update of Quality Plan and Program Description

Table of Contents

Introduction
Vision for Quality
Alignment with Strategic Plan
Reflections Regarding Achievement of 2011 Quality Goals
2012 Quality Hypothesis and Goals
2012 Quality Framework and Action Plan

Quality Program Description
Quality Improvement Planning Process
Quality Program Implementation
Evaluation of the Quality Program
Confidentiality

Quality Program Structure and Accountability – Committee Descriptions

Attachment 1

Attachment 2
Attachment 3

Attachment 4

Attachment 5

Attachment 6
Attachment 7

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