Washington ? What may well be the most promising development in health care reform in many years passed almost without notice in Washington last week.

For the first time, the Malcolm Baldrige National Quality Award — the most prestigious honor in business for outstanding performance — was given to a firm in the medical world. The award, named for the late commerce secretary in the Reagan Cabinet, went to SSM Health Care, a huge ($1.8 billion in revenues) nonprofit Catholic organization headquartered in St. Louis and operating in four Midwestern states with 21 hospitals, three nursing homes, 5,000 affiliated physicians and 23,000 employees.

Sister Mary Jean Ryan, the wisp of a woman who has been CEO of SSM for 17 years, told me that since the award was announced late last year, she has had hundreds of e-mails from other hospital groups here and abroad and 75 speaking invitations. But when she came to Washington with almost 100 of her SSM colleagues for the three-day, Commerce Department-sponsored meeting where the three 2002 Baldrige winners shared their lessons with hundreds of other eager-to-learn executives, Congress and the press were too busy with other things to notice.

That is not unusual here. The conceit of Washington is that big changes in important services must be mandated from the outside — by legislation or regulation. Last year, when the Baldrige awards honored two school systems for the first time, official Washington was too caught up in its fascination with the No Child Left Behind legislation to ask what lessons these real-world practitioners might have to impart.

But increasingly it is clear that systemic change in vital human service functions such as education and health care are more likely to emerge from the search for internal improvements than from external mandates.

The competition — begun 15 years ago to spur American firms’ competitiveness in the global economy — requires organizations to demonstrate rigorous and continuous efforts by all their managers and workers to improve the quality of their products and services.

SSM, which traces its roots to four penniless nuns who fled religious persecution in Germany and arrived in St. Louis during a smallpox epidemic in 1872, now is sponsored by the Franciscan Sisters of Mary. Its faith is reflected in its mission statement: “Through our exceptional health care services, we reveal the healing presence of God.”

Ryan said SSM began pursuing quality improvements in 1990, and five years later began winning state quality awards. The development of the mission statement in 1998-99, through an internal process involving thousands of employees, was a key step in that process, she said. When Baldrige made health care organizations eligible for the competition in 1999, SSM immediately applied.

“When the Baldrige site visitor team asked us what we meant by ‘exceptional,'” Ryan said, “we were stunned. We couldn’t answer. So we set out to define it.”

The result is a set of sophisticated measurements of the degree to which SSM satisfies five goals: meeting the expectations of patients, doctors and employees while producing exceptional clinical and financial results. The patients and medical personnel are surveyed constantly and interviewed at length about their experience with SSM.

Their winning Baldrige application included no fewer than 69 charts and graphs, tracking progress on everything from unplanned readmissions within 31 days of hospitalization to systemwide turnover rates for all employees, including nurses — all of which are now well below national norms.

The fact that Ryan began as a hospital nurse herself makes her a forceful advocate of relying on front-line workers for advice — and demanding that they be given leadership responsibility in the collaborative teams working in each facility. Early on, she said, she once failed to report her own error in medicating a patient, so SSM has created a “blame-free” zone for reporting not only errors but near-misses. “Half the reported incidents lead directly to system improvements,” she said.

SSM is proving that good medicine is also an economic asset. Its market share is rising, and, in contrast to many hospitals, it is operating in the black, while delivering millions of dollars worth of charity and uncompensated care.

In her talk at last week’s conference, Ryan said, “We are living proof that health care in the United States is capable of improving, despite many predictions to the contrary. We are proof that large and complex health care organizations can push themselves to step out of their comfort zones to achieve exceptional results. And the more of us that commit to performance excellence, the greater will be our ability to deliver health care breathtakingly better than it’s ever been done before. The nation deserves no less.”

Those words — and the performance behind them — deserve more attention than Washington gave them last week.