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Commentary: presenting the value of medical quality to nonclinical senior management and boards of directors.

Many physicians find hospital or health plan boards of directors to be intimidating arenas for medical quality presentations. This essay presents a number of "pearls" gleaned from successful senior clinician managers who have learned to relate to senior management and advance in their careers. This commentary was developed from research and a presentation of the same title delivered at the American College of Medical Quality Annual Meeting held in Las Vegas in October, 2001. It is important that medical directors who work with financial managers convert quality concepts into "business value" concepts. Talking in the language of business, rather than the language of doctors, makes it much easier to communicate with management (although some translation is often in order). As a clinician presenting to financial managers, you should become familiar with financial terms and how they are used. Indeed, the development of a financial model representing clinical activity results in the highest level of success. There are a number of methods for estimating impact that have been found within general business and health services research areas that are acceptable. Successful presenters of information approach their task effectively. Reports are in a more readable format and convey information for action by the corporation rather than as a scholarly treatise. Approaching senior management, one must consider the psychology of individuals in senior positions. Senior medical executives who are successful report similar approaches to their tasks, and offer helpful insight into career advancement.

Chief Executive Officers, Hospital↗

Long-term service contracts may not be advantageous.

Equipment maintenance costs in healthcare organizations often are the second highest operating costs in departments such as radiology. Savvy financial managers are beginning to understand that much of their organizations' equipment may be under long-term service contracts that are hard to break and that can prevent an organization from saving money. Financial managers should carefully consider their organizations' long-term maintenance goals before entering into such service contracts.

Contract Services↗

Analyzing the service contract when buying equipment.

When purchasing equipment, financial managers must consider how much maintenance and repair will cost in addition to the initial purchase price. Equipment service contracts can help ease the cost of equipment maintenance. But before signing a contract, financial managers should carefully analyze the agreement, considering such factors as vendor qualifications, covered equipment, and the term, coverage, conditions, and cost of the agreement.

Contract Services↗

Joint ventures revisited: we're all in this together.

Healthcare organizations are finding it advantageous, and in some cases necessary, to join together to offer new services, seek economies of scale, or just stay in business. These partnerships can take various forms including joint ventures, shared service agreements, or multiprovider arrangements. together, they represent new approaches to operating more efficiently and effectively in a changing healthcare industry. This article marks the beginning of a three-part series on the joint venture in health care. The series explores possible joint venture models, explains the legal implications in setting up a joint venture, and shows how to evaluate a potential deal. Together they provide a background and a starting point for the financial manager considering the possibility of a joint venture.

Commerce↗

Overcoming barriers to operating room inventory control.

Simple controls can reduce a hospital's operating room (OR) inventory by 10 percent to 30 percent. Controlling OR inventory involves a four-step plan: count the materials, estimate their value, reduce the value, and implement controls. This process provides valuable information for negotiating with vendors. Armed with inventory data, financial managers may be able to save their healthcare organizations $200,000.

Cost Control↗

Capital financing demands new, innovative practices.

Hospitals are facing challenges in the financing of capital expenditures. Credit ratings have shifted to a lower rating category. Interest rates for long-term debt have risen, and the use of short-term variable rate debt has increased. Also, the elimination of tax-exempt financing is being considered. Clearly, capital financing is in a state of flux. With a need for low cost capital, hospital financing is in a state of flux. With a need for low cost capital, hospital financial managers should study the changing credit market and consider innovative practices in healthcare financing.

Capital Financing↗

Medicare cost reporting: how to put a hospital's cost report on a micro-computer.

The major advantage of the micro-computer, in addition to its cost and speed, is that a particular analysis or work sheet can be done with relatively ease by the accountant. Without waiting for a programmer to program the particular application, debug it, and then change it several times after determination that it doesn't provide all of the information needed, the financial manager can do this right at his desk.

Computers↗

Guidelines (1988) for training in clinical laboratory management. International Federation of Clinical Chemistry (IFCC) Education Division and International Union of Pure and Applied Chemistry (IUPAC) Clinical Chemistry Division Commission on Teaching of Clinical Chemistry.

Trainees in laboratory medicine must develop skills in laboratory management. Guidelines are detailed for laboratory staff in training, directors responsible for staff development and professional bodies wishing to generate material appropriate to their needs. The syllabus delineates the knowledge base required and includes laboratory planning and organisation, control of operations, methodology and instrumentation, data management and statistics, financial management, clinical use of tests, communication, personnel management and training, and research and development. Methods for achievement of the skills required are suggested. A bibliography of IFCC publications and other material is provided to assist in training in laboratory management.

Administrative Personnel↗

Revolving drug funds: conducting business in the public sector.

Pharmaceuticals are essential for preventive and therapeutic health services. Unfortunately, significant demand, limited funds and high prices contribute to frequent shortages of drugs in many public health programs. One method for financing pharmaceutical supplies has been the establishment of revolving drug funds (RDFs) in which, after an initial capital investment, drug supplies are replenished with monies collected from the sale of drugs. All too often however, the funds actually recovered are insufficient to replenish supplies and the fund is soon depleted. In this paper we consider the potential benefits and common pitfalls of revolving drug funds and then focus on the central role of financial planning in establishing drug sales programs. Experiences from a variety of countries suggest several causes for the failure of some RDFs, including: under-estimation of capitalization costs, prices set below true replacement cost, frequent failure to collect payment, delays in cash flow which make funds unavailable for replenishment of drug stocks, rapid program expansion for which additional capital funds are not available, losses due to theft and deterioration of drugs, unanticipated price increases due to inflation or changes in parity rates and foreign exchange purchase restrictions. Common to many of these problems is the lack of a businesslike orientation to RDFs and, in particular, lack of careful financial planning and management. Financial planning for an RDF includes four analytical tasks: assessment of the potential market, estimation of the costs of an RDF, establishment of the cost-recovery objectives, definition of the role of subsidies and surcharges.(ABSTRACT TRUNCATED AT 250 WORDS)

Developing Countries↗

Using the micro to accurately allocate a hospital's departmental overhead.

A major component of standard costing is overhead allocation. Unfortunately, overhead allocation can be complex and difficult. But, at one hospital, this problem was solved with a microcomputer-based technique. The technique, using the spreadsheet Lotus 1-2-3, was logical, simple, and technically sound, allowing the financial manager to more accurately allocate overhead in the standard costing process.

Cardiology↗

Suggestions for establishment of pulmonary rehabilitation programs.

Chronic obstructive pulmonary disease (COPD) is the second greatest cause of disability in the USA. COPD rehabilitation programs can reduce numbers of rehospitalizations, reduce overall costs of care, and improve the quality of patients' lives. A rehabilitation program must address both physical and emotional disability and must be designed for the individual patient's unique life-pattern. The program should be a team effort, involving physicians, nurses, respiratory therapists, psychologists, social workers, and, at times, other allied health personnel. Respiratory therapists can participate in pulmonary rehabilitation programs in program design and evaluation, in interviewing, educating, and counseling patients and families, by performing respiratory and physical therapy, and in vital research on costs and benefits of pulmonary rehabilitation. In addition, some respiratory therapy managers may direct financial management of such programs.

Hospital Departments↗