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Control of high cost medicines.
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Helpful or harmful? The impact of strategic change on the performance of U.S. urban hospitals.
OBJECTIVE: To contribute to the debate as to whether strategic change helps or harms organizations by empirically examining how strategic change influences performance change in urban hospitals. DATA SOURCES: AHA Annual Survey (1994 and 1996), Health Care Financing Administration's Medicare Cost Reports (1994 and 1996) and Medicare HMO Files (1994), U.S. Bureau of the Census' County Business Patterns Files (1994), and Area Resources File (1994). STUDY DESIGN: This work employed a longitudinal approach using a panel design to study the effect of environmental and organizational characteristics on urban hospital strategic behavior and performance. A path analytic model was used to examine the simultaneous effects of environmental and organizational characteristics (1994) on strategic behavior (change in strategies to enhance HMO business and change in strategies to control costs 1994-96), as well as the effects of all of these variables on change in urban hospital performance (change in market share, change in operational efficiency, change in financial performance 1994-96). PRINCIPAL FINDINGS: (1) Environmental context exerts a greater influence on urban hospitals' HMO business enhancement strategies, whereas organizational characteristics have more influence on cost-control strategies. (2) Between the two strategies, HMO business enhancement and cost control, strategic change to enhance business with HMOs is much more complex. (3) Strategic change observed across the 1994 to 1996 time period can be either helpful or harmful to urban hospitals. A strategic change that contributes positively to one type of performance can negatively impact the other. CONCLUSIONS: Although differences of opinion persist in the strategic change debate, results of this study indicate that strategic change can be helpful or harmful to urban hospitals, and its consequences are far more complex than previously thought. Strategic rationality has its own limitations and cannot always be relied on to yield expected results. Hospital strategic changes require coordination to achieve greater performance results.
The German health care system: structure and changes.
The German health care system has often been viewed by American policy makers as a model for a system that controls costs and provides coverage to virtually all of its citizens, while maintaining a private market for the delivery of most services. Nevertheless, German policy makers are as concerned as their American counterparts about the increasing share of national income devoted to health care. To control rising health care costs, the German government, after two decades of cost control interventions, has enacted a major health care reform aimed at reducing structural deficits of the current system and enhancing competition within the system. We review the general structure of the German health care system and analyze its specific problems. We also discuss its accomplishments and present the recently enacted health care reform.
A comparison of two methods for estimating the health care costs of epilepsy.
PURPOSE: Previous studies have estimated medical care costs of epilepsy by applying unit costs to estimated utilization or by summing costs for (a) ambulatory care and hospitalizations coded as epilepsy and (b) procedures and drugs specifically associated with the diagnosis or treatment of epilepsy. These methods may underestimate the cost of medical care for epilepsy. Two methods for estimating the medical care costs of epilepsy ("epilepsy-attributable cost method" and "case-control cost method") were compared. METHODS: The study population was 655 individuals with an epilepsy diagnosis enrolled in a managed care plan in the southwestern United States. The epilepsy-attributable costs were determined by summing costs for inpatient and outpatient encounters coded as epilepsy, procedures for the diagnosis or treatment of epilepsy, and drugs used to treat epilepsy. The case-control method determined costs by calculating the difference in total costs between cases and 1,965 age- and gender-matched controls. RESULTS: The case-control epilepsy costs were $2,923 per case compared with epilepsy-attributable costs of $1,335 per case. The case-control method found statistically significant differences in costs between cases and controls for inpatient care, prescription drugs, and 8 of 11 categories of outpatient care. The largest contributors to the discrepancy between estimates were inpatient care, emergency department care, laboratory tests, and "other specialist" care. CONCLUSIONS: Epilepsy-attributable costs accounted for only 46% of the total difference in costs between epilepsy cases and controls. Persons with epilepsy use more medical services than controls, but a substantial portion of this care is not coded to epilepsy.
Standardizing social indicators to enhance medical case management.
With the advent of Medicaid Managed Care, health care professionals and administrators have sought ways to increase patient compliance and appropriate utilization of services under a capitated system. The major focus has been on medical managed care and utilization review to control cost. This paper focuses on the development and standardization of social indicators to identify the biopsychosocial problems that cause medical noncompliance and inappropriate utilization of medical services by the Medicaid patient. The development of what is called Life Indicators is discussed and serves as a basis for enhancing the medical case management model to control cost when providing services to patients with complex medical and social problems.
Creating health delivery systems. Interview by Donald E. Johnson.
Coalitions between health care providers and employers that enable hospitals to focus on the important issues of the community will go a long way in controlling costs as well as answering questions of industry. In the following interview with Health Care Strategic Management's Donald E.L. Johnson, Samuel T. Wallace, president of St. Luke's Hospital, Cedar Rapids, Iowa, a 520-bed institution that serves as a center for cancer, neonatal and heart services, describes a coalition concept that can help control costs while addressing the specific health care problems of local employees.
Controlling the costs of antibiotic resistance.
Excessive and inappropriate use of antibiotics in hospitals contributes to the development of antibiotic resistance and to increased hospital costs. Denver's three major teaching hospitals have developed a multifaceted approach that has curbed inappropriate antibiotic prescribing and reduced costs for antibiotic purchases. A joint antibiotic-use committee with representatives from each hospital's pharmacy and therapeutics committee developed a single antibiotic formulary for systemically active antibacterial agents, based on simplicity, clinical efficacy, previous use patterns, local resistance patterns, and relative cost. This formulary includes primary agents, ordered at the prescriber's discretion; secondary agents, ordered only for an approved condition; and restricted agents, which had been used excessively or inappropriately in the past, and are now dispensed only after consultation with infectious disease specialists. A computerized antibiotic order-entry program at the Denver V.A. Medical Center requires all physicians to enter antibiotic requests through a centralized computer system. Drug utilization is evaluated using data collected from the computer data base and in vitro data from the microbiology laboratory. In addition, appropriate antibiotic prescribing and infection control practices are taught in an education program for physicians, nurses, and other health care workers.
Cost containment: medical system rehabilitation or reform.
Cost containment is considered the premier goal for improvement of the medical care system. Before any other steps can be taken to improve availability, accessibility, or quality, or before introduction of any governmental programs for the removal of economic obstacles to obtaining medical care,--in other words, before any effort to make the medical care system more equitable--the rapid hyperinflation of medical care costs must be arrested. It is argued here that the defects of the system as currently operating are such that no cost control effort can be effective without radical change and reorganization of the system itself: methods of practice, methods of reimbursing providers, and methods of assuring accountability and supervision. And it is further argued, that if only cost control measures are instituted, not only will inflation not be stemmed, but it will be further aggravated and at the same time, the poor and minorities now suffering the consequences of an inadequate, ineffective, and unresponsive medical care system will be further deprived.
Parity for mental health and substance abuse care under managed care.
BACKGROUND: Parity in insurance coverage for mental health and substance abuse has been a key goal of mental health and substance abuse care advocates in the United States during most of the past 20 years. The push for parity began during the era of indemnity insurance and fee for service payment when benefit design was the main rationing device in health care. The central economic argument for enacting legislation aimed at regulating the insurance benefit was to address market failure stemming from adverse selection. The case against parity was based on inefficiency related to moral hazard. Empirical analyses provided evidence that ambulatory mental health services were considerably more responsive to the terms of insurance than were ambulatory medical services. AIMS: Our goal in this research is to reexamine the economics of parity in the light of recent changes in the delivery of health care in the United States. Specifically managed care has fundamentally altered the way in which health services are rationed. Benefit design is now only one mechanism among many that are used to allocate health care resources and control costs. We examine the implication of these changes for policies aimed at achieving parity in insurance coverage. METHOD: We develop a theoretical approach to characterizing rationing under managed care. We then analyze the traditional efficiency concerns in insurance, adverse selection and moral hazard in the context of policy aimed at regulating health and mental health benefits under private insurance. RESULTS: We show that since managed care controls costs and utilization in new ways parity in benefit design no longer implies equal access to and quality of mental health and substance abuse care. Because costs are controlled by management under managed care and not primarily by out of pocket prices paid by consumers, demand response recedes as an efficiency argument against parity. At the same time parity in benefit design may accomplish less with respect to providing a remedy to problems related to adverse selection.
[Data processing in dental practice - cost increases controlled by computer].
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Cutting costs by controlling physicians.
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Even you can control energy costs [a bit].
Senior executives pay relatively scant attention to their hospital's utility bills. They are a relatively small portion of overall costs, and anyway, executives reason, not much can be done about them. But innovative energy managers dispute such thinking. They're attacking the problem from entirely new angles, and the savings for hospitals can be significant.
Combating employee benefit cost and control issues: the case for coalition purchasing.
Growing in popularity, employee benefit coalitions can impact an employer's bottom line and are becoming a market factor to be dealt with in every industry and business setting. This article examines how modern-day coalitions are bringing classic aggregation theory into the 21st century and the reasons behind the growing popularity of employee benefit coalitions. It also suggests several strategic initiatives that human resource (HR) and benefit managers can take within their own organization to unlock the power of the coalition movement toward a better, more efficient buying model.
Effects of community based nurses specialising in Parkinson's disease on health outcome and costs: randomised controlled trial.
OBJECTIVE: To determine the effects of community based nurses specialising in Parkinson's disease on health outcomes and healthcare costs. DESIGN: Two year randomised controlled trial. SETTING: 438 general practices in nine randomly selected health authority areas of England. PARTICIPANTS: 1859 patients with Parkinson's disease identified by the participating general practices. MAIN OUTCOME MEASURES: Survival, stand-up test, dot in square test, bone fracture, global health question, PDQ-39, Euroqol, and healthcare costs. RESULTS: After two years 315 (17.3%) patients had died, although mortality did not differ between those who were attended by nurse specialists and those receiving standard care from their general practitioner (hazard ratio for nurse group v control group 0.91, 95% confidence interval 0.73 to 1.13). No significant differences were found between the two groups for the stand-up test (odds ratio 1.15, 0.93 to 1.42) and dot in square score (difference -0.7, -3.25 to 1.84). Scores on the global health question were significantly better in patients attended by nurse specialists than in controls (difference -0.23, -0.4 to -0.06), but no difference was observed in the results of the PDQ-39 or Euroqol questionnaires. Direct costs for patient health care increased by an average of 2658 pounds sterling during the study, although not differentially between groups: the average increase was 266 pounds sterling lower among patients attended by a nurse specialist (-981 pounds sterling to 449 pounds sterling ). CONCLUSIONS: Nurse specialists in Parkinson's disease had little effect on the clinical condition of patients, but they did improve their patients' sense of wellbeing, with no increase in patients' healthcare costs.
Controlling health expenditures--the Canadian reality.
Canada and the United States have conducted a large-scale social experiment on the effects of alternative ways of funding expenditures for health care. Two very similar societies, with (until recently) very similar systems of providing health care, have adopted radically different systems of reimbursement. The results of this experiment are of increasing interest to Americans, because the Canadian approach has avoided or solved several of the more intractable problems facing the United States. In particular, overall health expenditures have been constrained to a stable share of national income, and universality of coverage (without user charges) eliminates the problems of uncompensated care, individual burdens of catastrophic illness, and uninsured populations. The combination of cost control with universal, comprehensive coverage has surprised some American observers, who have questioned its reality, its sustainability, or both. We present a comparison of the Canadian and American data on expenditures, identifying the sectors in which the experience of the two nations diverges most, and describing the processes of control. In any system, cost control involves conflict between providers and payers. Political processes focus this conflict, whereas market processes diffuse it. But the stylized political combat in Canada may result in less intrusion on the professional autonomy of the individual physician than is occurring in the United States.
Cost and quality: two sides of the coin in cost containment.
DRGs have increased the effort of healthcare organizations to control costs. But with increased cost containment comes the question of decreased quality of care. Can decreased cost and quality care coexist? Using physician-specified patterns of care in conjunction with cost accounting, cost-effective, quality patient care can be delivered. Resources can be allocated efficiently without compromising quality.
Regional task force aligns health groups against rising costs.
The hospitals, health care associations, HSA, and Blue Cross of Northwest Ohio have formed a task force through which they have conducted successful joint cost containment projects. Some of these projects include a voluntary "cap" on price increases, promotion of hospital cost containment committees, sharing of cost containment ideas for inhospital implementation, educating the public about its role in health care cost control, and communicating with political and business leaders about cost control.