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Capitated payment arrangements are changing and expanding. The private sector is paying growing attention to capitating dental care and paying capitation rates for specialty services. The federal government plans to experiment with global purchasing and competitive bidding to establish capitation rates for Medicare beneficiaries.
As competitive bidding for large blocks of volume expands, the need for properly planning and monitoring pricing arrangements will become increasingly important. The strategies presented above have been designed to provide hospital managers with proper methodologies for developing competitive prices and monitoring how the pricing impacts profitability.
As competitive bidding for large blocks of volume expands, the need for properly planning and monitoring pricing arrangements will become increasingly important. The strategies presented above have been designed to provide hospital managers with proper methodologies for developing competitive prices and monitoring how the pricing impacts profitability.
A program for decreasing expenditures for i.v. sets and related items at a 530-bed university teaching hospital is described. A multidisciplinary committee originally formed to evaluate infusion-control devices (ICDs) developed a cost-containment strategy for reducing the number of accessories and amount of equipment used in i.v. therapy and for reducing inappropriate use of these items. Major problems identified in an audit were excessive use of secondary sets; inappropriate use of add-on flow-control devices, extension sets, and metered-chamber sets; and use of the wrong type of i.v. set with ICDs. New procedural guidelines, inservice-education programs, evaluation of new and different i.v. products, and increased enforcement of policies and procedures by the pharmacy department were implemented to address these problems. For fiscal year 1986, the bid process for i.v. equipment was divided into 10 sections so that manufacturers who may not have been able to bid on every item could bid only on individual sections if they desired. A follow-up audit six months after implementation of the strategy showed increased compliance with guidelines for use of i.v. sets and devices. Compared with the previous year, data for fiscal year 1986 showed total savings of $142,223 attributable to decreased use of i.v. equipment. The competitive-bid process saved $54,942; the total amount saved was $197,165. The trend of appropriate use as a result of adherence to the guidelines continued through fiscal year 1987. This multidisciplinary cost-containment approach was effective in reducing expenditures for i.v. sets and equipment.
This regulation implements section 2175 of the Omnibus Budget Reconciliation Act of 1981 (Pub. L. 97-35). It revises in several ways the current requirements regarding a Medicaid beneficiary's right to choose among participating providers of covered items or services: (1) A State will not be found out of compliance with otherwise applicable requirements if it enters into certain arrangements to purchase laboratory services or medical devices through competitive bids, or if, under certain circumstances, it restricts for a reasonable period of time a specific beneficiary's choice of providers or the participation of a specific provider. (2) States may also request the Secretary to waive statutory requirements, as necessary, in order to: (a) implement a primary care case management system. (b) allow a locality to act as a central broker in aiding beneficiaries to select among competing health care plans, (c) share with beneficiaries, through provision of additional services, savings resulting from beneficiary use of more cost effective medical care, and (d) restrict beneficiaries to receive services (other than in emergency circumstances) only from efficient and cost-effective providers or practitioners. The purpose of these regulations is to provide States with increased flexibility in administering their Medicaid programs, in order that they may increase the efficiency and effectiveness of the delivery of health care services, and reduce their costs.
Most comparisons of the relative effectiveness of cost containment in the Canadian and U.S. health systems trace Canada's greater success to its single-payer approach. However, these studies ignore the substantial variation that exists in hospital and personal health care spending among both the American states and the provinces and territories of Canada. Four American states have adopted all-payer hospital rate setting; one other uses competitive bidding. All five show rates of growth in per capita hospital spending comparable to (and in some cases, lower than) the Canadian jurisdictions. Hospital spending, as a percentage of state gross domestic product (GDP), declined or remained constant in four of the five states. In four out of the five, growth in per capita spending on personal care, as a percentage of GDP, remained or fell below the national average. By contrast, in Canada, per capita spending on both hospitals and personal health care increased as a percentage of GDP in ten out of eleven jurisdictions. In each of the U.S. states, government played a central role in structuring the terms of payment and thus strengthened the hand of purchasers over providers. This strategy, rather than specifically a single-payer or universal health insurance approach, seems to be the key to limiting the growth in health costs to the growth in state or national income.
Traditional state-university collaborations, known as public-academic liaisons (PALs), have resulted in improved quality of service and enhanced residency training. Recent national trends for treating persons with serious mental illness, including moving services from institutional settings to community-based care and emphasizing the use of rehabilitative approaches as well as changes in the health care delivery system itself, have led to preliminary rethinking of some discrete aspects of more traditional approaches. Rather than discrete changes, Massachusetts has responded to these emerging trends with a new and comprehensive initiative that emphasizes one set of statewide standards in these emerging content areas for all residency training programs. Consistent with new practices in health care delivery, this new initiative was fielded through a process of competitive bidding rather than through traditional allocation of service positions. The development, implementation, and initial outcomes of this new approach are presented and implications for mental health administrators are discussed.
The aim of this paper is to examine the determinants of interest rates on tax-exempt hospital bonds. The results highlight the potential and actual roles of Federal and state policy in the determination of these rates. The shift to a Prospective Payment System under Medicare has subsidized the borrowing costs of some hospitals at the expense of others. The selection of underwriters by negotiation rather than by competitive bidding results in higher interest rates. The Federal tax act of 1986 raised the cost of hospital debt by encouraging bond issues to contain call features.
This article analyzes the World Bank's lending activity on pharmaceuticals and medical products (PMP) during the fiscal years (FY) 1999-2001 by regions, borrower and supplier country, and procurement method. Data for the study derived from the World Bank Project and the Business Warehouse databases. The information included all Bank projects approved during the study period. Information for the PMP procurement contracts was extracted for the health sector components of all sector projects awarded. Contract dollar amount was aggregated by borrower and supplier countries. A total of 365 contracts of PMP for a value of US$ 364.5 million (2001 prices) were awarded. International competitive bidding was the most common procurement method used representing 46.0% of the total PMP contracts amount. Domestic providers supplied 52.5% of the PMP contracts managed by the borrower countries. Twenty-two countries accounted for 97.0% of the total PMP purchased during the period of analysis. Only a small fraction of the Bank activity was directed to the pharmaceutical sector. There is a need for more involvement of the World Bank to increase accessibility, affordability and rational use of pharmaceuticals and medical products. An evaluation of the different procurement methods and their implications on drug quality and prices should be performed.
An independent foodservice consultant performs the design functions and puts the specifications and plans out for a competitive bid to dealers. A foodservice equipment dealer will order and install equipment and handle concerns after installation. Planning and forethought on the part of the foodservice director and consultant can assist the food-service designer in coordinating the functions to create an efficient kitchen.
The Medicare program is in precarious financial condition because of underfunding and structural defects in the way it pays providers of medical care. Given the prevailing anti-tax sentiment, the more promising route for attaining Medicare fiscal solvency would seem to lie on the expenditure side of the equation. This paper proposes a managed care model for reform that relies on an efficient and already-tested form of competitive bidding for the provision of medical care. It concludes with a discussion of short-run, intermediate-run, and long-run budgetary and tax implications for the Medicare program.
In Canada, home care is growing rapidly. Each province takes a somewhat different approach to its delivery. Ontario uses a competitive bidding model to award contracts to community agencies that bid for service delivery rights. Contracts are to be awarded based on quality and price. However, the attributes thought to contribute to high quality, such as continuity of care, are not clearly defined and are not measured. We sought to identify factors that were important to experiencing continuity of care in home care. We interviewed home care clients and their caregivers, workers in the home care system (nursing and homemaking service providers, case managers) and physicians whose patients use home care. During in-depth interviews with these key stakeholders, they described the conditions that led to continuity of care in home care. Service providers and case managers were also asked about the types of clients who need a high level of care continuity. Care that is experienced as running smoothly, that responds to clients' needs and requires no special effort for clients to maintain, was seen as having continuity. The attributes of care experienced as facilitating continuity could be grouped under two dimensions of care-managing care (care planning, monitoring and review; and care coordination) and direct service provision (uninterrupted service delivery; consistent, appropriate knowledge and skills; ongoing accurate observation; trusting relationship between service provider and client/caregiver; rapport among team members; and consistent timing). Different stakeholders emphasized different attributes of care as most important to continuity. Clients included consistency of timing of service delivery while rarely mentioning care management issues. They emphasized the importance of consistent knowledge and skills in the workers and trusting relationships as important to experiencing care continuity. The description of attributes of continuity of home care that emerged from this study is compared to definitions found in the nursing, mental health and primary care literature.
Subjects asked to simulate decision makers in a competitive bidding situation chose repeatedly between two alternatives; reward probability varied according to a sine wave function of time for one alternative but was held constant over time for the other. Learning functions for choice probability exhibited the wavelike pattern predicted by a statistical learning model. However, on later transfer trials, when success probability was independent of subjects' choices, their choice behavior continued to follow a wavelike function rather than approaching the constant .5 level predicted by the learning model. A possible basis in memory for the transfer performance was revealed in subjects' sketches of the remembered pattern of variation in reward probabilities. It is concluded that choice performance is controlled by a mixture of local feedback, in a manner described by the learning model, and more global information encoded in an abstract memory representation, with the balance of the influence shifting toward the latter when local feedback becomes uninformative.
The notion of the action zone has emerged as a key feature of New Labour's approach to social policy. There is some debate about whether Labour's area-based policies reflect the Old Left, the New Right or the "third way". This paper critically examines these issues for Health Action Zones (HAZs). First, it outlines the development of HAZs and their main features. It then examines the themes that may have underpinned the HAZ strategy. Finally it examines critiques of HAZs in the light of wider debates about area-based strategies. It is concluded that HAZs fit well with some of New Labour's key themes, and may have some characteristics of a third way in that they incorporate features of both the "Old Left" of the Black Report and the New Right of competitive, bidding exercises. Moreover, they have addressed some of the main criticisms of earlier area-based policies, arguably being based on place rather than people poverty. However, some of the issues regarding their designation illustrate unresolved problems.
The population of many Latin American countries is having increasing difficulty in accessing needed medicines due to the rise in their unitary cost and the growing number of poor in most countries of the region. A number of countries have taken steps to increase access to pharmaceuticals and have had different levels of success. This article reports on two country-wide programmes: the AIDS programme in Brazil, which has been judged as being highly successful, and the Remediar programme that has been implemented recently in Argentina. Both programmes have significantly increased access to needed pharmaceuticals, and Argentina has done it in a record time. In the discussion, we suggest that pharmaceutical interventions are successful when there is a firm political commitment, they are comprehensive, include the participation of civil society, and use a combination of methods to control the rising cost of medicines, including centralized international competitive bidding processes for drug procurement and reliance on multi-source drugs.
Faced with constantly increasing costs for the provision of laboratory services to Medicaid recipients, the New York City Department of Health last year attempted to implement a program to fundamentally restructure the organizational patterns and financing mechanisms of New York City's clinical laboratory industry. The program, based on competitive bidding, gave one laboratory in each of New York's five boroughs exclusive rights to process Medicaid lab samples and replaced presently existing fee-for-service reimbursement mechanisms with a unique system combining unit pricing and capitation. This paper outlines the principal provisions of the City's proposed contract, analyzes the underlying motivations of the City's decision, and describes the reactions of the existing laboratory service delivery system. In addition, the generic problems of implementing effective administrative techniques for cost and quality control of laboratory services are discussed.
OBJECTIVE: To describe the methods used to estimate and compare Veterans Health Administration (VA) annual expenditures for assistive devices and their repair at six VA hospitals with payments for those same devices in the private sector. METHODS: Information about dispensed assistive devices and their costs was extracted from (1) the VA's National Prosthetic Patient Database, (2) each site's listing of the VA's Denver Distribution Center cost center in the Cost Distribution Jurisdictional Report, and (3) review of invoices for implanted prosthetics at each study site. We estimated private sector payments by applying Medicare geographically adjusted rates for purchases or rentals, where rates existed, or by inflating VA costs by 30%. RESULTS: The VA spent a total of $30.6 million for prosthetics at the six sites in fiscal year 1999, of which $14.2 million was for items captured in the National Prosthetic Patient Database, $3.4 million for the Denver Distribution Center, and more than $8.1 million for implants. Indirect VA costs were estimated at $4.8 million. Hypothetical private sector payments were estimated at $49.8 million. CONCLUSIONS: Unlike Medicare, VA both contracts to provide assistive devices (through a competitive bidding process) and dispenses devices it has purchased. This approach results in significantly lower expenditures, consistent with other reports. Generalizing these cost savings to other private or federal programs covering assistive devices requires further study.
The recent institution of prospective methods of hospital reimbursement has created a strong incentive to reduce costs. Significant savings were achieved in the cardiovascular-interventional radiology section of our hospital by obtaining competitive bids, purchasing in bulk, purchasing certain comparable but less expensive supplies, reducing film use, and altering patterns of use of some supplies.