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PubMed1994

Antitrust, competition, and health care reform.

The goals of health care reform and the antitrust laws are similar: promotion of consumer welfare. Under reform, having large groups of consumers and providers will offer substantial efficiencies in purchasing and providing health care services but also will pose some antitrust risks. Health alliances may have excessive market power. Health plans and provider networks may have the potential to foreclose competition from actual or potential rivals. Mergers and joint ventures between providers will proliferate but may raise similar problems. Explicit exemptions from the antitrust laws-through federal or state legislation-may significantly limit the benefits of competition for consumers. A reformed health care system will not reduce the need for antitrust enforcement.

Antitrust Laws↗

PubMedDate not supplied

Why employers need to rethink how they buy health care.

Employers will continue to have a key role in the U.S. health system. Unfortunately, their purchasing practices have fallen far short of ideal. Large employers can lead the way for smaller companies, but by not routinely using competitive bidding or integrating quality into their specifications, they have sent mixed messages to both health plans and providers. Employers need to either get serious about buying health care as individual companies or explore other options. To purchase effectively, both health care expertise and the sustained commitment of senior leadership are needed. Whether employers can reverse their historical performance and become better purchasers is an open question.

Commerce↗

PubMed1984

Needs assessment under the Maternal and Child Health Services Block Grant: Massachusetts.

The Massachusetts maternal and child health (MCH) agency has developed a needs assessment process which includes four components: a statistical measure of need based on indirect, proxy health and social indicators; clinical standards for services to be provided; an advisory process which guides decision making and involves constituency groups; and a management system for implementing funds distribution, namely open competitive bidding in response to a Request for Proposals. In Fiscal Years 1982 and 1983, the process was applied statewide in the distribution of primary prenatal (MIC) and pediatric (C&Y) care services and lead poisoning prevention projects. Both processes resulted in clearer definitions of services to be provided under contract to the state as well as redistribution of funds to serve localities that had previously received no resources. Although the needs assessment process does not provide a direct measure of unmet need in a complex system of private and public services, it can be used to advocate for increased MCH funding and guide the distribution of new MCH service dollars.

Child Health Services↗

PubMed2000

Single Price/Case Price Purchasing in orthopaedic surgery: experience at the Lahey Clinic.

BACKGROUND: Hospital revenues for orthopaedic operations are not keeping pace with inflation or with rising hospital expenses. In an attempt to reduce the hospital cost of orthopaedic operations by reducing the cost of operating-room supplies, we developed a Single Price/Case Price Purchasing Program for implants used in total hip arthroplasty, total knee arthroplasty, and total shoulder arthroplasty as well as for arthroscopic shavers and burrs, interference screws, and bone-suture anchors. METHODS: The Lahey Clinic asked orthopaedic vendors to supply all instruments, implants, and disposable items related to these selected products for one single price per unit or case. For example, a single price for total hip arthroplasty implants included instruments, acetabular cups, acetabular liners, acetabular screws, femoral stems, femoral heads, and stem centralizers, if required. The hospital implemented the Single Price/ Case Price Purchasing Program with a competitive-bid request for proposal. Surgeons evaluated the responses to the bidding process, and they made final decisions on product selection. RESULTS: The Single Price/Case Price Purchasing Program at the Lahey Clinic was successful in reducing the cost of orthopaedic implants and supplies. In the present article, we could not disclose the specific prices that we agreed to pay our vendors. The specific cost reductions were 32 percent for hip implants with a change of vendor, 23 percent for knee implants without a change of vendor, 25 percent for shoulder implants with a change of vendor, 45 percent for arthroscopic shavers and burrs without a change of vendor, 45 percent for interference screws without a change of vendor, and 23 percent for bone-suture anchors without a change of vendor. CONCLUSIONS: The Single Price/Case Price Purchasing Program at the Lahey Clinic allowed the hospital to reduce its cost of orthopaedic operations by lowering the cost of operating-room supplies. This cost reduction is important in a health-care economy in which hospital revenues per unit of service or care are decreasing.

Arthroplasty, Replacement↗

PubMed2006

Enteral formulary management: a cost-effective approach.

Although enteral formularies emerged over 30 years ago, their effectiveness remains to be clearly demonstrated. Enteral formulary (EF) development has occurred over 17 years at the Toronto Rehabilitation Institute (Toronto Rehab), and a historical account is available in the literature. At Toronto Rehab, the creative process begins with a review of specific nutrition support requirements for each patient population, which is coupled with a clinical decision-making algorithm to promote standardized clinical nutrition practices and selection of products. The requirements are translated into detailed product specifications for a streamlined array of oral and tube-feeding formulae. Despite outsourced food service systems, the feasibility of simple in-house production should be considered to help curtail overall costs. The promotion of consistent practices requires nutrition support guidelines, including indications and contraindications for each EF product. Competitive bidding practices and policies that scrutinize non-formulary requests and encourage automatic substitution for non-formulary products promote formulary adherence and contain costs. Ongoing evaluation is intended to capture changes in patient populations and product availability to target opportunities for future EF revisions.

Canada↗

PubMed1999

Comparison of the hospital cost of primary and revision total hip arthroplasty after cost containment.

This study compared the hospital cost of primary and revision total hip arthroplasty (THA) after the introduction of cost-containment programs (clinical pathway, hip implant standardization, and competitive bid purchasing of hip implants). Hospital financial records for 290 primary and 85 revision THAs performed from October 1993 through September 1995 were analyzed. A cost-accounting system provided actual hospital cost data for each procedure. Accurate calculation of hospital income or loss was determined. Average hospital length of stay was 4.9 days for primary THA and 5.9 days for revision THA. Average hospital cost was $11,104 for primary THA and $14,935 for revision THA. Average net income (hospital revenue hospital expense) for primary THA was $2486. Average loss from revision THA was $401. The payer mix included commercial insurance, Blue Cross/Blue Shield, managed care, Medicare, Medicaid, and workmen's compensation. For primary THA, all payers were profitable except Medicaid and selected managed care contracts. For revision THA, profit was achieved with payment from commercial insurance only. Despite the introduction of cost-containment programs, revision THA did not achieve profitability at our institution.

Aged↗

PubMed1999

Comparison of the hospital cost of primary and revision total knee arthroplasty after cost containment.

Revision total knee arthroplasty (TKA) consumes more time, more work, and more supplies than primary TKA. This study compared the hospital cost of primary and revision TKA after the introduction of cost-containment programs (implant standardization, clinical pathway, and competitive bid implant purchasing) at our hospital. Hospital financial records of 207 primary unilateral TKA operations and 32 revision TKA operations performed from October 1993 through September 1995 were analyzed. A cost-accounting system provided actual hospital cost data for each procedure. Accurate calculation of hospital income or loss was determined for all 239 procedures. The average hospital length of stay was 4.7 days for primary unilateral TKA and 5.1 days for revision TKA. There were 26 three-component revision operations and 6 one- or two-component revision operations. The average hospital cost was $10,421 for primary TKA and $11,906 for revision TKA. The average net hospital income (hospital revenue - hospital expense) was $3211 for primary TKA and $1853 for revision TKA. The payer mix included indemnity insurance, Medicare, Medicaid, managed care, and workmen's compensation. All payers were profitable except for Medicaid and selected managed care contracts for both primary and revision TKA. As a result of cost-containment programs, revision TKA can be profitable at our institution.

Aged↗

PubMedDate not supplied

On their own: a profile of the individually insured.

More than 13.6 million Americans under the age of 65 own a health insurance policy that they purchased directly from an insurance company or agent. Buyers tend to come from a "Golden Girls" cohort-- white, widowed or divorced, age 55-64, and working for a small company. High premiums have helped to reduce the number of individual policyholders. Insurers incur high administrative costs, have low loss ratios, and have suffered financial losses. As a result, the market is serving neither buyer nor seller well. One solution would establish competitive bidding at the state level limiting the franchise to sell individual insurance to three-to-five carriers; require bidders to include cost controls; and reduce agent commissions and other marketing costs by having states take an active role in informing the public.

Adolescent↗

PubMed1990

Military contracts present growth opportunities.

Healthcare organizations interested in new markets should consider military contracting opportunities now available in many areas of the United States. To ensure a competitive bid, however, knowledge of military procurement procedures and bidding demands is needed. Like any other venture, doing business with the Federal government depends on the capabilities of the organization and the nature of the services to be provided.

Contract Services↗

PubMed1997

Protecting the integrity of clinical laboratory test results.

The authors' inspection reports demonstrate that the improper alteration of patient data is not a rare aberration in private commercial clinical laboratories. Although laboratory surveyors could be trained to recognize this problem, the availability of unprotected test systems makes even trained inspectors ineffectual. Both regulatory agencies and professional accrediting agencies should be concerned that their surveyors may be placing a seal of approval on what are, in reality, compromised or even fabricated data. In proposing the regulations discussed in this paper, the FDA sought to "preserve the integrity of the agency's enforcement process." This goal will remain unattainable, however, until a mechanism has been devised to secure the original raw data produced by all of the analytical systems being used not only in clinical laboratories but also in environmental laboratories, pharmaceutical laboratories, etc. Laboratories, as well as regulatory agencies and accrediting bodies, need to be concerned on behalf of the patient, but laboratories may also need to be concerned on their own behalf. In the coming era of unprecedented cost constraints and competitive bidding, unscrupulous testing facilities or groups of such facilities could have a significant edge over their conscientious competitors if the issues raised here continue to be ignored. Although the analytical data management systems provide tremendous benefits, some have serious problems in ensuring the security of their data. However, if regulatory agencies, accrediting bodies, professional organizations, and the analyzer vendors make a united commitment, the problem of securing the integrity of analytical data could eventually be resolved. It is hoped that such a commitment will be made in the near future.

Autoanalysis↗

PubMed1998

Evaluating and improving the delivery of heart care: the University of Michigan experience.

With increasing pressure to curb escalating costs in medical care, there is particular emphasis on the delivery of cardiovascular services, which account for a substantial portion of the current healthcare dollar spent in the United States. A variety of tools were used to improve performance at the University of Michigan Health System, one of the oldest university-affiliated hospitals in the United States. The tools included initiatives to understand outcomes after coronary bypass operations and coronary angioplasty through use of proper risk-adjusted models. Critical pathways and guidelines were implemented to streamline care and improve quality in interventional cardiology, management of myocardial infarction, and preoperative assessment of patients undergoing vascular operations. Strategies to curb unnecessary costs included competitive bidding of vendors for expensive cardiac commodities, pharmacy cost reductions, and changes in nursing staff. Methods were instituted to improve guest services and partnerships with the community in disease prevention and health promotion.

Cardiology Service, Hospital↗

PubMedDate not supplied

Cost sharing in corporate benefit plans: the cases of Gulf Oil and DuPont.

In 1983 the Health Systems Management Center of Case Western Reserve University contracted with the Business Roundtable Health Initiatives Task Force to use BRT's survey of members as a guide to the top firms who had taken action regarding health care costs and more importantly, had also evaluated the cost implication of that action. The mandate was to draw together representative case studies on seven firms who met those criteria for use in BRT educational seminars and elsewhere. These cases may provide important insight for other companies which are contemplating action regarding their health care costs. They should also lead to further research on alternative actions available and the means of evaluation that should be considered. Most importantly they may provide some methodology for top management to choose among proposals for attacking this burgeoning corporate cost. Two of the case studies selected as representative were DuPont Corporation and Gulf Oil Corporation. Both DuPont and Gulf Oil, increased the level of cost sharing through copayments and deductibles and improved administrative efficiency by consolidating multiple plans into a limited set of options available to all employees nationally under an administrator chosen by competitive bid. Both plans were evaluated by projecting experience that might be expected under the former arrangements with consideration of biases due to adverse selection among options. This was compared with actual experience to reveal substantial savings in each case which should be replicable elsewhere under similar circumstances. Unfortunately, lack of suitable controls and comparisons limits the confidence in the precision of these evaluations.

Deductibles and Coinsurance↗

PubMed1988

Managerial innovation in the hospital: an analysis of the diffusion of hospital cost-accounting systems.

Currently much interest is focused on the uses of cost-accounting systems within the hospital industry. Proponents frequently contend that such systems will help hospitals successfully adapt to new methods of financial reimbursement because they are essential to a number of major management functions, including competitive bidding, cost management, pricing, and profitability assessment. This article reports the results of a study conducted to examine the extent to which hospitals in a major market are actually beginning to use standard cost-accounting systems and identify factors that either aid or hinder the diffusion of these methods. Chief financial officers from 94 hospitals (83 percent response rate) participated in the study during the summer of 1986 where less than half of the hospitals (43 percent) had recently purchased a cost-accounting system. Detailed information about the interface of cost-accounting systems with other application systems and their specific management uses is reported.

Accounting↗

PubMed1988

Medicare: criteria and standards for evaluating intermediary and carrier performance during fiscal year 1989--HCFA. General notice with comment period.

This notice describes the criteria and standards to be used for evaluating the performance of fiscal intermediaries and carriers in the administration of the Medicare program for the fiscal year beginning October 1, 1988. The results of these evaluations are considered whenever we enter into, renew, or terminate an intermediary or carrier agreement or take other contract actions; assign or reassign providers of services to an intermediary; or designate regional or national intermediaries. In addition, this notice describes the methodology for identifying contractors with performance over a period of time in the lowest 20th percentile that HCFA may replace using competitive bidding. This notice is published in accordance with sections 1816(f) and 1842(b)(2) of the Social Security Act, which require us to publish for public comment in the Federal Register those criteria and standards against which we evaluate intermediaries and carriers.

Contract Services↗

PubMed1987

Evaluation of Arizona Health Care Cost Containment System, 1984-85.

In this article, we describe the evaluation of the Arizona Health Care Cost Containment System (AHCCCS), Arizona's alternative to the acute care portion of Medicaid. We provide an assessment of implementation of the program's innovative features during its second 18 months of operation, from April 1984 through September 1985. Included in the evaluation are assessments of the administration of the program, provider relations, eligibility, enrollment and marketing, information systems, quality assurance and member satisfaction activities, the relationship of the county governments to AHCCCS, the competitive bidding process, and the plans and their financial status.

Arizona↗

PubMed1989

An analysis of 1986 drug procurement practices in hospitals within the United States.

The purpose of this study was to statistically answer a set of predefined objectives concerning pharmaceutical procurement. The key indicators were assumed to be cost per patient day and turnover rate. Of the 5,911 surveys mailed, 709 surveys were returned for a 12% response rate. The following statements were based on attempts to answer the six predetermined objectives. Pharmaceutical purchasing is controlled by pharmacy departments to the extent that comparisons to pharmaceutical purchasing by materials management departments was not possible. Prime vendor purchasing is the procurement method of choice. Competitive bidding through a group process is so popular that a valid comparison to nongroup bidding could not be accomplished with the results of this survey. Certain variables of group purchasing such as group age, contract adherence, and volume commitment, do not appear to be correlated to purchasing outcomes in this study. When comparing government to private hospitals, the private sector seems to have an advantage in managing turnover rates. Cost per patient day results were less conclusive. As single and multiple hospital systems were compared for purchasing outcomes, the results were not totally conclusive. Although, multiple hospital systems had a significantly higher turnover rate. Finally, a comparison based on the use, or lack of use, of prime vendor arrangements demonstrated interesting results. The duration of contract did not significantly affect the purchasing outcomes. Other hospital variables such as size, type, ownership, and organization, demonstrated notable trends. The importance of examining hospitals based on case mix and mission seems to be most important. Also, the ability to relate purchasing outcomes with formulary management strategies needs further study before conclusive statements can be adopted.

Contract Services↗

PubMed1979

Comparisons show construction management's benefits.

Analysis of competitive bid, design-build, and construction management approaches shows that construction management offers owners substantial advantages regarding project cost and quality and substantial involvement and control throughout the process.

Administrative Personnel↗

PubMed2003

Ensuring supplies of quality diethylcarbamazine citrate (DEC).

In 1997, the World Health Organization (WHO) made a commitment to eliminate lymphatic filariasis. The WHO Global Program to Eliminate Lymphatic Filariasis (WHO-FIL) needed a reliable supply of diethylcarbamazine citrate (DEC) of known acceptable quality at an affordable price, so in August 1999, it started the DEC Project. Today's standards required development of a modern stability-indicating assay method for DEC and for DEC tablet dissolution. ADD Advanced Drug Delivery Technologies (Switzerland) developed a high-pressure liquid chromatography assay, which was independently validated and is in the United States Pharmacopoeia 25 (2002). After a global search, the project found that almost all existing and potential DEC active pharmaceutical ingredient (API) and tablet manufacturers are in low-income countries. The project constructed an audit team to conduct on-site audits to assess good manufacturing practices according to European Union standards. National/state inspectors accompany the audit team. The team prequalified one DEC API manufacturer and three DEC tablet manufacturers. The project plans to increase the number of prequalified DEC manufacturers. Now, WHO-FIL only purchases from prequalified manufacturers. Consolidation of several national program DEC requirements into a limited international competitive bid reduced the price for DEC tablets between 30% and 45%, compared to previous small-scale WHO purchases.

Chromatography, High Pressure Liquid↗