I get paid fast; what about you?

The process of billing an insurance company for health care services has changed radically. In the past few years, the emphasis has been on automation. The change is fueled by the opinion of cost containment experts who claim that automation will help reduce costs in the U.S. health care delivery system. Key to success for the provider in adapting to this change will be understanding the coding used in the billing process and following standards of accuracy and fairness. This article is not intended to represent the adjudication rules of any particular insurance company. It is the result of experience as a practicing surgeon and as a consultant in the health care field.     

Cost containment in health care: a model for management research.

Cost containment is a dominant problem in the health care field, but it has not been addressed from a comprehensive management perspective. To fill this gap, we have developed an inclusive model of the cost containment process. The model has implications for management research in several areas: cost containment baselines, incentive systems, organization structures, cost/quality trade-offs, and cost containment constraints.     

Status quo won't work

The division between those who provide health care services and those who pay for them may be widening. Costs continue to rise, quality remains ill-defined, and there don't seem to be any easy answers to the dilemma. Joseph W. Duva, Director of the New York Region Health/Welfare Benefits Consulting Practice of Ernst and Young, believes the answer has been found. While Director of Employee Benefits at Allied Signal Corp., he was instrumental in the formulation of a total managed health care plan for employees. He recently founded the Managed Health Care Association to share the experience at Allied Signal with others and to provide a business forum for exploration of the managed care concept. Duva's views on managed care as a cost containment strategy were the subject of an interview conducted by Physician Executive at the National Conference of Physician Executives in San Antonio in May.     

How much administration is today's physician doing?

The substantial changes in the organization and financing of health care services that have occurred in the United States over the past decade have helped to facilitate a growing role for physicians in health care management. These administrative roles for physicians are becoming increasingly important within many health care institutions with regard to such issues as cost containment and cost effectiveness, quality assurance and professional standards, and access to care. The growing complexity and diversity of the delivery system have created the need for more physicians to become involved in "orchestrat(ing)" the management of the medical-industrial complex."     

Making the health care delivery system accountable.

Accountability has become the fact of life for the health care provider and the delivery system. Until recently, accountability has been viewed primarily through the judicial process as issues of fraud and liability, or by managed care entities through evaluation of the financial bottom line. It is this second consideration and its ramifications that will be explored in this article. Appropriate measurement tools are needed to evaluate services, delivery, performance, customer satisfaction, and outcomes assessment. Measurement tools will be considered in light of the industry's unique considerations and realities. All participants, including insurers, employers, management, and health care providers and recipients, bear responsibilities which necessitate assessment and analysis. However, until the basic question, "Who is the customer?" is resolved, accountability issues remain complex and obscured. Accountability costs and impacts must be evaluated over time. They go way beyond bottom line cost containment and reduction. Accountability will be accomplished when the health care industry implements quality and measurement concepts that yield the highest levels of validity and appropriateness for health care delivery.     

Dynamic Policies for Optimal LEO Satellite Launches

Low‐earth orbit satellite (LEO) systems continue to provide mobile communication services. The issue of cost containment in system maintenance is a critical factor for continued operation. Satellite finite life‐times follow a stochastic process, and since satellite replenishment cost is the most significant on‐going cost of operation, finding optimal launch policies is of paramount importance. This paper formulates the satellite launch problem as a Markovian decision model that can be solved using dynamic programming. The policy space of the system is enormous and traditional action space dominance rules do not apply. In order to solve the dynamic program for realistic problem sizes, a novel procedure for limiting the state space considered in the dynamic program is developed. The viability of the proposed solution procedure is demonstrated in example problems using realistic system data. The policies derived by the proposed solution procedure are superior to those currently considered by LEO system operators, and result in substantial annual cost savings.     

Clinical reengineering. Integrating medical and operational management

In the continuing push for cost containment in health care, many organizations have turned to cost reduction methods that fundamentally change the way care is delivered. As health care organizations continue to make financially-driven staffing changes that impact patient care, medical leadership must take on greater responsibility for operational management. Physician executives are uniquely qualified to take on leadership roles in work redesign, and must do so to ensure excellent and fiscally-responsible patient care. This article presents a proven methodology for work redesign that helps physician executives apply their clinical skills to operational management in designing new health care delivery models.     

Utilization management key to HMO success.

Utilization management has a long history in prepaid health programs, especially in capitated, prepaid risk programs that were the precursors of HMOs. Utilization management is commonly considered to be that set of systems and procedures used to ensure that a patient's medical needs are met at the least cost possible consistent with adequate quality. Examples of measures taken in managing utilization include avoiding unnecessary surgery, unnecessary hospitalization, excessive hospitalization, and unnecessary diagnostic and therapeutic measures, and encouraging use of less expensive means of care, such as home health care services. Also included, and of great importance, is obtaining those services at the least possible cost through favorable contracting for services.     

Promising, and delivering, health care value

It came as no surprise a year or so ago to read in Physician Executive that "Clinical decision-making is no longer the exclusive domain of the health care practitioner." The authors pointed out that consumers, as patients and as business-payers, are insisting on provider accountability, both in quality and in appropriate cost. They used the phrase "health care value" to show a balance between cost containment and quality. One managed care operation has decided to operate on the premise of health care value.     

The American health system: a contentious environment in the 21st Century

In the 21st Century, the American public and its elected officials will be unable to reach any overall consensus on our nation's health policies and priorities. With greater demands for health services and fewer fiscal resources, a more contentious environment in the health industry will ensue. As the American health system in the next 100 years continues to behave with an amalgam of competitive and regulatory approaches, it will be difficult to ensure that all Americans will receive universal access, equity, comprehensive benefits, and a high quality of care. For these reasons, the health system is predicted later on to swing away from market-driven to more state-oriented regulatory strategies as the United States attempts to blend such concepts as pluralism, regionalization of resources, and enforcing cost containment.     

Which degree should you choose?

Which degree should physician executives pursue to enhance their careers--an MBA, MHA, MPH, MS in Administrative Medicine, JD, or other graduate degree? While options abound and the debate continues over which graduate degree physicians preparing for senior management roles in the health field should select, several variables are analyzed in this article that must be considered. Physicians need to be trained to provide leadership in the new, more market-driven environment--their education must focus more on the integration and coordination of clinical and managerial processes. New managerial competencies will be required by the paradigm shift away from simply delivering effective and efficient health services to one that emphasizes improved access, social equity, and particularly on cost containment and quality of care efforts.     

Legal issues in accepting capitation

The effort to reduce the cost of medical, hospital, and ancillary services increasingly focuses on shifting the financial risk for the cost of these services to those who provide them. Shifting arrangements include capitation for physicians classified as "primary care" physicians; capitation arrangements that include primary and specialty services; risk shifting to medical groups, IPAs, and other physician organizations; as well as the packaging of physician and hospital services on a "full risk," "per case," or other basis. Accepting financial risk for the cost of medical and other health care services, as well as the responsibility for managing the provision of services, may very well be the only remaining opportunity for providers to maximize reimbursement and maintain administrative and clinical self-direction. However, physicians must work with managed care organizations (MCOs) through negotiation of contracts and throughout the relationship to make sure: Unnecessary financial and legal risks to the MCO and physicians are eliminated. Risks that cannot be eliminated are apportioned between the MCO and physicians. All risks are managed in a coordinated fashion between the MCO and physicians.     

Clinical reengineering. A benchmark strategy

The health care provider marketplace continues to undergo dramatic changes with the advent of hospital mergers, acquisitions, and physician and hospital alliances. In this era of managed care, cost containment is still vital to a hospital's success, but many stakeholders--patients, employers, and physicians--are determined that quality of care also remain paramount. How can hospitals reduce their expenses and maintain a quality focus? The answer lies in a successful clinical reengineering initiative. One progressive model of clinical reengineering is presented, as well as examples of initiatives at three health care institutions. Initial results of clinical redesign programs have been dramatic and encouraging, with documented evidence of simultaneous cost savings and improved patient care.     

Biotechnology: will it break the health care bank?

Pharmaceuticals traditionally have been viewed as a cost-effective component in medicine's technological armamentarium. The use of pharmaceuticals has been estimated to account for 6-8 percent of the nation's total expenditures on health care. The first wave of pharmaceuticals/biologicals that has been produced by the biotechnology industry has offered therapies that can provide much benefit to patients, but it has also raised concern about the cost of these new recombinant drugs. In addition to pricing, methods of promotion and modifications in the FDA approval process have raised concerns.     

Issues to consider in internalization of a service

In a staff-model HMO, the demand for services may be greater in one area than in another. Services with little demand and/or high cost are usually contracted to an external provider or institution. Equipment purchases or renovation of a facility to accommodate a new service sometimes go hand in hand with internalizing a service, and capital budgeting is an integral part of the process. The decision on when it is feasible to internalize services has to be considered on two levels: service and finance. This article will look at what issues affect the organization on these two levels and will consider the cost-benefit and legal issues that need to be considered when making such a decision. A work sheet that may be used as is or modified is included.     

The new management competencies: a global perspective

How will tighter controls over health expenditures, an increased supply of qualified doctors, and clinical acumen becoming more critical in allocating health resources under market-driven, capitated payment-type plans affect physicians? Throughout the world, they will play a greater role in the management of health facilities and services. To train doctors to provide leadership in these new, more market driven environments, education should focus more on the integration and coordination of clinical and managerial processes, an approach outside the scope of most curricula now offered. New managerial competencies will be required by the paradigm shift away from simply delivering quality health services to tighter cost containment efforts. Physicians will play an increasing role in how medical facilities and services are organized and financed--the blending of clinical and managerial-financial-information science processes will be paramount in these educational pursuits.     

Physician leadership. The time is now

During the past 30 years, third party payers have imposed virtually every imaginable form of external cost controls on the traditional health care system. All have failed. And now those paying the bills--the large-scale health care purchasers--have finally seized control. They are fomenting fundamental structural change in the health care system. In order to continue doing business with these purchasers, health care providers are finding that they must form alliances to present a comprehensive "package" of health services for the constituents of these purchasers. In short, they must form integrated delivery systems. Current developments have created a unique opportunity for physician leaders to take a commanding role in shaping the emerging American health care system.     

Why activity-based costing works

With advancing technology and the quest for delineating the true cost of a procedure or diagnostic test, cost accounting techniques are being re-explored in the health care setting. Activity-based costing (ABC), adopted from other businesses, is one such example that has applications in the health industry. The purpose of this paper is to enhance the understanding of health care costs among physician providers, emphasizing a new approach--activity-based costing.     

The new production theory for health care through clinical reengineering: a study of clinical guidelines--Part I

Drucker writes that the emerging theory of manufacturing includes four principles and practices: statistical quality control, manufacturing accounting, modular organization, and systems approach. SQC is a rigorous, scientific method of identifying variation in the quality and productivity of a given production process, with an emphasis on improvement. The new manufacturing economics intends to integrate the production strategy with the business strategy in order to account for the biggest portions of costs that the old methods did not assess: time and automation. Production operations that are both standardized and flexible will allow the organization to keep up with changes in design, technology, and the market. The return on innovation in this environment is predicated on a modular arrangement of flexible steps in the process. Finally, the systems approach sees the entire process as being integrated in converting goods or services into economic satisfaction. There is now a major restructuring of the U.S. health care industry, and the incorporation of these four theories into health care reform would appear to be essential. This two-part article will address two problems: Will Drucker's theories relate to health care (Part I)? Will the "new manufacturing" in health care (practice guidelines) demonstrate cost, quality, and access changes that reform demands (Part II)?     

Trends in managed care organizations: implications for the physician executive.

The rapid change in the managed health care industry is placing substantial demands on the managerial and leadership skills of physician executives. These changes are forcing a reevaluation of the fundamental principles of managed care organizations, specifically in terms of patient satisfaction, cost containment, and quality health care. Additionally, the physician executive will be confronted with substantial issues concerning future staffing needs. This article assesses the health care industry's environment to suggest where managed care is going and how physician executives should position themselves to optimize their position in the marketplace.