The Impact of Health Reform on Hospital Costing Systems, Term Paper Example

Introduction

In recent years, hospitals have established a number of new policies and initiatives with respect to health reform that have a significant impact on costs and efficiency. There have been many challenges related to federally mandated regulations that have required health and economic experts to be engaged in the developments related to healthcare reform and how they influence patient care outcomes to enhance quality of care while simultaneously reducing costs. This process has required a shift in strategy in many hospitals in order to accommodate these needs and to reflect upon the issues that are most relevant to accommodate change within hospital practices as a means of promoting new ideas and approaches to organizational growth and longevity in the age of healthcare reform. It is necessary to evaluate some of the reforms that have been established and to consider other challenges that will have a significant impact on hospital spending and how it translates into high quality patient care on a long-term basis.

It is anticipated that hospital costing systems will continue to grow and evolve with the emergence of new technologies and that these opportunities will engage healthcare experts in achieving greater control over costs and excessive spending in hospital environments. In addition, it is expected that effective decision-making will encourage the development of new ideas and approaches to health reform will facilitate. Nonetheless, it is believed that hospital cost containment strategies will expand at a slow yet gradual rate and will require a high level of expertise and a significant dependence on technology-based solutions and funding to adopt these solutions in order to achieve the expected outcomes. The following discussion will address hospital costing in greater detail in the era of health reform and will examine the different ideas and opportunities that impact healthcare reform and the quality of care that patients receive in the hospital environment.

Analysis

The costs of receiving care in hospitals is significant and requires a unique balance between different approaches and systems, along with creative expertise, in order to fulfill the mandates set forth through health reform. These efforts also require a high level understanding of the different constructs of care and how they impact quality over time, particularly when spending is reduced and there is a potential reduction of services in this regard. One of the key factors to consider is the cost of healthcare services for average families, which have continued to rise, in spite of advancements in technology and diagnostic tools that are designed to improve overall health and wellbeing (Auerbach & Kellermann, 2011). Healthcare spending has also grown at a national level, noted as follows: “US health spending grew by $96 billion in 2009, an increase of 4 percent from the previous year… During this period, the percentage of GDP devoted to health care climbed from 13.8 percent to 17.6 percent, and per capita health spending grew from $4,600 to just over $8,000” (Auerbach & Kellermann, 2011, p. 1). This perspective demonstrates that hospital spending on many levels lacks a strong and determined containment strategy, thereby increasing the costs per capita of individuals throughout the United States, even when insurance reforms have emerged and more individuals now have health insurance as a mandate of the Affordable Care Act (Auerbah & Kellermann, 2011).

It is evident that many hospitals have been unsuccessful in containing their costs effectively in recent years, due in large part to the developments associated with evolving changes in health reform that require new systems to be established and new technologies to be purchased, all of which is transferred back to the end user in one form or another. As a result, organizations face issues that are difficult to overcome when they aim to reduce costs associated with the provision of care or of technology-based purchases to meet the required standards set forth by state and federal governments. These costs are complex in nature and require expert knowledge to ensure that these costs are minimized as best as possible and that they will translate into positive results and eventual cost reductions throughout the organization. It is necessary to evaluate these conditions and to aim to better understand the conditions under which organizations must operate so that they are able to support changes within the system to accommodate the growth and development of approaches to improve a hospital’s economic costing strategy. These costs are complex in nature and require a high level understanding of the issues that are likely to impact organizational outcomes effectively.

In the majority of hospitals, waste and excess spending are commonplace; therefore, it is important to identify areas where spending might be decreased and new strategies to improve spending rates. Waste in healthcare spending is a difficult phenomenon that does not offer a simple solution; however, the following areas may be considered as open to change and improvements in spending to minimize waste: “In just 6 categories of waste—overtreatment, failures of care coordination, failures in execution of care processes, administrative complexity, pricing failures, and fraud and abuse—the sum of the lowest available estimates exceeds 20% of total health care expenditures…the savings potentially achievable from systematic, comprehensive, and cooperative pursuit of even a fractional reduction in waste are far higher than from more direct and blunter cuts in care and coverage” (Berwick & Hackbarth, 2012, p. 1513). From this perspective, hospitals must ultimately identify areas where waste a serious problem and aim to be more proactive in addressing these needs effectively with those who are responsible (Berwick & Hackbarth, 2012). This is a challenging process because many departments within hospitals are resistant to reducing their costs and their overall budgets, along with other factors that may minimize their ability to provide high quality care and treatment; therefore, their efforts may not be fully supportive of these ideas (Berwick & Hackbarth, 2012). Nonetheless, it is important to identify these issues and to be respectful of the challenges that exist so that there are sufficient opportunities to address cost containment within hospitals more effectively. In many instances, the culture of an organization may be to blame in its lack of support for different initiatives that have a significant impact on reduced spending within the hospital environment.

One area of consideration to reduce spending and to address costing procedures is to examine the context of spending with respect to payments that are given to healthcare providers, as this is a significant area of discord and controversy within U.S. hospitals (McClellan, 2011). In this context, organizations must be mindful of the efforts that are required to ensure that organizations are prepared to manage costs over the long term in an efficient manner (McClellan, 2011). Therefore, a stricter regulation of pricing and subsequent payments to healthcare providers must be addressed in a serious manner, as this has a significant impact on outcomes and in determining how to address spending as part of a larger contextual problem within hospitals (McClellan, 2011). One approach is to consider how the value of healthcare is observed and how this supports a new direction in achieving positive results in healthcare spending, particularly when physicians and other healthcare providers are aligned with patients in how treatments should be addressed (McClellan, 2011). These factors are likely to engage healthcare providers in performing only those duties that provide significant value to their patients in a manner that promotes high quality and consistency in care and treatment on a continuous basis (McClellan, 2011). This process also requires organizations to reexamine their relationships with healthcare providers, to tighten up areas where spending is excessive, and to maintain a highly professional approach to managing outcomes so that patients reap the benefits of these directives over time (McClellan, 2011).

It is also necessary to specifically address the regulations mandated through health reform in the United States and how they impact costs, particularly at the hospital level (Orszag & Emanuel, 2010). It is known that “Health care costs are unevenly distributed: 10% of patients account for 64% of costs. Many of these are patients with chronic conditions, such as congestive heart failure, diabetes, and hypertension. Sustained cost control will occur only with more coordinated care that prevents avoidable complications for patients with chronic illness” (Orszag & Emanuel, 2010, p. 602). From this perspective, it may be argued that organizations must essentially evaluate their current practices and aim to redirect their priorities in a manner that is consistent with primary care improvements in the areas of health promotion and preventative care, both of which will provide a basis for exploring new directions in healthcare practice that will contribute to positive outcomes (Orszag & Emanuel, 2010). These factors support a new set of directives that are designed to facilitate effective care and treatment and to also demonstrate a higher level understanding of healthcare needs that are more closely aligned with patients at the preventative level (Orszag & Emanuel, 2010). In this context, hospitals must examine methods to reduce costs and to reprioritize these costs accordingly on the preventative side so that chronic disease and other serious forms of illness are minimized as best as possible (Orszag & Emanuel, 2010). This process will encourage organizations to be proactive in meeting the needs of their patients and in examining new ideas to achieve greater growth and change within the context of the healthcare environment so that patient care quality is improved and is more focused on preventative methods to achieve greater outcomes with respect to patient health and wellbeing (Orszag & Emanuel, 2010).

Conclusion

Healthcare spending is a serious problem for hospitals throughout the United States and represents a major set of challenges that impact all departments within the hospital environment. Cost containment strategies must be explored that will have a significant impact on spending reductions, but also demonstrate that these reductions do not minimize the quality of patient care that is received. It is important to address these conditions and to be respectful of the different challenges that healthcare experts face as they strive to be effective in addressing spending in a proactive and practical manner. Most importantly, hospitals must look to health reform objectives as a means of seeking reductions in spending that are practical and appropriate to meet the needs of patients. Furthermore, when these costs are reduced, they eventually flow down to the patient and support reduced spending on patients at this level. Therefore, it is the responsibility of hospital leaders and economic experts to make decisions regarding spending that are in the best interests of their patients and employees and to recognize where waste occurs so that it may be minimized as best as possible. If these changes occur, then it will be possible to reduce spending and to improve hospital costing procedures, particularly when efficient technologies are used to achieve these objectives. This process requires a high level of acceptance of health reform, which also requires a shift in perspective for many healthcare experts and providers who are largely resistant to change. This process is ongoing and requires organizations to be proactive in aiming to improve quality of care, while also aiming to be effective in meeting patient needs over time, particularly with respect to prevention and health promotion activities in order to minimize long-term complications and the events that are associated with chronic disease.

References

Auerbach, D. I., & Kellermann, A. L. (2011). A decade of health care cost growth has wiped out real income gains for an average US family. Health Affairs, 30(9), 1630-1636. Retrieved from http://ctmirror.dev.cshp.co/cms/assets/uploads/2011/09/Auerbach-FF.pdf

Berwick, D. M., & Hackbarth, A. D. (2012). Eliminating waste in US health care. Jama, 307(14), 1513-1516. Retrieved from http://colearnr-media.s3.amazonaws.com/Healthcare/Waste_in_Healthcare_JAMA_2012.pdf

McClellan, M. (2011). Reforming payments to healthcare providers: The key to slowing healthcare cost growth while improving quality?. The Journal of Economic Perspectives, 69-92. Retrieved from http://www.hci3.org/sites/default/files/files/McClellan-ReformingPaymentsHealthcareProviders.pdf

Orszag, P. R., & Emanuel, E. J. (2010). Health care reform and cost control. New England Journal of Medicine, 363(7), 601-603. Retrieved from http://comedsoc.org/images/HCR%20Cost%20Control%20Orszag%20Emanuel%20NEJM%208-12-10.pdf