From the Spring Issue 2019
To guide healthcare’s transformation to a value-based
model and address financial challenges, leaders must be able to
calculate the true cost of care and achieve price transparency. In their
estimable efforts to determine the accurate cost of care, some
hospitals and health systems have implemented various costing systems
with questionable credibility. Unfortunately, lacking accurate data,
efforts to reduce costs and provide prices are seeing limited success.
How can organizations make decisions to support
transformation and improve quality if costs are not correctly computed?
This question is important because organizational viability is
contingent on assessing the true costs of care, including the cost of
errors and inefficient processes and the money wasted on overtreatment
and unnecessary supplies. True costs—identified with the right data and
analytics—must be calculated before price transparency can be achieved.
As the articles and commentaries in this issue of Frontiers of Health Services Management
point out, many factors make the task of determining the actual cost of
care and services particularly difficult. Healthcare differs from other
US business sectors in its extreme complexity, and consumers have not
purchased healthcare in the same way they shop for other goods and
services (even if they have been inclined to do so). However,
skyrocketing deductibles and out-of-pocket costs are now prompting
consumers to shop around and ask more questions about prices. And so, to
function effectively in a value-based risk payment environment,
hospitals and health systems must be able to provide accurate
information to consumers, engage them in their care, negotiate favorable
contracts with payers, and clearly identify resource utilization in
caring for a defined population.
Continue reading this Issue's Editorial here...
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