2. Outlines:
1-Definition cost-containment.
2-The key policy options most likely to achieve the greatest
cost savings are those that.
3-Target of Cost Containment
4-Cost Containment Strategy
5-Methods of cost containment
6-Why is cost containment essential ?
7-How to achieve cost containment?
8- Challenges
3. Definition cost-containment:
* The process of controlling the expenses
required to operate an organization or perform a
project within pre-planned budgetary
constraints.
* The cost containment process is an important
management function that helps keep costs down
to only necessary and intended expenses in order
to satisfy financial targets.
4. CONT.
* Cost containment is the business practice of
maintaining expense levels to prevent unnecessary
spending or thoughtfully reducing expenses to
improve profitability without long-term damage to the
organization.
5. The key policy options most likely to achieve the
greatest cost savings are those that:
1- Reduce avoidable, ineffective, and duplicate use of
services, including technology, and encourage clinically
effective care based on comparative effectiveness research
and implementation of information technology.
2- Pay appropriately for health care services, and encourage
adoption of innovative models of health care delivery, such as
the Patient Centered Medical Home..
6. CONT.
3- Ensure accurate pricing of services.
4- Ensure an appropriate physician workforce specialty mix.
5- Reduce administrative costs.
6- Reduce costs from medical malpractice and defensive
medicine.
7- Promote wellness, prevention, chronic care management,
changes in unhealthy behaviors, and encourage patient
responsibility for health and cost-consciousness
7. Target of Cost Containment
1-High health care system administrative costs.
2-Administrative inefficiencies associated with complex,
uncoordinated, often duplicate regulatory and
administrative requirements.
3-Lack of financial incentives for providers to hold down
total care costs for a population of patients.
4-Inefficient, uncoordinated care.
5- Not enough attention to management of chronic
conditions.
8. CONT..
6-Prevention and early diagnosis and treatment.
7-Lack of financial incentives for providers to manage
the total cost of care for an episode of illness.
8- Inefficient, uncoordinated care.
9-Inability to identify and reward high-quality / low
cost providers
10- Lack of data to enable consumers to compare
provider prices and care quality.
9. Cost Containment Strategy
1-Promote or require use of standardized, common electronic
or paper forms (e.g., for billing and coding);
2-Improve the efficiency of provider-insurer transactions in
claims processing and payment;
3-Institute a single process for verifying provider (for
example doctors, specialists, nurses) experience and
education that is recognized by all parties, as opposed
to having separate processes for each health plan, hospital
and practice that requires providers to
verify their credentials before hiring or paying them;
10. CONT..
4-Give providers and patients instant access to a
patient’s insurance coverage information (e.g., services
covered, required copayments and caps on benefits)
using a magnetic swipe card;
5-Standardize medical management policies (e.g.,
preauthorization Procedures)
6-Streamline government regulations and compliance
requirements.
11. Methods of cost containment
a. Diagnostic related groups (DRG)
b. Combination of services
c. Outpatient services
d. Mass or bulk purchasing
e. Early intervention and preventative
services
12. Why is cost containment essential
?
1-rising material cost.
2-increments for staff.
3-less availability of manpower.
4-quality : accreditation .
5-reduction of income:
Government schemes trying to cap bills.
Poor reimbursement rates.
Hospital only source of revenue is patients.
13. How to achieve cost containment?
Accomplishing these cost containment and cost
reduction objectives requires:
1- experience.
2- functional knowledge.
3-strong project management.
4-correct business analysis skills.
5- ability to effectively manage the change.
14. Challenges :
All hospitals are faced with challenges in today’s economic
climate.
These include:
1-containing spend and reducing costs are the highest priorities.
2-accomplish this containment and reduction with less help.
3-achieve results without poor in quality.
4- targets need to be achieved in a timely manner
