Health economics and resource management: a model for hospital efficiency

As health care spending continues to climb, government and industry, as the two major purchasers of health care services, are intensifying their scrutiny over health care delivery in an attempt to reduce their health care burden. The first round of utilization controls and reimbursement restrictions focused on necessity of admission and efficiency of care, causing a profound effect on hospital-based services. Declining occupancy rates, reduced inpatient reimbursements, and mounting contractual losses have pushed many hospitals to the point of financial disaster. The second round of controls has expanded into the outpatient sector and will begin to focus on both appropriateness of treatment and outcome of care, affecting both hospital and physician-related services. In an environment of increasing external pressures for appropriateness, justification and outcome of medical services, and potential financial risk imposed by reimbursement cutoffs or penalties for unnecessary care, hospitals and physicians are under increasing pressure to improve their efficiency as health care providers. The resource management model is presented as an example of how hospitals and physicians can monitor health care services and improve their performance in the delivery of more cost-efficient, high-quality medical care. The importance of hospital-physician education, communication, and interaction is stressed as a means of attaining internal control over a system plagued by resource-limited external constraints.