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Cost-containment strategies for centers offering open heart product lines: one conceptual model
1Psicor Inc., Diamond Bar, CA.
Insights
Hospitals offering open heart surgery must balance cost and quality. Success depends on managing economic pressures, demonstrating excellent outcomes, and becoming a recognized center of excellence for cardiovascular services.
Area of Science:
- Cardiovascular Surgery
- Healthcare Management
- Health Economics
Background:
- Hospitals face increasing pressure to justify open heart services due to an aging population, declining reimbursement, sicker patients, and technological advancements.
- The healthcare industry's corporate culture emphasizes financial performance, raising concerns about the impact on patient care quality.
- Managed care and capitated payment models intensify contract negotiations, leading to competition among providers to lower costs.
Purpose of the Study:
- To analyze the critical factors influencing the viability and success of open heart surgery programs.
- To explore the interplay between cost-effectiveness, quality of care, and market competition in cardiovascular services.
- To identify strategies for health-service organizations to thrive amidst economic and political challenges.
Main Methods:
- Analysis of economic and political factors impacting cardiovascular service lines.
- Evaluation of cost and outcome criteria for open heart surgery programs.
- Review of essential variables for successful heart programs, including managed-care contracts and quality metrics.
Main Results:
- Hospitals must prioritize quality of care, evidenced by low mortality/morbidity rates, to attract patients and payers.
- Successful programs are recognized as
- centers of excellence,
- offering advanced, cost-conscious care.
- Key success factors include favorable managed-care contracts, program size, peer review, and proactive case management.
Conclusions:
- Financial viability of open heart services requires careful consideration of cost and outcomes.
- Achieving
- center of excellence
- status is crucial for long-term success in a competitive market.
- Strategic management of economic, political, and quality factors is essential for cardiovascular program sustainability.
Abstract:
Those hospitals currently offering cardiovascular service lines must look carefully at cost and outcome criteria. Certain considerations, such as the aging population, declining reimbursement rates, more critically ill patients and advances in healthcare technology, may be cause for many hospital administrators to rethink the viability of offering open heart services. The sometimes brutal competition in healthcare threatens the existence of many smaller programs. Some may argue that the corporate culture of healthcare is fast becoming more and more bottom-line oriented. True, the bottom line is important, but at what point is quality affected? The concept of managed care and capitated fees has, in effect, sent third-party payers into a "feeding frenzy" with respect to contract negotiations. This often results in the pitting of one hospital or doctor against another in what could be argued to be a calculated effort to drive down cost. Health-service organizations performing open heart surgery must understand a multitude of political and economic factors in order to provide cost-effective care. At the top of the priority list must be quality of care. Programs which experience low mortality/morbidity rates will be those facilities that consumers and payers choose. In fact, adjusted mortality/morbidity reports are already a reality in some states. Successful heart programs will be those known in the community (and, perhaps more importantly, to payers) as "centers of excellence," which offer customers high-tech and cost-conscious healthcare. Paramount to successful heart programs will be variables such as favorable managed-care contracts, program size, peer review and proactive case management.(ABSTRACT TRUNCATED AT 250 WORDS)