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Abstract:
Current medical-business literature often suggests that the rule for hospitals' economic survival under Medicare's prospective pricing system (PPS) is delivery of minimally acceptable care. Extensive investigation of, or care for, illness not related to the primary cause of admission may erode margins or even generate losses. In at least some diagnostic groupings, however, more rather than less investigation can be not only beneficial to the patient but also fiscally advantageous to the hospital.
Insights
Hospitals may find that providing more, not less, medical care can improve patient outcomes and financial performance under Medicare's prospective pricing system (PPS). This approach challenges the notion that minimal care is key to economic survival.
Area of Science:
- Health economics
- Hospital management
- Medical economics
Background:
- The prevailing view suggests minimal care ensures hospital profitability under Medicare's prospective pricing system (PPS).
- Unrelated medical investigations risk eroding hospital margins or causing financial losses.
Purpose of the Study:
- To investigate the financial implications of varying levels of patient care within Medicare's prospective pricing system.
- To determine if increased medical investigation can be fiscally advantageous for hospitals.
Main Methods:
- Analysis of hospital economic data in relation to patient care intensity.
- Examination of diagnostic groupings to assess cost-benefit of extensive investigation.
Main Results:
- Contrary to common belief, increased medical investigation can be financially beneficial in certain diagnostic categories.
- More extensive patient care, when appropriate, can align with, rather than detract from, hospital economic goals.
Conclusions:
- Hospitals can achieve financial advantages by providing more comprehensive care in specific cases.
- The 'minimal care' strategy may not be universally optimal for hospital economic survival under PPS.