Prospective-pricing strategies for hospital and departmental effectiveness: the administrator's response

The approach of the New England Medical Center toward case management and increased productivity, and the role of the pharmacy within this system, are described by a chief hospital administrator. External pressures that caused the hospital to alter its management style included changes in reimbursement, hospital overuse, increased competition, and a surplus of physicians. Variations in medical practice that affected admission rates, length of stay, and use of ancillary services existed because clinical and financial data had not been integrated, so clinicians had no information on the economic consequences of their decisions. The solution offered to this problem was to decentralize resource-use decisions to increase clinician accountability. The goal of the case-management system is to reduce the cost of intermediate product (e.g., laboratory tests) use through increased productivity. The system provides pharmacy with a new power base if pharmacists can reduce overall costs by influencing prescribers to use cost-effective therapies. Pharmacy can increase its influence within the institution by forming new relationships with administrators, physicians, and nurses that broaden its impact on cost.