Saving Money/Reducing Costs

Hello All,

I would generally agree that the most blatant reason for the rising cost of health care would be “administrative costs and excessive profits”.  While I don’t know specifics on the actual profit margins for insurance companies I can comment first-hand on the contribution of inefficient administration to costs. 

I am currently in the process of assisting an Urgent Care Center in adopting a purely electronic medical records system using software from a company called Allscripts.  Observing their transition, it has become incredibly apparent just how much inefficiency can cost.  Due to inadequate documentation and record-keeping, a backlog in billing resulted in a loss of tens of thousands of dollars in funding.  This of course does not include the added cost of hiring additional employees to fix the documentation (multiple times as it was re-done incorrectly a number of times) and re-bill.  In this particular situation the cost is not transferred to the patients, yet even as a very small operation (only 17 patients per day) you can see that the amount of money wasted is staggering.  Were this to happen at a full-scale hospital, or a similar situation internally at a major insurance company, I imagine this cost would be added into company “overhead” and eventually find it’s way into patient premiums.  The benefits of this electronic medical record program highlight where employers can easily save the most money: internal efficiency, whether it be through safeguarding proper documentation, reducing mistakes, etc.

         In searching for alternative methods for reducing cost, one of the best examples is the abundant information in the same PBS videos we viewed for last week’s blog entry.  Just these 5 countries provide ideas such as negotiating price control/fixing, manufacturing inexpensive medical technology/machines, eliminating the middlemen or “gatekeepers”, and many others. 

Not surprisingly, competition appears to be the major method that is most popular in the U.S. for its ability to reduce costs and save money.  The Agency for Healthcare Research and Quality notes that simply having multiple HMOs in a single market saves patients money through price competition.  Also, employers who allow employees a choice of health plans from several different insurance providers has been shown to encourage competition among these providers. I found this and much more in a great discussion of the proven benefits of price competition and other methods that showed more mixed results on the Department of Health and Human Services’ website: http://www.ahrq.gov/research/costsria/

Thanks!