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Child neurology programs can be net margin generators for children's hospitals. The relative value unit (RVU) expectations for child neurologists are heavily influenced by proceduralists (neurophysiologists, Botox injectors, and so forth) and means in most RVU data sets are not realistic expectations for Evaluation and Management coding, outpatient neurologists. Yet each neurologist has a net revenue/expense ratio of 1.97 for a hospital neurology enterprise, so each of the neurologists generates nearly twice their salary for the hospital. Downstream revenue is even more impressive. Each neurologist generates about $2,000,000.00 in downstream revenue per year.

Objective We describe our experience in implementing enterprise-wide standardized structured reporting for chest radiographs (CXRs) via change management strategies and assess the economic impact of structured template adoption. Methods Enterprise-wide standardized structured CXR reporting was implemented in a large urban health care enterprise in two phases from September 2016 to March 2019: initial implementation of division-specific structured templates followed by introduction of auto launching cross-divisional consensus structured templates. Usage was tracked over time, and potential radiologist time savings were estimated. Correct-to-bill (CTB) rates were collected between January 2018 and May 2019 for radiography. Results CXR structured template adoption increased from 46% to 92% in phase 1 and to 96.2% in phase 2, resulting in an estimated 8.5 hours per month of radiologist time saved. CTB rates for both radiographs and all radiology reports showed a linearly increasing trend postintervention with radiography CTB rate showing greater absolute values with an average difference of 20% throughout the sampling period. The CTB rate for all modalities increased by 12%, and the rate for radiography increased by 8%. Discussion Change management strategies prompted adoption of division-specific structured templates, and exposure via auto launching enforced widespread adoption of consensus templates. Standardized structured reporting resulted in both economic gains and projected radiologist time saved.

Dr Egeland is senior director of business development and licensing in the Early Technologies business unit of the Minimally Invasive Therapies Group at Medtronic. Mr Rapp is an associate consultant at Pharmagellan, a biotech consultancy. Dr David is the founder and managing director of Pharmagellan.

Technological innovation in healthcare yields better health outcomes but also drives healthcare expenditure, and governments are struggling to maintain an appropriate balance between patient access to modern care and the economic sustainability of healthcare systems. Health Technology Assessment (HTA) and centralized procurement are increasingly used to govern the introduction and diffusion of new technologies in an effort to make access to innovation financially sustainable. However, little empirical evidence is available to determine how they affect the selection of new technologies and unit prices. This paper focuses on medical devices (MDs) and investigates the combined effect of various HTA governance models and procurement practices on the two steps of the MD purchasing process (i.e., selecting the product and setting the unit price). Our analyses are based on primary data collected through a national survey of Italian public hospitals. The Italian National Health Service is an ideal case study because it is highly decentralized and because regions have adopted different HTA governance models (i.e., regional, hospital-based, double-level or no HTA), often in combination with centralized regional procurement programs. Hence, the Italian case allows us to test the impact of different combinations of HTA models and procurement programs in the various regions. The results show that regional HTA increases the probability of purchasing the costliest devices, whereas hospital-based HTA functions more like a cost-containment unit. Centralized regional procurement does not significantly affect MD selection and is associated with a reduction in the MD unit price: on average, hospitals located in regions with centralized procurement pay 10.1% less for the same product. Hospitals located in regions with active regional HTA programs pay higher prices for the same device (+23.2% for inexpensive products), whereas hospitals that have developed internal HTA programs pay 8.3% on average more for the same product.

Objective To examine hospital finances and physician payment associated with fenestrated endovascular aneurysm repair (FEVAR) for complex aortic disease at a high-volume center and to compare the costs and reimbursements for FEVAR with open repair, and their trends over time. Methods Clinical and financial data were collected retrospectively from electronic medical and administrative records. Data for each patient included inpatient and outpatient encounters 3 months before and 12 months after the primary aneurysm operation. Results Between 2007 and 2017, 157 and 71 patients were treated with physician-modified endograft (PMEG) and Cook Zenith Fenestrated (ZFEN) repair, respectively. Twenty-one patients who were evaluated for FEVAR underwent open repair instead. The 228 FEVAR patients provided a total positive contribution margin (reimbursements minus direct costs) of $2.65 million. The index encounter (the primary aneurysm operation and hospitalization) accounted for the majority (90.6%) of the total contribution margin. The largest component (50.3%) of direct cost for FEVAR from the index encounter was implant/graft expenses. The average direct costs for FEVAR and for open repair from the index encounter were $34,688 and $35,020, respectively. The average contribution margins for FEVAR and for open repair were approximately $10,548 and $21,349, respectively, attributable to differences in reimbursement. The average direct cost for FEVAR trended down over time as cumulative experience increased. Average reimbursement for FEVAR increased after Centers for Medicare and Medicaid Services approved payments with the Investigational Device Exemption (IDE) trial for PMEG in 2011, and a new technology add-on payment for ZFEN in 2012. These factors transitioned the average contribution margin from negative to positive in 2012. The average physician payments for PMEG increased from $128 to $5848 after the start of the IDE trial. The average physician payments for ZFEN and for open repair between 2011 and 2017 were $7597 and $7781, respectively. Conclusions FEVAR can be performed at a high-volume medical center with positive contribution margins and with comparable physician payments to open repair. At this institution, hospital reimbursement and physician payments improved for PMEG with participation in an IDE trial, while hospital direct costs decreased for both PMEG and ZFEN with accumulated experience.

Objectives The aim of this study was to determine the fiscal impact of implementation of a novel emergency department (ED) point-of-care (POC) ultrasound billing and reimbursement program. Methods This was a single-center retrospective study at an academic medical center. A novel POC ultrasound billing protocol was implemented using the Q-path Web-based image archival system. Patient care ultrasound examination reports were completed and signed electronically online by faculty using Q-path. A notification was automatically sent to ED coders from Q-path to bill the scans. ED coders billed the professional fees for scans on a daily basis and also notified hospital coders to bill for facility fees. A fiscal analysis was performed at the end of the year after implementing the new billing protocol, and a before-and-after comparison was conducted. Results After implementation of the new billing program, there was a 45% increase in the ED faculty participation in billing for patient care examinations (30%-75%). The number of ultrasound examinations billed increased 5.1-fold (4449 vs 857) during the post implementation period. The total units billed increased from previous year for professional services to 4157 from 649 and facility services to 3266 from 516. During the post implementation period, the facility fees revenue increased 7-fold and professional fees revenue increased 6.34-fold. After deducting the capital costs and ongoing operational costs from approximate collections, the net profits gained by our ED ultrasound program was approximately $350 000. Conclusions Within 1 year of inception, our novel POC ultrasound billing and reimbursement program generated significant revenue through ultrasound billing.

Objectives The paper analyzes the German inpatient capital costing scheme by assessing its cost module calculation. The costing scheme represents the first separated national calculation of performance-oriented capital cost lump sums per DRG. Methods The three steps in the costing scheme are reviewed and assessed: (1) accrual of capital costs; (2) cost-center and cost category accounting; (3) data processing for capital cost modules. The assessment of each step is based on its level of transparency and efficiency. A comparative view on operating costing and the English costing scheme is given. Results Advantages of the scheme are low participation hurdles, low calculation effort for G-DRG calculation participants, highly differentiated cost-center/cost category separation, and advanced patient-based resource allocation. The exclusion of relevant capital costs, nontransparent resource allocation, and unclear capital cost modules, limit the managerial relevance and transparency of the capital costing scheme. Conclusions The scheme generates the technical premises for a change from dual financing by insurances (operating costs) and state (capital costs) to a single financing source. The new capital costing scheme will intensify the discussion on how to solve the current investment backlog in Germany and can assist regulators in other countries with the introduction of accurate capital costing.

The aim of our paper is to analyse the effect of the so-called performance volume limit (PVL) financing method on acute hospital care.The data were derived from the nationwide administrative dataset of the National Health Insurance Fund Administration (OEP) covering the period 2003-2008. We analysed the trends in the DRG cost-weights, number of cases, case-mix, and average length of stay. We calculated the average annual reimbursement rate per DRG cost-weight with and without the application of PVL degression according to the hospital type and medical professions.Our results showed that although the national case mix (i.e., the sum of all of the DRG cost-weights produced in one year) did not change between 2003-2006, the trend of the annual number of cases increased, and the average length of stay decreased. During 2007-2008, a significant decline was found in each indicator. The introduction of the PVL resulted in a health insurance budget saving of 1.9% in 2004, 2.6% in 2005, 3.4% in 2006, 5.6% in 2007, and 3.2% in 2008. We found the lowest reimbursement rate per DRG cost-weight at the university medical schools (HUF 138,200 or € 550) and children's hospitals (HUF 132,547 or € 528), whereas the highest was at the county hospitals (HUF 143,451 or € 571) and city hospitals (HUF 142, 082 or € 565).The implementation of the PVL reduced the acute care hospital activity and reimbursement. The effect of the PVL was different on the different types of hospitals, and it had a serious disadvantageous effect on the university medical schools and children's hospitals.

Objective To explore differences in national approaches to hospital capital planning and financing in three European countries and to understand the roles and positions of the actors involved. Methods Case studies of major new hospital developments were undertaken in each of the study countries (France, Sweden and England), based on a review of documents related to each development and the national framework within which they took place, as well as interviews with key informants. The principal–agent model was used, focusing on identification of differing utilities and information asymmetries. Results There are substantial differences between countries, for example in relation to the role of the hospital in its own redevelopment, the organisational distance between actors, the institutional level at which decision rights for major investments are exercised, and how principals control the agents. These differences have implications for the processes involved and the nature of economic and health care problems that can arise. Conclusions There is evidence of, and opportunity for economic problems in all systems but these seems to be greater in France and England where the hospital leads the process, where there is limited involvement by the regional bodies, and informational differences appear greater. We conclude that hospital planning processes should be informed by an explicit understanding of the powerful groups involved and their divergent preferences and utilities.

The many ways monies enter and leave a university pediatric section are as poorly understood as the value and relationship to the parent hospital or university. This blinded confidential financial performance survey of similar university pediatric surgery sections begins to benchmark performance and define those relationships.

Objectives Global budget programs are utilized in many countries to control soaring healthcare expenditures. The present study was designed to evaluate the responses of Taiwanese hospitals to a new global budget program implemented in 2002. Methods Using data obtained from the Bureau of National Health Insurance (NHI) and two nationwide surveys conducted before and after the global budget program, changes in the length of stay, treatment intensity, insurance claims, and out-of-pocket fees were compared in 2002 and 2004. The analysis was conducted using the Generalized Estimating Equations (GEEs) method. Results Regression models revealed that implementation of the global budget was followed by a 7% increase in length of stay and a 15% increase in the number of prescribed procedures and medications per admission. The claim expenses increased by 14%, and out-of-pocket fees per admission increased by 6%. Among the hospitals, no coalition action was found during the study period. Conclusions In the present study, it appears that hospitals attempted to increase per-case expense claims to protect their reimbursement from possible discounts under a global budget cap. How Taiwanese hospitals respond to this challenge in the future deserves continued, long-term observation.

Healthcare managers are continuously urged to provide better patient services at a lower cost. To cope with these cost pressures, healthcare management needs to improve its understanding of the relevant cost drivers. Through a case study, we show how to perform a time-driven activity-based costing of five outpatient clinic’s departments and provide evidence of the benefits of such an analysis. © 2009 Elsevier Ireland Ltd. All rights reserved.

This scoping review sought evidence about organisational and management factors affecting infection control in general hospital settings. A literature search yielded a wide range of studies, systematic reviews and reports, but high quality direct evidence was scant. The majority of studies were observational and the standard of reporting was generally inadequate. Positive leadership at ward level and above appears to be a prerequisite for effective action to control infection, although the benefits of good clinical leadership are diffused by supervision of large numbers of staff. Senior clinical leaders need a highly visible presence and clear role boundaries and responsibilities. Team stability and morale are linked to improved patient outcomes. Organisational mechanisms for supporting training, appraisal and clinical governance are important determinants of effective practice and successful change. Rates of infection have been linked to workload, in terms of nurse staffing, bed occupancy and patient turnover. The organisational characteristics identified in the review should be considered risk factors for infection. They cannot always be eliminated or avoided completely, but appropriate assessment will enable targeted action to protect patients.

Hospitals operate in markets with varied demographic, competitive, and ownership characteristics, yet research on ownership tends to examine hospitals in isolation. Here we examine three hospital ownership types -- nonprofit, for-profit, and government -- and their spillover effects. We estimate the effects of for-profit market share in two ways, on the provision of medical services and on operating margins at the three types of hospitals. We find that nonprofit hospitals' medical service provision systematically varies by market mix. We find no significant effect of market mix on the operating margins of nonprofit hospitals, but find that for-profit hospitals have higher margins in markets with more for-profits. These results fit best with theories in which hospitals maximize their own output.

Diabetes mellitus is the fourth most common comorbid condition among hospitalized patients, and 30% of patients undergoing open-heart surgery have diabetes. The link between hyperglycemia and poor outcome has been well described, and large clinical trials have shown that aggressive control of blood glucose with an insulin infusion can improve these outcomes. The barriers to implementing an insulin infusion protocol are numerous, despite the fact that doing so is paramount to clinical success. Barriers include safety concerns, such as fear of hypoglycemia, insufficient nursing staff to patient ratios, lack of administrative and physician support, various system and procedural issues, and resistance to change. Key steps to overcome the barriers include building support with multidisciplinary champions, involving key staff, educating staff, and administrators of the clinical and economic benefits of improving glycemic control, setting realistic goals, selecting a validated insulin infusion protocol, and internally marketing the success of the protocol.

Introduction and objectives Previous studies suggest that the effectiveness of coronary surgery is influenced by the type of management at the healthcare centre where the intervention is performed. The present study assessed the risk-adjusted hospital mortality of coronary surgery in the Catalan healthcare system in hospitals under either private or public management. Methods We carried out a prospective study of all consecutive patients receiving a first coronary artery bypass graft, with public financial support, in a period of 2 years at 5 hospitals under either public or private management. Preoperative risk was assessed using the EuroSCORE and Catalan Agency for Health Technology Assessment (CAHTA) predictive models. Results Overall, 1605 patients underwent interventions, 21% of which were at private hospitals. The percentage of patients undergoing non-elective surgery was higher at private hospitals (64% vs 50%), as was the percentage needing intravenous nitrates (17% vs 11%) and the percentage in functional class IV (20% vs 11%). The odds ratio for in-hospital mortality in private compared with public hospitals was 0.56 (95% Cl, 0.29-1.06) when adjusted for EuroSCORE, 0.56 (95% Cl, 0.29-1.07) when adjusted for CAHTA score, and 0.43 (95% Cl, 0.21-0.87) when adjusted for patient characteristics. The mortality observed, 4.8% (95% Cl 3.8-5.6), was not significantly higher than that predicted. Conclusions a) Hospital mortality was equivalent to or lower than that expected after adjustment for the 2 risk scores; b) after adjustment for baseline patient characteristics, the results favored privately managed centers; and c) comparison with previous results suggests that coronary surgery effectiveness has improved in recent years.

The major factors to be considered in the real estate purchase decision are the interest rate, the depreciation schedule, the property appreciation, the income tax impact, and the impact of paying a principal payment as part of the real estate mortgage. All these factors must be compared with the costs of leasing.

McCue MJ, Thompson JM. Early effects of the prospective payment system on inpatient rehabilitation hospital performance. Objective To assess changes in utilization and financial performance for inpatient rehabilitation facilities (IRFs) that shifted from Medicare's cost-based payment system to the IRF prospective payment system (PPS). Design A pre-post nonequivalent comparison group design. The intervention group included IRFs that changed to the PPS in fiscal year 2002. The comparison group included IRFs that were paid under the cost-based system. Setting IRFs in the United States. Participants Final sample included 120 IRFs, with 26 IRFs in the comparison sample. Interventions Not applicable. Main Outcome Measures Outcome measures included utilization (length of stay [LOS], total discharges, Medicare discharges) and financial performance (revenue, expenses, profitability, Medicare payment and cost). Results PPS IRFs experienced a smaller decline in LOS, whereas Medicare cost per discharge increased at a lower rate. PPS IRFs reduced operating costs per discharge, whereas profit margin had a greater increase. Conclusions IRFs under PPS implemented cost controls that lead to lower operating costs below the fixed payment to profit under PPS. Discharge growth for PPS IRFs was similar to the comparison group. PPS facilities did not implement a strategy that attempted to admit more patients to increase Medicare payments.

The Japanese medical care system, highly rated internationally, has recently experienced a crisis that has placed a burden on all of its citizens, providers, and payers, due to the expansion of medical expenditures in rapidly aging society with the stagnant economy. To address this, in April 2003, Japan implemented a case-mix payment system, instead of conventional fee-for-service payment, based on an original case classification with 2552 groups (Diagnosis Procedure Combination: DPC), with inpatients from 82 special functioning hospitals. This system contains two parts: per diem prospective payment for hospital's fee with a three-level step down according to average length of stay for each diagnosis group, which is adjusted to secure the previous year's remuneration in each hospital; fee-for-service payment for doctor's fee based on national fee schedule. The payment system reduced average length of stay, but did not change inpatient expenditures and increased outpatient expenditures. The in-hospital mortality rate, although un-adjusted, did not changed, but the readmission rate increased mainly through an increase in planned, not accidental, readmissions. For the expansion of this system, ongoing program refinement, reflecting the results of data analysis, is indispensable.

Today’s complex coding and billing rules require a high level of involvement of emergency physicians and ancillary staff to assure compliance with established billing policy, achievement of financial goals, and service to an ever-increasing patient population. In many institutions, unlike in the early years of the specialty, emergency physicians are an integral part of the administration of the department and to a large extent the hospital. Whether employed by the hospital, an independent group, or working as an independent contractor, today’s emergency physician is the pivotal point for clinical, administrative, and financial management of emergency services for the physician and the facility. Coding and billing has evolved as a highly sophisticated, technologybased endeavor requiring in-depth knowledge of state, federal, and private payer requirements. An understanding of general business applications is essential to understanding receivables management, the importance of account aging, bad debt, resource allocation, adjustments, managed care contracting, and compliance requirements. Adding to this complexity are the unique demands of emergency medicine patient care driven by Consolidated Omnibus Budget Reconciliation Act of 1986/Emergency Medical Treatment and Labor Act (COBRA/EMTALA) regulations that require every patient be seen to identify potential medical emergencies. Although it is reasonable to assume these mandated emergency services are medically necessary, payers often deny payment when documentation and coding does not fully address the signs, symptoms, and medical conditions that require emergency department (ED) attention. A brief history of health insurance and coding

Existing models of hospital financing advocate mixed schemes which include both lump-sum and cost-based payments. The doctor is generally the unique decision maker, which is unrealistic in a hospital setting where both managers and doctors are involved. This paper develops a model in which managers and doctors are responsible for different decisions within the hospital. In this model, public authorities who provide the financing, hospital managers who allocate resources within the hospital, and doctors who assign patients to either a low-tech or a high-tech therapy have information of increasing quality on the casemix of patients. The public authorities sign with hospital managers contracts specifying some lump-sum financing and some size of a high-tech equipment. In turn, managers, who know the broad mix of patients in the hospital, sign with hospital doctors contracts that specify the non-medical resources allocated to this facility as well as some remuneration. Doctors, who know each patient's illness severity, select the patients to be treated by the high-tech facility, and receive from public authorities some fee-for-service payment that is differentiated according to the low- or high-tech treatment used for curing their patients. What emerges is a two-stage agency problem in which contracts are designed to elicit information in the most efficient way.

Background Studies on the effect of heart failure clinics have been encouraging and convincing with respect to reduced hospitalizations, improved quality of life, and reduced cost. However, previous results have been derived from patient populations either recently discharged and with specific exclusion criteria or from heart transplant lists. We here report the establishment of a heart failure clinic that offers an integrated approach to both diagnosing and managing heart failure patients, the baseline characteristics of the first 283 patients treated, and the impact on heart failure hospitalizations during establishment. Methods Since September 1, 1999, a heart failure clinic has been in operation at Frederiksberg University Hospital. The clinic was designed with both a diagnostic and a therapeutic unit. The diagnostic unit offers open access to all patients with suspected heart failure, either through referral from general practitioners or from the medical departments of the hospital. In the case of confirmed systolic heart failure, the patient is referred to the therapeutic unit for (1) uptitration and optimization of medical therapy and thorough information and education. In addition, the unit offers a rapid access track and the possibility of intravenous diuretic treatment. Results During the 21 months of operation, a total of 460 patients were referred to the clinic. Of these, 320 (70%) were found to have clinical evidence of heart failure, and 283 (88% of the patients with heart failure) had left ventricular systolic dysfunction (defined by an ejection fraction of ≤45%). These patients were seen in the clinic for education, control of fluid retention, and uptitration of medications. These patients with left ventricular dysfunction were predominantly elderly (aged 72.7 ± 10.7 y) and most often male (73%). Ischemic heart disease was the most common etiology (55%). Before referral, most patients with left ventricular dysfunction had been treated with none or only low-dose angiotensin-converting enzyme inhibitor (55%), and fewer than one third received β-blockers (29%). During the first year of operation of the clinic, there was a 23% decline of heart failure-related hospital admissions to the department of cardiology (from 396 to 306). Conclusion Patients with systolic heart failure are not always optimally treated. The establishment of a heart failure clinic, which offers the combination of diagnosing and managing congestive heart failure, appears to be efficient both in terms of therapy optimization and with respect to a concomitant decline in hospitalization for heart failure. (Am Heart J 2002;144:e2.)

In June 2000, Lifelines launched its first series on the business of women's health. As women's health continues to emerge as a "must‐provide" services line for all types of health care organizations, Lifelines again asked widely recognized women's health services experts to revisit the notion of creating a women's health business model. This issue features the third and final installment of this dynamic three‐part series and explores the most important basics in terms of the financial performance of health organizations, resource allocation and developing a successful women's health business model.

In the early 1990s, DRG based hospital financing was introduced into some hospital districts in Finland. The 1993 state subsidy reform decentralising all hospital financing to municipalities, and the aim of improving productivity, were the driving forces for introducing DRG. This study addresses the pros and cons of DRG in hospital financing in the Finnish health care system and puts forward several solutions to avoid potential problems. We consider the objectives and optimal features of hospital financing systems in the context of the public health care system, where the public sector owns and finances hospitals. We analyse impacts of introducing different types of DRG based hospital financing systems, taking into account earlier experiences in countries such as Sweden and Norway, as well as Finnish system specific features. DRG could assist the Finnish municipalities to compare quality, costs and prices of services between hospitals, and related cost information might help them budget expenditure more accurately. System specific features mean that traditional uses of DRG in hospital pricing are not feasible in Finland. But some benefits of DRG could be exploited, for instance in the controlled contracts between municipalities and hospitals.

Background In the mid-1990s, the Department of Veterans Affairs (DVA) implemented the Veterans Equitable Resource Allocation (VERA), a new financial model developed to attempt to better distribute the approximately $18 billion annual budget among roughly 170 Veterans Administration Medical Centers (VAMCs). VERA is based on a Health Maintenance Organization (HMO) model. VERA provides reimbursement to each of the 22 regional Veterans Integrated Service Networks (VISNs), and subsequent VISN distribution to individual VAMCs is based on an individual medical center's enrollment of unique social security numbers (uniques). In HMO vocabulary these are individual "covered lives." Methods Currently available demographic and staffing information regarding the DVA's 23 tertiary hospital systems (Category 7 hospitals) on the KLF database (DVA Austin Data Base) and published information on the DVA website were reviewed. The following was obtained: (1) staffing information-physician and nurse full-time employment equivalent (FTEE) staffing; (2) patient demographics and hospital workload-facility uniques (u), outpatient facility uniques, average daily census (ADC), discharges, and outpatient clinic visits. The following staffing ratios were calculated for both physician and nursing: FTEE/(u/1000), FTEE/(discharges/1000), FTEE/(clinic visits/1000), FTEE/ADC. For all categories the means +/- SD were calculated and correlation coefficients were calculated on pertinent pairings. Results Although categorized as similar tertiary care facilities, the 23 "Group 7" VA hospitals are anything but equivalent when reviewed using the VERA financing model with respect to physician staffing, nurse staffing, and facility uniques. Using VERA methodology, average physician FTEE and total nursing FTEE staffing/(u/1000) are 3.67 +/- 0.89 and 15.53 +/- 3.77, respectively. Correlation statistics of staffing versus unique SSNs demonstrated correlation coefficients of 0.46 and 0.59 with respect to physician and nurse staffing, respectively. On the other hand, when physician FTEE and nursing FTEE staffing were compared with VAMC workload parameters (total ADC, discharges, and outpatient visits), correlation coefficients were more consistent, ranging from 0.62 to 0.86. Conclusions In the VERA model, the reward of a larger annual budget for an individual VAMC or the regional VISN is realized when staffing of VAMCs is minimized, overall provided medical services (especially costly tertiary services) are limited, and the number of covered lives is maximized. A VAMC staffing system that equates medical services delivered in a tertiary VAMC setting based on an HMO model like VERA (where the user population is skewed toward the sicker, older patient) shows decreased correlation when compared with VAMC workload model parameters.

The economic structure of the PACU dictates whether a cost-reducing intervention (e.g., reducing the length of time patients stay in the PACU) is likely to decrease hospital costs. Cost-reducing interventions, such as changes in medical practice patterns (e.g., to reduce PACU length of stay), only impact variable costs. How PACU nurses are paid (e.g., salaried v hourly) affects which strategies to decrease PACU staffing costs will actually save money. For example, decreases in PACU labor costs resulting from increases in the number of patients that bypass the PACU vary depending on how the staff is compensated. The choice of anesthetic drugs and the elimination of low morbidity side effects of anesthesia, such as postoperative nausea, are likely to have little effect on the peak numbers of patients in a PACU and PACU staffing costs. Because the major determinant of labor productivity in the PACU is hour-to-hour and day-to-day variability in the timing of admissions from the operating room, a more even inflow of patients into the PACU could be attained by appropriate sequencing of cases in the operating room suite (e.g., have long cases scheduled at the beginning of the day). However, this mathematically proven solution may not be desirable. Surgeons, for example, may not want to lose control over the order of their cases. Guidelines for analysis of past daily peak numbers of patients are provided that will provide data to predict the minimum adequate number of nurses needed. Though many managers already do this manually on an ad hoc basis statistical methods summarized in this article may increase the accuracy.

The data presented by Katharine Levit and colleagues in "Health Care Spending in 1994: Slowest in Decades ''1 are both reassuring and puzzling. On the one hand, they confirm that the growth of national health care spending has descended markedly from the Congress iona l Budget Office's (CBO's) dire forecast of 1993, according to which health spending in 1994 would have exceeded 15 % of gross domestic product (GDP) (instead of the actual estimated 13.7%)} There is reason to believe that by the year 2000 health spending will remain much below the alarming 18.9% of GDP that had been forecast by the CBO only 3 years ago. At the same time, however, one wonders why the United States still spends close to 14% of its huge GDP on health care, when all other industrialized nations had succeeded in stabilizing that ratio below 10% as early as 1980 and have remained at those much lower levels so far) Much is made in this country of California's

A vascular surgeon has practiced in the same community for more than 20 years, holding privileges at the two largest local general hospitals. She is widely respected and admired by patients and fellow physicians in all specialties, and her results are consistently good. Recently, the board of directors at the hospital that has been the source of 80% of her case referrals hired a notorious slash-and-burn management firm to improve the balance sheet. The new chief executive officer (CEO) installed an information technology system that can provide management with physician-specific figures on costs and reimbursements. The management consultants identified the 10% of physicians with the worst cost/reimbursement ratios over the preceding 5 years and persuaded the board of directors to order their clinical privileges withdrawn. Our seasoned surgeon learns that she is among the targeted group. Is there an ethical issue here, and, if so, how should she respond?

This paper focuses on the organisational, technical and ethical aspects related to the use of person identifiable health information for various health care management, administration, finance, research and educational purposes. It is based on the ethical standpoint that to the individuals in question, the identifiable health information represents the uttermost sensitive and critical information. In addition, nobody, possibly apart from the patients themselves, may claim ownership of such information. Thus identifiable health information should be (per individual) kept as collected and protected as possible, within the scope of the patient provider relationship. Identifiable health information should, whenever possible and reasonable, be restricted to the health care professionals providing the treatment and care to the patient, and only be made available to others, e.g. for management, research or educational purposes, either in anonymous or pseudonymous form. Secure information management (SIM) is presented as the socio-technical means to facilitate our ethical standpoint in a practical health care environment.

The casemix funding arrangements introduced in Victoria on 1 July 1993 represent a significant departure from the previous approaches to public hospital funding in Australia. They are designed to change the economic incentives on hospitals by linking payment to the number and case complexity of patients treated. The new funding arrangements include a combination of fixed and variable payments to hospitals for inpatient services. Outpatient services remain funded on a historical basis. Special payments are made for teaching and research functions. Total payments to hospitals are capped through operation of an 'Additional Throughput Pool' which allows price to fluctuate inversely with volume to ensure an expenditure limit. Because of operations of specific conditions on the Additional Throughput Pool, hospitals were given an incentive to reduce waiting lists. Despite the success in reducing waiting lists and budgets, there are a number of problems with the casemix approach including both technical issues (how are payment rates to be updated?; the failure to address problems of capital) and ethical issues. These are discussed in the paper.

Despite the rapid growth in the number of rehabilitation specialty hospitals in recent years, there is little knowledge of the performance of these facilities. The recent growth in the number of for-profit rehabilitation providers and increasing competition among for-profit and not-for-profit rehabilitation hospitals have raised questions about differences in performance. This study analyzed differences in financial and operational performance between for-profit rehabilitation specialty hospitals and not-for-profit rehabilitation specialty hospitals for fiscal years ending in 1989 through 1992. Because rehabilitation hospitals are exempted from Medicare's Prospective Payment System, but subject to cost limits established under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), this study controlled for the influence of TEFRA by grouping hospitals into "new" and "existing" categories. The findings show significantly higher net revenue and profits in existing for-profit rehabilitation hospitals. In addition, existing for-profit rehabilitation facilities served a larger percentage of Medicare patients and had fewer employees than existing not-for-profit facilities. It was concluded that existing for-profit rehabilitation hospitals maximized their charges to increase their revenues. These findings have important policy implications for reimbursement alternatives under consideration for inpatient rehabilitation programs.

Article-at-a-Glance Background The need to move toward continuous quality improvement (CQI) is often perceived as a financial hardship on large and small hospitals alike. Avista Hospital, a small, 50-bed hospital, accepted the challenge to implement CQI in a thorough but cost-effective manner. Method Without the use of consultants, the CQI process was developed internally using formal and informal methods of education for the change agents, and just-in-time education for improvement teams. All employees were involved in a brainstorming session to introduce them to the concept of CQI and to define quality and identify customers. The implementation plan was established on a five-year timeline to provide a methodical and systematic approach, and the entire process was under the direction of a quality council. RoundTables To date 18 RoundTables have been chartered by the quality council. One RoundTable, "The Care of the Ml [myocardial infarction] Patient," addressed the lack of continuity in the teaching of the MI patient. The team developed a teaching plan, with all printed materials provided in a binder to patients. Conclusions The overall cost to implement the five-year plan, including education, staff time, and a budgeted amount to begin recognition celebrations in 1995, was estimated at $10,000. Commitment and determination are the necessary components for implementation of a CQI program. With proper planning and support from the administration, a small hospital can be successful at CQI.

Nearly ten years after the implementation of Medicare's Prospective Payment System (PPS), some of its major impacts remain hard to explain using existing economic models. We develop a simple model of the hospital's choice of intensity of care, which affects demand for admissions. The model suggests an important role for the level of prospective payment, independent of the effect of marginal incentives. Predictions from the model are compared first with aggregate utilization data from Medicare's PPS experience, and then with various hospital-level studies which control for interhospital differences in reimbursement rates.

Hospital finance in developing countries has attracted increasing attention in recent years as economists and health planners have examined whether financial reforms will make public hospitals more financially autonomous and consequently reduce (or limit the increase in) their share of government health budgets. This paper presents estimates of the effects of some reforms of hospital user fees on total hospital revenue and on the amount of fees paid by patients in various payor categories. The reforms include special fees for non-referred patients and changes in exemptions for some categories of patients and types of care. The estimates show that doubling fees for non-referred patients increases revenue more than charging them prices equal to operating costs, because current fees are not uniformly less than operating costs. Eliminating exemptions can be as important as changing fees. For example, eliminating exemptions for surgery and inpatient diagnostic exams increases the percentage of operating costs recovered by the same amount as doubling prices for non-referred patients in estimates with an elasticity of demand equal to zero.

The aim of this paper is to examine the determinants of interests rates on tax-exempt hospital bonds. The results highlight the potential and actual roles of Federal and state policy in the determination of these rates. The shift to a Prospective Payment System under Medicare has subsidized the borrowing costs of some hospitals at the expense of others. The selection of underwriters by negotiation rather than by competitive bidding results in higher interest rates. It is cheaper for hospitals in states with relatively high income tax rates to issue debt. The Federal tax act of 1986 raised the cost of hospital debt by encouraging bond issues to contain call features. Are the interest rate effects associated with these policies desirable or undesirable? This question can not be answered in the absence of estimates of the optimal subsidy that an average hospital should receive via its participation in tax-exempt markets, how this subsidy should vary among hospitals with different characteristics, and how the welfare costs associated with this subsidy can be minimized. Our results do not contain these estimates but they underscore that the differentials at issue are substantial.

The introduction of Medicare's prospective payment system (PPS) meant an important change in the environment of US hospitals. The new payment system was expected to improve clinical and non-clinical efficiency in hospitals. A case study in a non-profit Pennsylvania hospital was performed to analyse the impact of PPS on hospital services. The hospital responded to PPS by a twofold strategy. First, attempts were made to achieve effective cost containment by improving the efficiency of intermediate and final outputs. Here special attention is paid to the activities of the DRG coordinator and the Utilization Review Committee and to the activities of nurses in their role as case manager. The second strategy was directed at revenue enhancement, initially mainly by shifting more costs to non-Medicare patients and later by trying to strengthen the position of the hospital in the local health care market. This second strategy was considered more important than the strategy of cost containment. With respect to organizational structure and policy-making, the following changes can be observed: a growing importance of strategic management; more integrated hospital-physician relationships; and the development of an adequate medical information system and a medical records department.

PPOs and HMOs have gained widespread acceptance due in part to the belief that excess capacity and competitive market conditions can be leveraged to negotiate lower prices with health care providers. We investigated prices obtained in different types of markets by the largest PPO in California. Our findings indicate that greater hospital competition leads to lower prices. Furthermore, as the importance of a hospital to the PPO in an area increases, the price rises substantially. Our testing of alternative methods for defining hospital geographic markets reveals that the common practice of using counties to define the market leads to an underestimate of the price-increasing effects of a merger.

This article compares the organization of the Swedish health care system with that in three other countries, the U.S., the U.K., and Canada, focussing on three main areas: (1) the provision and financing (public or private) of health insurance, including the question of the quality of the insurance protection offered; (2) the organization of the production of health services, and the economic incentives on the system's decision-makers (doctors, hospital managers, politicians, etc.). Possible answers are suggested to the question why one country (the U.K.) is able to provide health care to its population at an average cost considerably below that of the others: Differences in the quality of the insurance protection and health services; in the incentives on the system managers to exercise cost control; and in the incentives on service providers such as physicians, to consider cost-effectiveness when making treatment decisions. An attempt is made to suggest lessons for health care reform in Sweden and elsewhere.

In this paper, the effects of using diagnosis-related groups (DRGs) as the basis of a hospital funding mechanism and within a global budgeting mechanism are reviewed. Most forthcoming is the indeterminate effect of DRGs as a funding mechanism. By controlling only the price of hospital care, such systems remain vulnerable to compensatory increases in patient throughout, cost shifting and patient-shifting. Whether the use of DRGs has substantially reduced hospital cost per case is also not clear cut. Effects on patient outcome have not been adequately assessed. At this stage, use of DRGs within a system of global budgeting will simply focus attention on the current average costs of treating cases without consideration of whether such average costs represent efficient clinical practice. Efficient clinical practice is better established through use of less sophisticated techniques, such as clinical budgeting and cost-effectiveness analysis. The failure of more global budgeting in the past has been that patient outcome has not been monitored. Data on outcome are crucial to determining efficiency. Once efficient clinical practice is established through budgeting, DRGs could be calculated according to efficiency criteria rather than current average cost.

In this paper, the empirical evidence addressing the particular issue of how hospitals may be reimbursed is reviewed. Most forthcoming is the indeterminate effect of prospective payment systems using diagnosis-related groups as a means of controlling costs. Such systems, by controlling only the price of hospital care, remain vulnerable to compensatory increase in patient throughput, cost-shifting and patient-shifting despite hospital cost per case being reduced. Health maintenance organisations have been shown to reduce hospital costs, but their effects on patients selection and patient outcome are unclear. Selective contracting in California (similar to the U.K. Government's proposed internal market) has also been shown to reduce costs by affecting both the price and quantity of hospital care. But these effects have occurred only in areas with high concentrations of hospitals. Global and clinical budgeting (which control price times quantity) seem to offer the most potential for cost reduction whilst maintaining patient outcome. By monitoring both cost and outcome within clinical budgets it should be possible to reduce wasteful variations in health care and so establish more efficient hospital practice.

We have established a nationwide directory of the specialist surgical units and their Lead Consultants with expertise in acetabular fracture surgery throughout the UK. Our directory has facilitated an estimation of the total numbers of operative acetabular fracture cases managed annually in the UK, as reported by those actually providing this specialist service. Previously the total number of acetabular injuries admitted and operated on in the UK was not known and there was no directory of acetabular surgeons in the UK. The introduction and accuracy of the OPCS codings will have massive financial implications for the DoH at a local and national level in the planning and provision of adequate health care resources. We have performed a questionnaire study to validate the DoH data for acetabular fracture surgery. Data was compiled using the ICD-10 for diagnosis of fracture of the acetabulum, and the OPCS-4 codes for the surgical procedures used for fracture fixation for the year 2003-2004. The Department of Health (DoH) data identified 44 units that had OPCS-4 coding for acetabular fracture fixation. We had a 95% (42 out of 44 units) response to our questionnaire. A total of 9 units contacted had actually performed no surgery, whereas the DoH coded these as having performed a maximum of 35 cases. The DoH data showed a total of 1825 admissions to 311 NHS hospitals for acetabular fractures, including 258 operative cases performed in 44 NHS hospitals in the UK. Our study has found that 748 acetabular fracture fixation cases were performed at 33 NHS hospitals in the UK in this study period. The total difference between the DoH operated cases and those confirmed by our study was 490. The hospital care for an operative acetabular fracture case may cost approximately 14,830, pounds if the actual numbers are under-reported to or by the DoH are 490, then approximately 7,266,700 pounds has been lost by these centres due to incorrect proportioning of resources.

This paper provides evidence of the growing similarity in capacity of for-profit and nonprofit hospitals. In 1960, nonprofit hospitals maintained on average more than three times as many beds per hospital as their for-profit counterparts; following a monotonic decline in relative size, by 2000, the average nonprofit hospital was only 32% larger than the typical for-profit hospital. Hospital level data for the United States indicate that the convergence was driven primarily by industry-wide effects such as entry, exit and ownership switches, rather than expansions or downsizing of existing hospitals. These findings suggest that hospitals may in fact strategically choose their ownership type (nonprofit vs. for-profit status) and hence, their regulatory environment. Accordingly, I develop a model in which firms have identical objectives but differ in their ability to benefit from a given ownership form. In contrast to the existing literature, this approach relies neither on different ownership type-specific objectives nor on market failure to generate an equilibrium in which both ownership types are chosen by a strictly positive fraction of hospitals. Changes in the economic environment alter firms' incentives to maintain a given ownership type. This in turn induces firms to modify their capacity and encourages some firms to switch their ownership type. Crowding-out of government hospitals, population growth and increasing involvement of the government in the healthcare market may account for the convergence in size. Policymakers and legislators often exert pressure on nonprofit hospitals by tying tax-exemptions to hospital-level measures of community benefits such as free care for the indigent. I argue that by omitting industry-wide effects of a hospital's tax-exempt status on price and industry output, such pressure may both lead to convergence in size and be welfare decreasing. Analysis at the state and Metropolitan Statistical Area (MSA) level as well as at the hospital level corroborate the principal theoretical predictions.

Emergency department (ED) practices are traditionally profiled in terms of their patient encounters. Such evaluations reflect a preponderance of outpatient visits while crediting income from admitted patients to traditional hospital-based services. This study evaluates the contribution of ED admissions to inpatient hospital revenue. The study was set at an urban tertiary care community hospital with university affiliation. Information referable to ED patients was collected from the hospital's Universal Billing Code (UB-92)-based patient information warehouse. Data fields referable to hospital charges, insurance type, and disposition were used for analysis of a 1-year period from September 1, 1998 to August 31, 1999. Statistical analysis was through chi square and ANOVA. During the study period 33,174 patients were treated in the ED with 6,671 (20%) admitted to inpatient services. Total hospital charges for all ED patients during this time were $107 million dollars with $9.1 million (8.5%) generated from discharged patients and $98.0 million (91.5%) from admitted ED patients (P.001). Mean charges for individual discharged patients were $344.10 whereas for individual admitted patients mean charges were $14,692.28. (P.001) Medicaid and self pay represented 55.4% of the insurance coverage for discharged ED patients whereas these same insurance classes accounted for only 16.3% of admitted patients. (P.001) Medicare visits accounted for 12.7% of discharged ED patients but 60.7% of admitted patients (P.001). Total hospital gross revenue for inpatient services for the study period was $288 million of which 34% was contributed from admitted ED patients. ED services represent a major source of inpatient hospital revenue. The recognition of the ED's potential in this area may be lost if income from patients admitted through the ED is credited to traditional hospital-based services.

Cost-shifting is seen as a three-way phenomenon involving hospital interests as well as those of government and private patients. Without economies of scale, private patients are indifferent to government policies unless underpayment leads to hospital bankruptcy. In the presence of economies of scale, private patients benefit from reductions in government payment under either cost reimbursement or prospective payment. Their interest in a shift to prospective payment depends upon the hospital's location on its cost curve. Hospitals benefit from increases in payment rates in all cases, but benefit from a shift to prospective payment only if operating in a region of declining average costs. The conventional view of cost-shifting is inconsistent with profit maximization and may be inappropriate for many voluntary hospitals as well.

The purpose of the paper is to analyze the set of rules and mechanisms that control the financing of Belgian hospitals. It emphasizes their effects on economic incentives for hospital managers and physicians. For this purpose, it is first necessary to understand how the social security system and the health care sector are organized in Belgium. The paper first describes their main features. The paper then gives an historical overview of recent developments in the financing of Belgian hospitals. It emphasizes the double source of hospital revenues, i.e., patient per-diam prices and medical practice fees, although its main concern is with the evolution of the rate-setting process for the per-diem prices. Since the 1981 decision to freeze the per-diem prices and patient-day quotas for individual hospitals, proposals for changes in the financing system have been under study. Implementation of some of these changes began in 1986. The major modification involved is to correct historical per-diem prices by means of interhospital cost comparisons. The paper ends with a critical appraisal of these latest developments. It focuses on the advantages and shortcomings of the pre-1986 system and of the recent changes. The accent is put on the economic incentives and their effects on the behavior of hospitals.

This article reports on a study to ascertain the strategic and tactical responses of policy decision-makers in six Ontario hospitals to moderate levels of 'underfunding' by the provincial government over a 5 year period. The study provides a preliminary test of several theoretical ideas in the current literature on organizational decline. Findings support the hypothesized importance of the decision-makers' subjective interpretation of the causes for cutbacks, and the common initial tendency to 'blame inward' and cut costs through efficiency measures. It also illustrates how prolonged underfunding can bring about a shift in response from one based on techno-economic rationality to political bargaining.