Prospective-pricing strategies for hospital and departmental effectiveness: the physician's response.
Physician-practice patterns are discussed, and programs of decentralization designed to reduce ancillary use are described. The New England Medical Center (NEMC) conducted a study with two other major hospitals in Boston comparing physician-practice patterns for patients who had had carotid endarterectomies. The indications for surgery for these patients did not appear to be different among the hospitals; however, average charges and length of stay varied considerably. Operating-room time and postoperative management also varied substantially. Strategies to change physician-practice patterns must address the issues of incentives to physicians and hospitals. At NEMC, a program of decentralization is being implemented that involves physician participation in budgeting hospital resources. A program of product pricing has been developed, whereby the NEMC offers an HMO a fixed price for certain kinds of cases upon admission. A daily use report was started to report resource use for specific cases compared with annual medians for that type of case. Case types from many different surgical specialties are involved. The reports show physicians the difference between the actual and expected costs in terms of variances. The NEMC has reoriented its budgeting process to include clinical divisions. Clinical services are planning to budget the use of intermediate products across different cost centers. The clinical budgeting program makes the planning process more objective, lowers the use of ancillary services, and reduces costs.
D000720:Ancillary Services, Hospital / Q000706:statistics & numerical data; D001900:Boston; D002017:Budgets; D005376:Financial Management; D005377:Financial Management, Hospital; D006745:Hospital Bed Capacity, 300 to 499; D006801:Humans; D008505:Medical Staff, Hospital / Q000191:economics*; D010607:Pharmacy Service, Hospital / Q000191:economics*; D010819:Physician's Role; D011364:Professional Practice; D011445:Prospective Payment System / Q000458:organization & administration*; D012051:Reimbursement Mechanisms / Q000458:organization & administration*