Cost Concepts in Health Care

Cost Concepts in Health Care Order Description a) What are applications in your work setting where algebra can be used in solving for unknown values? b) To quote from the Tregoe and Spitzer article, "Management fads come and go, initiatives change, market and economic pressures rise and fall, but cost management must be a way of life". Of the suggestions offered by the author(s), which concepts give you the greatest insight into managing organizational costs in the organization where you work (or one in which you are familiar)? Where can they be applied within that organization? Be sure to identify which article or author you are referencing and keep your answer to about a paragraph or two. SAMPLE ANSWER (DO NOT COPY) a) What are applications in your work setting where algebra can be used in solving for unknown values? At my hospital we have a Value Analysis committee that reviews new product requests for the OR. I believe we could use algebra to solve for the cost threshold of what we are willing to pay for a new product or system knowing the probable reimbursement associated with the product or system and the preferred rate of return. We can also use algebra to solve for the financial impact of converting from a single product to multiple products with differing expected usage. b) To quote from the Tregoe and Spitzer article, "Management fads come and go, initiatives change, market and economic pressures rise and fall, but cost management must be a way of life". Of the suggestions offered by the author(s), which concepts give you the greatest insight into managing organizational costs in the organization where you work (or one in which you are familiar)? Where can they be applied within that organization? Be sure to identify which article or author you are referencing and keep your answer to about a paragraph or two. In the article “7 Pitfalls and 7 Principles of Effective Cost Management,” the authors Benjamin Tregoe and T. Quinn Spitzer argue that cost cutting is not the same as cost management. Effective cost management involves knowing the true cost of doing business. In the hospital setting, specifically in the OR it is very useful to know the true cost of doing a procedure. The true cost of a procedure should include not just the disposable supplies and implants, but the cost of using the equipment, surgical instrumentation, Anesthesia and OR time, etc. I think that often the hospital where I work does engage in temporary cost cutting measures rather than taking the time to understand the true cost of operations and managing that cost proactively with an eye towards controlling costs long-term. We are always trying to save money on supplies in the OR and sometimes how we go about it doesn’t make much sense. For instance, we converted to a different brand of endo bags this year that are less expensive, but after we implemented it we found that in certain procedures we now have to use 2 endo bags instead of just one. This kind of thing happens a lot. I think part of it is that we don’t always have all the input we need. Surgeons don’t always pay attention when we ask them to trial something new with the intention of replacing something else. They somehow think that we are going to keep both the new and old product or they just don’t give it much thought until later when we have already signed the contract and made the switch – then it becomes a problem that we eliminated the other product that was being used. I also agree with the authors Tregoe and Spitzer that it is important to include the people that are actively involved in operations when making decisions about cost-saving initiatives and even with understanding the true cost of operations. Often the people higher up the chain are too far removed to capture all of the costs involved and when it comes to making improvements to achieve cost savings and efficiency the people with a direct role need to contribute to the strategy and provide their input. Spitzer, T. and Tregoe, B. (1992). 7 Pitfalls and 7 Principles of effective cost management. Exceutive Excellence: 9, 8: p. 17-18.