Health Care Finance: Cost Escalation | Free Essay Example

Health Care Finance: Cost Escalation

Words: 597
Topic: Health & Medicine
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Introduction

Nowadays, many people are not insured, and the number of these people is constantly growing. In the same manner, the costs of health care are growing rapidly. One of the main reasons for this occurrence is the employment of medical technology, the costs for which are escalating annually. It should be noted that the escalating costs of health care are worrying, and the financial administrators of the health care institutions should take measures. For that matter, it is crucial to consider the ways the use of medical technology and different variables can be managed in an effective way.

Analysis

The medical technology should be considered the main cost driver in the majority of the health care institutions. The technologies play an important role and are an integral part of the health care delivery (J. Baker and R. Baker 451). With the introduction of the new technics and the increased use of the old ones, it becomes evident that the yearly cost increases are inevitable. It should be mentioned that the entire health care system is oriented at the application of the technology while the specialists are trained to utilize it, it is necessary to deliver specific care, and the industry earns huge amounts of money selling it. Subsequently, due to the impossibility of reducing the technology application, it is important to control the effective usage of it.

Despite the fact that innovations have always been fundamental to health care (for instance, the technological advance enabled designing vaccines and antibiotics or conducting complex surgeries), all institutions should introduce strategies that allow reducing costs in the future (J. Baker and R. Baker 178).

One of the strategies that the health care administrators can utilize is to reduce superfluous testing and diagnostics (Amelung 208). By eliminating the inefficient or unnecessary use of the lab testing, the hospitals will be able to cut down the care costs. For instance, when the patient may be therapeutically checked, the organization should not send the person to have a CT scan. It does not imply that the technologies should be used only in very complex cases; however, many hospitals tend to overuse them, and the patients now expect a full examination rather than a simple check by their therapist that can fully respond to the patient’s needs.

Last year, the most significant cost within the hospital I work for was the insufficient utilization of equipment, pharmaceuticals, and other variables, which has caused an increase in supply costs for the institution, and it was decided to apply the strategy of better clinical utilization. It is believed that the correct employment will reduce costs and subsequently affect the variation in suppliers and vendors of high-cost equipment and other supplies.

As per the financial statement, the physicians did not base their choice of supplies on the expediency but rather on their personal preference (for instance, preferred vendor) (Amelung 85). It led to a situation when the same supplies were purchased for the higher prices. By reducing the high-cost procedural stockpiles without losing the quality of care provision, the hospital can reduce up to 10 percent of the costs. It can be achieved through cooperating with the suppliers with the variant stock-keeping units.

In addition, the approach implies informing the physicians about the cost-saving strategy of the hospital. Further, the standardized purchasing is to provoke the volume discounts. Needless to say that the cooperation with other health care organizations would be beneficial. Thus, by eliminating inefficient clinical usage of the supplies, the hospital will improve its financial situation and make the necessary cuts on the supply costs.

Works Cited

Amelung, Eric. Healthcare Management, New York: Springer Science & Business Media, 2013. Print.

Baker, Judith J, and RW. Baker. Health Care Finance: Basic Tools for Nonfinancial Managers, Burlington: Jones & Bartlett Learning, 2013. Print.