Pricing commodity outpatient procedures assessing the impact.

Hospitals should carefully consider all relevant factors before choosing to lower prices and payments for certain outpatient commodity services in an effort to remain competitive in their market. Key steps to take in the evaluation process include: Determining current profitability. Assessing profitability by payer class.

Time to replace adjusted discharges.

With inpatient revenue averaging less than 50 percent of total operating revenue for hospitals and bundled payments becoming the norm, Equivalent Discharges is a simple, alternative metric that offers superior predictive power of hospital volume. Equivalent Discharges are not subject to the same measurement flaws as adjusted discharges or adjusted patient days. The new metric also explains cost variation in situations where there is a more complex case mix.

Equity versus adequacy of managed care contracts.

Healthcare finance leaders can use a methodology and metrics to compare managed care payments against those of their local and regional peers. Depending on payment levels, they should adopt one of the following negotiation stances with payers: If payment levels are both equitable and adequate, they should view a continuation of the present structure as desirable. If payment levels are adequate but not equitable (e.

A better way to measure volume--and benchmark costs.

Equivalent patient units is a more reliable measure of a hospital's patient volume than adjusted discharges or adjusted patient days because it better accounts for both inpatient and outpatient volumes. Three elements are required to calculate equivalent patient units: equivalent discharges, equivalent visits, and the payment ratio. All of these elements are available through publicly available data, making it possible for hospitals to immediately adopt this new metric and, thereby, better understand their potential for savings.

Is there a cost associated with higher quality?

An analysis of the relationship between quality and cost using a sample of 3081 Medicare-reimbursed acute care hospitals found that cost appears to increase somewhat with quality improvement. However, an analysis that focused on the top 10 Medicare severity-adjusted DRGs (MS-DRGs) in terms of volume, based on national statistics, found that improving quality can help to reduce costs. An examination of mortality associated with a single MS-DRG found that cost increases steadily as mortality rates increase, supporting a conclusion that poor outcomes lead to greater expenditures.