Can coordination of health care save 30 % of costs ?

Posted on May 27, 2012 by aviyer2010

An article in the New York Times (May 23, 2012) describes an effort by UCLA’s Health System to save 30% of costs by coordinating the hospital, patient, doctors and health insurers. These reductions will come from decreasing the number of X-rays per patient per day from 10 down to two, discouraging unnecessary blood transfusions (given the $ 400 cost per unit of blood), eliminating fried foods and encouraging wellness etc. Given the current $ 2.7 trillion cost of health care, can coordination of efforts and encouraging “accountable care organizations” enable realization of expected savings ? Will patient followup and after care responsibility have to be assumed by the accountable hospital to ensure compliance to medicine ? How will the system be incented to deliver on these expected savings ?

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44 Responses to Can coordination of health care save 30 % of costs ?

Amit Agarwal says:

August 27, 2018 at 5:29 pm

With the advancement in the technology, several things can be done like implementing block chain and Analytics. Bock chain will reduce the efforts made by Patients and hospitals to maintain the medical history. The other benefit of this will be traceable medical history of any patient (if he permits) and making it available to the doctor on the go. A lot of money is spent on tests when a patient is shifted from one doctor to another, this cost can be saved as every detailed info will be digitally stored with accuracy. Similarly, with analytics, algorithms can be developed which will consider medical history along with the current vitals (captured through e-devices like fit bands) of an individual and provide information about the preventive measures which need to be taken care of and enable the patient to make decision to consult a doctor. A similar message will be passed to the hospital/insurer to bring better coordination about the prospective patient and the management can work on scheduling tasks with better planning. The treatment costs incurred when any disease is in initial stage is much lower as compared to the cost incurred in later stage. I think if the block chain and data analytics are implemented in the medical field, a lot of saving will be made by the insurer and patient. But what about the Hospitals & doctors who get paid based on the revenue generated.? The answer to this is working on sharing incentives. The equipment manufacturer, hospitals, doctors, insurers and patients all are entities of the value chain. If less money is spent on materials used in medical procedure, the savings can be distributed as an incentive to the individual entities on an agreed upon basis. Also the inventory of medical supplies will come down and result in more capital flow.
Eliminating fried foods from hospital cafeterias and encouraging wellness is not something which needs to be looked for bringing down cost but as a move to promote a healthy eating pattern which in long term will give returns to the patient/ visitor through better health and less medical expenses.

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- Bhartula Peeyush Sharma says:
  
  August 28, 2018 at 10:03 pm
  
  Amit, I think you made two greats point on Blockchain and how this advancement can have another application in this case and also on the fact that promoting a healthy eating habit in and out of the hospital cafeteria needs to be done to improve the benefits. Not only would the coordination improve using this method, but also the overall transparency and accountability would improve which are extremely important. However, this is still something that is in the R&D phase and we still do not fully understand the full potential of Blockchain. Hence, it will certainly take time and resources to see how the benefits pan out.
  
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Yun (Winnie) Lo says:

August 27, 2018 at 7:39 pm

From my point of view, I do not think that the care responsibility will be assumed by the accountable hospital to ensure compliance to medicine. The efficiency can be enhanced with coordination, which is to bring together the different elements. That is, with proper coordination, such as setting goals and negotiation, it is possible that the total costs can be saved without the other party bearing additional liabilities. Additionally, by reaching agreement, the system will be incented to deliver on these expected savings because of the increase of expected supply chain profits.

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Bhartula Peeyush Sharma says:

August 27, 2018 at 8:17 pm

First of all, before talking about coordination, I would like to point out the basic issue with the fact that paying for more doesn’t always get you more. By this, I mean that for the services with fees, most of provider payment is actually based on how much care is provided rather than if the care is actually needed by the patient, or the effectiveness of the treatment. Hence, there is no pressure for the providers to limit themselves from continuing to prescribe services, even if they are unnecessary. From the patient’s perspective, because they are covered by their health insurance, they would welcome any service that providers say might benefit them.

Next, I feel coordinated care is definitely something that is vital and has a huge potential to grow and improve. Given that the group of people with complex medical problems have to face more difficulties such as moving in and out of hospital, moving to home care, with poor communication between providers, sometimes patients undergo same lab tests, receive wrong medication, etc. These type of issues is what results in higher costs and poor care for such patients. Coordination could also include electronic methods that could enable providers to see patient’s history and be aligned with exactly what needs to be done which can prevent the issues I mentioned above. Apart from this, better coordination could also reduce readmissions, which could certainly lead to a lot more savings. Regarding food, safety and after care services, sure, not serving fried chicken in the cafeteria is one way, but it does not guarantee what will happen once the patient checks out. However, if clear instructions are given on how to care for themselves at home, as well as help in scheduling and keeping follow-up appointments, sticking to a prescribed medication plan, and making necessary lifestyle changes, the process would work better.

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- Mark Messick says:
  
  August 29, 2018 at 8:18 pm
  
  Peeyush,
  
  I think you bring up an important point of how payments are made based on services provided and not services needed. I think an important component to be considered in the need to control frivolous lawsuits. Many times these lawsuits push medical personnel to “play it safe” and order extra testing or extend hospital sales. Do you think that perhaps this culture could be to blame? Have we become less willing to except any medical outcome other than perfect health?
  
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Adam M Hook says:

August 29, 2018 at 10:05 am

Health care costs is something that will always be a hot topic, as they only ever seem to go up. Coordination between all parties is a strategy that has the potential to lead to a significant amount of cost savings for everyone involved as there is currently little coordination in the industry. As technology improves, it is essential for the healthcare industry to implement methodologies to not only simplify the service of healthcare, but also utilizing it to implement cost reduction strategies. This can come through enhanced information sharing, coordination in the supply chain, or improved patient care. The major issue to watch is that even though healthcare facilities and insurers will see potential reductions in cost, will these savings be passed along to the consumer in the form of reduced prices for care and insurance costs?

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- Mark Messick says:
  
  August 29, 2018 at 8:23 pm
  
  Adam,
  
  If savings are passed along to consumers, do you think they will be more likely to seek medical care more frequently? This has the potential to create more demand and reduce the availability of care, driving up the cost or if cost is limited by regulation the wait time for health care. What are your thoughts? Will cheaper health care promote customers to more frequently seek medical services?
  
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  - Adam McKinney says:
    
    August 31, 2018 at 12:54 pm
    
    Mark,
    
    I think the suggestion that Adam makes won’t necessarily lead to increased use of the health care system. It is still going to cost patients and insurers to utilize health care resources. I would agree with you if the entire system was made free to use for patients because then (outside of time spent waiting) there is no opportunity cost to be lost. I could see situations in which people may seek medical care when they otherwise wouldn’t because of reduced cost; however, I think these situations would be offset by the reduction in people utilizing high demand/high cost resources as is often the case today (i.e. people without insurance utilizing the emergency room for a common sore throat). But that’s just my 2 cents.
    
    Adam McKinney
  - Yash Kothari says:
    
    September 3, 2018 at 8:20 pm
    
    Mark,
    
    I agree with your opinion. In India as well, there is only one hospital for every 2,046 people. If we can reduce the cost of the healthcare system using coordination, we can take the system to rural areas as well, and this can benefit those who cannot afford the medical care now. Further, this is a tremendous opportunity to obtain economies of scale considering the population of India, and this will further reduce the overall costs of medical care. Also, I would like to add one more point. In the article, it states that the number of X-rays can be reduced from 10 to 2. This reduction will reduce the required number of machines and will reduce the capital needed and thus will again reduce the cost of medical care. Incentives like regular medical check-ups can help in driving the growth of this system.
Xin Liu says:

August 29, 2018 at 6:02 pm

In my opinion, the current cost can be reduced if the hospital, patient, doctors and health insurers can reach an agreement. Many years ago in China, the doctor ‘s bonus is related to the medicine they sell, which means that some pharmaceutical companies will give doctors a certain percentage of money when they sell this drug. Thus, most doctor will choose to recommend the medicine with higher price and extract a certain percentage of profit. In fact, this expensive medicine has the same effect with the regular one and insurance cannot always cover this cost. In order to control this kind of behavior, government put up some policy to restrict it and enhance the connection of hospital, patient, doctors and health insurers. It is easy to anticipate that policy dramatically reduce the cost of health care.
When all institutions form a strategic unification, they can share information, jointly develop policies, and guide patients to save medical expenses through healthy lifestyles and reasonable preventive measures. Insurance companies can prompt patients to have regular medical examinations because many diseases are easily to be cured in the early stages and medical expenses will be relatively small. Thus, the saved medical costs can be used to motivate the medical supply chain to develop in the long term.

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Mark Messick says:

August 29, 2018 at 8:31 pm

I think more issues are at hand that make this coordination more difficult. I agree that information sharing and coordinated care can prevent wasted time on re-learning patents or additional unnecessary tests. I don’t think that the insurance, hospital, and patient have created an environment that makes a doctor want to save costs. Mainly this is malpractice. Until doctors are more protected from frivolous lawsuits when correct procedures were followed, doctors will “play it safe”. The other point I have is that if cost reduces, demand for health care services may increase. This demand increase may result in higher prices or longer wait times.

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Chushi Yang says:

August 29, 2018 at 9:27 pm

Saving 30% of costs by coordination of health care is not as easy as imagined and I think the key is to coordinate the relations and distribute profits between different participants of health care. In this situation, hospitals and patients have motivation to increase the health care costs. To hospitals, more health care fees mean more profits. Therefore, hospitals may demand doctors to let patients do more physical examination to improve profits. If “accountable care organizations” are built and achieve patients’ trust, patients will not do health care in ordinary hospitals. As a result, the problem that hospitals have motivation to increase medical fees is alleviated.

On the other hand, considering patients, because some insurances can cover most of the medical cost, patients don’t have motivation to reduce physical examination. What’s more, it’s common that patients are willing to go to familiar hospitals instead of new-built care organizations. Thus, it may be difficult to incent patients to go to “accountable care organizations”. Solving the problem above may help to save health care costs. Changing the insurances coverage, such as enlarging the insurance coverage of medical costs in care organizations, may be proper solution. Moreover, establishing patients’ trust in care organizations is essential as well.

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Sai Krishna Jayakumar says:

August 29, 2018 at 11:55 pm

While the measures mentioned in the article may help bring down costs, I believe a lot of improvements are needed at the operational level – encompassing sourcing, scheduling, treatment and the healthcare delivery model.

I’d like to throw light on 2 large hospital chains in India – Narayana Hrudayalaya (NH) and Aravind Eye Care. These 2 chains are renowned for developing systems that bring world-class, affordable healthcare to the masses. In fact, NH operates a hospital in the Cayman Islands, where it provides heart surgeries at less than half of what it costs in the US and the quality is on par with or even exceeds that in US hospitals.

Both these chains implement the best practices in sourcing, inventory management and in all other day-to-day operations, use state-of-the-art equipment and hire only the best doctors. Essentially these hospitals have brought the speed, efficiency, quality and high throughput of the manufacturing assembly line to the healthcare delivery system and they’ve demonstrated that this model is successful and sustainable. Their implementation of best practices in day-to-day operations is a classic example of Wickham Skinner’s ‘Focused Factory’. Therefore, in my opinion, hospitals in the US should focus on introducing, improving and maintaining operational excellence, as a result of which costs should come down.

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- Jimlee Borboruah says:
  
  August 30, 2018 at 11:29 am
  
  I agree to the point highlighted by Sai that in addition to the above measures, operational efficiencies would further reduce costs. The hospitals mentioned are true reflections of this. However, one very important aspect to consider is the cancer industry where lot of discussion is happening on the incentives received by doctors on referring patients for chemotherapy. The cancer rate has surged in the last decade and so is the total costs incurred in the treatments. A lot needs to be explored and analysed on how coordination and operational efficiencies can be implemented in this field.
  
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  - Seerat Anjay says:
    
    September 3, 2018 at 9:48 am
    
    There are some really good examples mentioned by Sai here. These hospitals have successfully controlled costs. The hospitals industry is relatively new and, as mentioned by Jimlee, it needs to be explored more. One has to check whether is there any risk associated with the measures taken. Coordination and post-visit follow up are definitely one to start with, which I think is going to help by better utilization of resources and reducing visit to hospitals. The crux is to take the possible initiatives, by considering the risk, but should not be limited to other only certain aspects
Puneet Pandey says:

August 30, 2018 at 1:28 am

Yes, the savings can be realized. However it will take a very systematic coordination between the patients, hospitals, insurers, food retailers, NGO’s and of course, the government.
— Hospitals should maintain a real time data of the patient’s health and history to avoid unwanted tests and procedures. Having more hospitals and doctors would also bring the overall cost down.
— Government, NGO’s and food retailers should come together to encourage healthier eating habits. Further, the regulatory environment should not only incentivise healthy food retailers but also tax the non healthy food retailers.
— Insurance companies can have access to health history of the patients in tie up with the hospitals so that they can adjust their premiums according to the patient’s lifestyle. Once patients know about it, it will push them to adopt a better lifestyle.
— Lastly the savings resulting from these steps should go back to reduce price of healthy foods, bring more people under insurance and improve medical technology and reduce medical cost.

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Carlos Mario Pelaez says:

August 30, 2018 at 9:23 am

If we step out of the subject of healthcare for a second, coordination can bring savings to almost anything. If we get the bigger picture of what is going on here is just a coordination of the supply chain in the healthcare business. There is a lot to improve in healthcare and we can observe it by just going into an emergency room and wait till something happens.
This initiative could bring cost savings but in the other hand can bring some issues in the doctor-patient relationship. Skipping a step when talking about health could bring serious problems so this project should be really careful in analyzing which steps are they going to implement.
A better communication and coordination between the Hospital, doctor, insurer, and patient could always speed up the process and make it more efficient, and by efficient I mean bring savings to patients and at the same time to the hospitals. To conclude this, information sharing could prevent a lot of issues that might increase cost.

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Asmita Parashar says:

August 30, 2018 at 9:34 am

Healthcare costs have been a pain point for a while now and while it is has been talked about, little has been done about it. Why? Because it is complicated. Drug manufacturing companies, for the most part, dictate the price of medicine in the market. Clinics, hospitals have higher overheads today than ever before. High competition is leading hospitals to invest in the latest technologies and what is the combined effect – the patient gets a huge bill, health insurers get creative with their models (the creativity may or may not be patient-focused).
The key is to deliver medicine as a need and not as a want. There should be a need to protect the patient and not the pharmaceutical companies. Coordination will happen as soon as competition is put to an end. And let’s face it – people will always fall sick and need medication. There will always be a need for healthcare. Why should healthcare be expensive when the demand will always be there? Though regulated, healthcare needs regulation on the number of players in the market – be it companies, hospitals, clinics.
Healthcare is such a sensitive topic and no conversation about healthcare doesn’t have a mention of how expensive it is. The sector should be made as transparent as possible. The transparency will benefit the patient as it will allow them to see what they are paying for and why. This will impact the entire healthcare chain as it will involve every stakeholder. Though this will be against the “need” of pharmaceutical companies and health care in general, hospitals should be incentivized for decreased patient revisits. Let’s be responsible.

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Nachiket Joshi says:

August 30, 2018 at 11:23 am

I believe that the coordination is possible only if all the involved parties are profiting out of it. The question is how this coordination plan will incentivize the hospitals, pharmaceutical companies and healthcare material suppliers will gain value out of this proposition. Because reduction in the healthcare costs is directly going to affect the profits of these components in the system. However, the insurance companies are going to be the biggest beneficiaries of these improvements in the healthcare system. Thus, if the insurance companies agree to pass on the benefits upstream in the supply chain then there is a definite potential for this coordinated system to work.
Encouraging wellness is obviously a good idea as it will help the hospitals to differentiate themselves from the competitors and open up new business opportunities for them.

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- Swathi veeradhi says:
  
  September 5, 2018 at 10:45 pm
  
  Nachiket,
  I agree with your point about the plan materializing only if all parties see an incentive. But the way I see it, this coordination will lead to patients recovering more easily and requiring fewer trips the hospitals post treatment. I am not sure if the insurance companies are going to be happy about it. The patients will benefit from improved health and hospitals will profit from a better reputation but the coordination will lead to insurance companies demanding other ways to make money. There are always ways to ensure harmony and insurance companies can come up with innovative schemes to make sure this does not hurt them. Only then will the coordination work in everybody’s favor.
  
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Chiao-Ya Lin says:

August 30, 2018 at 12:58 pm

In my opinion, yes, coordination of efforts and accountable care organizations can enable the realization fo expected savings. Patients easily fail to schedule follow-up visits with their doctor and not getting clear instructions about their care after they left the hospital. Through collaboration, patients reduce times readmitting to the hospital. The accountable hospital assumes patents that their follow-up treatment is aligned. By grouping the hospital and patients, the economic scale can be achieved. Information and medical resource are shared. More hospitals carry the after-care responsibility for patients to reduces the chance patents readmit.

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sai sravan akasam says:

August 30, 2018 at 1:13 pm

Coordination between hospital, patient, doctors and health insurers will have significant reduction on health care costs. In order to make the hospitals and health insurers take the initiative, they should receive incentives that should be able to cover up their losses. Insurers can encourage people by giving away one free annual check up. By doing so, people can take preventive actions. Hospitals can reduce their supply chain costs by following good practices and providing services not more than what a patient needs. In FY 2018, the Medicare program cost $583 billion, about 14 percent of total federal government spending. Those incentives should come from federal government as a way to appreciate the efforts made by hospitals and insurers.

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- Puneeth Shetty says:
  
  September 5, 2018 at 9:57 pm
  
  Sai,
  Your suggestions regarding ways to incentivise stakeholders within the health industry sound reasonable, although hard to implement. Any information regarding similar agreements between all parties involved in comparable industry would be great to backup your statement. Have you seen such agreements being made in other industries and is there any data that we could use to backup these recommendations?
  
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Derek Curtis says:

August 30, 2018 at 7:08 pm

Coordination of efforts within health care could help increase savings to some degree, as I believe that information sharing is currently very poor between doctors, patients, health insurers, etc. based on my experiences as a patient. However, one of the results of this coordination, which is to decrease the number of physical examinations, might not be well-received by patients. I believe that are plenty of patients who would actually prefer to have as many examinations as possible for self-assurance in relation to their physical state.
Patient follow-up and after-care responsibility will need to be assumed by the accountable hospital. As part of this relationship, treating the patients in the best manner possible still needs to the number one priority, not cost savings in the form of decreased patient readmittances.
One way that the system can be incented would be based on the number of patient visits. If patients do not have to readmit themselves for the same issue, then hospitals would be incented.

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- Siddhanth Rajagopalan says:
  
  October 1, 2018 at 4:58 pm
  
  Hi Derek. I agree with your point on the hospitals incentive based on the number of patient visits but i dont think that most of the patients wish to go through plenty of examinations. In light of that matter, as a patient, it would be most beneficial to have a reduced insurance premium with lower but effective physical examinations. This would not only benefit the insurance company as they get to be billed lesser but also increase the likeliness of patient remedy. Patient follow-up and after-care responsibility will have to be assumed by the accountable hospital but the risk they take can be shared with the insurance companies as well.
  
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chenxi wang says:

August 30, 2018 at 9:25 pm

I do think the coordination among hospital, patient, doctor and health insurer is a good strategy. By sharing information, it saves a lot of time for hospitals relearning the patient’s medicine history and increases the efficiency of whole supply chain. However, I do not think the health care would save 30% of costs if the hospital takes the responsibility for following up patients and ensuring compliance to medicine. The question is who will do this job? If it is assigned to current workers, they are gonna request for increasing their income. If the hospital hire someone outside the company, does the hospital need to train the new worker? Also, how will the hospital deisign the after care process. All these questions need money to figure out.

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yingrui wang says:

August 30, 2018 at 11:19 pm

the coordination can be implemented to improve the efficiency.Because coordination can enhance the information sharing, patient allocation and etc. However, It is difficult to deduct the cost saving will be off 30 percent due to lack of information. Furthurmore, when the coordination is implemented, there might be more people added to be reponsible for the coordination. The cost at first would increase after coordination has been implementation, and if its a success, the investment would be returned in the future.

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Nikeeta Brijwasi says:

August 31, 2018 at 12:58 am

Instead of reducing the number of tests for all patients, the doctors and insurers can work in coordination to categorize a patient’s illness and allow the patients only some particular type and number of tests. This will address the issue of financially restricting the patients in need when the maximum number of tests are lowered for patients generally. Doctors can be incentivized over the rate and quality of patient care instead of granting them a share of the suggested tests.
As suggested by many, having a centralized record for patients can reduce the costs of re-tests. With the help of free annual health checkups and using the data from activity tracking devices to see any irregularity in a patient’s health, the costs can be further brought down by early analysis.
Once a patient is treated and/or discharged from the hospital, mobile apps can help the hospitals track patients activity and medicine intake schedule. This can lower the number of readmits and in turn lower the total health costs.

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Ying Yang says:

August 31, 2018 at 2:38 pm

I would say that this coordination will definitely will with the cost saving. According to coordinate the hospital, patient, doctors and health insurers, UCLA’s Health System can make best use of different resources and therefore the operation efficiency of hospital can be improved. In this way, the benefit resulting from the coordination shows through the cost and waste decreasing. As for the patient follow up and after care responsibility, the hospital should take the compliance to medicine into account to make sure that the basic ethic issue and care for the patients are under control. The saving should be conveyed to the public by claiming that the hospital will allocate more resource to the public health and technology development.

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Zibo Meng says:

September 1, 2018 at 12:25 pm

First of all, I think this problem needs to start with reducing the cost of the hospital. For example, control the management costs of the hospital，strictly control the purchase price of drugs etc.The rise in medical costs will not only increase the financial burden of the affected population, but will also be passed on to everyone. If a country wants to spend more money on medical treatment, it means withdrawing more money from other places.
Second is the trust of doctors, patients, and insurance. The medical market is a market with asymmetric information. Doctors have more information and enjoy the advantage of the transaction. If the three parties play against each other in order to distrust each other’s interests, doctors and patients have the motivation to push up the medical expenses, which means that there will be waste.

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NAICONG NING says:

September 1, 2018 at 3:59 pm

It brings my mind about my experience in hospital. Especially for high-standard hospital, different pre test seems to unavoidable procedure such as blood transfusions and X-rays. It is clear for doctors to observe patients’ body status and save time, which means doctors could meet more patients one day. However, it will definitely increase the cost and give pressure to health system, just as there are always pros and cons for a new implement. When talk about fried foods and wellness, it should be encouraged but hard to reach. Just as smoking has a bad influence to health but still has a big market.
To solve the problem, hospitals could start from a regulated management which means they could centralized for patients and make a harmony atmosphere. Not ocus on the profit but patients for manager to doctors will definitely decrease the unnecessary procedure. Improving the skills of doctors and a good manage of system recording could save everyone’s time. Of course, the encourage could be sustainable messaged to patients by emails. There is a long way for every hospital to go. In conclusion, as an important aspect of people’s life, health cost will be reached in final.

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Jiangxu Chen says:

September 1, 2018 at 8:51 pm

From the perspective of supply and demand, medicines flow from suppliers to hospitals to patients, and funds flow from patients or insurance companies to hospitals to suppliers. This is a relatively stable supply chain, and upstream and downstream have reduced their respective costs, so they can By coordinating the hospital’s procurement and inventory costs, and patients can also achieve cost savings by reducing drug demand, insurance companies naturally. Therefore, if the patient fully communicates with the hospital to understand the details of the condition and fully trusts the doctor’s judgment, such cost reduction can be established. But the premise is that the doctor can accurately determine the condition and effectively treat, and the patient can fully trust the decision made by the hospital. Simply put, it is information symmetry. This puts a test on the skill level of hospital doctors. In order to track medical effects, hospitals need to followup the patients, and this part will also cost much money. Overall, the cost-saving effect needs to be weighed.
Of course, a healthy life can also reduce the needs of patients, but in reality it is not an easy task to completely control your living habits, so the effect may not be very good.

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Charles Nwaokobia says:

September 2, 2018 at 4:42 pm

I believe the need for the 30% reduction on costs is because they are unnecessary, and the value generated from the savings can be tailored towards other value add and revenue generating activities, such as, research and training, maintaining and updating their medical equipment and systems, and increasing the number of hospital beds to accommodate more patients. The co-ordination between the hospital, doctors, patients and health insurers to ensure this cost reduction can be achieved as stated below:

1. The May 2017 editorial in the journal of the American Medical Association by Ian Larkin and George Loewenstein recommends that doctors be paid salaries rather than a fee-for-service or volume-based reimbursement. They argue that these salary payment terms influence doctors to order more and different services than those that match patient needs, to make more money. If they are paid salaries instead, the doctors would be more inclined to order only necessary services, encourage wellness and follow up to ensure compliance to medicine.

2. The health insurers would need to review their policies to encourage fewer doctor visits and use of medical services, while ensuring that the patients get value for the premiums they pay.

3. There would need to be some strong co-ordination between all competing entities or a law backing all these changes so a patient, for instance, who feels the need for more services than may be necessary would not have the option of changing doctors or insurance providers.

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Seerat Anjay says:

September 3, 2018 at 8:45 am

Hospital industry is one industry which can benefit a lot from any form of savings introduced to the system. The economies of scale can definitely save a lot of time and cost by having less doctors to treat more patients i.e. effective utilization of a critical resource. Secondly, the home healthcare is one industry that works on post operative treatment, or providing various medical services to the patient at lower rates, at home. This helps to reduce cost by almost 40-45%, as compared to what is spent in hospital. Also, The hospital beds are free to be used by other patients. So regarding the post hospitalization follow-up, if there is one dedicated team then a lot of readmission and revisit to hospital can be controlled. It will save a lot of money in the course.
Thirdly the healthcare analytics can be used for preventive care by predicting the chances of any illness by analyzing the combination of lifestyle, hereditary, environment etc. a person is living in. This will help to know the type of resources that may be required in future, and can help save a patient save a lot of money, by taking preventive actions in present scenario. It will prevent the heavy cost burden that may come after diagnosis of disease, saving money for payer, provider and patient.
The savings can help the hospital to cater to large number of patients, to pass certain % of reduction in cost to the patient, saving for all the parties at the same time, that is too without compromising on quality

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Sruthy K M says:

September 3, 2018 at 10:14 am

To reduce costs, one must look at the scenario from both the Hospitals’ side and patient perspective. However, these two maybe interlinked as in-the better coordinated various entities of the hospital and patient are, the lesser is the re-admission rate of patients, which in turn leads to lesser post-op procedures, subsequently leading to lower costs for the hospital. However, this is easier said than done. First and foremost, this can start with the customers themselves (i.e the patients). Most patients are ignorant about the procedures and know-how about what to do once they are discharged from the hospital. Hence a patient education program can be set-up wherein the patients are made aware of their ailment, steps to take care of post-discharge from the hospital etc. when to next visit the hospital etc. This is just one of the many steps that ensure proper patient care. From the Hospital perspective, cost savings can be realized in investing in good quality equipment, hiring the right talent and the like. However, all of these come with a high capital investment. A cost-benefit analysis needs to be carried out by hospitals to evaluate if “Coordinated Care” is worth it or not in aligning itself to the strategic long-term goals of the organization, both in providing superior care and value to the patients and substantial cost-savings.

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Devin Ewell says:

September 3, 2018 at 5:10 pm

Not just the hospital, but the pharmacy providing the medication can be a critical part of the healthcare system that can ensure medication adherence. Most pharmacies have medical adherence programs that are coordinated with insurers to improve patient adherence. Additional programs the pharmacies have are new-to-therapy calls that pharmacists make to patients taking a new medication to ask if they have had any issues with the medication or have any further questions. Refill reminders by text and phone are also programs the pharmacies implement to ensure adherence. Pharmacists also provide medication therapy management programs in conjunction with the insurance companies to improve patient healthcare outcomes and lower costs overall. The pharmacies can receive financial incentives from the insurance companies for providing this extra services and it benefits the entire system in the long run, therefore keeping the patients healthy and keeping costs down.

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- Aatira Benn John says:
  
  September 4, 2018 at 11:13 am
  
  Yes. I do think coordinated efforts can reduce health care costs. I’m reminded on a class we had several months back about Virginia Mason Medical Center, where the center saved millions of dollars through planned capital investment, reduced wait time for test reports, reduced inventory through supply chain coordination and reduced premiums for professional liability insurance by 56%.
  The challenge in reducing health care costs, however, lies in the implementation. The various departments in a hospital tend to operate as silos preventing the flow of information between patients, healthcare professionals, and caregivers. For instance, better communication between divisions for transitional care can lower hospital readmissions and unnecessary hospitalizations thereby reducing costs.
  
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Gopi Manthena says:

September 3, 2018 at 6:34 pm

As mentioned by a lot of people above, it is not an easy task to save 30% of costs by co-ordination. However, one way to achieve this is to distribute the profits among all players involved in order to motivate them in this cost-saving plan. Also, maintaining data about patients will go a long way in reducing costs by avoiding unwanted procedures and tests which add no value.

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Neelesh Prakash says:

September 3, 2018 at 8:47 pm

Coordination of efforts within any supply chain or any network is usually very helpful and it makes the information flow smooth throughout the value chain which in turn leads to the profitability of the industry as whole. Saying that implementing the same in Health supply chain would be very complex as some of the players in the whole value chain might be sensitive to it. The patients want best medical care which is available whereas the insurance company wants to payout as less as possible with the doctors playing the role in between both players. So it might not be very easy to implement as no one wants to suffer loss in today’s competitive world.
To incent the system different techniques could be applied to the system like giving patients additional benefits in their insurance if they are ready to consider not going through with some of the trivial procedures which would save the overall cost of the system.

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Mayank Daga says:

September 3, 2018 at 10:37 pm

The whole point of collaboration project and achieving a targeted savings of 30% in healthcare sector is to direct all the members in the supply chain to act according to their ideal behavior that would make this project functional. Even if one element goes out because of some vested interests, then the savings numbers go upside down. Therefore, a lot depends upon the program design and structure to incentivize each member in the chain so that he/she behaves in the appropriate manner.

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- Geetali Pradhan says:
  
  September 4, 2018 at 8:58 am
  
  Mayank, you bring up a good point here. A coordinated effort needs collaboration from all involved in the supply chain. If all players gain from such effort then it can become a reality some day. Although there are some other factors that might make incorporation of this concept tough, few of which I mention below. 1. Lawsuits against hospitals/physicians for negligence. Due to fear of such lawsuits, physicians are encouraged to do battery of tests that might not be necessary. 2. Hospitals/clinics do not necessarily aim for achieving economies of scale with their procurement and other functions. There is at least 1 classic example of a hospital in India (that I am aware of), which have managed to do just that resulting in affordable care including surgery for patients. 3. Hospitals can encourage their physicians to reduce expenditures in various ways including prescription of generics when applicable, avoiding unwanted tests based on their experience and judgement, reducing length of stay in hospitals if not necessary etc. without comprising the quality of healthcare. In return, the hospitals can share % of profit earned with their physicians.
  
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Logan Aven says:

September 4, 2018 at 8:50 am

While i do think that it is possible to incentive’s Hospitals to work more effectively i don’t know that telling doctors not to do tests or blood transfusion is the best way. Cost is almost always a measure of service in the inverse and i don’t want anyone in the medical business to be thinking about the cost of blood while i am laying on the operating table. I think that rather then focusing on this they should focus on standardizing the equipment like Scopes or other tools that add cost because all the doctors have not been trained to use the same tools. Another option would be to make a standard cost for having a procedure done so that the only thing that matters is the success rate of the doctor. If the price is set on every tonsillectomy then competition and the market will have to try and figure out ways to make it more profitable. This will also drive service because hospitals who do not perform well will inevitably be put out of business.

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Tanya Arora says:

September 4, 2018 at 11:17 am

Coordination of efforts between the hospital, patient, doctors and health insurers, should enable savings within the healthcare system. Patients history can be tracked to offer cost effective insurance plans customized to the needs of the patients. In turn, patients would have an incentive to maintain their overall health and faster recovery, owing to lower insurance premiums. The insurance companies would be inherently benefited due to lower insurance claims. There can be a performance related pay system for the doctors that is attributed directly to the recovery of the patients. Overall, the leakages within the health care system would then be used for mutual benefit of all the parties involved, thereby bringing the overall costs down.

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Anesh Krishna J N says:

September 20, 2018 at 10:05 am

Part of the reason health care spending is going up so fast is, pricing for everything from health care labor to drugs to CT scanners are skyrocketing. But the more worrisome reason for rising spending is the quantity of high technology specialty services we undergo. We get more high-tech imaging studies, more days in the ICU, more robotic surgeries than we did 15 years ago. Sometimes that high-tech medicine leads to better outcomes, but a lot of the time it does not — it just means we spend more. The real problem, then, isn’t merely that we’re spending a larger and larger percentage of our income on healthcare – it’s that we are spending indiscriminately.
Thus we need to encourage the growth of Accountable care organizations (ACO) to give coordinated high-quality care to the patients. They are accountable and responsible for providing the right care to the right patient at the right time, thus avoiding duplication of services and preventing medical errors. This coordination will certainly bring the costs down but, the extent of its success depends on the extent to which all the players in the healthcare chain coordinate.

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