Moving Beyond Cost Reduction to Focus on Value

health care

It’s time for health care providers to move beyond cost reduction to focus on increasing value. With the changing landscape of payment, providers need a new strategy to stay competitive. By focusing on improving patient outcomes and efficiency, they can maintain market share and build a stronger contracting position. Value-based care will be increasingly important, and those who succeed in doing so will be the most competitive. Meanwhile, those who fail to do so will be the ones facing increasing pressure from health insurers and consumers.

While there are many factors that go into health care spending, it is important to remember that life expectancy is just one of many. While health care spending is typically a percentage of GDP, there is a strong correlation between life expectancy and health care spending among OECD countries. While life expectancy is not the only measure of health care quality, it can be a good way to gauge a health system’s effectiveness.

Increasing investment in preventive care and services can help save lives and reduce health care spending. This includes free screening programs and vaccinations. By reducing the incidence of preventable diseases, we can prevent high-cost diseases from affecting our society. Furthermore, we can reduce health care spending by focusing on environmental and societal factors that contribute to the prevalence of these diseases.

Health care spending is out of proportion to the amount of population living in the country. Due to this, the number of hospital beds is declining. In fact, it has fallen from three beds per thousand people in 1999 to 2.6 in 2010. Yet physician income has remained stable over the past decade, indicating that physicians know that working harder can’t compensate for rising expenses. Meanwhile, national retailers are attacking the primary care market on a large scale, offering in-store clinics. Walmart and other retailers offer basic health care services at lower prices than physicians.

However, the health care industry is prone to self-dealing and fraud. While regulation aims to curb these problems, it often hinders integration of care across specialties. Furthermore, most of these measures focus on the least controversial outcomes, such as LDL cholesterol checks and hemoglobin A1c levels. Those with diabetes care about outcomes like amputation, dialysis, and vision loss.

In addition to the federal and state government programs, the private sector also provides some free or low-cost health care. Private health care plans also have no co-payments for some preventive services. Further, many providers offer free or subsidized care to low-income patients. These programs are called safety-net programs.

Although existing costing systems work well for overall department budgeting, they are often insufficient for determining the costs of a specific service. In addition, they often result in crude estimates of what the service actually costs.

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