Managing Resources Responsibly

Chapter 3

Factors Affecting Costs of Health Care

Factors Affecting Costs of Health Care Increased demand for

health care services Technological

advances Increased

pharmacologic, medical equipment, and supply costs

Increase in health care personnel salaries

Increase in hospital costs

Increase in litigation

Revenue Sources for Health Care

Health care insurance– Fee for service– Third party payer

Governmental programs– Medicare– Medicaid– SCHIP

Question The State Children’s Health Insurance Plan

(SCHIP) was designed for families who did not qualify for Medicaid yet could not afford health insurance. How is this plan funded?A. By the federal governmentB. By the state governmentC. By the federal and state governments jointlyD. By the state government and private endowment

AnswerC. By the federal and state governments jointly

Rationale: this plan is jointly funded by the federal government and the individual state and is administered by the state.

Access to Health Care Economic access

Geographic access-

– rural versus city

Cultural access

– Education, language, literacy

Cost Containment

Using reimbursement to control costs Prospective payment systems

– Tax Equity and Fiscal Responsibility Act – Medicare and Medicaid payment policies – Diagnostic related groups (DRGs)– Private insurance companies and managed care

plans – Balanced Budget Act

Definition of managed care

– Any health plan system in which care is actively managed by the third-party payer who sets the ground rules for care and determines where, how, and by whom care will be provided

Managed Care and Preferred Providers

Definition of preferred provider

– Preferred providers are physicians, hospitals, and other health care providers who have contracted for a specific, usually lower, payment for their services and thus have an incentive to decrease the costs

Managed Care and Preferred Providers (cont'd)

Capitation – Plan contracts with a provider organization – Provider organization is paid a flat amount for every

individual enrolled – Provider assumes the risk that an individual

consumer might need very high-cost care – Incentive for the provider organization to work at

health promotion and disease prevention strategies

Managed Care and Preferred Providers (cont'd)

Restructuring of organizations providing health care

Cost awareness for nurses Contributors to individual patient costs of care

– Acuity level of the patient

– Length of stay

– Complications

Managed Care and Preferred Providers (cont'd)

Cost of personnel– Accounts for 50% to 60% of the total hospital

operating budget – Traditionally included on the patient’s bill – Direct nursing costs and total nursing costs – Essential to enhance accountability for efficient

and cost-effective care – How many hours of work are needed – Fluctuation in acuity and census

Managed Care and Preferred Providers (cont'd)

Question

What is included in direct nursing costs?A. Supervising other staffB. Planning and implementing patient careC. Evaluating the work of other staffD. Acuity of patients on unit

AnswerB. Planning and implementing patient care

Rationale: direct nursing costs reflect the intensity of nursing care that can be measured in time required to provide the care. They include assessing, planning, implementing, and evaluating nursing care.

Non-salary costs of care

Cost-containment strategies for nurses

Examining procedures and processes

Participating in prevention services

Effective assessment and management of care

Cost Awareness for Nurses

Decrease staff turnover

Managing supplies

Legal and ethical aspects of cost containment

Future of cost containment

Cost Awareness for Nurses (cont’d)

Question

Is the following statement true or false?

Legal and ethical standards of care are defined by the profession.

AnswerTrue.

Rationale: legal and ethical standards for nursing care require adherence to standards of care defined by the profession.

Using Budgets to Manage Finances

Capital versus operating budgets Budgets and organizational evaluation Budget processes

– Planning the budget

– Value analysis

– Approval of the budget

Monitoring the budget

Operating Budget concerned with items that can’t be

reused and that are needed for the daily operation of the facility.

Examples-– Salaries– Supples– Costs to run the institution

Capital Budget Include major equipment or changes in

the building such as construction, renovation

High expense items…ie anything over $1000.00

Examples of items that fall under the Capital budget include:– Remodeling– Cath lab equipment– Mechanical lift devices

Managing Time

Strategies for effective time management – Time assessment

– Writing things down

– Prioritizing activities- (Display 3.3 p. 112)

– Learning to do tasks more quickly

– Organizing tasks

– Multitasking

Question Multitasking on a nursing unit presents its

own dangers. What is a danger created when a nurse multitasks?

A. All tasks may not be finished on time.

B. You must re-orient and re-focus.

C. Delegating of tasks is not accomplished.

D. You may feel scattered and forget part of the task.

Answer

D. You may feel scattered and forget part of the task.

Rationale: if you have too many tasks going, you may feel scattered and may forget some aspect.

Strategies continued

– Delegating

– Organizing with the team

– Eliminating unnecessary tasks

– Creating effective meetings

Managing Time (cont'd)

Barriers to Effective Time Management

Time wasters- p.119

– Controlled

– Uncontrolled

Personal approaches to time

– Procrastination