Hospital and health system spending is projected to grow faster than the U.S. gross domestic product over the next 10 years. And it’s already at an unsustainable level. That’s why hospitals are continually striving to reduce costs and improve efficiency.
Measuring the Total Cost of Care
One way that hospitals can improve efficiency and reduce unnecessary costs is by accurately measuring the “total cost of care.” Total Cost of Care includes all direct and indirect costs associated with an episode of care for a period of time–such as one benefit year in a health plan. The question is this: is your facility equipped to adequately measure the total costs of care?
Two key variables used to measure the total cost of care are: Price (How much is reimbursed for a particular service?) and Utilization (How much it costs the provider to deliver the service?). Key questions that hospitals and health systems must ask themselves about before they begin measuring the total cost of care are:
- Is your organization currently capable of tracking and monitoring the total cost of care?
- Though payers and providers are working together more frequently on value-based payment arrangements (bundled payments, capitated arrangements, etc.) these models require providers to accurately measure the total cost of care to identify unexpected variations in either utilization or price.
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- Do you have sufficient access to claims data?
- Claims data is essential to track the total cost of care. It can be accessed via payers and all-payer claims databases.
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- Are any multi-stakeholder collaboratives already partnering organizations to improve cost measurement?
- Hospitals and health systems are working together in collaboration to drive improvements across regions and states. Identify whether any such collaborative exists. MN Community Measurement is just one example.
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- Are you part of the conversation about health care use and cost?
- Join the conversation. The way we measure total cost of care will continue to evolve. Take part in educational meetings by the American Hospital Association related to the total cost of care.
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- Ensuring all appropriate charges are submitted is of the utmost importance. This data allows Medicare to understand the services that are being performed, and therefore, the actual cost of care, and aligns reimbursement accordingly. Services that are not reported are not understood as part of the cost of care and will not be considered for reimbursement. As margins continue to narrow, it is important to capture every dollar of reimbursement for which your health system is eligible.
MedCom Solutions can Help
MedCom Solutions develops and implements state-of-the-art software that has helped numerous organizations overcome the most serious reimbursement issues affecting hospitals and health systems today. We are a software and consulting firm that has yielded hundreds of millions in net revenue for healthcare providers with unique Chargemaster, Pricing, and Compliance solutions. Learn more.