Once the rate of hospital readmissions starts declining, there is a reduction in costs and increased rates of illness among patients. As such, a decrease in hospital readmissions will not just cut the treatment cost for the patients, but hospitals will also see a reduction in their administrative and operational expenses. The insurers will also see a reduction in costs used in paying for the readmitted patients. In the case of the hospital, most of the costs are perceived from the financial incentives given to the physicians and nurses which at times are counted per each patient visits.
With the hospital seeing an increased rate of avoidable readmissions, it was able to save about $50,000,000. This indicates that there is no need for a high number of physician and nurses at the hospital. The number of physicians should be about 50 while the nurses 70. This will see combined salary remuneration and incentives per year of $19,243,000. The profit received by the hospital will be $ 30,757,000.
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The salary reimbursement method is the best method to use in remunerating the physicians and nurses. However, it is a high remuneration which sees each doctor and nurse getting 10% of their salary as a bonus. However, the fee-for-service remuneration method is not the best. This is because it will not just see the doctor earning remuneration but also does not promotes quality patient health care. In this method, the reimbursement is given to the physicians and a nurse when they provide treatments to more patients thus it does not focus on the quality of care. The fee-for-service method as such, it will increase the cost and dismays the competencies of integrated care. By moving away from the fee-for-service remuneration method, it will introduce quality and efficiency incentives rather than reward only quantity.
As a result of the increased competition in the healthcare industry seen from physicians and nurses, there are high chances for supplier-induced demand to occur. This is seen when the physicians conspire in the manipulation of their patients’ demand for health-care amenities so as to upsurge the use of medical services. On the other hand, doctors should preferably supply services on the foundation of each patient’s health needs and the delivery of health-care should not be motivated by their interest. Supplier-induced demand will like wisely see an increase in the healthcare spending and an upsurge in the financial burden on public health cover programs (Shigeoka & Fushimi, 2014). The diagnostic related groups are a reimbursement strategy that can be used in reducing the supplier-induced demand. By using this type of incentive strategy, it allows for the grouping of a patient’s consistent potential payment to the health-care facilities thus encouraging cost control initiatives. The Diagnostic Related Group payment will cover all charges associated with an inpatient stay from the time of admission until when he/she is discharged. As such, in case the treatment cost of a particular patient in a similar group in higher compared to another, the case is referred to as an outlier. As such in the long run, the supplier-induced demand created by the physician will see a decline.
It is crucial for a health-care facility to ensure that its patients are getting the best possible care that can be offered. However, in ensuring this is possible, the health-care staff should get the best possible remuneration package. The physician should also not put their interests inform of the patients but should act professionally as they offer services to the patients.
References
Shigeoka, H., & Fushimi, K. (2014). Supplier-induced demand for newborn treatment: Evidence from Japan. Journal of health economics , 35 , 162-178.
