Johnny Ch Lok

Raising Service Performance Methods Johnny Ch Lok

One hospital was trying to compete across a range of transplant services, including heart, kidney, liver, and bone marrow transplants. Fierce local competition sent the hospital into a downward spiral; it took on unprofitable cases and performed too few procedures to maintain clinical expertise or even the recommended safety standards. When it discovered poor clinical outcomes were the result. Liver transplant surgeons and hepatologists began taking their cases to other hospitals, where heavier case loads and experienced support staff helped ensure a higher quality of care. The less patients hospitals recognized that to improve its clinical quality it had to attract more transplant patients. But its efforts yielded disappointing financial results because the hospital focused on disciplines where revenues were highest, without regard to profit margins. ?calculation the medical cost and charge to patients service fee However, to execute a service-line approach, hospitals must first gain a strong understanding of their economics-down to the level of specific clinical activities-and of the growth potential of various service lines. This change of focus involves learning more about the competitive environment, referral patterns, and the possibility of cross-selling other hospital services to current patients. Understanding current economics Hospitals should aim to understand their profitability by diagnosis-related groups, payers, physicians, and service lines before they undertake a new service-line strategy. Standard billing approaches usually make revenue numbers straightforward, but costs-and hence profit margins-are another thing. For many hospital services, each patient and procedure is different; therefore allocating costs is far more complicated and expensive for them than for manufacturers or retailers. An accurate cost-accounting system is a prerequisite for effective service-line planning. Simply relying on surrogates (such as volume, payer mix, or revenues) can be deceptive and leads, in many cases, to incorrect conclusions.