Healthcare Cost Containment - An Introduction
In most industries, increased sales is good news because it indicates growth of the industry. The flow of revenue makes more room for investments in techniques and approaches that can reduce costs, making the industry more efficient, or even improve the quality or quantity of services and products produced, thus, making the industry more productive. This is a basic mechanism of the free economy.
This is not the case for the healthcare industry, however. It is universally accepted that increase in healthcare sales is a bad thing (TM). Governments believe that quality healthcare is too important to be left uncontrolled in the hands of the free economy. If millions of people have no access to good cars, they can afford to wait for market forces to give birth to suppliers of good cars. If millions of people are dying from cancer yearly, we cannot afford to wait a few years for market forces to make it profitable for hospitals to supply good cancer treatments.
Despite all our achievements in telecommunications, nanotechnology, and other high-tech discoveries, the human race have not found a efficient and productive system to ensure that basic quality healthcare is accessible to all of its members. This is obviously true on a global scale, but it is also true on a national scale.
There are two concerns: the role of private, for-profit organizations in the healthcare delivery system of a nation, and the role of the government in regulating the industry to ensure that basic quality healthcare is accessible to all citizens.
For-profit organizations will always attempt to maximize profit within the constraints of economic forces. Though this profit maximization activity can be seen as not in line with the national objective of providing basic quality healthcare for all citizens, the industry can still benefit from the distributed, dynamic, innovative, and enterprising nature of these organizations in becoming a delivery infrastructure for healthcare services. In other words, if all healthcare service providing organization has to be initiated, founded, and run by the government, it will be very slow, inefficient, and painful to have a nation-wide healthcare service delivery network.
Government efforts to increase productivity and efficiency of the nation's healthcare industry is offen reffered to as healthcare cost containment. There are different approaches. From a truly social system where government funds, runs, and owns all healthcare service providers, to a hybrid system where government does the funding, but healthcare services are provided by both public and private organizations.
A number of efforts using the hybrid approach exist worldwide: Askes/Jamsostek in Indonesia, Medicare/Medicaid in USA, Medibank/Medicare in Australia, and Medicare-like systems in the UK, Sweden, Finland, and many other countries. The government funding come in various forms, from taxation, to national insurance programs, to government-controlled provident funds.
These efforts, though have been in existence for quite some time, are fragmented, and lack a solid strategy for achieving the containment of healthcare costs. The US healthcare expenditures have risen from only 4.4% of GNP in 1950 to 11.2% of GNP in 1987. The average hospital stay in 1950 is USD127, in 1986 the same stay had increased to USD3,527. The same trend is found in other countries.
Healthcare cost containment is definitely a huge challenge for all of us. All nations are facing it, those who aren't, will eventually face it. What's the state of today's healthcare cost containment efforts ? what are the challenges that they face ? who are the thought-leaders of these efforts ? and what do they think ?
Check this blog for other articles on this topic. I'll write more in the future.
This is not the case for the healthcare industry, however. It is universally accepted that increase in healthcare sales is a bad thing (TM). Governments believe that quality healthcare is too important to be left uncontrolled in the hands of the free economy. If millions of people have no access to good cars, they can afford to wait for market forces to give birth to suppliers of good cars. If millions of people are dying from cancer yearly, we cannot afford to wait a few years for market forces to make it profitable for hospitals to supply good cancer treatments.
Despite all our achievements in telecommunications, nanotechnology, and other high-tech discoveries, the human race have not found a efficient and productive system to ensure that basic quality healthcare is accessible to all of its members. This is obviously true on a global scale, but it is also true on a national scale.
There are two concerns: the role of private, for-profit organizations in the healthcare delivery system of a nation, and the role of the government in regulating the industry to ensure that basic quality healthcare is accessible to all citizens.
For-profit organizations will always attempt to maximize profit within the constraints of economic forces. Though this profit maximization activity can be seen as not in line with the national objective of providing basic quality healthcare for all citizens, the industry can still benefit from the distributed, dynamic, innovative, and enterprising nature of these organizations in becoming a delivery infrastructure for healthcare services. In other words, if all healthcare service providing organization has to be initiated, founded, and run by the government, it will be very slow, inefficient, and painful to have a nation-wide healthcare service delivery network.
Government efforts to increase productivity and efficiency of the nation's healthcare industry is offen reffered to as healthcare cost containment. There are different approaches. From a truly social system where government funds, runs, and owns all healthcare service providers, to a hybrid system where government does the funding, but healthcare services are provided by both public and private organizations.
A number of efforts using the hybrid approach exist worldwide: Askes/Jamsostek in Indonesia, Medicare/Medicaid in USA, Medibank/Medicare in Australia, and Medicare-like systems in the UK, Sweden, Finland, and many other countries. The government funding come in various forms, from taxation, to national insurance programs, to government-controlled provident funds.
These efforts, though have been in existence for quite some time, are fragmented, and lack a solid strategy for achieving the containment of healthcare costs. The US healthcare expenditures have risen from only 4.4% of GNP in 1950 to 11.2% of GNP in 1987. The average hospital stay in 1950 is USD127, in 1986 the same stay had increased to USD3,527. The same trend is found in other countries.
Healthcare cost containment is definitely a huge challenge for all of us. All nations are facing it, those who aren't, will eventually face it. What's the state of today's healthcare cost containment efforts ? what are the challenges that they face ? who are the thought-leaders of these efforts ? and what do they think ?
Check this blog for other articles on this topic. I'll write more in the future.
posted by JPG at
09:35
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