Understanding and determining costs of care can be challenging due to the complexity of health care delivery and financing mechanisms. However, to improve value, costs must be accurately measured. Clinicians need to understand the basic terminology and methods of cost accounting in health care. We can advocate for more rational health care pricing and can help design local cost accounting practices. Focusing on costs AND patient-centered outcomes simultaneously is the only way to ensure we are truly providing value.
Health care costs increasingly affect patients directly. Understanding basic financing and health care cost mechanisms may allow clinicians to help our patients navigate this challenging landscape, and to ensure we do not unnecessarily cause financial harms.
Listen to Morgan Congdon describe her experience negotiating the complex, often frustrating world of medical care costs and charges.
Costs for health care to patients can be high and harmful. It is important to remember the patient and their ability to pay when providing health care.
Health care financing in the US is complicated and involves many players, including the government, private insurers, and the uninsured.
Understanding the language of health care costs including charges, cost, price, and reimbursement is vital to comprehending our health care system and helping patients navigate it.
There are many potential reimbursement mechanisms in US health care, but fee-for-service (FFS) currently dominates the market.
Time-driven activity-based costing (TDABC) and value-based bundled payments represent new and alternative cost accounting and reimbursement models that aim to improve the value of care provided to patients.
MD Anderson Cancer Center in Houston, Texas is an example of a health care institution that has implemented new accounting mechanisms, such as TDABC, and has demonstrated reduced costs of providing care to patients
Compare the application of traditional and value-based costing methods in the course of a patient’s treatment.
BOOK
This chapter of Understanding Value-Based Healthcare covers how healthcare is paid for in the United States, including a discussion of health insurance terms and descriptions of different payers.
Moriates C, Arora V, Shah N. McGraw-Hill Education; 2015.
Accessed March 27,
2017.
BOOK
This chapter of Understanding Value-Based Healthcare discusses the complexities of healthcare pricing and the challenges in interpreting price data in healthcare.
Moriates C, Arora V, Shah N. McGraw-Hill Education; 2015.
March 27,
2017
ARTICLE
This paper describes how U.S. hospitals price their services to the various third-party payers and patients, and the future of the system where the concept of “consumer-directed health care” is increasingly popular.
Reinhardt UE. Health Aff Jan 2006; 25(1): 57-69.
ARTICLE
This article describes value and costing in health care, including a discussion of TDABC and process mapping.
Kaplan RS, Porter ME. Harvard Business Review. September 2011.
Accessed March 27,
2017.
ARTICLE
This article describes the concept of TDABC in detail, including a comparison of older ABC models with revised ABC models.
Kaplan RS, Anderson ME. Harvard Business Review. November 2004.
Accessed March 27,
2017.
ARTICLE
This article discusses ways clinicians can screen patients for potential financial harm and urges for a universal approach where every patient is asked about their ability to pay for their health care.
Moriates C, Shah NT, Arora VM. JAMA. 2013;310(6): 577-578.