Improving efficiency and losing money

Hospitals are working hard to streamline operations and improve efficiency. What do they get for this? A higher risk of red ink. Way to go fee-for-service!

“The good news is that Virginia Mason identified ways to streamline and improve care; the bad news is that the medical center’s bottom line may take a significant financial hit as a result,” said Hoangmai H. Pham, M.D., M.P.H., an HSC senior health researcher and lead author of the study funded by the California HealthCare Foundation (CHCF).

In an accompanying HSC Issue Brief, “Distorted Payment System Undermines Business Case for Health Quality and Efficiency Gains,” also funded by the CHCF, Paul Ginsburg, Ph.D., HSC president, points out that “most efforts to improve efficiency for a specific medical condition usually reduce the number of services per patient that can be billed, posing financial challenges for providers. These challenges are often magnified by the current fee-for-service payment structure, where some services are highly profitable and others are unprofitable.”

(via The Health Care Blog)