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Managing Health Costs

Healthcare systems worldwide are undergoing major revisions to improve efficiency and to contain costs. Doctors may find that they have to conform to clinical guidelines. Also, systems of cost control may require doctors to generate paperwork to make claims for the services that have been provided. In America, where coding is complex and payment may not be granted, there may be unhappiness. The poetic experience of a neonatologist (Martin 1996) reprinted in this issue is a case in point.

Also, there is no such entity as an "average patient". Perhaps, that is why fee-for-service is appealing to doctors because one can pay exactly what is consumed. Unfortunately, fee-for-service tends to result in higher fees. It has also been found that whichever the billing system is being implemented, doctors and administrators learn to claim the maximum out of the system.

America leads the world in spawning various reimbursing systems to deal with paying the doctors and hospitals, namely, Guidelines on Fees, the RBRVS System, the DRGs and case-mix systems. Some of these ideas have found teir way round the globe. What is clear is there are problems with each of these systems, some more serious than others.

Take case-mix funding for instance. There is now a need for an army of coders, to make sure that the best number is chosen. Not only that, the pattern of disuse may well possibly be changed to suit the reimbursement codes. Also, there may well be maneuvers to get more out of the system by procedural changes. For instances, what could be done as outpatient may well be done as inpatient one day admissions.

A recent paper gave the example of gas-enema reduction of intestinal intussuception giving way to surgical reduction (Stein et al, 1997). "The introduction and the universal use of gas-enema reduction has produced significant savings to the health system at large, but because of the case-mix funding arrangements, the hospital benefits less financially when it successfully reduces an intussception non-operatively, rather than by surgery. The fact that as the hospital is advantaged financially by treating intussuception in a sub-optimal way, whether it be in terms of patient morbidity or total cost to the community (through taxation) is of concern."

It was noted that the non-operative way reduced the overall costs to the commuity by 38%. The surgeons and radiologists have also successfully reduced the physical and psychological trauma of the most common surgical emergency in the first year of life. The paper concluded that perhaps hospital funding arrangements should be designed to promote such a trend, so that hospitals are advantaged, rather than penalised for providing the optimal treatment. This is food for thought.