...CONTROLLING HEALTH CARE COSTS WHILE PROMOTING THE BEST POSSIBLE HEALTH OUTCOMES American College of Physicians A White Paper 2009 Controlling Health Care Costs While Promoting the Best Possible Health Outcomes Summary of Position Paper Approved by the ACP Board of Regents, September 2009 What are the Major Drivers of Health Care Costs? Major drivers of health care costs include: inappropriate utilization especially of advanced medical technology, lack of patient involvement in decision-making, payment system distortions that encourage over-use, high prices for health care services, a health care workforce that is not aligned with national needs, excessive administrative costs, medical liability and defensive medicine, more Americans with declining health status and chronic disease, and demographic changes including an increase in elderly persons. This paper addresses each of these drivers of health care costs and provides recommendations for controlling them. Why Do We Need to Control Health Care Costs? Improvements in health care have the ability to provide opportunities for all people to live better, healthier lives. However, the rate of increase in U.S. spending on health care continues to exceed economic growth at an unsustainable pace. The rate of growth in health care spending is the single most important factor undermining the nation’s long-term fiscal condition. Why Should Controlling Health Care Costs be Linked to Promoting Good Health Outcomes? Increasing pressure...
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...Organizing a Cost- Reduction program The Bottom Line * You need a multidisciplinary team to attain significant cost- reduction. Support from the top helps greatly. * Encounter resistance to the cost reduction effort * There are risks associated with cost – reduction opportunities * Meet at least once a week * Maintain an action plan to create and sustain reduction momentum. * Someone who writes well and is good in capturing details should take notes and publish meeting minutes no later than one day after each meeting. The meeting minutes should be sent to the chief executive, the team members, and the head of each department. Doing this keep others in the loop, and it keeps the effort alive. * The meeting minutes should include “living” task list. Team members should provide input regarding the status of each task in the meeting, and the person preparing the meeting minutes should update the task list to show current status. * The team members should discuss cost- reduction ideas in a free- flowing manner. The ideas may come from the team members or from others in the company. All of the ideas should be captured on a paper. After discussing all of the ideas, the team should decide if each idea should be pursued. If the team thinks an idea has a merit, in most cases it will go to the affected department manager. Key Questions: 1.) Do we have a cost – reduction effort in place? 2.) Do we have cost – reduction targets? 3.) How do we identify and eliminate...
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...Reducing Airline Fuel Consumption and Cost Fuel costs have become a major percentage of total airline operating costs. Fuel accounts for roughly 40% of total operating expenses and for U.S. carriers it totaled $47.3 billion last year (Grose, 2013). In an attempt to reduce such high costs, airlines have implemented a variety of fuel saving strategies. Weight Reduction Weight reduction is a major concern for airline fuel savings. Every aspect of aircraft design is looked at from a weight/safety standpoint. Below are a few of the most novel approaches to weight reduction that airlines have implemented in the past few years. Phasing Out Paper In 2011, United and Continental pilots began using 1.5lb iPads as electronic flight bags to replace the traditional 38lb paper flight manuals. The projected fuel savings was calculated to be 326,000 gallons of jet fuel for a savings of $1.2 million per year (United Continental Holdings Inc., 2011). This year, American Airlines received regulatory approval for flight attendants to swap out their 5lb paper manuals for 1lb Samsung tablets for a fuel savings of $650,000 per year (Dastin, 2014). While there is a large upfront capital cost for the purchase of thousands of tablets, this is offset by no longer having to print millions of sheets of paper each year for manuals. As for in-flight magazines, Singapore Airlines has been experimenting with providing digitized content for its three magazines on long-haul flights....
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...Reducing Rehospitalizations in Skilled Nursing Facilities Increases the Quality of Care Residents Receive and Decreases Unnecessary Health Care Cost Nurses have the power to increase positive patient outcomes by implementing changes in their practice based on the evidence found in the nursing literature. Utilizing evidence-based practice (EBP) increases nurses job satisfaction, increases communication across the interdisciplinary team, enables nurses to provide their patients with high-quality care and decreases health care cost. The purpose of this paper is to describe why readmissions from nursing homes (NHs) is a nurse practice problem, nurse practice changes to reduce hospitalizations in NHs, evidence found in the nursing literature that supports the change in nursing practice and how to evaluate the change in practice after implementation of interventions. The Problem Residents in NHs continue to experience potentially avoidable 30-day readmissions to hospitals. Rahman, Foster, Grabowski, Zinn, & Mor (2013) define 30-day readmissions as when the resident is readmitted to the hospital within 30 days of being discharged from the hospital to NHs and avoidable readmissions as conditions that can be managed safely and efficiently in NHs instead of the resident being transferred to the hospital (p. 1901) There are more than 1.6 million Americans living in NHs in the United States and 23.5% of these Americans experience readmission to the hospital within 30 days of discharges...
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...Reducing social risk is to assist individuals, households, and communities better manage risk, and to provide support to the critically poor. As a result of economic and political liberalization, globalization among other forces, households tend to face more risks now than in the past. Due to increase risks faced and decreased ability to manage risks, many poor and near-poor households are expressing anxiety about their perceived vulnerability. Government regulation can usually reduce social risk. A successful society can be achieved by taxing higher rates and many of the governments are practicing it today. The funds received from the tax are channeled back to the economy through subsidies and loans to the poor. The effectiveness of such schemes depends on a lot of factors including the level of transparency and accountability in government, the sustainability of the project and the existing political environment. For example, in Sweden, paying high taxes is considered to be a benefit. Swedes' personal income tax can be as little as 29 per cent of their pay, but most people (anyone earning over £32,000) will pay between 49 and 60 per cent through a combination of local government and state income tax. Taxpayers get back what they pay for through various situations such as free education – public and private and free health and dental care for under 18s. There are also child allowance of £ 1,080 a year per child and can enjoy parental leave lasting 480 days as 390 days...
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...with fresh eyes, it becomes clear that the Internet is not necessarily a blessing. It tends to alter industry structures in ways that dampen overall profitability, and it has a leveling effect on business practices, reducing the ability of any company to establish an operational advantage that can be sustained. 103 Internet Technology provides buyers with easier access to information about products and suppliers, thus bolstering buyer bargaining power. 105 With more competitors selling largely undifferentiated products, the basis for competition shifts ever more toward price. 107 On the Internet, buyers can often switch suppliers with just a few mouse clicks, and new Web technologies are systematically reducing switching costs even further. ON COMPETITION Strategy and the Internet 97 Some companies, for example, have used Internet technology to shift the basis of competition away from quality, featurs, and service and toward price, making it harder for anyone in their industries to turn a profit. 98 When seen with fresh eyes, it becomes clear that the Internet is not necessarily a blessing. It tends to alter industry structures in ways that dampen overall profitability, and it has a leveling effect on business practices, reducing the ability of any company to establish an operational advantage that can be sustained. 103 Internet Technology provides buyers with easier access to information about products and suppliers, thus bolstering buyer...
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...Introduction In the earlier years, Materials Management was treated as a Cost Centre, since Purchasing Department was spending money on materials while Stores was holding huge inventory of materials, blocking money and space. However, with the process of liberalization and opening up of global economy, there has been a drastic change in the business environment, resulting in manufacturing organizations exposed to intense competition in the market place. Indian manufacturers have been working out various strategies to face the above challenges and to cut down manufacturing costs to remain competitive. Progressive Management have since recognized that Materials Management can provide opportunities to reduce manufacturing costs and can be treated as a Profit Centre. On an average, half the Sales income is spent on Materials. Suppose a firm is spending 50% of its volume on materials and the profits are 10% of sales volume. A 2% reduction in materials cost will boost the profits to 11% of sales or the profits will be increased by 10%. To achieve the same increase in profit through sales efforts, a 10% increase in sales volume will be necessary. In other words, compared to sales volume, material cost has five times the average on profits. Organizations earn or loose large sums depending on how effective are their Materials Management. The cost savings which are possible in Purchasing are as follows: a) By obtaining materials at lower prices through: • Development of new...
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...Chapter 09 Reducing Project Duration Multiple Choice Questions 1. Without any formal planning, the president of a software company remarks in a speech that new technologically advanced software will be available in one year. This may lead to a project that must be done faster than anticipated. This is an example of reducing project duration caused by A. Imposed project deadlines. B. Time to market. C. Unforeseen project delays. D. High overhead. E. Incentive contracts. 2. Intense global competition and rapid technological advances create pressure to develop projects rapidly. This is an example of reducing project duration caused by A. Imposed project deadlines. B. Time to market. C. Unforeseen project delays. D. High overhead. E. Incentive contracts. 9-1 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 3. A contractor finished a bridge across a lake 18 months early and received more than $6 million for the early completion. This is an example of reducing project duration caused by A. Imposed project deadlines. B. Time to market. C. Unforeseen project delays. D. High overhead. E. Incentive contracts. 4. Adverse weather, design flaws, and equipment breakdown can create negative slack. This is an example of reducing project duration caused...
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...entire tendering process. From estimating to procurement and beyond, our products provide an innovative and integrated approach to reducing risk, managing cost and ensuring compliance – all of which contribute to increased profitability. Estimating Causeway Estimating will help produce accurate bids, fast. Unlike other estimating systems which are nothing more than standalone pricing tools, Causeway provides estimating as part of an integrated supply chain management suite. Using Causeway Estimating will help your business log, assess and properly evaluate bid risks. It will improve your quality bid by demonstrating that you are serious about rationalising your supply chain to deliver best value and continuous improvement to your clients. Causeway Estimating will cut traditional tender enquiry costs by up to 50%. Sophisticated pricing tools will ensure consistent calculations, eliminate errors and significantly improve tender throughput, all resulting in improved tender win rate. Enquiry alerts Industry estimates the cost of issuing enquiry packages to subcontractors at between £50 and £100 each, with a quarter never being returned. The wastage associated with the tender phase of a construction project can be significant but in many cases is simply written off as an overhead, an unavoidable cost associated with bidding for work. Causeway’s Supply Chain Management (SCM) solutions provide companies in construction with...
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...Latest economic conditions changing views of companies to find sustainable green supply chain efficiencies. Green supply chain has got importance to reduce overall transaction costs, to lower inventory costs. Technological innovations lifting awareness of sustainable solutions to supply chain system and changing views with respect to quicker customer interaction to find appropriate changes in the market. Efficient ways which are used in Green Supply Chain: 1. Increasing company's revenue by reducing and recycling waste material / scrap, ultimately decreasing costs which are associated with waste and material losses. 2. Reducing material handling, training and transportation expenses 3. Decreasing usage industry specific hazardous chemicals and henceforth decreasing total carbon footprint. General Motors increased revenue by reducing disposal costs by $ 12 million with the help of reusable container program with GM's suppliers. 4. Recycling or refurbishment at end of product life disposal. 5. Role of third party logistics is necessary to reduce extra costs by shifting transportation modes, fing alternative solutions to relocate inventory to feasible locations as per business requirements. 6. Using sustainable packaging, repair solutions which can reduce wastes in supply chain cycle. Walmart is working on reducing CO2 emission of its total supply chain by 20 million metric tons by end of 2015 which is equivalent to taking 3.8 million cars off the road. Kellog has set goals to reduce...
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...a result of reducing R&D activities to save costs. A strategy is defined as a course of action, and Kolind, as the CEO, begun reshaping Oticon’s overall business strategy. The first 2 years were spent on consolidating the organisation, a move which reduced costs by 20%, following which was a new overall objective- To increase productivity by 30% in 3 years. A pre-Lars Kolind Oticon saw the company struggling to establish itself on the growing ‘in the ear’ hearing aid market, a result of reducing R&D activities to save costs. A strategy is defined as a course of action, and Kolind, as the CEO, begun reshaping Oticon’s overall business strategy. The first 2 years were spent on consolidating the organisation, a move which reduced costs by 20%, following which was a new overall objective- To increase productivity by 30% in 3 years. A pre-Lars Kolind Oticon saw the company struggling to establish itself on the growing ‘in the ear’ hearing aid market, a result of reducing R&D activities to save costs. A strategy is defined as a course of action, and Kolind, as the CEO, begun reshaping Oticon’s overall business strategy. The first 2 years were spent on consolidating the organisation, a move which reduced costs by 20%, following which was a new overall objective- To increase productivity by 30% in 3 years. A pre-Lars Kolind Oticon saw the company struggling to establish itself on the growing ‘in the ear’ hearing aid market, a result of reducing R&D activities to save costs. A strategy...
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...private marginal cost, social marginal cost, private marginal benefit, and social marginal benefit of gasoline when there is a negative externality – for example, dirty exhaust from a tailpipe. Assume that neither supply nor demand is perfectly elastic or perfectly inelastic. [pic] 2. If government chose to tackle the problem by taxing the sellers of gasoline a constant tax per gallon sold, show these things on your graph: a. the tax b. the new equilibrium price and quantity [pic] 3. Is the increase in price equal to the tax per gallon? Use your graph to answer this question. Yes it should be unless there are additional taxes 4. Is there any way to figure out if the tax is equal to the external cost of the gasoline? 5. Consumers obviously have less money left, after they buy gasoline, as a result of the tax. Give an example of something government can do to help consumers, while maintaining the tax and its resulting disincentive for purchasing gasoline. What are the pros and cons of your idea? Government can do things to make it so people don’t have to use cars, like improve public transit, by putting in bus lanes and promoting alternative methods of transportation like better bike routes with lanes and traffic lights for bikers. This would be good in the sense that we are making solid infrastructure investments, but it would be bad in the sense that it would not directly bring down the costs of those taxes...
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...reGinald tomaS yu-lee October 2011 October 2011 39 proper lean accounting rom its inception, lean has been about cost savings. The proof can be found by going to the founder of the concept. Lean has its roots in the Toyota Production System (TPS) or just-in-time manufacturing. Taiichi Ohno, the primary architect of the TPS, suggested that its goal was reducing costs. Ohno and his consultant, Shigeo Shingo, went so far as to restructure the profit and pricing equation so that its interpretation would be different to emphasize the concept of cost reduction. Often, the selling price is determined by adding profit to cost, or equation No. 1: cost + profit = selling price. For instance, the sales department always wants to know the cost so it can add a reasonable margin to get a proposed selling price. This, according to Shingo, was not a realistic perspective. He believed that the market determined the selling price. They thought that a more realistic way of looking at cost was to subtract cost from selling price to determine profit, or equation No. 2: selling price - cost = profit. With this approach, according to Ohno, “At Toyota, as in all manufacturing industries, profit can be obtained only by reducing costs.” Since lean was designed to focus on cost, the creators had to find places to look. The answer was to eliminate waste because, by eliminating waste, costs should go down. The next step was to categorize and define waste categories. Initially, Ohno and Shingo defined seven...
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...Question 2: The Coase Theorem states that if property rights are well defined, and no significant transaction costs exist, an efficient allocation of resources will result even with externalities (Harris, 2002). Coase argued that market failure, can be privately solved to an optimal level when the legal system intervenes, giving property rights to one of the parties involved. Essentially, the theorem is based on two underlying assumptions which are low transaction costs and the assignment of property rights. Firstly, the assignment of property rights is the right to have the exclusive use of their property, including the right to buy and sell it (Hubbard et al, 2009). Initially, polluters pollute because they believe they have the right too although the third party affected believe they have the right to less pollution. Hence without property rights, an inefficient level of equilibrium will be produced until the point in which the market intervenes assigning property rights. Another vital assumption is low transaction costs, which are the costs in time and other resources that parties incur in the process of carrying out an exchange of goods and services (Hubbard et al, 2009). As transaction costs of negotiating, binding and monitoring the agreement are very expensive when many individuals are involved, the transaction costs can exceed the gains from the transaction itself. When these two assumptions are held, an optimal solution will be reached when the monetary damage of one...
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...In reaction to cost minimization and profit maximization the business world has begun reengineering the business process. Energy sources that are scarce are being consumed by the transportation industry. The Peregrine Trucking Company is developing a strategic plan to reduce the fuel cost and by using various trucking equipment’s that are more efficient and socially conscious while creating a competitive advantage. This study is to help understand the importance of reducing the fuel costs for Peregrine Trucking Company. This highlighted outline also discusses various tools, equipment’s and methods to reduce the fuel expenses of the company. This discussion targets the business processes in the transportation industry to reduce the fuel cost incurred for trucks with special reference to the Peregrine Trucking Company. Over the last two decades the transportation industry became highly competitive. Freight transport demand has grown rapidly and will grow further as our economies recover from the current economic instability. This puts pressure on the capacity of transport networks and community acceptance of the environmental and safety impacts of freight transport, especially by the trucking industry. Alternative cost and energy saving methods need to be identified by the transportation industry to reduce not just the fuel cost but reduce the environmental impact the transportation industry has in the country. The IEA, according to the Aluminum Association (2008)...
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