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Date Submitted: 08/26/2012 07:08 PM
Cost-Cutting and Healthcare
Sheila Smallwood
BUS630: Managerial Accounting
Ashford University
Instructor: John Kuhn
5/12/12
Cost-Cutting and Healthcare
According to the Centers for Medicare and Medicaid services, healthcare expenditures in the United States neared $2.6 trillion in 2010, over 10 times the $256 billion spent in 1980. The rate of growth of expenditures is still expected to grow faster than national income over the foreseeable future. In total, health care spending accounts for approximately 17.9% of the nation’s Gross Domestic Product. In 2010, the Affordable Care Act was passed and aimed at cost containment through:
* Greater government oversight and regulation
* Payment reforms that aim to reduce payments for treatments and hospitalizations based on poor quality of care
* Refocusing medical delivery systems to be patient-centered and improve the coordination and quality of care.
Other practices directed at controlling costs include “Meaningful Use” which is integration of electronic health records, increasing consumer out of pocket costs, and improving health efficiency and quality of care. Approximately 51% of the nation’s healthcare expenditures are related to hospital care and physician service. So, how do hospitals improve quality of care and cut costs at the same time? Many industries are downsizing, reengineering, and/or restructuring, but which one is best for hospital organizations? The following paragraphs will review the different strategies and potential impact on the quality of care for hospitalized patients.
Similar to other industries, healthcare organizations are under increasing pressure to contain costs while maintaining high-quality services. The healthcare industry’s pace at implementing cost-cutting strategies is accelerating rapidly, due in large part to the way healthcare is financed in the United States and Canada (Leatt, et.al. 1997). In addition to the Affordable Care Act, consumers are...