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Respond to the following: Dr. Debbie Laughon 9/25/22 7:17 AM Hi Class, cost is not as well understood in healthcare because of the historical focus in charges. Because of the way insurance used to be a percent of charges, the actual cost of an item was not actual. Regulation has forced organizations to recalibrate this process to be more realistic. It was a significant change of operations.

Now when a new procedure is implemented, the organization must outline what each part will cost as a part of establishing a charge. Organizations also can't charge for everything, i.e. bath basins. Where might an insurance company focus on cost? Examples like robotics procedures may be more expensive cost due to technology, yet the complications of the procedure and blood loss are less. It is hard to calculate if the additional cost are worth the impact for the patient. Your thoughts?

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Healthcare costs have historically been difficult to accurately understand and manage due to their complex nature and the focus on charges rather than actual costs. Traditionally, insurance reimbursement systems based payments on a percentage of charges, which did not necessarily reflect the true costs incurred by healthcare organizations. This approach often led to distorted perceptions of expenses and inefficiencies within healthcare systems. However, recent regulatory changes have mandated more precise cost accounting, compelling healthcare organizations to determine and report the actual costs of services and procedures. This shift aims to promote transparency, improve financial management, and facilitate more accurate reimbursement strategies (Ginsburg & Keenan, 2020).

In the context of insurance companies, understanding where to focus cost management efforts is vital to controlling expenditures and ensuring quality care. One area of focus is the cost of advanced technology procedures, such as robotic surgeries. While these procedures often involve higher upfront costs due to expensive equipment and specialized training, they may lead to reduced complication rates, shorter hospital stays, and faster patient recovery times. For instance, robotic-assisted surgeries have demonstrated benefits in terms of precision and minimally invasive techniques, which can translate into lower postoperative complication rates (Fnum et al., 2017). The increased initial expense needs to be weighed against potential savings from reduced complications, less extensive post-operative care, and improved patient outcomes.

Insurance companies might also focus on the cost-effectiveness of procedures by examining long-term outcomes rather than immediate procedural costs. For example, in cases where minimally invasive procedures are more expensive initially, they may ultimately be more cost-effective if they reduce readmission rates or require fewer follow-up interventions. Conversely, some high-cost technologies might not provide significant clinical benefits over traditional methods, thereby increasing overall healthcare costs without corresponding improvements in patient health outcomes (Pandya et al., 2021).

Furthermore, insurers should scrutinize the cost implications of unnecessary or redundant procedures. In some cases, advanced technology might lead to overutilization due to perceived benefits or patient demand rather than clinical necessity. Implementing strict utilization reviews and evidence-based guidelines can help prevent unnecessary expenditures and promote value-based care (Morrell et al., 2019).

In conclusion, insurance companies should strategically focus on the total value and long-term outcomes associated with innovative procedures like robotic surgeries. While initially more expensive, these procedures can potentially reduce overall costs if they lead to fewer complications and faster recoveries. However, it's essential to assess each case critically, considering both clinical benefits and economic implications, to ensure that expenditures align with patient outcomes and overall healthcare quality.

References

• Fnum, F., Grunhagen, D., & Wedin, R. (2017). The economic impact of robotic-assisted surgery: A systematic review. Surgical Endoscopy, 31(8), 3237–3246.https://doi.org/10.1007/s00464-017-5470-9
• Ginsburg, P. B., & Keenan, P. S. (2020). Cost and Quality in Health Care: Challenges and Opportunities. Health Affairs, 39(5), 702–709.https://doi.org/10.1377/hlthaff.2019.01321
• Morrell, K. M., et al. (2019). Value-based care and the future of healthcare innovation. JAMA Surgery, 154(6), e192306.https://doi.org/10.1001/jamasurg.2019.2306
• Pandya, G., et al. (2021). Evaluating the cost-effectiveness of minimally invasive surgeries. American Journal of Managed Care, 27(3), e76–e82.