William N. Zelman

Extending Simulation Modeling to Activity-Based Costing for Clinical Procedures

A simulation model was developed to measure costs in an Emergency Department setting for patients presenting with possible cervical-spine injury who needed radiological imaging. Simulation, a tool widely used to account for process variability but typically focused on utilization and throughput analysis, is being introduced here as a realistic means to perform an activity-based-costing (ABC) analysis, because traditional ABC methods have difficulty coping with process variation in healthcare. Though the study model has a very specific application, it can be generalized to other settings simply by changing the input parameters. In essence, simulation was found to be an accurate and viable means to conduct an ABC analysis; in fact, the output provides more complete information than could be achieved through other conventional analyses, which gives management more leverage with which to negotiate contractual reimbursements.

Strategic, operational, and marketing concerns of product-line management in health care.

Product-line management is a specialist strategy that focuses on specific products and markets. This article presents a typology of organizational approaches to implementing such a strategy and discusses the advantages and disadvantages of each. Finally, the relationship of the control of marketing to product-line strategy and decentralization is discussed.

The effect of cost construction based on either DRG or ICD-9 codes or risk group stratification on the resulting cost-effectiveness ratios

AbstractBackground: As cost-effectiveness analyses (CEAs) are increasingly used to inform policy decisions, there is a need for more information on how different cost determination methods affect cost estimates and the degree to which the resulting cost-effectiveness ratios (CERs) may be affected. The lack of specificity of diagnosis-related groups (DRGs) could mean that they are ill-suited for costing applications in CEAs. Yet, the implications of using International Classification of Diseases—9th edition (ICD-9) codes or a form of disease-specific risk group stratification instead of DRGs has yet to be clearly documented. Objective: To demonstrate the implications of different disease coding mechanisms on costs and the magnitude of error that could be introduced in head-to-head comparisons of resulting CERs. Methods: We based our analyses on a previously published Markov model for HIV/AIDS therapies. We used the Healthcare Cost and Utilisation Project Nationwide Inpatient Sample (HCUP-NIS) data release 6, which contains all-payer data on hospital inpatient stays from selected states. We added costs for the mean number of hospitalisations, derived from analyses based on either DRG or ICD-9 codes or risk group stratification cost weights, to the standard outpatient and prescription drug costs to yield an estimate of total charges for each AIDS-defining illness (ADI). Finally, we estimated the Markov model three times with the appropriate ADI cost weights to obtain CERs specific to the use of either DRG or ICD-9 codes or risk group. Results: Contrary to expectations, we found that the choice of coding/grouping assumptions that are disease-specific by either DRG codes, ICD-9 codes or risk group resulted in very similar CER estimates for highly active antiretroviral therapy. The large variations in the specific ADI cost weights across the three different coding approaches was especially interesting. However, because no one approach produced consistently higher estimates than the others, the Markov model’s weighted cost per event and resulting CERs were remarkably close in value to one another. Conclusion: Although DRG codes are based on broader categories and contain less information than ICD-9 codes, in practice the choice of whether to use DRGs or ICD-9 codes may have little effect on the CEA results in heterogeneous conditions such as HIV/AIDS.

Managing mental health organizations with 25 key performance indicators.

A set of 25 key performance indicators were developed to support managers and policy makers in assessing the performance of their program relative to others. The indicators cover four major areas: Revenue mix, client mix, staff mix, and service mix. Comparisons can be made among programs within or across a state or region, or among programs of similar circumstances (e.g., urban or rural).

Survival strategies for community mental health organizations: A conceptual framework

Changing conditions call for each Community Mental Health Center (CMHC) to develop a survival strategy based on its own standards and values. The strategy must contain political, funding, programmatic, structural and role change components. A CMHC must orchestrate its strategy as part of an overall survival plan, but may be constrained by the degree of control it has over programs and resources. Major types of risks associated with entrepreneurial (viz., high control over programs and resources) and restricted models (viz., low control over programs and resources) are reviewed.Changing conditions call for each Community Mental Health Center (CMHC) to develop a survival strategy based on its own standards and values. The strategy must contain political, funding, programmatic, structural and role change components. A CMHC must orchestrate its strategy as part of an overall survival plan, but may be constrained by the degree of control it has over programs and resources. Major types of risks associated with entrepreneurial (viz., high control over programs and resources) and restricted models (viz., low control over programs and resources) are reviewed.

Cost And Economic Analysis For PACS, A Tutorial

In order to better understand the potential viability of Picture Archiving and Communications Systems (PACS) as an addition to the operating environment of hospitals and clinics, the cost and economic implications of these systems must be evaluated. This paper discusses some key cost-related concepts basic to such an analysis.

Product lines in a complex marketplace: Matching organizational strategy to buyer behavior

Product-line strategy should be developed in relation to markets. This article focuses on designing product-line strategy in relation to four purchaser types: (1) traditional purchasers, (2) motivated purchasers, (3) HMO-type purchasers, and (4) PPO-type purchasers. In many cases, productline strategy may have to adopt various combinations of the above.