Please write a response to each discussion
As far as what accounts for the difference in cost, there could be several reasons. However, the Centers for Medicare & Medicaid Services note that if a hospital treats a large amount of low-income patients, it receives a percentage add-on payment (disproportionate share hospital adjustment) applied to the DRG-adjusted base payment rate. Which provides for a percentage increase in Medicare payment for qualifying hospitals under either of two statutory formulas designed to identify hospitals that serve a disproportionate share of low-income patients. For qualifying hospitals, the amount of this adjustment may vary based on the outcome of the statutory calculation. Not to mention, there are no standardized pricing fees for such services as knee replacements, implants, removal of gallbladders etc. as these can and do vary from area to area depending on what the industry charges the hospital at a premium. Last, another thing to consider with regarding varied costs are the patients length of stay.
DB 5.1: Franks
From comparing the two hospitals, the one factor that stands out to me is the factor of patient age for the hospitals. The costs of my hospital are higher than my competitor’s costs. A 68-year old who has a major joint or limb reattachment will more than likely cost the hospital more when compared to a 50-year old individual. Also, the length of stay differs between the two hospitals because patients who are older will generally need a longer stay after a major surgery is performed. In addition to this, patients who are 68 and older will more than likely have a chronic condition for which they are generally on a routine, prescribed prescription for, which could account to the difference in the pharmacy costs for the two hospitals. According to the Healthcare Cost and Utilization Project, adults aged 65-84 years had the highest mean costs per stay, which exceeded the average cost for all hospital stays (Pfuntner, Wier, & Steiner, 2013). Further, a variety of factors may account for the cost differences between the two hospitals, which can be associated with providing higher quality of care (Guerin-Calvert, 2011). There are also factors including costs imposed by different state regulations and different cost-containment strategies employed by the hospital.
Dr. Mallory practices at your hospital and your competitor. Presented below are data for DRG 209 (Major Joint and Limb Reattachments, Lower Extremity) that reflect practice patterns for Dr. Mallory at the two hospitals. What do you think accounts for the difference in costs between the two hospitals?
One factor that can account for the difference in cost is the patient’s age. According to The U.S. Department of health and human servicesmore elderly (65 to 74) patients have a longer stay and higher hospital cost because they are more likely to have DRG 209 and complications. Another factor could be the location. “The average inpatient hospital charges for a patient getting a joint replacement may range from $5,300 at a hospital in Ada, Okla. to $223,000 at a hospital in Monterey Park, California” (Jaslow, 2013)
“Each DRG represents a category of patients. This category contains patients whose resource consumption, on statistical average, is equivalent. DRGs are part of the prospective payment reimbursement methodology.”
When looking through the comparison of costs between the two hospitals, the first factor that stands out to me is the difference in the amount of discharges. By producing a larger number of discharges and seeing more patients at hospital A there is more accumulation of charges which explains the difference in ancillary costs such as the $1,332 gap between facilities when it comes to medical supply cost. With the medical supply costs for hospital A surpassing hospital B by such a large amount the question could be asked if hospital A should seek a different provider to even out those costs or if they truly are that high due to the length of stay being longer and the number of discharges being higher.
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