MONITORING PROGRAMS AND BUDGETING IN THE NEW HEALTHCARE ENVIRONMENT

The healthcare delivery environment has changed dramatically over the last several years. Most notably is the emphasis on appropriate limitation of medical resources to those patients that truly require it by set criteria. Healthcare organizations now face unique challenges in this new environment to deliver appropriate and quality healthcare yet remain profitable. How can they determine if what they are doing is economically beneficial? Should they continue the same programs and how much money should they devote to each program to remain profitable? How can they determine this analytically?

This is a perfect scenario where cost effectiveness analysis (CEA) can provide the appropriate guidelines to make good economic decisions. In CEA, one sets up a decision tree with two or more scenarios to compare which scenario (branch) is the best economically.  CEA also has the added advantage of building the effectiveness of each decision branch into the model.

For example, suppose that your organization has a CHF disease management program as a supplement to the physician’s offices to help manage these chronically ill patients. A CEA decision tree can compare the costs to maintain CHF patients without the program, versus with the program. If the patients are clinically better with the program, this can be built into the model using Quality Adjusted Life Years (QALY). A CEA model can tell how much savings one program can bring versus another program or no program at all. This information can help in not only deciding whether to keep such a program, but also how much one can invest in the program for economic benefit to the healthcare organization. This can be critical to budgeting for subsequent years.

This is only one example of how CEA can help healthcare organizations in medical decision making and budgeting of existing healthcare programs. 

About William L. Matzner, M.D., PhD, FACP

Dr. William Matzner works in the area of healthcare economics consulting at Healthcare Analytics, LLC, in California. He graduated Phi Beta Kappa from Stanford University. He received his M.D. with Honors from Baylor College of Medicine. In 1988, he was the Solomon Scholar for Resident Research at Cedar Sinai Medical Center. Dr. Matzner subsequently was awarded a PhD in Neuro Economics from Claremont Graduate University. He is board certified in Internal Medicine and Palliative Medicine. He has researched and published extensively on the issue of reproduction and immunology in medical literature. He has been in private practice since 1989, specializing in Reproductive Immunology and Internal medicine.

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