REVENUE GENERATION IN THE OUTPATIENT SETTING

Unlike other forms of economics, in healthcare, one cannot create increased demand for healthcare de novo as people do not seek healthcare professionals unless they are sick or injured. Therefore the pool of potential revenue is essentially fixed by the nature of various diseases and/or injuries. The problem that was suggested to me is that building a new surgery center will require much thought because the patients will come from local referrals and insurance companies, and not from a network of local physicians as had been done previously. However, the conversion of this potential revenue into increased demand for the surgery center is the key problem to solve before they would proceed with construction of the center.
 
Cost Effectiveness Analysis (CEA) presents a convenient and accurate way to compare revenue from physician referral vs from local and insurance referrals. One branch can compare the cost of generating the referrals from a physician referral network and its effectiveness in bringing in patients vs a branch, showing the costs in generating revenue using local marketing and insurance networks. The result will give a good idea if this new type of revenue generation is effective enough to justify the investment into a new surgery center. 
 
CEA provides a unique and rigorous way to compare what at first appears to be apples vs. oranges. It can provide quantitative results that can help in deciding the feasibility of new investments for the healthcare organization. 
 
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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