My view on Healthcare Waste

According to PriceWaterhouseCoopers (PwC) Spending can be classified into three waste “baskets”: behavioral, clinical and operational. These baskets cross all of the health sectors and include consumers, government and industry.  The top three areas of wasted spending are defensive medicine ($210 billion annually), inefficient claims processing (up to $210 billion annually), and care spent on preventable conditions related to obesity and overweight ($200 billion annually). (PwC 2008)

Clinical Waste

What is Clinical Waste? According to PricewaterhouseCoopers (PWC)  article The Price of Excess Identifying waste in healthcare spending Clinical waste is” where medical care itself is considered inappropriate, entailing overuse, misuse, or under-use of particular interventions, missed opportunities for earlier interventions, and overt errors leading to quality problems for the patient, plus cost and rework.”  (PWC 2008)

Defensive medicine is defined as the ordering of treatments, tests and procedures primarily to help protect the physician from liability rather than to substantially further the patients diagnosis or treatment While perhaps not “unnecessary care, defensive medicine is meant more to offer economic  and psychological benefit to the physician than to the patient (Hermer 2010) According to a recent national physicians’ survey by Jackson Healthcare, the nation’s third largest healthcare staffing agency, 75% of doctors say that they order more tests, procedures and medicines than are medically necessary in an attempt to avoid lawsuits. (Scherz 2013)

According to Forbes magazine:

A middle aged man enters the emergency room with chest pains. The attending physician diagnoses the patient with indigestion. The physician wants the patient to change his diet, take medication and go home. Due a worried look on the faces of the patient and wife, the doctor has second thoughts.  Despite the

doctors conviction that the diagnosis is correct, the physician orders a battery of tests to rule out a heart attack, and everything is normal. This is defensive medicine. (Scherz 2013)

According to Healthcare Finance News there was an interview of 462 physicians, and the doctors believed that 26% of overall healthcare expenses could be attributed to defensive medicine. Nearly 3 out of 4 respondents said they practiced some form of defensive medicine in the past 12 months. In 2010 dollars, such lawsuit-inspired medicine may have cost the nation $650 billion. The article goes on to highlight that the threat of lawsuits drives defensive medicine, an analysis published in the August issue of Health Affairs suggests that physicians’ fear of a lawsuit may overshadow their actual risk of being sued.  Researchers tried to find a correlation between physicians’ propensity to order tests with the actual risk of a malpractice lawsuit as measured by award caps and a risk index based on how many malpractice claims were filed and award amounts they did not find one. This means that the doctors ordering additional test was not based upon the relative threat of being sued but rather the fear of being sued. (Cerrato 2013)

According to another article in Healthcare Finance News a report from advocacy group Public Citizen shows the results of an analysis of data from the federal government’s

National Practitioner Data Bank, which has tracked malpractice payments since 1990 found the following: (Irving 2013)

·         The number of malpractice payments on behalf of doctors (9,379) was the lowest on record in 2012, falling for the ninth consecutive year.

·         The value of payments made on behalf of doctors ($3.1 billion) was the lowest on record if adjusted for inflation. In unadjusted dollars, payments were at their lowest level since 1998.

·         More than four-fifths of medical malpractice awards compensated for death, catastrophic harm or serious permanent injuries.

·         Medical malpractice payments’ share of the nation’s healthcare bill was the lowest on record, falling to about one-tenth of 1 percent (0.11 percent) of national healthcare costs.

·         Medical liability insurance premiums, which takes into account defense litigation costs and other factors as well as actual payments, fell to 0.36 of 1 percent of healthcare costs, the lowest level in the past decade. (Lincoln 2013)

 According to the New England Journal of Medicine article Claims, Errors, Compensation Payments in Medical Malpractice Litigation reviewed a random sample of 1452 closed malpractice claims from five liability insurers to determine whether it was due to medical error. The result was that claims involving errors accounted for 78 percent of total administrative costs. (Studdert 2009)

Preventable Readmissions Is another category of clinical waste.

Hospital readmission rates have been proposed as an important indicator of quality of care according to an article in Health Care Financing Review a readmission may result from actions taken or omitted during the initial hospital stay. A readmission may result from incomplete treatment or poor care of the underlying problem or poor coordination of services at the time of discharge and afterwards, such as incomplete discharge planning and or inadequate access to care. (Goldfield 2008)

According to Health Affairs magazine article titled Reducing Hospital Readmissions: It’s About Improving Patient Care the CMS paid $17.8 billion a year on patients whose return trips to the hospital could have been avoided.  (Ness 2013) Statistics also show that about one in five patients discharged from a hospital are readmitted within 30 days. Medicare Payment Payment Advisory Commission concluded that about three-quarters of readmissions within 30 days were potentially preventable. (James 2013)  According to the Article one program has had some success in reducing readmission rates is Project BOOST (Better Outcomes by Optimizing Safe Transitions)  Some of the procedures are:

·         Medication Reconciliation Forms

·         A Checklist for discharge patient Education

·         A Checklist for post discharge continuity checks.

In addition to the process of follow up there have been provisions made by the ACA where facilities were charged a hospital for excess Medicare readmissions. Interestingly, hospitals, serving a large number of low-income patients were about twice as likely to receive penalties (77 percent) as hospitals with fewest poor patients (36 percent) (James 2013)

According to the Robert J Woods foundation:

One patient, Eric, said he left the hospital dog tired with a diagnosis of chronic obstructive pulmonary disease but no understanding of when to use his inhaler. He also continued to smoke. To no one’s surprise, he was back in the hospital. Thankfully, the second time around, he was flagged by his health plan and received better follow-up care. He now answers five questions daily so his care team can monitor his breathing, and he takes smoking cessation classes.

(Goodman 2013)

Another issue to why patients are readmitted to hospital is when a patient leaves the hospital with a treatment plan for one illness when other problems of equal importance are ignored. Many patients are discharged without understanding their illnesses or treatment plans, or inadvertently discontinue important medicines needed to stay well.

Operational Waste

What is operational Waste? According to PriceWaterhouseCoopers Operational waste is, ”where administrative or other business processes appear to add costs without creating value.” (PwC 2008)

Inefficient payment for services is an idea that money can be saved based upon how the transaction occurs. Instead of sending healthcare information via mail or other land based carrier significant money can be saved. According to PNC Bank on Average hospitals send information four times before it is paid in full. Health plans said they have to go back to providers on average six times to get additional pay a claim. In 2006 9 in 10 executives still use regular mail and receive paper claims. In 2010 United Health estimated paying for over 145 million claims at $.21 per claim. Electronic claims are estimated to have brought down the transaction cost to $.018 per transaction or a total of $2.7 million. (Mitchell 2011) According to the American Health Information Management Association the process goes like this, when a patient makes an appointment the process begins there must be a collection of the patient’s information to include name, address, insurance or payer, and medical history. Once the patient sees the physician the physician must document the procedures sometimes through dictation, annotation, or through the electronic medical records system.  The information may then go to through a process to record the information in the patient’s medical records. Then the coders need to make sure that the coding is correct or add coding for the services performed.  Next there must be a charge entry to the record and the information must then be transmitted to the insurance payer for further review to make sure evidence of care. Once the insurance firm has the correct information and evidence of care then the payment posting is made to the healthcare facility. As accounts receivable receives payment the bill is finally closed out. (Crocker 2006)

According to articles here are 3 benefits for using an integrated EMR

·         Records management one of the advantages is that multiple users can access the records with an ability to monitor usage and effective security controls.

·         Chart analyses and completion with the EHR if there are missing signatures then a flag can be raised on the system versus waiting for the medical record to be audited and pass through a series of steps to complete the information the amount of time saved from this is significant. Chart analysis can be done for rural areas to optimize workforce strategies.

·         Coding and reimbursement is another area where EHRs can effectively enhance operations. Due to data being available real time the coding process can be done in prior to discharge. Also coding can be done outside of the local labor market. (Deschenes 2012)

Behavioral Waste

What is Behavioral Waste? Behavioral Waste PriceWaterhouseCoopers defines behavioral waste as, “where individual behaviors are shown to lead to health problems, and have potential opportunities for earlier, non-medical interventions.  (PwC 2008)

Preventable conditions in healthcare are unhealthy behaviors such as smoking, poor eating habits, and lack of exercise. According to A Partnership for Prevention paper titled The Economic Argument for disease Prevention: Distinguishing between Value and Savings “unhealthy behaviors account for 38% of all deaths in the United States.” There are three kinds of prevention Primary prevention, Secondary prevention and Tertiary prevention.  Primary prevention is enhancing the lifestyle. Secondary prevention is screening for the diseases caused by lifestyle. Finally, Tertiary prevention is treating the disease. It is important to distinguish between healthcare and medical care. Preventative medicine can be categorized as healthcare. Secondary care can be categorized as medical care. (Woolf 2009) This distinction is noted because a person can receive medical care but it the unhealthy habits persist; all the money spent will only treat the problem versus eliminating the problem. In order to get the biggest value out of this category prevention is the biggest value.

Possible Solutions

Clinical waste

In the category of clinical waste one of the main areas is defensive medicine or the idea that medical professionals are running extra tests in order to prevent lawsuits.  Studies have shown how the amount paid for malpractice lawsuits has been on the decline. (Lincoln 2013) The article goes on to conclude that there is no evidence that the decline in medical malpractice payments is due to safer medical care. If medical malpractice litigation were truly the, “the biggest cost driver” in medicine, then declining payments should have pulled overall health costs down.  The article goes on to conclude that instead of focusing on malpractice claims and lawsuits facilities should focus on avoidable medical errors.  This overlaps with the hospital readmission rates. Just by virtue of hospital readmission being a component of quality of care. (Lincoln 2013)

Operational Waste

Under operational waste is the component of inefficient payment of services. To remedy inefficient payment there is information technology. Under this category PricewaterhouseCoopers also listed inefficient use of technology as an area of waste.

Behavioral Waste

Under the category of behavioral waste are the preventable portions where education and lifestyle changes can work as a primary solution to problem. According to Harvard School of Public Health lists 6 key behaviors:

·         Choosing healthier foods (whole grains, fruits and vegetables, healthy fats and protein sources) and beverages

·         Limiting unhealthy foods (refined grains and sweets, potatoes, red meat, processed meat) and beverages (sugary drinks)

·         Increasing physical activity

·         Limiting television time, screen time, and other “sit time”

·         Improving sleep

·         Reducing stress (Harvard 2014)

Conclusion

The underlying things that could help on the clinical and operational side are the ability to coordinate and to be able to decide. To be able to enhance coordination and decision

there are information technology systems that can streamline the way the business is done. 

For example in the clinical waste basket there are issues with defensive medicine or medical errors as well as hospital readmissions which can also be described as a medical error.  If we examine what happens from the time a person enters a healthcare facility to the time they go home we can note that all of the detailed patient information and services has to go into the medical record as well as the billing record.

Technology is now to the point where the patient can be managed real time by multiple people versus in the old way information was recorded by one singular person at a time.  Sometimes there are errors in patient data as in the example of the patient that comes in with the worried look and indigestion the physician can look at the patient medical record to see which tests have been run already and not duplicate services. The patient can then receive their prescription a cross reference against what the patient is taking so that the physician and pharmacist can cross reference against allergies or check for interactions. All of this can happen while simultaneously coding the information for billing purposes and as soon as the patient is leaving the facility the billing and paying entity can receive their information. The patient can receive the information of services as well as any instructions for follow on care. All of this can happen from the ability to effectively utilize the electronic medical record as well as networking capabilities.

When it comes to behavioral waste this component can be moderately helped through education and information. After the patient receives their services through the electronic medical record the patient can receive educational materials. In the future the hospitals or healthcare provider can track whether or not the patient is following the instructions that have been sent to the patient to be able to continue their care.

The applications of information technology and sharing can have huge impacts on the way current processes are done. I think that a large amount of processes can be managed through information technology beginning with the electronic health record and integrating of information sharing between care facilities as well as payers. Even if there are more reporting requirements are needed with IT systems it would be a matter of deciding which information is tracked and which information needs to be communicated to whom.

According to the Pathways to “Evidnce-Informed” Policy and Practices a frame work for action “The framework encourages research and planning in the area of how to “adopt, adapt, and act” on the evidence and in capacity for implementation as part of the evidence-informed policy development process.” (Zwi 2005) This review of what the issues in healthcare waste are will help get a basic understanding of what ideas to adopt; and how to put actions into place to solve some of the issues with cost.

References

Cerrato, Paul Defensive medicine:A solvable problem Healthcare Finance News Retrieved from: 

http://www.healthcarefinancenews.com/news/defensive-medicine-solvable-problem?single-                page=true

Crocker, Janice 2006 How to Improve Your Revenue Cycle Processes in a Clinic or Physician

Practice, AHIMA 78^th National Convention and Exhibit Proceedings Retrieved from:  http://library.ahima.org/xpedio/groups/public/documents/ahima/bok1_035391.hcsp?dDocName=bok1_035391

Deschenes, Steff (2012) 3 Operational benefits of EHR adoption, Healthcare Finance News Retrieved

from: http://www.healthcarefinancenews.com/news/3-operational-benefits-ehr-adoption?single-page=true

Harvard (2014) Obesity Prevention Strategies, Harvard School of Public Health Website hsph.harvard.edu last accessed on

4/16/2014 Retrieved from: http://www.hsph.harvard.edu/obesity-prevention-source/obesity-prevention/

Hermer, Laura; Brody, Howard 2010, Defensive Medicine, Cost Containment, and Reform Journal of

Internal Medicine Retrieved from: http//www.ncbi.nlm.nih.gov/pmc/articles/pmc2855004/

GoldField, Norbert; McCullogh, Elizabeth; Hughes, John; Tang, Ana; Eastman, Beth; Rawlins, Lisa; Averill, Richard (2008)

Identifying Potentially Preventable Readmissions, Health Care Financing Review Retrieved from https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/HealthCareFinancingReview/downloads/08Fallpg75.pdf

Irving,  Frank (2013) Malpractice not cause of healthcare cost,  Healthcare Finance News Retrieved from: 

http://www.healthcarefinancenews.com/news/malpractice-not-cause-healthcare-cost

James, Julia (2013) Medicare Hospital Readmissions Reduction Program, Health Policy Brief Retrieved from: 

http://healthaffairs.org/healthpolicybriefs/brief_pdfs/healthpolicybrief_102.pdf

Goodman, David; Fisher, Elliott; Chang, Chiang-Hua; (2013) The Revolving Door: A Report on U.S. Hospital Readmissions,

Robert J Woods Foundation Retrieved from: http://www.rwjf.org/content/dam/farm/reports/reports/2013/rwjf404178

Lincold, Taylor (2013) No Correlation Continued Decrease in Medical Malpractice Payments Debunks

Theory That Litigation Is to Blame for Soaring Medical Costs, Public Citizen Retrieved from: http://www.citizen.org/documents/medical-malpractice-payments-do-not-increase-health-care-costs-report-2013.pdf

Mitchell International (2011) Keys to Successfully Automating Medical Claims Payment Needs, Issues,

Requirements and Results retrieved from:  http//www.mitchell.com

Ness, Debra, Kramer (2013) Reducing Hospital Readmissions: It’s about Improving Patient Care, Health Affairs, Retrieved from:

http://healthaffairs.org/blog/2013/08/16/reducing-hospital-readmissions-its-about-improving-patient-care/

PricewaterhouseCoopers Health Research Institute. (2008). The Price of Excess. 

http://pwchealth.com Retrieved from PricewaterhouseCoopers Health Research Website: http://pwchealth.com/cgi-local/hregister.cgi?link=reg/waste.pdf

Scherz, Hal; Oliver, Wayne 2013, Defensive Medicine: A Cure Worse Than The Disease Forbes Magazine

Retrieved from: http//www.forbes.com/sites/realspin/2013/08/27/defensive-medicine-a-cure-worse-than-the-disease/

Studdert , David; Mello, Michelle; Gawande, Atul; Gandhi, Tejal; Kachalia, Allen; Yoon, Catherine; Puopolo, Ann; Brennan,

Troyen (2009) Claims, Errors, and Compensation Payments in Medical Malpractice Litigation, The New England Journal of Medicine, Retrieved from: http://symptomchecker.isabelhealthcare.com/pdf/Claims_Errors_and_Compensation_Payments.pdf

Woolf, Steven; Husten, Corrine; Lawrence, Lewin; Marks, James (2009) The Economic Argument for

Disease Prevention: Distinguishing Between Value and Savings Partnership for Prevention Retrieved from: http://www.prevent.org/data/files/initiatives/economicargumentfordiseaseprevention.pdf

Zwi,  Bowen (2005) Pathways to “Evidence-Informed” Policy and Practice: A Framework for Action PLos Med Retrieved from:

http://www.plosmedicine.org/article/info%3Adoi%2F10.1371%2Fjournal.pmed.0020166#pmed-0020166-g001

BPR vs BPO and IT

Estimates according to Rand Corporation Paper titled The 21^st Century at Work Forces Shaping the Future Workforce and Workplace in the United States mentions that in the coming 10-15 years, work in the United States would have been shaped by demographic trends, technological advances, and economic globalization (Karoly 2004) The article further explains that through synergies across technologies and disciplines will generate advances in research and development, production, processes, and the nature of products and services. This will further support higher productivity growth, and change the organization of business and the nature of employment relationships. (Karoly 2004)

BPR BPO and Technology

Business Process Reengineering (BPR) was first introduced by Hammer, Davenport and Short, as an approach to management process involved in raising performance.  Since its initiation, it has become popular management tool for dealing with rapid technological and business change in today’s competitive environment. BPR evolved from the experiences of a few US-based companies in the late 1980’s (Pellicelli 2012)

Business Process Outsourcing (BPO) is the model of delegation of one or more information technology enabled business processes to an external source provider.  Outsourcing of business processes that involve the manipulation of either physical or informational objects constitutes contract manufacturing.  Information Technology is integral to process execution and management in BPO. This is true of transactional processes such as administration or processing services, where IT performs simple automation or process updates, as well as more strategic processes such as customer analytics or financial planning, where IT facilitates linkages with other processes and delivers business information to process workers in a timely fashion.  (Mani 2010)

Business Process Reengineering generally is more dramatic and higher risk than Business Process Outsourcing.  According to Bain and Company there are five steps to the business process reengineering:

•           Refocus company values on customer needs

•           Redesign core processes, often using information technology to enable improvements

•           Reorganize a business into cross-functional teams with end-to-end responsibility for a process

•           Rethink basic organizational and people issues

•           Improve business processes across the organization (Rigby 2013)

According to the Rand Corporation they have predicted a vertical disintegration, whereby firms change the production process and specialize in broad products and services that define core competencies, while outsourcing non core activities. (Karoly 2004)

Some of the technologies that have helped enabled business re-engineering are:

•           Shared databases, making information available at many places

•           Expert systems, allowing generalist to perform specialist tasks

•           Telecommunication networks, allowing organizations to be centralized and decentralized at the same time

•           Decision support tools, allowing decision-making to be part of everybody’s job

•           Wireless data communication and portable computers, allowing field personnel to work office independent

•           Interactive videodisk, to get immediate contact with potential buyers

•           Automatic identification and tracking, allowing things to tell where they are, instead of requiring to be found

•           High performance computing, allowing on the fly planning and envisioning.

(Johnson 2011)

According to Gunasekaran, in Modeling and analysis of business process reengineering in the 1980s, Total Quality Management (TQM) helped incremental process improvements in manufacturing/service organizations, but in the 1990s it was replaced by BPR using advanced IT (Gunasekaran 2002) according to the article the most efficient method was process mapped through the restructuring of an information system that should support functional integration to improve productivity and quality. There are several modeling methods for IT to help the BPR process.  Since the strategy begins with a top down approach here are some of the steps and software.

The decision support systems help businesses decide on a strategic level.  These enterprise systems help select suitable strategies and methods for reengineering based on a set of performance measures and metrics. Decision Support Systems (DSS) have evolved from two main areas of research the theoretical studies of organization decision making conducted during the 1950s and 1960’s at Carnegie Institute of Technology and Massachusetts Institute of Technology respectively. (Shim, J.P. 2002)

Some of the DSS systems in use today are in the healthcare field particularly a component of the Electronic Health Records. This allows the ability to improve care at the point of delivery with a variety of tools called Clinical Decision Support System where the software provides general clinical knowledge and guidance, intelligently processed patient data, or a mixture of both; and information delivery formats can be drawn from data and order entry facilitators, filtered data displays, reference information, alerts, and others. (Teich, J 2012)

The business process system design helps with system design considering the non value added activities the tools used for this activity are usually the analytical models such as queuing and simulation models. (Gunasekaran 2002)

Under the umbrella of project management are the Program Evaluation Review Technique/ Critical Path Method (PERT/CPM) and flow charts are used for the implementation of various reengineering processes. (Gunasekaran 2002)

Under the area of reengineering business process there are activity based analysis (ABA) and workflow model including flow charts used to analyze the business process and identify the value and non value added activities. (Gunasekaran 2002)

To understand the business process system there are Integration Definition models (IDEF),  European Forum for Quality Management (EFQMO) Models and Petri-Net Models these produce visual forms. (Gunasekaran 2002)

How the Technology works

How does the business achieve its goals? How does this tie in to the achieving customer needs? According to an article in Educause Quarterly the University of Wisconsin had an issue with their computer systems. Some of the systems implemented in the 1980’s could not keep up with the web environment in the 90’s so the school system purchased a system wide license for Peoplesoft. This tied some of the older systems together an Admissions module, a Student Records module, Student Financials module. With these new modules the school administration was able to produce more accurate and meaningful reports for various levels of the university.

Some of the main things highlighted by this Process reengineering were the sharing of multiple databases also known as modules between different parts of the business. In this case they were student Finance, Admissions, and Student Records.

Some of the telecommunications networks allowed for multiple access of information in a timely manner. E-Hive web application allowed successive enrollment by student classification Seniors, Juniors, Sophomores, and Freshman. If a student doesn’t meet the time and classification requirements they may not be allowed to enroll during that window. Students with financial hold will not be allowed to register this is another example of the database integration that the school did not have before the integration. This is also an example of shared decision making between users. One can easily see the parallel between this situation and some of the technology drivers. (Yakovlev 2002)

Some of the interesting finds were Mutual Benefit Life had an issue where it would take several months to process an insurance policy with 225 people in 5 departments using 19 specialist undertaking 30 specific tasks and 7 different computer systems. It is now processed the same day with 1 case manager, 55% less staff doing 20% more business and a 40% cut in overhead using a single computer system. (Norman 1993)

Process Integration

According to the Chartered Institute of Purchasing and Supply in an article titled Business Process Re-engineering & Business Processing Outsourcing – what the procurement professional needs to know BPR is just one element of making a step change.

When an organization has chosen the appropriate process and considered the use of IT to deliver that process, it will need to think about other aspects such as structure, systems, people, culture, and of course whether it is obtaining optimum value for money from its external suppliers.  Are they going to do the process re-engineering in house or will they outsource the process.  (Bates 2013)

So from a more generic view a firm may analyze Total Quality, then decide if a more dramatic change is needed or re-engineering. Finally the question becomes if the firm wants to use in house staff to complete the engineering or outsource the process.  (Bates 2013)

Domestic vs Offshore Outsourcing

According to an article in Industrial Labor Relations Review estimates staffing services reduced the amount of employment by manufacturers by 6 million or 3%.  The rapid growth of blue collar workers in the staffing sector began in the 1980’s. In 2010 the staffing services sector comprised of three industries temporary help services, professional employer services, and employment agencies comprised 77%, 15%, and 9% respectively.  (Dey 2012)

American manufacturing companies chose to outsource production overseas, for various reasons. Some reasons were to establish presence in China, Brazil, and India others were the low cost of labor. This low cost labor allowed the products to flood the global marketplace.  There are, hidden costs of outsourcing estimated to be between 14 and 60 percent of purchase price according to CCMP Supply Chain Quarterly article titled The 10 hidden costs of outsourcing.  According to the article there can be some faulty assumptions:

·         Oil Prices have tripled since 2000, making shipping more expensive

·         Wages in China have increased five fold

·         Some American Labor Unions are becoming globally competitive

·         The natural gas boom in the United States has lowered operating and facility costs. Natural Gas in Asia can be four times as high as those in the US.

·         Higher material-value content in products combined with productivity gains through continuous improvement has made chasing labor savings outdated.

·         Much of the labor savings has been trumped by waste and overhead costs required to make the supply chain function well. (Burton 2013)

Because of these assumptions and points of friction some authors are expecting manufacturing to return to the US.  According to Mayer in his article Strategies: U.S. companies are bringing back manufacturing jobs he argues that some 70% of large manufacturers had some production in non U.S. locations. (Mayer 2013)

Conclusion

Information Technology has had a powerful effect on the process of business operations. We have seen the manufacturing sector undergo several changes as a result.  From Total Quality Management, to Business Process Re-engineering to Business Process Outsourcing business have transition from a centralized hierarchy to a, “disintegrated” firm with production and manufacturing overseas.  This has all been enabled with Information Technology systems that integrate data systems for de-centralized information with real time implications due to newer World Wide Web applications and networking.  I think the next step is to move the business based upon where the services or products are consumed AJ Sweatt has used the term of Manufacturing in Markets of Consumption. (Sweatt 2011)   Manufacturing and servicing both have abilities to be decentralized at some point.  There has to be some gained benefit at approximation of consumption in the future it might be some other method of evaluating where these processes take place and this in itself will could lead to a further change in the way that business is conducted.

References

Bates, James (2013) Business Process Re-engineering and Business Process Outsourcing Retrieved

from: http://www.cips.org/Documents/Knowledge/Procurement-Topics-and-Skills/7-Understand-Need-Market-and-Options-Assessment/Outsourcing-Offshoring-and-Insourcing/CIPS_and_PACG_Re-engineering_and_Outsourcing.pdf

Burton, Terence (2013) The 10 hidden costs of outsourcing, CCMP’s Supply Chain Quarterly Retrieved

from: http://www.supplychainquarterly.com/topics/Strategy/20130621-the-10-hidden-costs-of-outsourcing/

DEY, M., HOUSEMAN, S. N., & POLIVKA, A. E. (2012). MANUFACTURERS' OUTSOURCING

TO STAFFING SERVICES. Industrial & Labor Relations Review, 65(3), 533-559.

Retrieved from http://proxy.devry.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&AuthType=url,cookie,ip,uid&db=bth&AN=80305227&site=eds-live

Gunasekaran, A; Kobu, B. (2002) Modelling and analysis of business process reengineering International

Journal of Production Research Retrieved from: http://www.umassd.edu/media/umassdartmouth/businessinnovationresearchcenter/publications/modelling_bpr.pdf

Johnson, Abhinav (2011) Role of IT in BPR Retrieved from:

http://www.slideshare.net/abhinavjohnson/business-process-reengineering-bpr-role-of-it#

Mani, D., Barua, A., & Whinston, A. (2010). AN EMPIRICAL ANALYSIS OF THE

IMPACT  OF INFORMATION CAPABILITIES DESIGN ON BUSINESS

PROCESS OUTSOURCING PERFORMANCE. MIS Quarterly, 34(1), 39-62.

Retrieved from: http://proxy.devry.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&AuthType=url,cookie,ip,uid&db=bth&AN=48478140&site=eds-live

Mayer, Alan (2013) Strategies U.S. companies are bringing back manufacturing jobs  The Business

Journals Retrieved from: http://www.bizjournals.com/bizjournals/how-to/growth-strategies/2013/06/strategies-us-companies-are.html?page=all

Norman, David (1993) Business Process Reengineering, European Conference on Information Systems

website  Retrieved from: http://is2.lse.ac.uk/asp/aspecis/19930028.pdf  Accessed April 7, 2014

Pellicelli, M., Meo, C., & Cioffi, A. (2012). ORGANIZATIONAL CHANGE: BUSINESS

PROCESS  REENGINEERING OR OUTSOURCING?. Annals Of The University

Of Oradea, Economic Science Series, 21(2), 277-293. Retrieved from:

http://proxy.devry.edu/login?url=http://search.ebscohost.com/login.aspx?direct=tr

ue&AuthType=url,cookie,ip,uid&db=bth&AN=48478140&site=eds-live

Rigby, Darrell (2013) Management Tools Bain & Company Retrieved from:

http://www.bain.com/Images/MANAGEMENT_TOOLS_2013_An_Executives_guide.pdf

Shim, J.P. Merrill; Warkentin, Merrill; Courtney, James; Power, Daniel; Sharda, Ramesh,

Carlsson, Christer (2002) Past present, and future of decision support technology, Dession Support Systems Retrieved from: http://www.researchgate.net/publication/222402824_Past_present_and_future_of_decision_support_technology/file/79e4150f98f12023cc.pdf

Sweatt, AJ Instead of Reshoring Think Manufacturing In Markets of Consumption retrieved from

website AJSweatt.com Retrieved from: http://ajsweatt.com/instead-of-reshoring-think-%E2%80%98manufacturing-in-markets-of-consumption%E2%80%99/ Accessed on April 7, 2014

Teich, Jonathan (2012) Clinical Decision Support Systems, HiMSS Retrieved from:

https://www.himss.org/library/clinical-decision-support

Yakovlev, Ilya (2002) An ERP Implementation and Business Process Reengineering at a Small

Univeristy Educase Quarterly Retrieved from: https://net.educause.edu/ir/library/pdf/eqm0227.pdf

How is the Affordable Health Care Act going to save you money?

Will the Affordable Care Act Make Health Care More Affordable.  By the RAND Corporation 2013

Healthcare cost has posed a substantial burden for Americans.  Between 2001 and 2010 the share of working age adults with medical expenses totaling 10 percent or more of income increased from 21 percent to 32 percent.

Rand has completed the following study:

RAND has a Comprehensive Assessment of Reform Efforts (COMPARE) model, RAND researchers estimated how changes in coverage under the ACA will affect consumers’ spending on health care and their risk of catastrophically high health care costs. Specifically, the analysis examined two kinds of consumer spending  out of pocket spending,  which includes deductibles, copayments, and coinsurance (the fraction of expenses paid by the insured person), and total spending which includes out of pocket spending plus the net cost of premiums (total premiums minus subsidies). Because the ACA offers different coverage options based on income, the research team assessed how the effects on consumer spending will vary across three income groups those with incomes below 138% FPL and 400% FPL. (RAND 2013)

According to the Health and Human Services the FPL for a family of 4 is $23,555. The Federal Poverty Level (FPL) is the minimum amount of gross income that a family needs for food, clothing, transportation, shelter and other necessities. This level is determined by the Department of Health and Human Services (DHHS). FPL varies according to family size. Public assistance programs, such as Medicaid in the U.S., define eligibility income limits as some percentage of FPL. (Investopedia 2014)

Consumers with incomes below 138% of FPL (In the family of four this is $32,499. In a family of four the FPL at 400% is $94,200) Consumers in this group will see an estimated decrease in out-of-pocket spending under the ACA, but effects on total spending will vary. (RAND 2013)

According to the Kaiser Family Fund calculator with a Silver plan for a two income home with 4 persons at $81,000 (the 2012 Texas Median income is $80,092 for respective situation Census 2014)  annual income the premium would be $9148, (Kaiser 2014) this would place the family between the FPL of 138% and 400% at 344%. According to the RAND Corporation this group transitioning from the pre-ACA individual market to the ACA-regulated individual market will see a decrease in both out-of-pocket spending (from $1,191 to $686) and total spending (from $4,417 to $3,523). (RAND 2013) There is also an opportunity to receive a government tax credit subsidy of up to $1723 per year. (Kaiser 2014) Additionally the out of pocket maximum can be no more than $12,700.

A two person income home earning $21,000 (135% FPL) annually will only receive a tax credit up to $4,465 for a silver plan. However if they opt to enroll in the bronze plane it may not cost anything for the premium and receive up to $3505 in subsidies.  The group enrolled in the bronze plan will pay less in premiums but have higher out of pocket expenses. (Kaiser 2014)

I think the premise of the Affordable Care Act RAND Corporation study is to show how the ACA will help catastrophic medical expenses. After either purchasing health insurance there will be in most instances a reduction in out of pocket expenses. Some of the premiums can approach as much as 10% of a group’s income. The tradeoff between paying high premiums and minimum co-insurance payments in some scenarios may prove more beneficial if you are consistently spending more than the premiums minus the tax credits. If you are consistently spending less on healthcare then the premiums may not be most beneficial. This perhaps can enhance the insurance companies to find more efficient healthcare facilities. Insurers may work in similar fashion to the Health Maintenance Organizations where at times it would be a challenge to receive care.

Census (2014) State Median Income, Income Data, U.S. Census Bureau website last accessed 4/13/2014

Retrieved from: http://www.census.gov/hhes/www/income/data/statemedian/

Federal Poverty Level (2014) Definition Investopedia  Website Last Accessed 4/13/2014 Retrieved from:

http://www.investopedia.com/terms/f/fpl.asp

RAND Corporation (2013) Willl the Affordable Care Act Make Health Care More Affordable? RAND

Corporation Brief Retrieved from: http://www.rand.org/content/dam/rand/pubs/research_briefs/RB9700/RB9734/RAND_RB9734.pdf

Kaiser Family Foundation Subsidy Calculator (2014) KFF.org Website Last Accessed 4/13/2014 Retrieved

from http://kff.org/interactive/subsidy-calculator

Health Insurance Premiums annually reach above $16,000 for a family

I'm looking at the average amounts for premiums for medical care. I am starting to think that the cost/versus the benefits is worth it, I know there are instances where it is helpful but for most people I am thinking otherwise. According to the National Conference of State Legislatures the annual premium cost per family is just above $16000. Over 20 years this is a total of $320,000 for 20 years. To me that looks like a mortgage payment. Last year my children went to the doctors office probably 3 times each. At $150 per visit that would bring our yearly spending for health to just around $900 and if factor in the cost of drugs I would guess that we would be up to $1500, slightly above the cost of one month of premiums of $1333.33 I'm sure you could figure in dental and eye visits too. If that is the case then let's say you got up to $3000 which would be the cost of a pair of glasses and a few dental visits with cleanings. My son has asthma and allergies my daughter is going to be 3. So in my particular case of mandating health insurance I would say it probably wouldn't be worth it. In one of the premium posts I figured the unpaid healthclaims was around $41 Billion. So lets say among the 150 million workers according to the BLS the amount due per person is $282 that would be an additional $525 for my family and that would put us at around $3550 per year. I am not 100% sure if I have a handle on the cost  portion but, I imagine these health insurance guys are making out pretty good.  So for the government mandate that everyone get insurance seems a little suspect to me. I almost think that it would be more feasible to require someone to have a catastrophic insurance that pays up to a certain amount for people in their older age for serious issues like cancer, heart attacks, strokes. Instead we must pay annually steep prices for insurance that wants to put caps on the amount we spend and if you leave a job you lose what you have paid in. That $16000 per year over 10 years is $124,500 that could be used to purchase a decent house or for the remainder of 10 years it would go toward retirement to me instead of having money for individuals we are lining the pockets of insurance workers. I wonder what the proponents for mandated socialism would say if they analyzed the ACA against their finances.

How to avoid a Doctor Shortage

 
Photo was used by the Rand Corporation full article here http://www.rand.org/blog/2014/04/how-to-avert-a-doctor-shortage.html

I think that the Retail Clinics are a way to go. The NPHs and PAs of the country can expand to meet the need for patient entry into the medical system. Combine this with the ACOs and I think that may be a winning combination. I remember going to a clinic and waiting no more than about 15 minutes to be seen and was out of there in under an hour with extra vaccinations at with a cost of about $90. I am of the conviction that primary cost shouldn't be at its current price point. I think these adjustments should drive that cost down as well.

http://www.rand.org/blog/2014/04/how-to-avert-a-doctor-shortage.html