Cost Versus Efficiency in Hospitals

The cost of any hospital unit does not account for the quality of health care received by patients. Therefore transferring patients from university hospitals to community hospitals does not improve efficiency. In this case, the cost is determined by the quality of health care, as well as the nature of the health conditions being treated. As for the university hospitals, there is a lot of research, and this attracts more severe conditions which often require superior machines. For instance, the resources available in these institutions are expensive, and this often increases costs amounting to increased prices. These prices affect all patients. On the other hand, community hospitals may not be expensive since the conditions handled do not require costly resources. Therefore, their efficiency levels may be similar to those of university hospitals although the costs incurred vary (Getzen and Allen, 179-181).

Hospitals and computers have different economies of scale. While computer technology becomes profitable by cutting down on costs, hospital technology involves the discovery of new cures. Such discovery involves a lot of research and advanced equipment which are often expensive. This makes quality improvements in hospitals more expensive than computer technology. Similarly, health care involves the treatment of illnesses that keep advancing to become more complex. Increased complexity requires more expertise and research while computer technology involves solving problems once and for all. Once an improvement is done, a problem is solved accurately. In health care accuracy is not guaranteed and one health issue may involve a lot of trials and research (Getzen and Allen, 185-188).

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If the cost per laboratory test is reduced by 75%, the total cost is likely to reduce by more than 75% since laboratory testing is routine care that has a steady flow of patients. the overall cost is not likely to go up. In this case, the cost of maintaining the automated machine matches the number of patients attended daily in a normal setting. The laboratory is not a very specialized unit; thus, there are few chances of failing to meet the expected number of tests required to pay off the cost. While specialized units depend on the number of admissions done, laboratory testing involves patients from various units and is not specific (Getzen and Allen, 186-188).

The revenue created is determined by the number of patients visiting a certain facility. However, hospitals compete with physicians and insurance companies. This is because these entities determine whether a patient chooses one hospital over another. Patients choose to go to a certain hospital if a preferred doctor is there to attend them. In this competition, hospitals offer doctors better income packages to attract them to work for them. As a consequence, many patients are attracted to the hospital. Such incentives include assistance in relocation, income guarantees, or even bonuses. Some insurance schemes are preferable hence hospitals strive to contract them. In this case, they have a big number of clients who are limited to the hospitals contracted. They also help physicians in their private practice to encourage them to move their practice to them. They also compete in terms of the quality and technological sophistication of the services offered. Hospitals seek to acquire more superior facilities than those of their competitors (Getzen and Allen, 191-192).

Works Cited

Getzen, Thomas E, and Bruce Allen. Health Care Economics. Hoboken, NJ: Wiley, 2007. Print.

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