COST vs. VALUE

I listened to an interesting discussion on public radio this morning while in my car. Ths issue was the state of cancer research and treatment. One of the comments made by a doctor was that too often when discussing alternative treatment plans with patients, the medical professionals fail to adequately discuss the likely outcomes. Costs and side effects are readily understood and communicated. However, since the various therapies are not curative but rather life extending, it is a difficult decision to make when you consider the "value" of adding 3 months to a life when the "cost" of the treatment can financially destroy a family.


Cost versus value...a balancing act.

Cost versus value is also a balancing consideration at the provider level, especially when looking at alternative financial solutions to the fiscal issues facing hospitals, including equity, debt and Medical A/R funding. Equity solutions are not always available, nor are they available to all providers [e.g. non profits]. Debt financing solutions can be less costly than A/R funding solutions, but they aren't necessarily the best "value" solution when the "hidden costs" of debt or bank financing are added in. The most effective financial solutions for healthcare financing should involve a combination of these three financial tools. By having a balanced financial portfolio, including debt financing, Medical Accounts Receivable [MAR] funding programs from a company like Sun Capital HealthCare Inc. , and equity financing where applicable, the healthcare provider will be well positioned for having a healthy balance sheet and financial results.

Hospital Costs Vary While Quality is Indiscernable

The Herald Tribune article explains how to evaluate a hospital for its quality and cost of its services.

An appendix, the mysterious little organ in the abdomen, is much the same in everyone. So why would it cost, on average, $61,737 to remove it at one hospital, and $17,437 at another? The phenomenon goes beyond surgery, even to common ailments that virtually every hospital sees.

Hospitals base those charges on their internal costs -- the price for bandages, the salaries of nurses, and so on -- and on what they think their local market can support, said David Verinder, chief financial officer at Sarasota Memorial Hospital.