Cost Containment And Its Effect On Quality And Worker Safety

To resolve the problem the major issue of cost containment and it's effects in hospitals today, the ration of hospital personnel versus the number of patients should be evaluated to ensure quality and worker safety. Cost containment is the practice of managing expense levels to avoid spending large amounts of money without cause; it’s also a way companies can lower spending to allow them to profit safely, but if it is implemented too lightly or heavily, it will either cause the hospital to lose money or have no effect. To deal with potential side effects of cost containment, a scheduling program should be used to predict how much employees are needed to complete an assignment and how much work they should expect. Hospitals can try different strategies like cost shifting and budget setting to save money.

Introduction

To resolve the problem the major issue of cost containment and it's effects in hospitals today, the ration of hospital personnel versus the number of patients should be evaluated to ensure quality and worker safety. Cost containment is the practice of managing expense levels to avoid spending large amounts of money without cause; it’s also a way companies can lower spending in order to allow them to profit safely. Cost containment, in theory, sounds like a great idea but just as a theory, it’s very difficult to put into practice. Results have shown that in certain cases, cost containment can actually hurt a company more than it helps them; this is especially true in the health industry.

Why is Cost Containment a Problem?

As stated before, cost containment can actually hurt a company more than it helps. In the health industry, if a hospital wants to save money and profit, one of the easiest ways it can do that is by letting some employees go. Those employees can be seen as ‘extra weight’ that has no real purpose and value to the hospital and only present to waste money, thus they are then disposed of. It’s fine to fire one or two employees, however when hospitals starts to fire too many employees in order to save money, it then becomes a big problem as it cause the remaining employees to lose faith in the hospital and leave, requiring the hospital to lose way more money to hire new employees that are not the best options available to fill in the missing spots. A nurse’s intention to leave is affected by their opinion of the hospital they’re working for, their opinion are influenced by the management, leadership, pay, benefits, job satisfaction and work to home interferences. From this, we can conclude that all of these are big factors to an employee staying or not, but trust is the biggest factor in an employee deciding to stay or leave a company, firing a lot of employees is the best way for a company to lose trust in them and therefore causing them to leave and the company to lose money rather than save it.

Another problem with cost containment is that when hospitals take it too far is that it will cause work overload. Overloading nurses causes them to burn out, take more sick days, become discontent, and most importantly it causes an increased chance of errors, accidents that could potentially harm a patient, also a high positioned personnel in the hospital now will spend more time doing small tasks that a low-paid personnel used to do for them, since the low-paid personnel have been fired to save money. As stated, firing low importance employees causes the more work for the high importance employees in a hospital, for example, you can fire a Certified Nursing Assistant (CNA) to save money but that in turn causes more work for a Registered Nurse (RN) as they have to do what a certified nursing assistant is certified to do. Cost containment can also cause hospitals experience nurse shortages. A poor hospital work environment will most likely experience nurse shortages. 488 hospitals were surveyed and this was the result, workers of any industries care deeply about what type of environment they work in so if it’s poor and messy, they won’t want to work in there. But cost containment is not just a problem for hospitals in the United States; it’s a global issue for the healthcare industry that includes famous first world European countries.

A recent study shows that between 2000 and 2010, the average per capita spending on health among Canada, France, Germany, United Kingdom, United States increased by more than 70 percent. Average per capita spending is the measure of the amount of money spent per person in a country or a certain place. For example, the growth of health spending in the United States was 72%, 87% in the United Kingdom, 62% in Germany, 56% in France, and 76% in Canada, with the highest being the United Kingdom. Trying to save money without affect quality is something every country, whether first or third world, deals with.

First Solution

Even though cost containment is a big problem in healthcare, it’s not hopeless. There are ways hospitals can prevent the potential problems caused by cost containment. The first solution would be to develop a way to assign work to nurses and employees and reduce the chance of them being overloaded. For example, a hospital developed a scheduling program that predicts how much employees are needed and how much work they may do. An automated scheduling program would help ease the problems that arise with cost containment like work overload and scheduling issues. Of course, this solution is only applicable if the hospital fired some of the employees to save; otherwise this solution is only there to help with scheduling issues. One of the most prominent problems that most hospitals deal with is work overload and poor scheduling for its employees, nurses are dealing with way more patients than recommended each shift. Once a nurse is drowned with too much patients, he or she will make more mistakes and will work in a depressive state or emotionally exhausted state that will eventually lead to burnout. For a nurse, their state of mind is extremely important especially during work. If a nurse is emotionally exhausted, they are more likely to make more mistakes and accidentally harm the patient, causing severe lost for the hospital.

Second Solution

The second solution would be for the hospital to plan for and list all its predicted expenses each year and rule out items that are not important and limit the expensive costs to a more affordable level, and they should also include an emergency savings in case of an unexpected situation. For example, in the beginning of a new year, a hospital can make a list of all the drugs and medicine that they need for patients, emergencies, etc. and cut off the drugs that won’t be as important and as for the drugs that will be heavily needed, they should only buy the predicted needed amount and 15% extra in case of emergencies. This would greatly reduce the expense spent on drugs and provide high quality care to patients, so hospitals won’t have to buy lower quality pills to satisfy needs and reduce quality care of its patients. A strategy used in European countries is to make payments to hospitals based on activities. Hospitals with more activity get more funding while hospitals with less get less funding, this system is very flexible as it rewards hospitals that are more active more than other hospitals that aren’t. But this system isn’t only to fund hospitals; it’s also being incorporated to payments to care providers like nurses, doctors, et cetera. For example, pharmacists are encouraged to share out lower-cost drugs instead of more expensive ones to hospitals and consumers and in return they are paid more.

Third Solution

The third solution would be for hospitals to request help from the government. Hospitals can either ask for more funds, which they need to run the hospital, or hospitals can request the government to place restrictions on drug prices and pharmaceutical companies to make it affordable without sacrificing quality. A great example of governments helping contain costs would be the Affordable Care Act (ACA) which was passed by the late president, Barack Obama. The national health expenditures are now expected to be $2. 6 trillion (11%) lower from 2014 through 2019 than projected before the law was enacted and hospital-acquired infection rates declined by 17% between 2010 and 2013. Another way governments can help hospitals with reducing costs would be to have policy makers try to control the way the providers supply health care, it can be direct, like rules or regulations, or indirectly, such as practice guidelines that are not required. Hospitals can also try the tactic of budget shifting, budget shifting looks to contain costs in two ways: it shift costs onto households or private insurers by reducing publicly financed health coverage, and also shift costs onto other parts of the government by moving financial responsibility from one administrative level to another, such as from the national to the state or local level, in some rare cases, budget shifting may only reduce certain public expenditures but not reduce overall health costs. One of the main reasons hospitals lose money is because of healthcare coverage, by removing some people who don’t need the coverage, like people who have private insurers; it can save a considerable amount of money each year because the costs would shift to those private insurers and companies, relieving hospitals of the extra burden.

Conclusion

In conclusion, the best way to deal with the effects of cost containment and maintain quality care to patients would be three options: first, hospitals can make a new or use an existing scheduling program that calculates how much employees you need and how much work they need to do that would satisfy quality care and deal with work overload. Second, a hospital can make a list of expenses that it predict to spend during the year and build a plan to buy certain drugs that are needed at an affordable price to keep the hospital’s expenses low, this would solve a major part of expenses that cause a hospital to suffer financially. Last but not least, hospitals should either demand more fund from the government or request that the government place restrictions on pharmaceuticals over-pricing their drugs, making drugs an affordable cost to hospitals and ensure that they can still give quality care to patients. Hospitals should try different strategies like cost shifting and budget setting to save money. Cost shifting can involve removing certain patients from the public coverage if they already have a private insurer and budget setting includes funding hospitals based on activity, where hospitals with more activity gets more funds than hospitals who have less. Payment based on activity isn’t only for funding hospitals; it can also be used to pay care providers, promoting the sales of low costing drugs.