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Are your ready for a revolution?

"The DRGs are coming! The DRGs are coming!"

This is the cry of many a modern-day Paul Revere in the health care field. It seems that whenever two or more health professionals get together, the conversation invariably turns to prospectiv payment. Hardly a week goes by that I don't receive a brochure inviting me to a seminar on the topic. Often, these workshops have ominous titles like "Dealing with the revolution in health care," or "How to survive under a prospective payment system." If prospective payment does nothing else, it will have provided a booming market for seminar organizers.

This "revolution" shouldn't come as a shock or even a surprise to any of us. We need only look at a graph of health care expenditures over the years since Medicare was enacted to realize that it wasn't a question of if something had to be done, but when and how. While inflation has increased the prices of all goods and services since 1967, the cost of a hospital room rose a staggering 528 per cent in that period, according to Labor Department statistics--topping even OPEC's infamous oil price hikes by 1 per cent! In dollars, health care expenditures rose from approxiamtely $50 billion in Medicare's first year to some $300 billion in 1983. Clearly, something had to give.

Having attended a few of those seminars and read a number of articles, I find that most experts agree on certain activities that today's lab manager and supervisor should be performing to function effectively under prospective payment. Here are some of them:

Have an active data base. Reports on test volume, workload, and gross revenue are no longer sufficient. Laboratory managers must be able to identify the true costs of performing specific tests. Along with detailed cost information, we need utilization data that can identify lab procedures per DRG, procedures ordered per physician, and so forth.

Practice inventory control. Develop a system to insure the efficient use of reagents and supplies, one that will prevent waste and provide the optimum inventory level at all times.

Review staffing levels. Make sure your employees are scheduled properly to meet workload demands. Have a schedule flexible enough to handle peak periods without excessive overtime. Also, review your technologist/technician ratio. Are costly technologists performing tasks that can be delegated to lower-grade personnel?

Review total laboratory utilization. Lab managers, in cooperation with pathologists, need to evaluate the demand for services, weigh it against available resources, and decide how best to utilize the shrinking health care dollar. With administrative and medical staff, they must review test ordering patterns, profiles, pre-and post-admission strategies, and in-house vs. referral testing.

It's not hard to summarize all these activities. Basically, laboratories must lower their cost per test, improve turnaround time, and avoid costly overutilization. But shouldn't we managers have been doing these things all along? If we and other health professionals had done so, perhaps we wouldn't be facing the current dilemma.

If the black cloud of prospective payment has a silver lining, it may be the fact that hospitals will be forced to follow sound everyday business practices. We will have to play by the rules that other businesses have followed for years. The institutions that prosper will be those offering a good product--namely, health care at a fair price. Inefficient, uncompetitive organizations will no longer have the safety net of cost-based reimbursement. Most likely, they'll go the way of countless other businesses that couldn't meet consumer demands.

I'm not trying to minimize the impact prospective payment will have on the health care industry. Obviously this new system will affect us all to some degree, both as providers and consumers. But this impact should not be as traumatic as many predict if we educate ourselves and give some thought to how we must adjust.

Worrying about the DRG revolution won't do you or your laboratory any good. If you really want something to worry about, think what's in store for us if prospective payment doesn't work.
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Author:Maratea, James M.
Publication:Medical Laboratory Observer
Date:May 1, 1984
Previous Article:And now, a good word for nurses.
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