Cost Savings Question

[ldiablosv2000]

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Hi everyone, I am a high school student applying for a BS/MD program and I writing an essay about Molecular Diagnostics and Pharmacogenomics and am including a small paragraph about the cost savings of Molecular Diagnostics. I just wanted to have people tell me if I explaining the hospital savings part correctly? Here is the paragraph:

Molecular diagnostic tests also provide financial savings for patients and hospitals. For example, by having the ability to diagnose Methicillin Resistant Staph Aureus (MRSA) the same day, appropriate antibiotic therapy can begin immediately. This results in a more rapid control and cure of the infection that would allow the patient to be discharged sooner, thus saving the expenses of additional days in the hospital. Hospitals would save money because under a managed care system, hospitals are only reimbursed a fixed fee. If diagnosis and treatments become faster and more effective, the hospital would spend less on each patient while still giving a higher quality of care and be able to keep the difference of the reimbursement.


The last sentence is the part that I am not sure of. A doctor that I work for tried to explain the system to me but I am not sure if I understood correctly. Any input would be very much appreciated. Thanks.

 

[docB]

Here's the simplified yet still complex answer: the hospital gets paid a fee for admitting a patient with a particular diagnosis called a DRG. That fee is based on how long CMS (the Centers for Medicare and Medicaid Services) thinks a patient with that diagnosis should be in the hospital. If the patient stays exactly that long the hospital breaks even. If he leavs early the hospital makes money. If he stays longer the hospital loses money. You could argue that the testing you describe would allow hospitals to treat patients more efficiently, discharge them sooner and capture more DRG as profit.

What I would do is say that this testing can lead to better patient care, shorter length of stay and cost savings and leave it at that.

 

[ldiablosv2000]

DocB, thank you very much for the simple yet complex version. That is exactly what I was looking for. Thank you very much for your help and advice.