The prices of all providers of day two and eight tests are to be reviewed. It comes after Health Secretary Sajid Javid asked the competition watchdog to investigate "excessive" pricing and "exploitative practices" among PCR Covid test firms.
He said misleading pricing will be clamped down on and providers failing to meet necessary standards will be removed from the government's approved list. NHS Test and Trace advertises its tests alongside private companies' packages and they are available to purchase to fulfil the government's testing requirements for international travel.
It is understood that if the review finds private companies are offering terms that are unfair and therefore unenforceable, enforcement action could be taken by the Competition and Markets Authority or Trading Standards.
If businesses are found to have breached consumer law, they could be subject to a court order to stop operating and told to compensate consumers. Instead of focusing on the costs of treating individual patients with specific medical conditions over their full cycle of care, providers aggregate and analyze costs at the specialty or service department level. Making matters worse, participants in the health care system do not even agree on what they mean by costs. Providers share in this confusion.
They often allocate their costs to procedures, departments, and services based not on the actual resources used to deliver care but on how much they are reimbursed. But reimbursement itself is based on arbitrary and inaccurate assumptions about the intensity of care.
Poor costing systems have disastrous consequences. It is a well-known management axiom that what is not measured cannot be managed or improved. Since providers misunderstand their costs, they are unable to link cost to process improvements or outcomes, preventing them from making systemic and sustainable cost reductions. Instead, providers and payors turn to simplistic actions such as across-the-board cuts in expensive services, staff compensation, and head count.
But imposing arbitrary spending limits on discrete components of care, or on specific line-item expense categories, achieves only marginal savings that often lead to higher total systems costs and poorer outcomes. Poor cost measurement has also led to huge cross-subsidies across services. Providers are generously reimbursed for some services and incur losses on others. These cross-subsidies introduce major distortions in the supply and efficiency of care.
The inability to properly measure cost and compare cost with outcomes is at the root of the incentive problem in health care and has severely retarded the shift to more effective reimbursement approaches. Finally, poor measurement of cost and outcomes also means that effective and efficient providers go unrewarded, while inefficient ones have little incentive to improve. Indeed, institutions may be penalized when the improvements they make in treatments and processes reduce the need for highly reimbursed services.
Without proper measurement, the healthy dynamic of competition—in which the highest-value providers expand and prosper—breaks down.
Instead we have zero-sum competition in which health care providers destroy value by focusing on highly reimbursed services, shifting costs to other entities, or pursuing piecemeal and ineffective line-item cost reductions.
Current health care reform initiatives will exacerbate the situation by increasing access to an inefficient system without addressing the fundamental value problem: how to deliver improved outcomes at a lower total cost.
The remedy to the cost crisis does not require medical science breakthroughs or new governmental regulation. It simply requires a new way to accurately measure costs and compare them with outcomes.
Fortunately, we can change this state of affairs. And the remedy does not require medical science breakthroughs or top-down governmental regulation. Our approach makes patients and their conditions—not departmental units, procedures, or services—the fundamental unit of analysis for measuring costs and outcomes.
The proper goal for any health care delivery system is to improve the value delivered to patients. Value in health care is measured in terms of the patient outcomes achieved per dollar expended. It is not the number of different services provided or the volume of services delivered that matters but the value. More care and more expensive care is not necessarily better care. To properly manage value, both outcomes and cost must be measured at the patient level.
A medical condition is an interrelated set of patient circumstances that are best addressed in a coordinated way and should be broadly defined to include common complications and comorbidities. The cost of treating a patient with diabetes, for example, must include not only the costs associated with endocrinological care but also the costs of managing and treating associated conditions such as vascular disease, retinal disease, and renal disease.
For primary and preventive care, the unit of value measurement is a particular patient population—that is, a group with similar primary care needs, such as healthy children or the frail and elderly with multiple chronic conditions. Outcomes for any medical condition or patient population should be measured along multiple dimensions, including survival, ability to function, duration of care, discomfort and complications, and the sustainability of recovery.
While measuring medical outcomes has received growing attention, measuring the costs required to deliver those outcomes, the second component of the value equation, has received far less attention. A powerful driver of value in health care is that better outcomes often go hand in hand with lower total care cycle costs.
Spending more on early detection and better diagnosis of disease, for example, spares patients suffering and often leads to less complex and less expensive care later. Reducing diagnostic and treatment delays limits deterioration of health and also lowers costs by reducing the resources required for care. Indeed, the potential to improve outcomes while driving down costs is greater in health care than in any other field we have encountered. The key to unlocking this potential is combining an accurate cost measurement system with the systematic measurement of outcomes.
With these powerful tools in place, health care providers can utilize medical staff, equipment, facilities, and administrative resources far more efficiently, streamline the path of patients through the system, and select treatment approaches that improve outcomes while eliminating services that do not.
Accurate cost measurement in health care is challenging, first because of the complexity of health care delivery itself. The path that the patient takes through the system depends on his or her medical condition.
The already complex path of care is further complicated by the highly fragmented way in which health care is delivered today. Care is also idiosyncratic; patients with the same condition often take different paths through the system.
The lack of standardization stems to some extent from the artisanal nature of medical practice—physicians in the same organizational unit performing the same medical process for instance, total knee replacement often use different procedures, drugs, devices, tests, and equipment.
In operational terms, you might describe health care today as a highly customized job shop. Existing costing systems, which measure the costs of individual departments, services, or support activities, often encourage the shifting of costs from one type of service or provider to another, or to the payor or consumer.
The micromanagement of costs at the individual organizational unit level does little to reduce total cost or improve value—and may in fact destroy value by reducing the effectiveness of care and driving up administrative costs. For more on the problems with current costing systems, see the three Myth sidebars. The widespread confusion between what a provider charges, what it is actually reimbursed, and its costs is a major barrier to reducing the cost of health care.
Providers have aggravated this problem by structuring important aspects of their costing systems around the way they are reimbursed. In the U. Rather than developing and maintaining accurate costing systems that are based on actual resource usage, separate from the regulatory standard required for reimbursement, hospitals defaulted to reimbursement-driven systems. Unfortunately, that approach was flawed from the start because it was based on the use of highly aggregate data for estimating costs and the deeply flawed assumption that every billable event in a department has the same profit margin.
Reimbursement-based costing also buries the costs of valuable but nonbillable events, such as patient consultations, in large overhead pools that are allocated arbitrarily and inaccurately to billable events.
Although costing systems for physician services differ from those used by hospitals, they suffer from the same problems. As is the case for hospitals, U. These resource estimates are derived from specialty panels and national surveys of physicians, who stand to gain from overestimating the time and complexity of their work.
Despite the required sign-off by government payors, the RVU estimates are not systematically measured or confirmed in practice settings. Reimbursing physicians on the basis of highly aggregate and likely inaccurate estimates of their costs introduces major incentive problems into the health care system. But the problems are compounded when the reimbursement rates are also used to allocate physician costs to patients, a purpose for which they were never intended.
We need to abandon the idea that charges billed or reimbursements paid in any way reflect costs. In reality, the cost of using a resource—a physician, nurse, case manager, piece of equipment, or square meter of space—is the same whether the resource is performing a poorly or a highly reimbursed service.
Most health care leaders will eventually accept the idea that the direct costs of patient care, such as nurses, physicians, and consumable supplies drugs, bandages, and syringes , ought to be assigned more accurately to individual patients.
But many leaders believe that allocating the costs of indirect and support units cannot be done except with crude, arbitrary methods, often dressed up to look sophisticated. The effect of such arbitrary support-department allocations on the measured cost of services can be profound.
The TDABC analysis showed, however, that the demand for many support-unit services, such as medical billing, is far higher during the days a patient spends in the acute-care facility than during rehab days. With support costs properly assigned, the rehab facility showed improved profitability. Once indirect costs have been accurately assigned, managers and physicians can look for ways to reduce demand for support-department services and improve the efficiency with which they are delivered.
That, in turn, will enable organizations to lower their spending on these resources. Many health care system participants, including economists and accountants, believe that most costs in health care are fixed because so much care is delivered using shared staff, space, and equipment. The result of this misguided thinking is that cost reduction efforts tend to focus on only the small fraction of costs seen as variable, such as drugs and supplies, which are sometimes referred to as marginal or incremental costs.
This myth also motivates some health care organizations to expand through mergers, acquisitions, and organic growth in order to reap economies of scale by spreading their fixed costs over an increased volume of business.
But if most health care costs were truly fixed, we would not have the health care cost problem we do today. If most costs were fixed, growth in demand for health care would increase only that small fraction of costs that are variable, leading to lower average costs in the system, not the dramatically higher share of GDP now being devoted to health care.
Hint: Personnel costs are not fixed. Hospital executives can set the quantity, mix, and compensation of their personnel each year, or even more frequently.
Personnel costs are fixed only when executives allow them to be. The claim that personnel costs are fixed is a reflection of management inattention, not of the nature of those costs. Space costs are also not fixed. If demand for space is reduced, units can be consolidated into smaller space, and excess space can be repurposed, sold, or subleased.
Similarly, equipment costs can be avoided if changes in processes, treatment protocols, or patient mix eliminate the demand for the resources. Equipment no longer needed can be retired or sold to other health care institutions that are expanding their capacity. Any accurate costing system must, at a fundamental level, account for the total costs of all the resources used by a patient as she or he traverses the system. That means tracking the sequence and duration of clinical and administrative processes used by individual patients—something that most hospital information systems today are unable to do.
In the meantime, it is possible to determine the predominant paths followed by patients with a particular medical condition, as our pilot sites have done. With good estimates of the typical path an individual patient takes for a medical condition, providers can use the time-driven activity-based costing TDABC system to assign costs accurately and relatively easily to each process step along the path. This improved version of activity-based costing requires that providers estimate only two parameters at each process step: the cost of each of the resources used in the process and the quantity of time the patient spends with each resource.
See Robert S. Kaplan and Steven R. In its initial implementation, such a costing system may appear complex. As health care providers begin to reorganize into units focused on conditions, standardize their protocols and treatment processes, and improve their information systems, using the TDABC system will become much simpler. Consider Patient Jones, who makes an outpatient visit to a clinic.
Just three clinical resources are required: an administrator Allen , a nurse White , and a physician Green. We begin by estimating the first of the two parameters: the quantity of time capacity the patient uses of each resource at each process. From information supplied by the three staffers, we learn that Jones spent 18 minutes 0.
Next, we calculate the capacity cost rate for each resource—that is, how much it costs, per hour or per minute, for a resource to be available for patient-related work—using the following equation:.
The numerator aggregates all the costs associated with supplying a health care resource, such as Allen, White, or Green.
It starts with the full compensation of each person, including salary, payroll taxes, and fringe benefits such as health insurance and pensions. To that we add the costs of all other associated resources that enable Allen, White, and Green to be available for patient care. Mental health: Household Pulse Survey. Accessed September 5, November 13, Nordhaus W. World Health Organization.
Scientific Brief. June 17, Modeling contact tracing strategies for COVID in the context of relaxed physical distancing measures. Rockefeller Foundation. National Covid testing and tracing action plan. July 16, Limit characters. Limit 25 characters. Conflicts of Interest Disclosure Identify all potential conflicts of interest that might be relevant to your comment. Err on the side of full disclosure.
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The IMF forecasts the world economy to grow 4. Huge fiscal mobilization from each country has reduced the extent of the deterioration of the world economy.
However, the deterioration of the world economy in is large compared to the 0. In the IMF report, the economic loss caused by the slowdown in world economic growth has been estimated at 28 trillion dollars over the next six years. Vaccines against COVID are expected to become widespread in , so the world economy is projected to grow by 5. As a result, Japan's economic growth rate in is projected to be minus 5.
However, the revised economic growth rate is the same negative growth as Japan's economic growth rate of 5. In , Japan's economic growth rate is expected to return to a gradual recovery trajectory with a positive growth of 2. If the vaccine against COVID spreads faster than expected, the world economic growth rate in will increase by 0.
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