In business, it’s important for management to have a solid understanding for the various forms of costs and their drivers. More important now, then ever before, is the need to leaders to take accountability for the financial and operational performance of their entities. They need to dig in and discover the causal factors contributing to poor process outcomes (too much variability). Inefficient processes consume more costs then efficient processes and, in turn, negatively impact the “bottom line” performance of companies. Since the health care industry tends to operate on narrow margins to begin with, failing to proactively address costing issues can have devastating consequences. As you can imagine, with increasing emphasis on healthcare reform and a growing focus on capitation, it’s vital that organizations make a concerted effort to more effectively manage costs. There are many cost reducing initiatives underway through the public and private sectors, which will be explored in this unit. According to Berwick, Nolan, and Whittington (2008), organizations that are committed to the care of clients, should be working to simultaneously reach three aims: 1) improve the experience of care; 2) improve population health; and 3) reduce healthcare costs per person.
In order to support your understanding of costs and the approaches being employed to bend the cost curve, you will be expected to complete the following end-of-chapter problems and mini-case:
Chapter 5: 5.5, 5.7, 5.12, 5.13 (pp. 14-16, Lee textbook); Case 5.2, Improving Performance (p. 81, Lee textbook)
Chapter 6: 6.1, 6.2, and 6.3 (pp. 102-103; Lee textbook)

Unit Learning Outcomes

ULO 1. Calculate average and margin costs. (CLO 5, 6, and 7)
ULO 2. Examine costs from the perspective ok key stakeholders (e.g., clients, practices, society, and insurers). (CLO 5, 6, and 7)
ULO 3. Illustrate the relationship between cost, efficiency, and quality. (CLO 3, 4, 5, 6, and 7)
ULO 4. Examine the impact of healthcare reforms initiatives on the Triple Aim as posited by Berwick, Nolan, and Whittington (2008). (CLO 5 and 7)
ULO 5. Evaluate several strategies for reducing services per patient. (CLO 6 and 7)
ULO 6. Compose several ways to reduce cost per case or service. (CLO 5, 6, and 7)

Directions

The students are expected to carefully read the assignment instructions, then thoroughly and explicitly address each question. Microsoft Excel will be used to perform the mathematical computations and graphs; however, the problems and their corresponding responses should be written up in a Microsoft Word document. Your responses to the assigned mini-case study should also be included in the same document. IMPORTANT: Make certain that there is a detailed description of how the calculations were performed. You will also need to include an interpretation of the results. While there is no minimum number of references that need to be utilized to support the completion of this assignment, it is generally understood that outside sources, including the text, will be necessary to complete the problems. The document must adhere to the APA writing style in terms of using in-text citations and the listing of sources on the references page. The Microsoft Word document and Excel spreadsheet are to be uploaded under the correct unit assignment page.