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If the trend observed from the research is to be extrapolated then the scenario of cost drivers will probably remain the same with the most important cost drivers being Provider Market Structure, Physician and Specialist Supply and Technologies.

Provider Market Structure

Depending on the supply and ownership of medical services facilities for both outpatient

And otherwise, there is and there will be a bigger overall outpatient expense due to the profit orientation of the owners of the healthcare facility.

Physician and specialist supply

I think that the number of physicians or specialists in a particular field, can be a

Highly significant driver of costs in healthcare facilities. This is because physician and specialist supply affects healthcare expenditures and the cost of all other healthcare services.

Treatment Patterns and Technology

Differences and changes in technologies and practices will be a major determinant of outpatient

Spending.  While technological innovation in itself can contribute to the cost of healthcare both positively and negatively, on close examination it can be found that technology to increase outpatient costs due to the fact that specialized equipment and practices are done by specialists who are paid. Effectively increasing the cost.

2) What would personally determine to be your top 3 cost drivers and how you would make healthcare activity based costing decisions to bring those costs down

From a personal observation, technology, market inflation and demographics seem to me to be the top cost drivers for healthcare activities.

Technology, by virtue that it is ever dynamic has the greatest potential to increase the cost of healthcare in that the cost of purchasing and maintaining the new equipments is prohibitive.

Demographics

while demographics and the general economic conditions may not significantly influence the costs of healthcare and other medical resources, it contribute, in a way to the availability of physicians and specialists in an area which leads indirectly to the cost of maintaining the personnel and other equipment which are shoveled to the outpatients as healthcare costs.

3) How will technology affect healthcare cost drivers going forward?

Medical technology as a healthcare cost driver encompasses drugs, biologics, devices, equipment and medical and surgical procedures. The availability of new approaches equipment has led to increased expenditure by patients who require delicate and vital surgical or other procedures.

Some of the factors that are fuelling this introduction of new technology are: advances in engineering and science, the third party payment policies, competition between medical suppliers which have led other healthcare providers to provide offer state-of-the-art care and physicians who are specially trained.

This will in turn make the new medical technologies beneficial in areas of prevention, diagnosis, palliation, screening, rehabilitation and diagnosis. Technology will increase the cost of healthcare as well as increase the volume of services providing incentives to increase volume and thus mitigate the high costs of acquisitions of new

Technologies. It has also been noted that as procedures become successful and less invasive, the demand of the patient increases; thus increasing the overall costs. It has also been noted that new technology has the potential of providing new techniques while other older techniques are still running.

Some of the more powerful diagnostic technology has the capacity to detect disease earlier and generate additional treatment for longer periods of time. This may ultimately lead to lower costs as well. Medical technology will be a significant driver of outpatient and

Total healthcare costs this is due to utilization per patient which will rise given that their might be higher unit prices. Some of the technologies that have been introduced include those in the areas of Scintimammography (used for lymph nodes imaging), breast cancer, Electron Beam Computed Tomography (EBCT), and other devices and related technologies.

Reference:

The Lewin Group, Inc (2002). Study of Healthcare Outpatient Cost Drivers. Retrieved from http://www.bcbs.com/blueresources/cost/6_Outpatient_Report.pdf on 10/10/2008.

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