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Am I — and Your CFO — to Blame for Spiraling Health Care Costs?

Posted in General, Government, Health Care, Hospitals, Pharmaceutical

Earlier today I had the opportunity to deliver the closing keynote presentation at the Alabama Hospitals Associations'Blame Annual Leadership Conference. Before my talk, I had the great pleasure of listening to Bill Ward, the director of the Master Health Administration Degree at the Johns Hopkins University's Bloomberg School of Public Health.

At one point, Bill brought up a slide and asked the audience which drug a hospital should buy: Drug A, at a cost $1.80 per dose; or Drug B, at a cost of $11.50 per dose.

At this point, I thought to myself, "Yes! This is exactly the problem with healthcare. Many people continue to prescribe brand name drugs when a cheaper but equally effective generic version is available."

While this is undoubtedly a real issue and many generic drugs should be prescribed, this was not the point Bill was trying to make. As a result of his next slide, I found myself unlearning.

The initial cost of the drug is only one of the variables which must be considered. Review the following:

Drug A Drug B

Drug cost/dose $1.80 $11.50

Administration cost/dose $15.oo $1.00

Nurse intervention/dose $3.00 $3.00

Total cost per dose $19.80 $15.50

Drug A is actually more expensive. The point, of course, is that all of us need to view healthcare costs from a broader perspective — myself included. (Ed. Obviously, the effectiveness of the drug and the length it must be administered must also be considered.)

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One thought on “Am I — and Your CFO — to Blame for Spiraling Health Care Costs?”

  1. Great explanation for all the CFO’s to think over. It’s not just the price of the drug, administrative costs are also important. I suppose some drugs are more difficult and may require special training to administer.

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