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August 18, 1999

Fixed vs Variable Costs of Hospital Care

Author Affiliations

Margaret A.WinkerMD, Deputy EditorIndividualAuthorPhil B.FontanarosaMD, Interim CoeditorIndividualAuthor

JAMA. 1999;282(7):630. doi:10-1001/pubs.JAMA-ISSN-0098-7484-282-7-jbk0818

To the Editor: Dr Roberts and colleagues1 provide great detail about the importance of developing a sound method for capturing and analyzing the clinical costs of care. Having just published an article on the importance of taking into account both the direct and indirect cost and benefits of performance improvement activities,2 I can verify that having a consistent method for allocating costs is the first crucial step in being able to measure the value of services rendered. On the negative side, I disagree with the authors as to the limited value of active medical resource management. While I agree that the bulk of the costs are in operational overhead, most of these costs are related to labor (and in particular nursing labor) and supplies.3 In our own institutions, programs designed to improve resource use are approached from a multidisciplinary perspective. While administrators reinforce effective use from the clinician's point of view, at the same time we also reinforce improvements in process flow, productivity, and other systemwide enhancements that maximize efficiencies in labor use and supply management that have had a significant impact on the bottom line. Programs that approach resource management from such a systemwide commitment are able to take much of the fix out of the purportedly fixed costs.

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