1.

In 2006 it was estimated the annual number of cases of community acquired pneumonia in the U.S. was between 5,000,000 and 6,000,000 with a total cost of more than $8 billion. While the cost per case is low, the cost per case for patients requiring hospitalization is not low. A group of physicians and support staff decided to analyze DRG 89, Pneumonia, to determine if there were cost saving opportunities and to prioritize any opportunities identified. Using the table below, A) calculate the potential cost savings based on the current treatment profile and the best practice identified, B) divide the potential savings based on whether the physician must change their practice style or managers should reduce the cost of delivering services, and C) prioritize the top four opportunities, i.e., which areas should be targeted for improvement first.

DRG 89 - Community Acquired Pneumonia
Current Practice					Best Practice
Service	Quantity	Cost	Total cost		Quantity	Cost
Admission	1	$39	$39		1	$30
Med/Surg	6	$1,200	$7,200		4.9	$1,050
Respiratory therapy	6	$200	$1,200		6	$150
Rehab therapy	4	$150	$600		3	$150
Dietary	18	$23	$414		14.7	$15
Clinical Lab	18	$75	$1,350		15	$75
Radiology	6	$100	$600		4	$95
Pharmacy	36	$110	$3,960		30	$85
Social services	3	$75	$225		3	$60
Cardiology	1.5	$100	$150		1.5	$100
Total Cost			$15,738