physicians who by their measures are the most cost efficient and provide the

Physicians who by their measures are the most cost

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physicians who, by their measures, are the most cost-efficient and provide the highest quality of care. Cost, service and resource utilization data are dimensions of measuring quality, but should not be used as independent measures of quality care. The ultimate goal is to deliver high quality, evidence-based care to improve clinical outcomes. The legal departments of healthcare organizations have to become stakeholders within the advertising process so that they could assist in complying with the legal limitations and so that, they could share the blame in case of a disaster. Rather than contracting out the advertising function to an ad agency and then isolating oneself with the process, healthcare organizations should actively engage in the process of collaborating with ad agencies so that they could understand the legal compliance requirements and focus their energies to remain within those constraints (Gray & Christiansen, 2008). Setting the right price in the healthcare industry is similar to walking on a tightrope because of the several legal, financial and strategic considerations involved in the process. Till the mid-20 th century, many of the health care institutions followed a traditional pricing strategy approach, where their focused remained on a cost plus pricing strategy, where they continued to increase prices for charge based customers (Kotler, et al., 2011). However, with increased competitive pressures, healthcare organizations faced pressures to put the revenue maximization goals ahead of several considerations thus forcing them to adopt marketing skimming, value based, premium priced or penetration marketing strategy based on their perceived differentiation. However, with increasing uninsured patients and rising costs of healthcare, these organizations came under strict public scrutiny and it because a norm for several organizations to adopt a defensive pricing strategy, where they would focus on increasing
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VALUE-BASED PURCHASING IN THE HEALTHCARE Page 6 or decreasing prices only when the same was defensible in front of the public. Furthermore, rather than hiding the pricing policies, most healthcare organizations began to reveal their cost plus pricing strategies as to avoid any public relations disaster (Berkowitz, 2010). However, the fact is that healthcare organizations should aim at finding the appropriate balance between revenue maximization pricing and defensive pricing. More importantly, companies should not only consider their costs but also other strategic considerations of market leadership, return on investment, sales volume, discouraging new entrants and others while setting their prices. Such an approach would not only decrease the chance of any ethical violations, but at the same time, allow the organization to pursue its goal of profit maximization.
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