“When insurance companies or government bodies try to control costs, they usually make across-the-board reimbursement cuts that ultimately are unsustainable because they have no connection to the true costs of delivering care,” Robert Kaplan, a professor of accounting, and Michael Porter, a professor of strategy. “Providers themselves do not measure their costs correctly. They assign costs to patients based on what they charge, not on the actual costs of the resources, like personnel and equipment, used to care for the patient. The result is that attempts to cut costs fail, and total health care costs just keep rising.”
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