Pricing the Future
Several hospitals have made initial, defensible pricing investments to eliminate the most egregious perceived offenses--e.g., the $100 aspirin--item from their chargemasters. However, few hospitals have designed or adopted a charge-code-by-charge-code pricing methodology that is auditable, logical, and defensible.
In theory, everybody buys the best and cheapest commodities offered to him on the market. In practice, if every one went around pricing, and chemically testing before purchasing, the dozens of soaps or fabrics or brands of bread which are for sale, economic life would become hopelessly jammed.edward berays
Looking into it a bit, Jamie found that the model used by Wall Street to price LEAPs, the Black-Scholes option pricing model, made some strange assumptions.michael lewis
The longer-term the option, the sillier the results generated by the Black-Scholes option pricing model, and the greater the opportunity for people who didn't use it.michael lewis
To put it simply, the chargemaster system on which hospitals rely to set pricing and billing codes has a forty-year history of changes that has distorted the relationship between price and cost.