Financing Healthcare Essay
Financing Healthcare Essay
Consider how compensation for healthcare services shape delivery of care, and reflects policy and policy changes and write a paper that addresses the bullets below. Be sure to completely address each bullet point. There should be four (4) sections in your paper; one for each bullet below. Separate each section in your paper with a clear brief heading that allows your professor to know which bullet you are addressing in that section of your paper. An introduction must be included, and please include a “Conclusion” section that summarizes all topics. This assignment will be at least 1100 words.
This week you will reflect upon accountability in healthcare finance to address the following: Financing Healthcare Essay
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• Discuss the history of private health insurance and manage care and how it involved into a healthcare industry?
• Identify the key federal laws that protect individuals who are enrolled in private insurance.
• Briefly discuss consumer-driven healthcare and the empowerment of the healthcare consumer.
• Explore the opportunities which have emerged for nurses within the private insurance market.
Length: 1100-1500 words in length
Structure: Include your reference page in APA format. These do not count towards the minimal word amount for this assignment. Your essay must include an introduction and a conclusion.
Nickitas, D. M., Middaugh, D. J., & Feeg, V. D. (2019). Policy and politics for nurses and other health professions: Advocacy and action. (3rd
ed.). Sudbury, MA: Jones and Bartlett Publishers. Read Chapters 9 & 10. Financing Healthcare Essay
• Bird, K., Reney, M., & Ross, R. (2015). Funds flow in the era of healthcare transformation. Healthcare Financial Management, 69(12), 42–47.
• CMS.gov (2019). What’s the quality payment program? (Explore the various links found on the Quality Payment Program website to learn more about the new way healthcare providers are being paid. Also, you will find resources on evidence-based measures that encourage improvement in clinical practice and the utilization of advanced technology that allows providers of care to easily exchange patient information)
• Mulder, J. (2017). The value of “smart growth” in the era of value-driven care. Health Management Technology, 38(9), 6–7.
• Wright, B., Potter, A. J., & Nattinger, M. C. (2016). Iowa Wavering on Medicaid: From Expansion to Modernization. Journal of Health Politics, Policy & Law, 41(2), 287–300.
Many governments today have made it their duty to put in place mechanisms that would ensure their citizenry is provided with an effective and affordable healthcare service. Healthcare is an expensive undertaking that needs proper financial planning. Financing Healthcare Essay
However, the sector, as the paper reveals, encounters a terrific deal of issues, which include staff and physician issues, cost-related issues, competition, and the drive for technology, just to mention but a few.
Further, as a chief finance officer, the paper gives me a chance to point out the strategies that I can put in place in a bid to curb the aforementioned issues in an attempt to make health care available to the majority without compromising its quality.
Healthcare finance issues
Staff and physician shortages affect the healthcare industry in so many ways. Staff and physicians who can be described here as health professionals are the backbone of the health industry without whom there will be no health industry thus doing away with healthcare. Financing Healthcare Essay
A logistic regression analysis on staff to patient ratio indicates that more staff per patient in the health industry increases the satisfaction of service provided to patient, as well as by the individual healthcare giver. This increases the patients’ confidence in the healthcare system, which will therefore lead to the patient investing further in the healthcare sector. Financing Healthcare Essay
Shortage of staff leads to burnout among staff members, as they are overworked therefore leading to a gradual compromise of the service provided (Zhu & Yu, 2012, p. 266). Such outcomes lead to patients losing their faith in the system thus leading to pullouts that will affect the financing of the whole program.
The drive for technology is another issue that affects the healthcare sector together with its financing in a positive and negative manner. Technology, as an industry, evolves every day. With it, it comes with better and efficient ways of solving problems. Improved technology in the diagnostic equipment leads to more accurate diagnostics and exact solutions to a problem. Financing Healthcare Essay
This leads to increased faith in the healthcare system, which will lead to further investment in the system and thus leading to financial stability. At the same time, technology is extremely expensive, as it leads to escalated costs in the services being provided.
This influences negatively on the financial position of healthcare service providers, as they will also have to raise their premiums for them to stay afloat (Ganz, 2011, p. 111). Such financial implications influence the scope of services provided, as well as the numbers of people who can afford it thus making it both an enhancing factor as well as a limiting factor. Financing Healthcare Essay
Increased competition is yet another issue that has had an impact in healthcare finance in different ways. Big companies with large capital bases have used their financial power to dominate the industry by developing exceptionally large networks of their businesses within the markets in which they operate.
This follows because their financial capacity and networks enable them to provide cheaper services, and an almost omnipresent presence makes them enjoy the benefits of the economies of scale. To dominate the market, the giant guns make takeover bids for the smaller providers. Financing Healthcare Essay
The small providers also merge with other small providers to enhance their capacity. Stiff competition has also led to the closure of healthcare providers who cannot compete effectively with others (Cleverly & Cameron, 2011, p. 461). It has also led to healthcare providers seeking further financing through tools such as equity and borrowing to enable them raise enough funds for stability in the market. Financing Healthcare Essay
Cost issues in the healthcare financing sector are one of the principal factors that affect the industry because the cost is heavily dependent on financing for it to move on. The basic drive of any investor is to make a profit, and if possible, in the shortest time possible. Therefore, when people invest in healthcare, they are there primarily for profits.
The demand for profit, as well as the need to provide a quality service, has to be balanced to come up with a winning situation for the investor and the clients. Reimbursement is a weighty and an urgent issue in healthcare management because healthcare firms provide services for which they are later compensated. Financing Healthcare Essay
Therefore, reimbursement, as a major component in healthcare, determines whether a firm will be paid for a service that it has already provided, and cannot be retracted. It also determines whether the firm will recoup its money, as well as profits.
Reimbursement in healthcare is a complex issue, as it mostly involves a third party who makes the payment on behalf of the patient way after the patient has received the service. It also involves a complex billing system that varies from one provider to the other (Casto & Layman, 2006, p. 16). A poor reimbursement structure will lead to losses, which can be irrecoverable. Financing Healthcare Essay
This makes financing healthcare a devilishly tricky matter for investors because any investor will only put his/her money in a system that guarantees positive returns. Therefore, reimbursement will dictate the financing of a healthcare program.
Strategies to Put in Place if I were a Chief Finance Officer (CFO)
As a chief finance officer of a healthcare system, I would come up with measures that would define the different cost areas in terms of service and administrative costs. The service cost would be the cost the firm incurs when it provides a given service to the client, and the administrative costs being the costs of running the firm. Other cost areas would be statutory costs, as well as costs related to credit obligations of the system. Financing Healthcare Essay
Overhead costs, though coming under administrative costs, are at times higher than expected. Therefore, in my view, the cost should stand out as one of the major costs that the firm might face in the future. Firstly, in a bid to fund the costs, I would commission a research survey that would bring out the cost of providing different services by the different service providers.
I would use the health insurance sector as a potential body besides donors who have the health of others at the center of their minds to fund the costs. Financing Healthcare Essay
Afterwards, I will come up with a cost that is fair compared to other providers and package it in such a way that it will be attractive to the insurance players at the same time being profitable to my firm. I would also price the services in a way that they would be able to cover the costs of the service that would have been provided. I would also apply for any exemptions and subsidies as provided for by the law.
I would allocate resources based on the following factors: the needs of the system, the availability of resources, and the demand for a given resource, as well as the different needs of the different distinctive groups, if any. Basic needs of the system will be allocated resources, as they are essential to the existence of the system. The demand for a given resource also makes it an integral bit of the system (Ganz, 2011, p. 113). Financing Healthcare Essay
Therefore, the availability of a given resource will determine how much each group will receive based on the corresponding order. Special groups make a system look different from others thus standing out as a decisive factor too.
As a CFO, I would make a decision on individual capital items to discard or retain depending on the factors at hand. Fixed assets like buildings, which appreciate over time, would not be discarded as long as the geographical position of the asset is still relevant to the business. Financing Healthcare Essay
Equipment will be discarded depending on the following factors: old machines, which have been broken down and are beyond repair, repairable machines, which are cheaper to replace than to repair, old machines, which are working but are obsolete in the industry, as well as equipment that can disposed before they lose value.
I would invest in human capital and technology, as well as assets that will be relevant to the future functioning of the firm. A competent and adequate work force is essential for the provision of services because healthcare is about service delivery, and, for a system to stand out, it has to have a unique touch, which should be different from the rest in the industry. Financing Healthcare Essay
Healthcare, like many other industries, is dependent on technology for proper, accurate and speedy delivery of services to the clientele. Investment in assets in strategic areas and locations will also be a consideration.
As the CFO of a healthcare system, I would base my financial prognosis on the capital base of the firm, the budget of the firm, and the different sources of revenue that the firm has been using. The capital base of the firm will allow the firm to plan with a given amount at hand without factoring in outside revenue intervention. Financing Healthcare Essay
Expected revenue will be based on the different services that the firm will be offering, as well as new services that could be introduced to increase the revenue base (Dechow & Larson, 2011, p. 39).
To prepare the health sector for the future, I would invest in research and development. The bit about research would enable the firm to predict expected trends in the market in a bid to come up with packages that would put it up-to-date in the industry. Financing Healthcare Essay
I would also enter into partnerships with other players in the industry upon which my organization depends. This is a sure way of securing the market and taking control of the market. I would also negotiate for favorable credit terms from creditors as a way of strengthening the organization’s capital base.
In conclusion, healthcare financing is one of the trickiest components about the healthcare system management, as it is intricate and complicated in nature. Healthcare is a gigantic industry in many countries. It is still growing and extremely dynamic in nature. Many factors that are not or should not be seen as main drivers of this system tend to play a prominent role in dictating the direction the industry is taking Financing Healthcare Essay
. Factors like technology and administrative systems, which should be secondary, have come up as main factors, which tend to dictate the direction and existence of the system. Planning and forecasting have also come up as significant factors due to their determinant nature of the future of the industry. Without planning and forecasting, the industry would simply come to a halt, as the financial industry is at times unpredictable.
Health Care financing has been a big issue in the Unites States since the 1960’s and today it is even more of a serious issue, with the millions without insurance and health care costs on the rise the United States health care industry is in trouble. Economic hard times have affected Medicare and Medicaid and it has resulted in many cuts. Private insurance companies have raised rates and employers have had to pass the cost onto employees by raising premiums. Health care is on the rise mainly because more and more people are getting older and are needing more and more medical procedures and physician visits. Technological advances are also a cause for rising health care. Financing Healthcare Essay
The legislation was passed by Congress earlier this year. By insuring that the 47 million Americans without insurance would be covered it would reduce these numbers by 60 percent, but it is less clear to see how this is going to affect the U.S. economy. This new law would produce close to $1 trillion dollars in new government spending and reduce the federal deficit by as much as $138 billion by 2019. However, the “Medicare and Medicaid Services found that the legislation would do little to stem the rise in health care expenditures which expect to increase to more than 20 percent of the GDP in the next decade.” (Johnson, 2010. P.2). Medicaid and Medicare programs which serve the low income population and the elderly 65 years and older is in danger. Cuts are made left and right to these programs and prescription drugs are costing the elderly more and more every day. The fiscal budget for Medicaid and Medicare is $20,000,000 for 2010 and beyond, but with health care costs rising to more than 20 percent of the GDP and more and more American’s being needy because of job loss and not being able to afford insurance this might not be enough. “Seventy-five percent of all federal spending will be consumed by Medicare and Medicaid by 2040, according to the President’s Council of Economic Advisors.” ( Hyman, 2009.p.1). Health Care spending is projected to reach the largest single Financing Healthcare Essay
Health care professionals play an important role in society. As such, there is a need for these professionals to understand the various health care reimbursement systems and methodologies to discharge their duties. There exist various financial systems adopted to cater for the financing of healthcare with each plan posing its risks as well as the incentives these systems exists solely because most patients have an insurance plan. Financing Healthcare Essay
Fees for service reimbursement program mean that a fee is paid dully to the healthcare provider for each specific service rendered. This system is widely used as it guarantees total independence of which services to sort from whichever healthcare provider. So the more service a provider renders the more reimbursement they get.
Managed care reimbursement methods are whereby the third party payers such as the patient or the insurance company manage the healthcare and the outcome without any input from the healthcare professional. This implies that the third party has set some measures to regulate the cost of health care without compromising the quality of care. The sole purpose of this system is to provide affordable but quality care. The forms of managed care include PPO (preferred provider organization), HMO (heath maintenance organization), and EPO (exclusive provider organization). Financing Healthcare Essay
The cost-based reimbursement method is whereby health care providers are paid based on the cost that they incur during the provision of the service. The major incentive in this program is the fact that the health care professional can recover what they incurred in providing the service. However, the risk is most patients may fail to cover these costs as they are too expensive.
A charge based payment system is driven by the fees that the provider charges the patient. These fees are based on every single procedure and assessment carried out as pertains to that illness. An example of charge includes: in Nairobi Hospital: caesarian section is $80, herniography is $20, antenatal care and H.I.V testing is free. Financing Healthcare Essay
Capitation and global payment are examples that fall into a health care reimbursement system called episode of care system. In this payment method, healthcare providers are paid a lump sum amount that covers all services rendered as per the disease. This effectively does away with individual fees and charges. Capitation is a form of healthcare payment method in which the third party payer (the insurance) reimburses a fixed sum to the provider after a fixed period. This is typical of health maintenance organizations. Capitation works on the contractual basis. The incentive of this system is that the patient can access any service from the provider without incurring extra cost while the healthcare provider is guaranteed a fixed sum regardless of the number of procedures. There is also guaranteed customer base for the provider. The risk is that the provider run incurring losses and this may compromise quality if care especially while doing complex procedures e.g. cancer management. Financing Healthcare Essay
In global payment, the third party pays a combined fee to various healthcare providers undertaking one episode of illness. Usually there’s no additional pay for any expensive or complicated procedure. An example includes Medicare payment system for home health services in the USA; with the services rendered including occupational therapy, social services as well as medical amenities.
Per Diem payment refers to daily payment. It is an example of prospective payment method. The third party payer reimburses the provider a fixed rate for each day he patient is hospitalized. The Indian as uses this system for inpatient services. Normally the per diem rates are set by the third party payers (insurance) based upon the population and history. The advantage is that providers can increase the number of admissions to gain extra fee this leaves the insurance companies incurring extra cost. Financing Healthcare Essay
Per diagnoses reimbursement method is where the providers receive a fixed predetermined fee for each case handled and diagnoses made. The patients or insurance companies pay for the case handled rather than the service rendered. The fee is determined by the resource needs of the average patient. An example includes: Medicare’s payment method for inpatient services.
Per procedure reimbursement method refers to a system whereby the patient or their insurer pays for every procedure undertaken by the provider in the management of the disease. This is mostly practiced in developing countries. For instance one patient undergoing a laparotomy pays much more than one who undergoes an appendectomy procedure. The fees are determined by the cost and sophistication of the equipment as well as the expertise. The risk involved is the affordability of a procedure to the patient especially if they are poor. Financing Healthcare Essay