Examine Financing Charity Care
SCENARIO: You have worked for ABC Hospital for several years. Recently, you were promoted to be the Director of Community Care and Outreach. In this role, you are responsible for increasing the hospital’s presence in the community, reaching new patients, and ensuring patients receive effective and coordinated care. You are aware of ABC Hospital’s current issue with charity care: there is no defined policy for who can write off an account, and no defined standards for what qualifies a patient to receive charity care. The billing department has reported multiple complaints due to the lack of a policy, and frustrations from both providers and patients. Your paper will address how to appropriately utilize the charity care resource of financing.
**Review the resource within Topic 3: Principles and Practices Board Sample 501c(3) Hospital Charity Care and Financial Assistance Policy and Procedures (Links to an external site.). (HFMA, n.d.)
QUESTIONS THAT NEED TO BE ANSWERED:
-Why does ABC Hospital need and use charity care?
-Patient demographics and percent of hospital patient population receiving charity care in the last fiscal year (fictional data).
-Define the issues that have contributed to poor management of the charity care provision.
-Propose a new way to move forward, providing effective care to patients, utilizing charity care properly. —-What is different about this approach than what was happening previously?
-Using bullet points, clearly define a minimum of three benefits of your plan for moving forward. These benefits should be focused on the financial health of ABC hospital, while balancing the needs of your patient population. These points will be the cornerstone for future development of a policy on charity care.
-Please include a minimum of three scholarly sources.
Healthcare Financial Management Association. (n.d.) Principles and Practices Board Sample 501c(3) Hospital Charity Care and Financial Assistance Policy and Procedures. https://www.hfma.org/content/dam/hfma/document/policies_practices/PDF/62649.pdf
Why does ABC Hospital need and use charity care?
Charity care refers to health services provided by healthcare facilities to the vulnerable in the community and lacks the financial capacity to access medical services they need. Charity care is a requirement by the federal and state laws, which requires hospitals to provide specific healthcare services for free or at a reduced cost if the patient is unable to pay the medical bill. It only covers specific treatments, including emergency room visits, inpatient hospital stays screening services, and community education programs (Bai et al., 2020). Hospitals use charity care as a means to ensure that all individuals in the community can access the quality healthcare services they need without discrimination due to their financial status. It is also a means of maintaining their not-for-profit status, ensuring inclusivity in healthcare, and reaching out to support the surrounding communities to develop better relationships with them (Zare et al., 2021).
Patient demographics and percent of hospital patient population receiving charity care in the last fiscal year
The majority of the patients that used charity care in the last fiscal year were aged between 19-64years and accounted for approximately 2% of the entire hospital patient population. The individuals reported at least one of the following negative financial consequences, including challenges in affording other necessities such as food, housing, and clothing. They also reported taking a credit card debt and had been declared bankrupt. The patients had an income of less than 300% of the federal poverty levels and were also uninsured. The total assets for the individual were less than $ 7500, while for families were less than $ 15000. Most of the patients were also unemployed or were working in the informal sector. The hospital provided charity worth $25 million in the last fiscal year (Goodman et al., 2020).
Define the issues that have contributed to poor management of the charity care provision.
The ABC hospital lacks a defined policy to regulate charity care. The federal and state governments do not provide a clear procedure on how charity care should be offered and only provides vague requirements. It is the responsibility of the hospitals to develop a charity care policy that will determine who is eligible for such offers, provide a defined application process for receiving charity, and the people responsible for handling patients that need charity. The ABC hospital lacks the policy to regulate charity care which is the main issue that has led to confusion and mismanagement of the charity care in the hospital (Goodman et al., 2020).
Propose a new way to move forward, providing effective care to patients, utilizing charity care properly.
As the new director for community care and outreach, a new move forward would be to assemble a committee to develop a hospital policy that will regulate charity care provided by the ABC hospital. The policy will define the requirements for one to qualify for charity care, whether partial or free care, establish the application procedure for patients that need the assistance, defines the basis for determining the amounts that patient who qualifies for financial assistance will be required to pay and establish the minimum amounts that the insured patient who qualifies for charity care will be charged and the billing process (Bai et al., 2020). This new approach will create order, which was not previously there. Development of the policy will provide clear procedures to be followed, from identifying patients that require assistance to determining the minimum amount one should pay for the services received.
Clearly define a minimum of three benefits of your plan for moving forward
- The hospital will be able to avoid unnecessary financial expenditures; establishing eligibility criteria will ensure that only the patients who qualify for financial assistance will be enrolled in a charity care program, hence avoiding unnecessary charity care expenditures, which will improve the hospital’s financial performance.
- Increased accountability, especially in the financial department; the policy will identify individuals responsible for specific activities such as writing-off accounts. Establishing clear procedures and assigning tasks will ensure that specific individuals are responsible for certain tasks hence improving accountability.
- Improved decision-making, which results in positive impacts on the hospital’s financial health. Policies and guidelines give clear direction on how decisions should be made, which increases the possibility of success in an organization (Bai et al., 2020).
Bai, G., Yehia, F., & Anderson, G. F. (2020). Charity care provision by US Nonprofit Hospitals. JAMA internal medicine, 180(4), 606-607. https://jamanetwork.com/journals/jamainternalmedicine/article-abstract/2760774
Goodman, C. W., Flanigan, A., Probst, J. C., & Brett, A. S. (2020). Charity care characteristics and expenditures among US tax-exempt hospitals in 2016. American journal of public health, 110(4), 492-498. https://ajph.aphapublications.org/doi/full/10.2105/AJPH.2019.305522
Zare, H., Eisenberg, M., & Anderson, G. (2021). Charity care and community benefit in non-profit hospitals: definition and requirements. INQUIRY: The Journal of Health Care Organization, Provision, and Financing, 58, 00469580211028180. https://journals.sagepub.com/doi/full/10.1177/00469580211028180