Financial Characteristics of Health Care

Financial Characteristics of Health Care Pamela S Hill HCA 340 Wanda Carter October, 16, 2011 “Quality healthcare management includes the financial growth and viability of the healthcare organization. A healthcare organization can realize quality healthcare management only when it is fully staffed with medical and managerial professionals and is able to invest in the most advanced equipment”. (eHow. com). In 2009 it was reported that 46 million Americans were uninsured. In 2011 the uninsured has risen to 50. 7 million people.

This was due to people losing their jobs, the recession, companies downsizing, and some companies dropping employee health insurance. What can this really mean? With just one person being uninsured in the United States that is still too many. Did you know that Health care is not the same as health insurance? “Everyone in the U. S. – including those illegally in the U. S. — is guaranteed access to basic health care. Under a 1968 federal law, all patients seeking care in hospital emergency rooms must be given a minimum level of treatment, regardless of their ability to pay or health insurance status.

The law applies to all hospitals that participate in Medicare — which most do – and requires the hospitals to provide initial patient screening, life-saving and “stabilizing” emergency care and transfers to advanced trauma centers, if needed. Those services must be provided without asking about the patient’s ability to pay. Of course, the growing demand on hospitals to Provide this minimum level of free care contributes to rising health care costs”. (About. om) In today’s economy the financing of health care is very important because where does all The revenue comes from for this healthcare delivery system? There are too many people out there that are not able to afford the health care that is needed. We depend largely on the Government to help with this problem. Some suggest we do not want the government to be involved. But without the help and support of the government where is this going to lead? The delivery system has to be able to manage cost, and the delivery of health care cost is on everyone’s minds.

There are people out there that think that those uninsured are taking advantage of those who have insurance. The reason for this is due to the hospitals charging the insured more for services then those without insurance. As the job market remains weak, Americans can no longer depend on their jobs for health insurance coverage. Some companies have just stopped offering health insurance while others have increased the cost to the employee. So they are not able to pay the premiums, they have to drop the coverage.

There are a few things like the wellness program that went into effect that can be a cost to you. The reason for this is that when you go to the Dr. (say to get your cholesterol checked or yearly exam). The Dr. sees something like say a mole and he test this mole. Well that blows the free yearly exam. As this was not on the free yearly exam. So you must watch for this when you go for your checkup. Also if your health insurance has something grandfathered in then you may still have to pay. This should all be fixed by the year 2014. If these new health care law would fall.

The economy will go down again. We will lose the money from the tax credits and the deficit will be on the rise again. We have got to go along with the new health care plan and do some tweaking along the way as President Obama says in his State of the Union Address he made. Health Care is important to me as what will happen in the future? I am sure we all have grandchildren or great grandchildren that we will worry about. We need to know that this problem can be fixed. It is vital to the United States to fix this problem in the near future. Although the health care law signed by President Obama in March is designed to insure an additional 32 million people in public and private programs, it doesn’t fully kick in until 2014. For the next few years, experts say, the problem could get worse. The average cost to insure a family of four is already about $14,000”. (USA Today. com) Where do human resources fit into this health Care system? “The management of human resources is an important function within HSOs because the performance of HSOs is tied directly to the motivation, commitment, knowledge, and skills of clinical, administrative, and support staff.

Human resources actions of HSOs are undertaken for both strategic and administrative purposes. A variety of human resources activities are included within the human resources area, and these activities typically fall within the domains of workforce planning/recruitment and employee retention. While human resources serves as a support function for line managers within HSOs, line managers and staff managers carry out human resources management roles as well, because they are involved in hiring, supervising, evaluating, promoting, and terminating staff.

Therefore, human resources staff and other manager’s work closely to ensure, that HSOs perform well. The contribution of the human resources management function is increasingly being evaluated by senior management, similar to other organizational functions, to determine the net contribution of human resources staff to organizational success. It is likely that management of human resources will increase in importance in the future, as HSOs face heightened external and internal pressures to recruit and retain committed and high performing staff”. Buchbinder, Sharon. Introduction to Health Care Management. Jones ; Bartlett Publishers, 012007. pp. 297 – 298). We will be looking at a number of cuts in different departments of Government to get the financing of health care where we need it. “Senator Charles Grassley of Iowa, the ranking Republican on the Senate Finance Committee, has decreed that reform must be financed entirely by savings or revenues within the health care system. He believes that would force greater efficiencies from a notoriously wasteful enterprise.

Senator Max Baucus of Montana, the Democrat who is chairman of the committee, seems inclined to accept that notion to win Republican votes for a filibuster-proof majority. Our preference would be to extract savings from the bloated, inefficient health care system — but also to raise revenues from a wider pool, preferably from well-to-do Americans who could be taxed more for a badly needed reform that would benefit all Americans. ” (Health Care reform, 7, 2009) As stated in the Article of health care reform July, 2009.

So much money is wasted on testing and treatments that are not necessary for the good of the patient. 30% or 700 billion a year is wasted on this stuff. Even if half that money could be recaptured it would be enough to finance health care reform. Human Resources play a big role in the health care plan. “They must come up with a Strategic plan, Monitoring and control of the strategic plan is most often accomplished through the use of an organizational dashboard, or scorecard. A dash- board is a visual reference used to monitor an organization’s performance against targets over time.

Its simplistic design should allow for quick assessment of areas that may need adjustment, similar to an automobile dashboard. Dashboards can depict strategic, operational and/or financial indicators, depending on the organization’s needs, but care must be taken to highlight a manageable number of indicators or the dashboard will lose its functionality. Depending on the organization’s needs, and depending on the types of indicators management identifies, the dashboard should be monitored regularly (e. . monthly or quarterly). At a minimum, as soon as an indicator highlights a variance from the desired target, managers must address the variance with tactics that correct or alter the results, but optimally, the dashboard should serve to facilitate management discussion regarding execution of the strategy. To best ensure success of the strategic plan, dash- board indicators are aligned with operational plans and their associated identified goals. (Buchbinder, Sharon.

Introduction to Health Care Management. Jones ; Bartlett Publishers, 012007. pp. 73 – 74). Payment reform: Provider payment structures play an important role in how well the health care delivery system meets the goals of delivering efficient and high-quality care. Policies must work to align the desires of practitioners and health organization managers to serve patients with the incentives that come from how they are paid. In an article from the New York Times states “that the U. S. oves to cut back regulations on hospitals. The Obama administration moved Tuesday to roll back numerous rules that apply to hospitals and other health care providers after concluding that the standards were obsolete or overly burdensome to the industry. Kathleen Sebelius, the secretary of health and human services, said the proposed changes, which would apply to more than 6,000 hospitals, would save providers nearly $1. 1 billion a year without creating any “consequential risks for patients. Under the proposals, issued with a view to “impending physician shortages,” it would be easier for hospitals to use “advanced practice nurse practitioners and physician assistants in lieu of higher-paid physicians. ” This change alone “could provide immediate savings to hospitals,” the administration said. Other proposals would roll back rules for doctors’ offices, kidney dialysis centers, organ transplant programs, outpatient surgery centers and institutions for people with severe mental disabilities”. (New York Times, October, 2011) With some other changes going into effect which will save money.

One of them is that hospitals will allow patients to bring their own drugs from home and administer themselves. They may also be able to administer the drugs given to them at the hospital on their own. This will also save money. The delivery system has to be able to manage cost. In today’s economy the financing of health care is very important is the delivery of health care cost is on everyone’s minds. Managing cost depends on the type of insurance that you have and this is where the amount of payment comes in. This is vital to generating revenues for daily operations, growth, and competiveness for health care organizations. With retrospective reimbursement, the amount of reimbursement is determined after the delivery of services, providing little financial risk to providers in most cases. It can involve the following methods: There is one method they use reading from the text Introduction to Health Care Management (Jones and Bartlett) this is called fee-for-service. Where health care providers are paid close to 100% of the price they charge. This is because there is no risk to the provider.

These programs are not very common now days. Unfortunately the people that do pay this way are the uninsured as they do not have insurance to negotiate the price for them. Another method as discussed in our book is charges minus a discount or percentage of charges: This is where some health care organizations offer discounted rates to third parties in return for more people coming to them. This is the second most common form of reimbursements for hospitals. There is the method as discussed in our book that is called cost plus a percentage for growth.

This is where the institution receives the cost for the service plus a small percentage to develop new products or services. Another method is the cost itself which is when the organization is reimbursed for the projected cost; this is expressed as a percentage of charges. They say this method provides the smallest amount of reimbursement to providers. But there is little risk, unless full costs are not recognized. The next method is called reimbursement; this method poses more of a risk for the providers. This is where the provider is reimbursed based on the quality measures and patient satisfaction measures etc.

There is also the prospective reimbursement. This is the one the hospitals use much of the time. It does pose some risk but also some incentives. This is where the dollar amount is established before the service is provided. Per Diem is defined as a dollar amount per day for the care provided. This is not always good for the acute patients due to the increased cost are incurred early in the care. Sample for this would be a daily charge for someone that is on IV therapy and needing more care the first day, and then gets better the second and third day. The cost per day is still charged.

Per Diagnosis this method is in which a defined dollar amount is paid per diagnosis. It provides risks and incentives. Most common are those similar to the rates utilized by CMS (Centers for Medicare and Medicaid) for Medicare reimbursements, including DRGs for hospitals, RUGs for nursing homes, and HHRGs for home health care. Additional rates have more recently been determined for outpatient and inpatient rehabilitation hospital services. In virtually all cases, fewer patient treatments or visits, and/or shorter hospital stays, are now being provided for any given diagnosis. Jones & Bartlett Publishers, 012007). There is the “Bundles for Hospital and Physician Services, in which a fixed amount is paid by the MCO for treatment of a patient and is to be shared by all providers”. (Jones & Bartlett Publishers, 012007). As we look further into this complicated area of payment we now have the Fee Schedule by CPT Code, or procedure code, which is the most common method for reimbursement of specialty physicians. The more complex and time-consuming the procedure, generally the higher will be the rate of reimbursement.

This also comes from the text and is very good reading. (Jones & Bartlett Publishers, 012007). Here is another way this is the “Capitation, which is an agreement under which a healthcare provider is paid a fixed amount per enrollee per month by a health plan in ex- change for a contractually specified set of medical services in the future. Negotiated capitated payments are based on perceptions of expenses for a population. Thus, capitation shifts the risk of coverage from the insurer to the provider of care, providing the most financial risk but also the most opportunity.

It is the most common reimbursement method for primary care physicians in MCOs, providing penalties and withholdings for too much care and bonuses as an incentive for ordering lower levels of care”. (Jones & Bartlett Publishers, 012007). The third-party reimbursement system in the healthcare has people standing on their heads trying to be able to figure this all out. Hospitals and Dr. Offices often have to hire additional people that specialize in different contract types to figure it all out, and negotiate, these being a lot or partly being Medicare and Medicaid “Not only do managed are companies have all of these ways to reimburse providers, but also the providers could contract with dozens of managed Care companies during any given year. This means that the provider, whether a hospital, a physician, a home health agency, or a SNF, needs a mechanism or tool to keep track of the deal being signed. Otherwise, it cannot prepare monthly financial statements that include managed care contractual adjustments. Providers have had to make significant adjustments in operating structure to accommodate the decreased reimbursements from MCOs”. Jones & Bartlett Publishers, 012007). The largest government-sponsored healthcare programs in the United States, known as Medicare and Medicaid, were signed into law in 1965 in an effort to provide health insurance for the growing numbers of uninsured elderly and for the otherwise medically indigent. As described in Chapter 7, “Financing Health Care and Health Insurance,” the number of Medicare and Medicaid enrollees increased much more rapidly than had been anticipated and was accompanied by an exponential rise in healthcare expenditures.

By the early 1980s the federal government became aware of the need to pass additional legislation to start reining in the skyrocketing costs in these programs. The current regulations regarding reimbursement to providers in these programs are reflective of various cost containment efforts”. (Jones & Bartlett Publishers, 012007). “Due to rapidly rising healthcare expenditures based on an initial retrospective, charge-based reimbursement system to providers, Congress passed the Tax Equity and Fiscal Responsibility Act (TEFRA) in 1982, with particular emphasis on Medicare cost controls.

Among its provisions included a mandate to hospitals for a prospective payment system (PPS) with reimbursement rates established up-front for certain conditions, the option of providing managed care plans to Medicare beneficiaries, and the requirement that Medicare become the secondary payer when a beneficiary had other insurance. Like most third-party payers for hospital services, the Centers for Medicare and Medicaid Services (CMS, formerly known as HCFA) substantially”. (Buchbinder, Sharon. Introduction to Health Care Management. Jones & Bartlett Publishers, 012007. pp. 205 – 208). This has also become complexes.

Such as nursing facility are paid with the PPS system. They are reimbursed per the care they give on a daily basis. The MDS are what the PPS is based on. The facility must keep track of the services provided very closely. They must uphold certain standard. Say a patient is receiving therapies, Speech, Occupational and physical. They must have a certain amount of time spent with the patient in order to be paid for the services that day. But if the patient is sick they are not able to work with the patient. They must make sure the MDS reflects this. If this is not done it could be considered Medicare fraud.

The MDS coordinator must make sure all the services are provided on that day to charge the patient for them. It is a very complex area. Say for example the aide taking care of the patient actually was able to walk this patient this day, but the rest of the days they are not walked. The MDS coordinator must question this to be sure it was not a mistake in charting. If this did occur she will leave it that way. This may lose money for that day as the patient did not need more extensive care. In conclusion the delivery of health care is a very complex area, and in today’s economy the financing of health care is on everyone’s mind.

It is important that the Government enforces laws to help the people. It is also important that insurance companies are not able to take advantage of the people anymore. This is partly why the delivery of health care has become the way it is today. Also hospitals and Dr. were able to charge enormous fees for services rendered and that did not help the economy at all. They were able to make good money off the people of the United States of America. The Government had to step in to take measure to ensure this did not continue.

With so many people out of work, the recession, the unemployment rate and all the people needing health care coverage and not being able to afford it. This will not go away overnight. It is going to take years to fix this problem. When President Obama is out of office and someone takes over for him. Will this continue to improve or will the next President tear it all down and try his on strategic planning? If so where will we end up? I hope for the sake of the nation that we will go forward, and not take ten steps backward; we need to fix this problem before we see the economy improving.

May God bless us all as we continue on this road to recovery? Resources (Buchbinder, S. B. & Shanks, N. H. (2007). Introduction to health care management. Sudbury, MA: Jones and Bartlett Publishers) Financing Health Care Reform. Published: July 6, 2009 http://www. ehow. com/about_5161797_definition-quality-healthcare-management. html#ixzz1aucNDnIP http://www. cms. gov/ Health Care Problems. org Huff Post Politics. com published October 31, 2011 U. S. Moves to Cut Back Regulations on Hospitals. By ROBERT PEAR Published: October 18, 2011