¶ … Americans healthcare delivery in the United States has been via a market driven system, 1 usually through purchase of health insurance, participation in HMOs or other types of collective agencies. For those who qualify enrollment in Medicare and Medicaid programs will cover or defray costs of healthcare.2 For a growing number of people in the U.S. medical care costs are not covered by insurance or government programs, for them out of pocket and indigent services are their only options.3 This paper will look at the how financing healthcare affects both costs and use of healthcare services.
Private Health insurance.
Private health insurance in the United States developed around the 1930's during the Depression4 and grew during the economic expansion of the post-WWII years. "Under most private insurance and Blue Cross -- Blue Shield plans, fee-for-service, with physicians determining the economic value of their own services, became the established method of reimbursement for physician services covered under the benefit structure of most insurance policies."5 Payment for healthcare services through private insurance arrangements removes the cost knowledge for the consumer of what the physician / hospital is actually charging of delivery of the services. In economic terms this indifference by the consumer to the costs of service removed the "market discipline."6 Healthcare providers have little reason to contain costs. To offset the removal of market discipline insurance companies initially developed two approaches, either insurance companies will pay up to a predetermined specified amount on or will pay based on a predetermined schedule of allowances, regardless of the charges.
Fee-schedule approaches require the patient to pay the difference between what the insurance company will pay for a particular service and what the healthcare provider is charging. When the difference between what the insurance company will pay and what the patient ends up paying out of pocket becomes too great, a dampening effect may occur where the healthcare provider is less likely to raise his rates do to economic pressures.7
With UCR type plans testing, hospital visits and procedures are covered but patient visits to doctors offices for routine issues are not. Consequently physicians are free to increase the fees for these covered services as a way to "cross-subsidize"10 within a practice pushing an inherent bias toward unnecessary testing and procedures to subsidize the costs of non-covered patient / physician consultations.
HMO's
Market forces driving healthcare cost have made HMOs the preferred healthcare provider organization by employers in the U.S.11
Health maintenance organizations subscribers pay a set annual fee, either via payroll deduction or direct payment to the organization. "Subscribers to HMOs pay a given amount per month, determined a year ahead, for medical care. The amount is determined per capita, not per service. The physician may be paid a salary, usually with a bonus. The lower the costs of tests, x-rays, hospital days, and physician visits charged to the primary care physician's patients, the higher the bonus."12 This incentive to keep costs down to increase compensation encourages physicians to not order tests, x-rays, procedures etc. that are not necessary or may be too costly. As result these negative incentives regularly ordered testing to rule out serious and often life-threatening conditions, have often been brushed aside as too costly or unnecessary resulting in conditions that were routinely regarded as not worth the biopsy. In a few notorious incidents, overlooking a serious sign or symptom meant that treatment was started very late following the correct diagnosis made-often…
Health Care Finance Assets and Liabilities Assets and liabilities are found in a balance sheet. Baker and Baker (2011, p. 107) define a balance sheet as a record of "what an organization owns, what it owes, and basically, what it is worth." Item Asset Liability Cash Inventory Bonds payable Buildings Payroll taxes due Accounts payable Equipment Notes receivable Assets, in basic terms, are all those items that an entity owns. In essence, an asset should have some value attributable to it. Current assets, according
Healthcare Finance: What is the break-Even analysis approach and its application in health care organizations? Unfortunately, hospital and health care budgeting of resources has become increasingly important in this cost-conscious era of health care. The last decades of cost-controlled medicine have required fiscally conscious approaches to the healthcare for many organizations, often at the expense of patient services. A financial analyst must strive to minimize this, yet still keep the organization
Healthcare Finance The relationship between the doctor and a possible patient is established when the physician asks the person for the first time as how he could be of possible help. This direct and simple enquiry is the beginning of the trust of the patient that has to be put in the physician for any treatment to proceed. The patient is in need of help at that time, and has to
Healthcare Finance What are the dynamics of patient accounts receivable? What are some of the factors affecting patients accounts receivable? Facing the challenge of how to address the hospital's unpaid accounts receivable can be one of the most emotionally draining issues for a patient accounts receivable department. In addition to people simply reigining on their payments, the department must face patients who cannot pay, who did not understand that their insurance would
Healthcare Finance Government rules: In United States the Congress had passed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 or MMA and with this imposed a stoppage for 18 months on the starting of new physician owned specialty hospitals. At the same time, they also wanted to know the position regarding certain matters of physician owned heart, orthopedic and surgical specialty hospitals through MedPAC. The team visited sites, made legal
Health Care Finance One of the things people should know is that the landscape for health care is not good at present, especially in the not-for-profit sector. We are definitely running a not-for-profit health care institution here at VGH. Consider the Moody's Outlook for 2012, which is currently negative. There are a number of challenges that institutions like ours face, and will be explained in this article. Hospital revenue growth for the
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now