Over time, health care costs have increased significantly and drawn attention to the implications of the existing financial structure of health care organizations.
3/22/21 11:16 am liaflowers 0
Financial Structures of Health Care
Over time, health care costs have increased significantly and drawn attention to the implications of the existing financial structure of health care organizations. They have a considerable influence on the quality of care, patient safety, and the provision of health care services. Thus, external and internal financial structures and the respective provisions of the Affordable Care Act have a significant impact on activities and services provided by health care organizations along with related ethical concerns https://bestwritingservice.co.uk
Health care organizations have comparable financial structures, internal and external ones. In some cases, they operate as public and non-profit, but others have a for-profit and proprietary system. Health care organizations depend on external financing from insurers, employers, individual consumers, as well as the government in the form of Medicare and Medicaid. These sources assist in reimbursing health care services provided to patients. However, the latter can make out-of-pocket payments to cover additional health expenditures. As important players in health care finance, insurers are an external financing source to healthcare organizations. Even so, some of them operate as mutual companies, reinvest their earnings in the insured population and provide benefits in terms of dividends or even lower premiums. On the other hand, the government reimburses care through Medicare and Medicaid programs. Various government levels also finance projects paying to health care organizations for services rendered to consumers.
Health care organizations often employ a chart of accounts as the most common part of the internal financial structure that highlights transactions depending on the respective responsibility center. Such facilities have cost or revenue centers. The sum of payment for services rendered in various departments of health care organizations varies significantly and represents money necessary for internal financing. For example, finances allocated to the pharmacy department depend on the variety and amount of medications that patients receive. In health care organizations, internal financing comes from patient visits, charges for specific services, and hospital admission fees. Revenue facilitates daily operations of these centers and helps in offsetting costs of providing services to clients. The pay-for-performance system is a more recent approach that the government uses now to reimburse health care organizations. The approach emphasizes provider performance as opposed to costs incurred by health care organizations. Health care organizations also employ negotiated rates.
The Affordable Care Act (ACA) currently in place has led to changes with significant implications for health care finance, namely, the expansion of insurance coverage for clients, forbidding the rejection of patients with existing conditions and facilitating the formation of exchanges. It also placed limits on a fraction of premiums that insurance companies should allocate to administrative expenses and their profit share. The introduction of the ACA exchanges has caused increased competition among insurers and provided subscribers with favorable insurance packages. However, this has resulted in problems in the insurance market as insurers continue to make huge losses. The second have suffered greatly, with the operations of some of them failing completely. Recently, United Healthcare, a renowned insurance player, has withdrawn from the majority of the ACA exchange markets and cited financial problems as one of the major reasons. The Commonwealth Fund noted that insurers experienced more medical claims then problems associated with an increase in premiums and administrative costs. It explains the decreasing profit margins and the worsening financial status of insurers, especially those in the individual market. The expansion of insurance coverage has increased hospital visits, especially to people who have previously had a self-pay and no-pay status. The ACA has also introduced a compensation for care provided to these persons, and hospitals have to implement pricing that adheres to the requirements of qualified health plans. It is noted that the act has considerably reduced profit margins of hospitals, continuing to deteriorate over time, even though hospital visits have significantly increased due to insurance expansion. It indicates that changes in market conditions as a result of ACA have impacted health care finance significantly. Further, the situation has affected care quality along with patient safety.
The health care system has adopted mechanisms that emphasize care quality and patient safety more than costs incurred. The pay-for-performance system has transformed health care and put greater focus on the quality of services. Together with other health care providers, hospitals continue to pursue quality care and patient safety as ways of accessing financial incentives. As noted, hospital readmissions and medical errors have been significantly reduced and translated into lower healthcare costs for health providers. The desire to decrease such expenses has acted as a driving force towards increased focus on quality improvement and patient safety with the growing adoption of quality improvement initiatives. As Andel, Davidow, Hollander, and Moreno note, ‘Hospitals have been looking for ways to improve quality and operational efficiency and cut costs for nearly three decades, using a variety of quality improvement strategies.’ However, health care financing is an area associated with ethical problems that revolve around social justice and equity. It particularly attracts attention whenever there is a need to perform certain therapies, where the mortality rate is questioned, as in the case of abortion, assisted contraception, sex-change treatment, and euthanasia. It is also noted that ethical concerns emerge over a universal coverage and cost containment as approaches for achieving equitable access to health services and providing fair pricing for the ones. As such, this guarantees equity and social justice among patients regardless of their socioeconomic status and race.
In conclusion, health care organizations have to contend with internal and external financial structures that significantly influence their operations. As noted, the ACA has affected health care finance by improving coverage for the uninsured. At the same time, it has led to increased medical claims, although administrative expenses increase, and premiums decrease. It has also caused financial problems to healthcare providers and insurers. Even so, health care finance influences patient safety and the quality of care to a great extent and raises ethical concerns.