SU_NSG6605_W2_A2_Sornoza_S
docx
School
South University, Savannah *
*We aren’t endorsed by this school
Course
6605
Subject
Health Science
Date
Jan 9, 2024
Type
docx
Pages
6
Uploaded by sharon.sornoza
1
Week 2 Mid-Week Project
Sharon Sornoza
South University
NSG6605 Quality Outcomes and Financial Management in Healthcare Organizations CP01
Dr. Linda Robinson
December 8, 2023
2
Week 2 Mid-Week Project
Multiple payment systems finance healthcare services in the United States (U.S.). Approximately half of the services received are paid for by government programs and taxation, and the other half is paid for by insurance companies and individuals (Finkler et al., 2018, p. 47). Healthcare spending is projected to grow 1.1% higher than the gross domestic product (GDP) yearly (Tulchinsky & Varavikova, 2014, p. 809). The major cost drivers, aside from increased costs of pharmaceuticals, are:
Fee-for-service reimbursement
o
Providers get paid for every test, procedure, or service they perform.
Physician, facility, and drug costs
o
U.S. hospitals are more resource-intensive than in other developed countries.
o
Pharmaceutical companies are developing “specialty” drugs that cost significantly more per treatment than before.
Fragmentation and lack of care coordination in the delivery system
o
How often has a patient said to you, “I just had (this test/procedure) done last week”? The reply usually given to the patient is that because it was done at the “X” facility, you don’t have access to those records. Therefore, it must be repeated since it would be faster than waiting for medical records to send the results.
o
Preventable hospital readmissions due to lack of post-acute care
High administrative burden on providers, payers, and patients
o
Approximately 26% of hospital spending is from administrative costs.
Billing and insurance-related costs
Changing demographics, lifestyle choices, and the right of chronic conditions
3
o
Prevalence of chronic illnesses: the top 10 causes of death were chronic diseases, with heart disease and cancer together accounting for nearly 46% of all deaths (Finkler et al., 2018, p. 49).
Reimbursement options
Approaches to funding healthcare were developed—programs such as Managed Care Organizations, hospital value-based purchasing, episode-of-care payments, public insurance, and philanthropic donations. Private insurance companies, to prevent overuse of health care treatments, have made it mandatory for patients to meet deductibles before the insurance is 100% responsible for the bill, requiring co-payments at the time of service and having restrictions on amounts of reimbursable claims. The most common options to reimburse providers for their services are public insurance, private insurance, and out-of-pocket payments.
Public insurance plans are managed through federal, state, and local governments. These plans include Medicare, Medicaid, and The Children’s Health Insurance Program (CHIP) (Finkler et al., 2018, p. 54). Medicare is provided to persons aged 65 years and older, individuals with specific disabilities younger than the age of 65 years, and individuals of all ages with end-stage renal disease (Finkler et al., 2018, p. 55). Medicare pays for hospital, hospice, and some home health care (Finkler et al., 2018, p. 55). Medicaid and CHIP programs provide healthcare coverage for medically needy individuals such as children, poverty-level families, and
senior citizens. Unlike Medicare, Medicaid, and CHIP are optional for states to participate in providing this type of coverage to their citizens. Out-of-pocket payments include the amount paid for services not covered by insurance (neither public nor private) and the number of copayments, deductibles, and payments covered
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
4
by health savings accounts (Barati & Fariditavana, 2022, p. 809). Types of out-of-pocket expenses include paying for over-the-counter medications, prescriptions, physician office visits, dental care, vision care, and eyeglasses (Finkler et al., 2018, p. 56). Though decreased over the last decade, philanthropic donations have provided funds to healthcare organizations to cover the
treatment costs of patients who cannot pay for their care.
Controlling costs
To control healthcare costs, hospital payment systems were developed. Two selected approaches to managing healthcare costs are seen in Diagnosis Related Groups (DRGs) and Managed Care Systems in the form of Health Maintenance Organizations (HMOs). Before 1960, hospitalized patients stayed considerably longer than they do now. Patients remained in
the hospital longer than they should have, partly because the hospitals were getting paid for each day the patients stayed. Once the DRG was formed, the payment system changed to paying for a “procedure or diagnosis” (Tulchinsky & Varavikova, 2014, p. 795) as a “standard
payment method for all insurance systems” (Tulchinsky & Varavikova, 2014, p. 795). Lengths of stay decreased, and patients were getting treated faster than previously as “payment is a predetermined fixed amount and is not dependent on the costs incurred in treating the patient” (Finkler et al., 2018, p. 68). Implementing and developing managed care systems due to the increasing costs of healthcare provided “resource management and quality assurance with rationalized use of technology” (Tulchinsky & Varavikova, 2014, p. 795).
The benefits of DRGs are that patients get assessed, diagnosed, and treated accordingly so they can get home quickly. The benefits of HMOs are established “set fee per member per month to provide all specified health care services to enrolled patients” (Finkler et al., 2018, p. 68). This means that the patient knows how much it will cost to get seen, and if a procedure needs to be completed, they will know how much to expect to pay out of pocket. This type of system promotes prevention vs reactive healthcare.
5
Another tactic to decrease healthcare costs comes from employer-sponsored health promotion approaches. For example, they provide their employees with tobacco-free discounts on their insurance plans, discounts on gym memberships, and nicotine cessation resources.
Conclusion
Healthcare costs have risen alarmingly and are expected to surpass the gross domestic product by 1.1%. The major cost drivers of healthcare include incentivizing providers' payment for each service/procedure/test ordered, compounding, and using specialty drugs vs. commonly used drugs, chronic illnesses, and lack of post-acute hospitalization after-care, causing an increase in avoidable readmissions. Reimbursement systems have been created to help pay for the care given. Programs such as diagnosis-related groups and Managed Care Organizations specify what reimbursement the provider/organization will get to prevent the physician from ordering anything and everything. The nurse manager, executives, physicians, and other stakeholders benefit from increased knowledge of the cost drivers, payment systems, policies, how the financial decisions will affect care delivery, and what must be anticipated to keep costs minimal.
6
References
Barati, M., & Fariditavana, H. (2022). Income and healthcare financing system in the united states: An asymmetric analysis. Journal of Economic Studies
, 49
(5), 809–820. https://doi.org/10.1108/jes-12-2020-0592
Finkler, S. A., Jones, C. B., Kovner, C. T., & Mose, J. (2018). Financial management for nurse managers and executives
(5th ed.). Saunders/Elsevier.
Tulchinsky, T. H., & Varavikova, E. A. (2014). The new public health
(Third ed.). Elsevier.
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help