Health Services Financial Essay

This week we have been talking about staffing in health care organizations. An important part of staffing a health care organization is selecting people who are up to date with industry standards. Professional organizations are one way that employers and employees keep themselves up to date with industry information. Health Services Financial Essay

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One of the key professional organizations for health care finance is the Healthcare Financial Management Association (HFMA). For this week’s discussion we are going to explore HFMA and identify the services that it offers to the industry. This will help familiarize you with the resources that are available to you.

The HFMA website can be found at http://www.hfma.org (Links to an external site.).

For your original post:

Identify one area of the HFMA website that provides information that you might find useful if you were a health care manager.
Explain what information is provided in this area and how you might use this information as a health care manager. Health Services Financial Essay

Chapter 1- Question and Answers

1.1
a. What are some of the industries in the healthcare sector?

Some of the industries in the healthcare sector are health insurance, pharmaceuticals and biotechnology, medical equipment and supplies and health services. Others include education institutions, government and private research agencies.

b. What is meant by the term healthcare finance as used in this book?

Healthcare finance is a term used in this book to describe accounting and financial management principles and practices used to ensure the financial well-being of health care organizations.

c. What are the two broad areas of healthcare finance?

The two broad areas of healthcare finance are accounting and financial…show more content…
The role of finance is to make health service organizations maximize their resources to increase their efficiency and their value. Health Services Financial Essay

b. Has this role increased or decreased in importance in recent years?

This role has increased in importance over the recent years, because of health care reform changes and economic crises.

1.4.
a. Briefly describe the following health services settings:

* Hospitals- provides general, acute care, diagnostics, surgery, usually for patients who need several hours of care. Recent operations allow shorter lengths of stay, which results in excess capacity. Hospitals can vary in size from 25 beds to 1000’s of beds. The constant nursing to patients make them labor intensive. * Ambulatory care-outpatient service, not requiring overnight stay; walk-in clinics, surgery clinics, provide services at lower costs than hospitals such as medical practices or emergency care. * Home health care- brings many of the same services provided in ambulatory care settings into the patients’ homes. This can help with day-to-day activities. * Long-term care- this is provided for individuals who are unable to perform day-to-day activities (i.e bathing, walking, eating) due to the lack of functional ability. * Integrated delivery systems- has all the health settings mentioned above under one entity. Health Services Financial Essay

HEALTH CARE REIMBURSEMENT PROGRAMMES.
Health care professionals play an important role in society. As such, there is a need for these professionals to understand the various health care reimbursement systems and methodologies to discharge their duties. There exist various financial systems adopted to cater for the financing of healthcare with each plan posing its risks as well as the incentives these systems exists solely because most patients have an insurance plan. Health Services Financial Essay

Fees for service reimbursement program mean that a fee is paid dully to the healthcare provider for each specific service rendered. This system is widely used as it guarantees total independence of which services to sort from whichever healthcare provider. So the more service a provider renders the more reimbursement they get.
Managed care reimbursement methods are whereby the third party payers such as the patient or the insurance company manage the healthcare and the outcome without any input from the healthcare professional. This implies that the third party has set some measures to regulate the cost of health care without compromising the quality of care. The sole purpose of this system is to provide affordable but quality care. The forms of managed care include PPO (preferred provider organization), HMO (heath maintenance organization), and EPO (exclusive provider organization). Health Services Financial Essay

The cost-based reimbursement method is whereby health care providers are paid based on the cost that they incur during the provision of the service. The major incentive in this program is the fact that the health care professional can recover what they incurred in providing the service. However, the risk is most patients may fail to cover these costs as they are too expensive.

A charge based payment system is driven by the fees that the provider charges the patient. These fees are based on every single procedure and assessment carried out as pertains to that illness. An example of charge includes: in Nairobi Hospital: caesarian section is $80, herniography is $20, antenatal care and H.I.V testing is free. Health Services Financial Essay

Capitation and global payment are examples that fall into a health care reimbursement system called episode of care system. In this payment method, healthcare providers are paid a lump sum amount that covers all services rendered as per the disease. This effectively does away with individual fees and charges. Capitation is a form of healthcare payment method in which the third party payer (the insurance) reimburses a fixed sum to the provider after a fixed period. This is typical of health maintenance organizations. Capitation works on the contractual basis. The incentive of this system is that the patient can access any service from the provider without incurring extra cost while the healthcare provider is guaranteed a fixed sum regardless of the number of procedures. There is also guaranteed customer base for the provider. The risk is that the provider run incurring losses and this may compromise quality if care especially while doing complex procedures e.g. cancer management. Health Services Financial Essay
In global payment, the third party pays a combined fee to various healthcare providers undertaking one episode of illness. Usually there’s no additional pay for any expensive or complicated procedure. An example includes Medicare payment system for home health services in the USA; with the services rendered including occupational therapy, social services as well as medical amenities.
Per Diem payment refers to daily payment. It is an example of prospective payment method. The third party payer reimburses the provider a fixed rate for each day he patient is hospitalized. The Indian as uses this system for inpatient services. Normally the per diem rates are set by the third party payers (insurance) based upon the population and history. The advantage is that providers can increase the number of admissions to gain extra fee this leaves the insurance companies incurring extra cost.
Per diagnoses reimbursement method is where the providers receive a fixed predetermined fee for each case handled and diagnoses made. The patients or insurance companies pay for the case handled rather than the service rendered. The fee is determined by the resource needs of the average patient. An example includes: Medicare’s payment method for inpatient services. Health Services Financial Essay
Per procedure reimbursement method refers to a system whereby the patient or their insurer pays for every procedure undertaken by the provider in the management of the disease. This is mostly practiced in developing countries. For instance one patient undergoing a laparotomy pays much more than one who undergoes an appendectomy procedure. The fees are determined by the cost and sophistication of the equipment as well as the expertise. The risk involved is the affordability of a procedure to the patient especially if they are poor.

In some countries their citizens don’t have to worry about finances to when it comes to healthcare, because it’s either provided by their government or it’s nonexistent. They don’t have to worry about which healthcare coverage to buy or how their providers get paid from their recent office visit. Either way, the role of finance in healthcare is very important it is what keeps the healthcare field to constantly improve and provide quality care for it patients. In this paper I will discuss the role of finance in healthcare and why it is important to its survival. I will also cover how hospital and clinic are reimbursed for their services and the role that health insurance has to do with all of it. According to Gapenski, Fundamentals of Healthcare Finance, the primary role of finance in health care is to plan for, acquire, and use resources to maximize the efficiency of the enterprise (Gapenski, 2013). The role of finance in healthcare is divided in to different sections that play a specific role in a healthcare organization. One of the sections that are first and foremost is planning and budgeting, which involves evaluating the financial effectiveness of current operation and planning
Financing decision is made to raise funds to buy the assets that are necessary to support the organization operations. To support the organization growth they will have to make Capital investment decisions, to expand their business in order to keep up with competition. Health Services Financial Essay

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It is common for people to confuse financial management and accounting. Financial management is a decision making process that entails the use of theories, concepts and tools to make better financial decisions. Accounting simply provides a way to gauge the financial performance of a business as well as budget for its functions. From these two definitions it is quite overt that financial management is very crucial in the healthcare sector.

Initially financial management was viewed in a very simplistic manner. In an organisation, the project’s financial demands would be made for goods and services. The management would estimate the amounts that should be spend on the project. Finally the accounting department will see how the funds would be raised to meet these needs. However, with the advancements in the study of financial management, other factors are now considered including: planning for, acquisition and utilizing funds to improve the efficiency of the organisation. Health Services Financial Essay

Every organisation must have their own set of financial management goals. These goals and objectives will depend Proofreading-Editingon the line of business that they are involved in. For example for organisations in the healthcare business, they need to come up with financial management objectives that target their specific functions with reference to their mission and vision.

Financial management has various benefits to an organisation in the healthcare sector including:

Evaluation and planning
Financial management is all about gauging the financial effectiveness of the present activities. The organisation also has to forecast and see where the financial position will be in the near and far future. This kind of planning entails considering all the activities and initiatives of an organisations against the supposed value. Health Services Financial Essay

Investment decisions
Future investments and expansion is in the future of every organisation. Financial management ensures that decisions like acquisition of fixed assets like equipment and facilities are made strategically. This way the organisation is able to make calculated risks and avert disappointments in the future. Wrong investments that are not well thought through can be the beginning of the end of an organisation.

Contract management
Organisations working in the healthcare sector deal with a lot of contracts. For example the issuing of contracts to drugs manufacturing companies. This function is normally in the docket of a few of the executive managers. Such decisions have to be made based on specified criteria. Health Services Financial Essay

Working capital management
When the working capital of a given organisation is not handled properly, then the organization is bound to experience unnecessary losses. In order to be effective, financial management principles have to be applied when handling the working capital. This is where financial management becomes a function of not just a few but all the managers within the organisation.

Financial risk management
It is important to be proactive as a healthcare organisation. Being proactive is demonstrated when an organisation comes up with initiatives that avert financial risk instead of coming up with fire fighting measures when they are already in trouble. Health Services Financial Essay