HEALTH FINANCE

Topic: HEALTH FINANCE

Order Description

answer the following questions:

2. After reading Joan Magretta’s article, comment on how numbers are used in your work setting or other part of your life in achieving financial goals.

3. Only in recent years have hospitals begun to develop meaningful systems of cost accounting. Why did they not begin such development sooner?

4. Teaching hospitals receive an additional payment to recognize the indirect costs of medical education. What rationale might be used to justify this extra payment?

SAMPLE ANSWERS (DO NOT COPY)
2. After reading Joan Magretta’s article, comment on how numbers are used in your work setting or other part of your life in achieving financial goals.

I really enjoyed this article and how it explained the balance between the interpretation of what numbers mean and how to use them to affect change. In MU we track a physicians success by comparing their achieved numbers to those established by the gov to make a given measure. What is frustrating is that the docs and staff lose focus of the value of what we are doing, trying to make an interoprative system of sharing medical information, with are we making the numbers? In this respect numbers are good and bad, good that we can get them and monitor progress and bad because they are blinding those looking at them on how we can improve care and make the numbers at the same time. The purpose and value of the program gets lost in the focus on the numbers. As a result we changed the order of the MU meeting. We talk process first, what’s best for the patients then we fit that into MU, or try to. The numbers are no longer posted at the start of the meetings but are saved for brief viewing in the final 2 minutes of the meeting. That and serving chocolate during the meeting seem to work fairly well – for now.

3. Only in recent years have hospitals begun to develop meaningful systems of cost accounting. Why did they not begin such development sooner?

In 1983 and before hospitals were paid actual costs for delivering service. In about 1983 Medicare introduced the perspective payment system for care. This payment system was based on a set amount of money the hospital would receive based on patient diagnosis not cost. If the hospital managed the care of the patient efficiently the hospital would break even and/or exceed expense (profit). if the hospital did not manage the patients well the hospital would lose money on that patients stay. A mechanism to forecast and determine best care practices was necessary for the hospital to survive financially. the hospital actually became accountable for efficient operations. Introduction of HMO payers, fixed rates for fixed service business added to the need for meaningful cost accounting.

4. Teaching hospitals receive an additional payment to recognize the indirect costs of medical education. What rationale might be used to justify this extra payment?

Teaching hospitals are established to support university based medical and dental training for advanced students. In most cases teaching hospitals are located cities where the indigent population is generally more concentrated than in suburban and rural settings. Thus the patient population in teaching hospitals is expected to of higher acuity than other hospitals, patients are sicker. The current DRG payment system does not adjust for this making it necessary for teaching hospitals to receive more than their suburban and rural counterparts.

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