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Al H 116/Rad T 216. Financial Aspects of Hospital Management. Allocates funds for specific uses Helps prevent unnecessary spending Provides a measure of effectiveness of services Helps set goals Helps assure adherence to the facility’s mission Forces development of alternative plans.
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Al H 116/Rad T 216 Financial Aspects of Hospital Management
Allocates funds for specific uses Helps prevent unnecessary spending Provides a measure of effectiveness of services Helps set goals Helps assure adherence to the facility’s mission Forces development of alternative plans Helps analyze percentage of effort and return Assess day to day operations Forces analysis of fund allocation Evaluate services on a per cost basis Evaluate organizational goals Function of a Budget
Operational Vital Signs • Admissions • Average length of stay • Patient days • Average daily census • Overall outpatient services • Overall staffing based on patient activity
Elements of a Hospital Budget • Direct expenses • Operating budget • Salaries • Benefits • Drugs • Supplies • Minor equipment • Misc expenses • Advertising/marketing
Leases/rentals • Discretionary expenses • Debt/discounts
Indirect expenses • Building depreciation • Equipment depreciation • Utilities • Maintenance • Service contracts • Purchased services
Revenue • Operating income • Investments • Funds • Gifts • Grants • Philanthropy
Relationship between Operating Costs and Patient Charges • Managed Care demands anticipated costs be accurately assessed. These estimates form the basis for contract negotiations with insures to determine reimbursement rates. • Once negotiated these costs are fixed and the hospital must stay within budget or loss money.
Health Care Insurance • How pays the Bill? • Government • 54.3% - Medicare and Medicaid • 34.1 % third party payors
National Health Systems • Only the US and South Africa don’t have national health systems. All other industrialized nations do. • A major perceived advantage is lower health care costs relative to GNP
Managed Health Care Organizations • HMO • The purest form • Payor and provider are the same (Kaiser) • Today • Typically, the payor contracts with physician groups
HMOs control costs • Monitor • Inpatient/outpatient services • Doctor visits • Use of specialists • Diagnostic testing
Cost Controls • Hospital days • Results reporting • Effectiveness of treatment • Number of repeated tests • Appropriateness of tests • Paying only for services provided
PPO • Preferred Provider Organization • Groups of providers who work together to provide services
Capitation • Basically, prepayment for services
Milestones: Health Care in the United States • 1973 Health Maintenance Organization (HMO) Act • encourages development of prepaid group plans to restrain providers and centralize health care delivery. • 1982 to control Medicare costs the government introduces a fee schedule based on Diagnostic Related Groups (DRGs) and beneficiaries were encouraged to use Preferred Provider Organizations. • 1992 President Bush proposed a tax credit and health insurance voucher program. • 1993 President Clinton’s Health Security Plan which would ensure health coverage for all Americans and control costs through managed competition is defeated.
Milestones: Health Care in the United States • 1935 Social Security Act (does not include health insurance) • 1939, 1943, Attempts to introduce a national health insurance • late 1940s plan were defeated by the Congress • Early 1960s President Kennedy’s attempts were unsuccessful • 1964 Medicare and Medicaid programs pass