Health Care Finance Case Study

In 3-4 paragraphs, explain why it is important to study health care finance specifically, versus business finance in general. What is the difference?

Health care is an ever changing environment of reimbursement from third party payees, partnerships, technological advancements cost containment and changing regulations all playing a part in the viability of the financial bottom line. Health care is not a product to be sent around the nation or the world, but is a local service and is dependent on providing the lowest cost with the highest quality product to ensure the organization’s viability.

Planning and evaluating the future of the organizations requires assessment of the current financial situation, finding ways to raise and utilize funds,

The incentive for a better quality of care, or the desired behaviors to receive payment, rely on patient safety and cost containment to drive higher reimbursement (Burns, Bradley & Weiner, 2012, p 257). For example, if a hospital decreased medical errors of health acquired infections (HAIs), revenue is increased but the inability to reduce HAIs decreases reimbursement (Peasah, et al., 2013).

Charge-based payment are based a rate schedule set by the charge master, who is the provider. It is affected by areas with limited access to services and negatively affects self-pay or private pay patients (Gapenski, p 44). Discounted charges or bulk rate discount chares are negotiated when insurers have a large number of patients available to the

These charges are known by the payer prior to services being provided. Per procedure bills separately for each service provided and is used primarily in outpatient settings, but can be applied in patients where complex diagnosis of a patient’s condition is present (Gapenski, p 45). When utilized, billing increases which drives up the cost of services and reimbursement. Per diagnosis charges a flat rate based on a patient diagnosis when compared with the diagnosis of a patient with the same diagnosis. Per diem reimbursements are based upon inpatient services dictated by the care they received that day. One day may be for emergency room treatment and the next surgical services and an inpatient overnight stay.

So, the allocation of resources is assumed to be the same and any charges over and above that cost is incurred by the facility. It was developed in 1983 by Medicare for diagnosis related groups, in case mix reimbursement, and is generally used by hospitals and nursing homes. Under per diem reimbursement is set by state governments, Medicare and Medicaid, the payment for treatment is made per each day admitted to a healthcare facility. Individual fees are paid for services and supplies with the reimbursement rate based on different