financial management to evaluate model in financial performance in the health care

| March 21, 2018

602: financial management to evaluate model in financial performance in the health care


Nowadays, financial management is crucial in health care or health insurance. Also, according to Kurt (2017), health insurance and hospital systems are important to help provide high quality healthcare services. To improve patients, as well as coordinating care, insurance companies pay medical services and drugs for patients.

WMHS became one of ten group providers that participated in a demonstration project on payment reform that would be applied to all Maryland hospitals three years later. This new care delivery and payment model drew national attention (Ronan, 2017). Using healthcare information technology to evaluate financial performance in the healthcare. According to Ronan (2017), the usage of different types of hospital IT impact the quality and cost associated with healthcare processes. Also, this paper aims to improve high quality in healthcare.

This paper focuses on the evaluate model in financial performance in healthcare or hospitals, such as patient’s safety and financial performance, the Physician Group Practice (PGP) Demonstration Project, integrated health systems (IHSs) , Affordable Care Act (ACA),


There are various models to evaluate financial performance in healthcare organizations. the first model used to evaluate financial performance is physician group project. According to Pual (2014), the Physician Group Practice (PGP) Demonstration Project was considered to determine whether high- quality healthcare can be supplied to Medicare patients, while simultaneously lowering overall Medicare costs. The Affordable Care Act (ACA), known as “Obamacare,” was passed by the U.S. The ACA defines an Accountable Care Organization (ACO) as an organization of healthcare providers responsible for decreases in the cost and improvements in the quality of medical care for people who use Medicare (Paul, 2014). In addition, there are some purposes of the ACO: “better medical care for individual patients, better health for populations, and slower overall growth in Medicare costs” ( Paul, 2014, p7).

Moreover, the design PGP serves as a test market for ACO. According to Pual (2014), the PGP demonstration undertaking changed into the 2003 regulation that creates Medicare component D prescription coverage, and used a hybrid fee machine: companies have been paid conventional Medicare rate for service reimbursement. Also, had possibility of incomes bonus bills are primarily based upon price financial saving which met a predestined threshold of 2 % of projected costs, presumably by using fewer resources while achieving high-quality health outcomes. “Electronic medical record (EMR) system in place for over 20 years, a factor they admit helped them significantly cost-wise with respect to the project” (p.9). PGP can be inefficient, such as “PGPs would have more room for improvement of efficiency than those al- ready operating more efficiently”(p.). The PGP comprised of two revenue sources, one guaranteed for traditional payment for specific services and the other potential payment to be paid at a future time based on the quality of the provider and their financial targets.

The second model used to evaluate financial performance is Affordable Care Act (ACA). According to McCue (2013), the Affordable Care Act’s law of medical loss ratios requires health insurers to use at least 80–85 % of the payments they collect for direct medical expenses (care delivery) or for efforts to improve the quality of care (p.1546). In addition, this law protects patients who pay less. “This law requires from companies to return 1.1 billion to consumer in the form of rebate”. This law effects on insurer key financial performance ratios, such as administrative costs and operating margins. The ACA medical loss ratio rule affects nonprofit insurers rather differently than it does for- profit insurers. For- profit insures medical loss ratio increased by 7.1 % points, while their median administrative cost ratio and operating margin declined by 2.9 and 2.2 % points, separately(p. 1548). For nonprofit. Both types of insurers must refund in the form of rebates any excess overhead amounts they accumulate (P. 1564).

Another model to evaluate is financial performance of integrated health systems (IHSs). This models helps to operate economics, and financial performance. There are some operating economics that include clinical services generated by employed physicians. “Physician-generated units of effort are created and measured as WRVUs. For every WRVU produced, related clinical activities, such as therapeutic procedures, inpatient bed-days, and the work units of clinical staff” (Zismer, 2013, p.314). For instance,” integrated health system that generates $1 billion in annual

revenues on 2 million physician WRVUs nets $500 in operating revenues per average physician WRVU produced. If this figure matches the organization’s target average, the IHS is on budget().

This model provides a way to understand how health practitioner carrier devices of effort translate to operating economics performance clinical services, operating revenue produced, working fees generated, and financial performance of IHS.

Thirdly, patient’s safety and financial performance is a model. This model is improving financial performance and patient’s safety in hospital. Patient’s safety and financial performance is significant in healthcare. According to Dobrzykowski, McFadden, Vonderembse (2016), hospitals are a major contributor in “healthcare spending category,” as they account for approximately 40% of total spending, making them an important target for cost reduction efforts (p. 40). Many healthcare organizations have applied quality plans such as lean process improvement to improve patient’s safety and financial performance. ??????In the healthcare or health insurance (delivery) make healthcare more affordable and cost effective. there is less consensus regarding where to focus improvement efforts. “Medicare Part D spending [covering pharmaceutical drugs] is estimated to be about $51 billion in 2009,” and is expected to rise. Health insurance premiums increased by 131% from 1999 to 2009 (National Coalition on Health, 2009) and are likely to increase()

Another model to evaluate Financial Performance of Rural Hospitals. This model have type of hospital presents payment methods applied to each classification. CAHs are reimbursed for 101% of their Medicare allowable costs for inpatient and outpatient care. Reimbursement to other rural hospitals with special Medicare payment provisions is based on either an adjusted PPS payment or a hospital-specific rate calculated from historical costs.

Furthermore, this model is about the transition to value-based payment and care delivery models through innovations in Maryland’s payment system. According to Ronan(2017), this model deals with patients in better places, such as homes, doctor offices, clinic, churches, and homeless shelters. Also, this model moves care to another place and workforce. With fewer patients to care for financial performance improves. This model helpful for a number of solutions to reduce costs and generate savings while enhancing quality and patient safety. The (TPR) is Fixed Total Gross Regulated Patient Revenue. The TPR cost less for patients and also cost less for hospitals or care homes to operate. because the TPR reduces utilization and has a much more comprehensive approach to care delivery. In addition, WMHS help organizations to reduce admission and readmission, minimize variation in quality, as well as saving new technology.

Finally, the health information technology (HIT) is used to improve some kind of quality of care, record patients, avoid errors or test, and achieve many efficiencies. HIT is capable to improve quality and health care provider efficiency. How technology affects hospital quality and cost connect with health care operations. Moreover,

Alternative payment models

Therea are some alternative models to evaluate financial performance

Fistly, Accountable Care Organization (ACOs) are groups of healthcare providers and hospitals that jointly provide coordinated care of the patient population with the goal of giving higher quality while reducing the cost. Health information technology and the data it provides should help to mea sure the quality of these efforts.

Secondly, Patient-Centered Medical Home (PCMH): This model marks a transition away from symptom-and-illness-based episodic care to a system of comprehensive coordi nated primary care. Personal physicians are responsible for coordination of care across all healthcare systems facilitated by registries, information technology, health information exchanges (HIEs), and other means to ensure patients receive care whenandwheretheyneedit.23


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