Aligning Physician Financial Incentives, Essay Example

Please define and explain the Payor sources for Healthcare Organizations in the United States. (Where do Healthcare Organizations derive their income?)

• Physician incentives are a means of healthcare organizations deriving income. As doctors bring in more patients and deliver more surgeries and procedures the more income is brought to the health care organization.
• Patient billing for operations and other techniques such as surgeries and procedures.
• Outpatient and Inpatient diagnostic testing services
• Cafeteria plan
• Fee for fee service but this practice is not used much anymore

What are allowances or contractual adjustments and what are their impact on revenue?

Examples

• Third party accounting and billing impact hospital revenue.
• Medical Malpractice insurance coverage and lawsuits impact revenue
• Allowances are future liabilities a company expects to incur. They impact the budget for the future however if they are manipulated into the forecast of the budget accurately and in time, all will work out fine with the budget. If they are left out the budget will fail due to inaccuracies for projected forecasts.

What are the challenges in managing profit margin in the health care organizations? Include allowances in your discussion.

The largest challenge to turning managing profit margins is turning your inventory over as fast as possible. Slotting allowances are fixed fees. A determining factor will be how much a healthcare organization sells or delivers to project the annual profit margin. The larger the anticipated projection, the higher the sales, the better changes the profit margin will be delivered.

References

Young, D. and McCarthy, S. (2000) Aligning Physician Financial Incentives in A Mixed-Payment Environment Retrieved June 21, 2010 from, http://findarticles.com/p/articles/mi_m3257/is_10_54/ai_66014906/

Allied Health Care International Retrieved June 21, 2010 from, http://www.marketwire.com/press-release/Allied-Healthcare-International-Inc-Reports-Fiscal-2010-First-Quarter-Results-NASDAQ-AHCI-1114182.htm