In a recent survey conducted by the American College of Healthcare Executives (ACHE, 2012), financial challenges ranked first among eleven issues listed in the questionnaire affecting healthcare organizations in the United States. The biggest concerns were expressed in relation to Medicaid reimbursement (83 %), as well as government funding cuts (81%), and Medicare reimbursement (72%). Other financial challenges affecting the work of hospital CEOs and functioning of the hospitals were (in order of importance): bad debt (69%), reduction of inpatient volume (61%), rising costs for supplies as well as staff and other things (52%), and insufficient funding for capital improvements (43%). Respondents also indicated problems with managed care payments, converting charges to cash, functioning of emergency departments, competition from other (specialty hospitals), and some other financial issues facing the hospital management.
This paper seeks to discuss and evaluate these financial challenges to American healthcare organizations. Additionally, it provides the author’s perspectives on the issues of U.S. healthcare financing and traces changes in these views since the beginning of the academic course.
First it needs to be mentioned that modern healthcare organizations in the United States confront serious financial challenges virtually at every turn. Costs for medical care go on rising while reimbursements tend to constrict. Essentially, healthcare providers face the situation when they have to treat a vast number of under- or un-insured patients (Oracle, 2009). In this context, the financial challenges of Medicare and Medicaid reimbursement are critical. According to one of the recent studies published by the National Center for Policy Analysis (Goodman, Scandlen, & Herrick, 2013), the problems associated with Medicare, U.S. healthcare program for the elderly, are those of cost, access, and quality. Specifics of the payment system of Medicare causes the situation when senior patients find themselves unable to get the same access as people of the working age to freestanding emergency facilities, walk-in clinics, etc. Medicare providers, in their turn, are lacking incentives to better the outcomes, since they get predetermined fees for a range of prescribed tasks. To make the matters worse, physicians will find themselves paid less once they provide low-cost care of high quality (for Medicare services provision, they are paid 20-30% less). Thus, more and more healthcare providers refuse to accept Medicare patients and limit their number (Goodman, Scandlen, & Herrick, 2013).
With Medicaid, a government-run United States’ healthcare program for the disabled and the poor, the financial challenge is quite similar. Medicaid reimburses to doctors just a fraction of what is paid by private insurers, which causes physicians to stop delivering services to Medicaid patients (Roy, 2012). According to a recent study by Sandra Decker from the National Center for Health Statistics, the percentage of doctors who indicated they are likely to reject patients with Medicaid in primary care delivery was as high as 73%; among specialists the percentage was 63% . The results of this survey are compatible with the data of one 2008 survey based on responses of 4,700 physicians. That study found that Medicaid patients were six times more likely to be rejected by doctors than those that were insured privately (Roy, 2012).
In relation to this, annual cuttings of payments by the government to the hospitals that provide care to a vast number of the disadvantaged are an issue of concern for hospital managers. Under the Patient Protection and Affordable Care Act, the payment cuts to hospitals that provide care for a big number of the poor increase every year. While the cuts have been manageable for the last 3 years, this year public hospitals’ managers expressed concern with these cuts and urged the government to delay them until the outcomes of Medicaid expansion on the population that is uninsured get clear. The cuts were called “neither justified nor manageable” (Kelly, 2013).
Assessing the financial issues that confront healthcare organizations in the United States today, one cannot help stating that the problem of managed care provision, specifically with Medicare and Medicaid patients, remains the most challenging. This is explained by the fact that it affects the most vulnerable fractions of the U.S. population and is caused by serious flaws in Medicare and Medicaid structures. How should the hospital provide high quality care at a low cost given no financial incentives? How should it retain its staff given cuts in government funding and decreasing volume of inpatients? How should the hospital prioritize on health of patients rather than on financial outcomes? The major financial challenge thus is that of ineffective and insufficient managed care option for the disadvantaged and senior citizens.
Just as new knowledge added on to the author’s previous knowledge base, the author expanded the view of current problems that confront healthcare organizations and their management today. General ideas got replaced with accurate knowledge of key issues affecting hospital management and patient care. At the same time, the new vision of how these problems may be managed in future started forming. It has become clear that major changes should be applied to the structure of the U.S. healthcare. Namely, American healthcare should adopt a combined pattern of functioning where a large part will be given to government-run healthcare. That will alter the essence of healthcare from a business to a medical care program. Also, during the course various ways of resolving pending problems in healthcare organizations management and healthcare delivery have been learnt and reflected on. It means that the basis for future activity in financial management has been laid. The author has learnt to reflect on various healthcare management issues from a number of perspectives. Still, practical application remains a weakness. Hopefully, the solid theoretical basis built during the course will be of great help.
American College of Healthcare Executives (2012). Top issues confronting hospitals. Retrieved from http://www.ache.org/PUBS/research/ceoissues.cfm.
Goodman, J., Scandlen, G., Herrick, D. (2013). How entrepreneurs could solve Medicare’s problems. Retrieved from http://www.ncpa.org/pub/st344.
Kelly, S. (2013). “U.S. proposes rule on Medicaid payment cuts for hospitals.” Retrieved from http://www.reuters.com/article/2013/05/13/us-medicaid-cuts-idUSBRE94C12820130513.
Oracle (2009). “Healthcare providers tackle complex challenges by embracing consumerism”. Retrieved from http://www.oracle.com/us/industries/healthcare/046142.pdf.
Roy, A. (2012). “Health Affairs study: One-third of doctors won’t accept new Medicaid patients”. Retrieved from http://www.forbes.com/sites/aroy/2012/08/07/health-affairs-study-one-third-of-doctors-wont-accept-new-medicaid-patients/.