Financial Management of Health Care Organizations An Introduction 4th edition, Zelman

1. Context of Health Care
Financial Management
Chapter 1

2. Learning Objectives
• Identify key elements that are driving changes in health care
delivery
• Identify key approaches to controlling health care costs and
resulting ethical issues
• Identify key changes in reimbursement mechanisms to
providers

3. Lowering Costs
• Patient Protection and Affordable Care Act (ACA)
The Affordable Care Act puts consumers back in charge of their
health care. Under the law, a new “Patient’s Bill of Rights” gives
the American people the stability and flexibility they need to
make informed choices about their health.
• CMS trying to control rising costs
• Center for Medicare and Medicaid Services (CMS)
demonstrate definitively that private insurance is increasingly
less efficient than Medicare.
• Value Based Purchasing (VBP)
• Payment methodology that rewards quality of care through
payment incentives and transparency in health care.

4. Goals of the Health Care System
• Access
• Cost
• Quality

5. 1. Access
• Help establish Health Insurance Marketplaces in every state to
expand access to coverage for individuals and small
businesses, reduce administrative expenses, and increase
competition;
• Work with states to expand Medicaid coverage to more low-income
Americans;
• Enhance HealthCare gov, which empowers consumers to make
informed choices about health care options

6. 2. Cost
• Improve accessibility and integration of health care databases
so researchers can identify cost-saving, health-protective, and
quality-enhancing practices
• Improve management of health care cost information to
identify key drivers of high costs and reduce delivery of
ineffective and inappropriate care;
• Adopt and implement Affordable Care Act provisions to
standardize administrative claims transactions and to achieve
greater interoperability between administrative and clinical
data

7. 3. Quality
• Identify innovative solutions to minimize harm in all settings
by engaging local front-line providers, patients, and families in
multi-stakeholder meetings
• Implement Learning and Action Networks to share best
practices for promoting quality, patient safety, prevention,
health literacy, and improved care transitions
• Improve the quality of, safety of, and access to care in long-term
services and supports settings, behavioral health
services, and acute care hospitals, and through state health
departments;

8. Changing Methods Of Health Care
Financing and Delivery
• Requirement that almost all individuals have insurance coverage
• Requirement that states create insurance exchanges
• Provisions for expansion of Medicaid (is a social health care program
for families and individuals with low income and resources)
• Provisions for medical loss ratio and premium rate reviews
• Bundled payments and VBP
• Accountable Care Organizations

9. Trends
• Rise of uninsured from 36 million to 50 million 2001-2010
• ACA authorizes competitive insurance marketplace
• Rise of uncompensated care for the uninsured 2001-2011
• Accountable Care Organizations
• Patient Centered Medical Home
• New technology
• VBP

10. Factors Affecting the Cost of Care

11. Impacts to Reimbursement
• Cost Accounting Systems
• Group Purchasing Organizations
• Reengineering/Redesigning
• Mergers and Acquisitions
• Retail Health Care
• Medical Tourism
• Compliance
• Recovery Audit Contractors (RACs)
• VBP
• New DRG System
• ICD 10

12. Summary
• Health care administrator faces numerous complex issues
when making strategic and financial decisions.
• High ethical standards must be demonstrated