THE NURSE LEADER AS ECONOMIST
What do a parking place, a picture of two men playing cards, a bird feather, and an old automobile have in common?
Surprisingly, each of these items are on the list of the most expensive items in the world. A parking spot in New York City, a painting titled “The Card Players” by artist Paul Cezanne, a feather from the extinct huia bird, and a 1963 Ferrari GTO will each set you back more money than most of us care to spend in a lifetime, let alone in a single purchase.
There is another characteristic that these items share, and it helps explain the price tags. Each of these items is rare; so rare that they are difficult to find. Their low supplies drive their demand and, subsequently, their prices. This relationship between supply, demand, and price is a fundamental economic concept.
For this Discussion, you share thoughts about prevalent healthcare financing concerns and consider how these concerns are impacted by economic principles such as price, supply and demand, and need.
RESOURCES
Be sure to review the Learning Resources before completing this activity.
Click the weekly resources link to access the resources.
TO PREPARE
- Research current healthcare financing concerns prevalent in the United States.
- Reflect on these or any other healthcare financing concerns that you have observed and/or that your healthcare organization currently experiences.
- Consider how these concerns relate to fundamental issues of economics, such as “price,” “supply vs. demand,” “scarcity of resources,” or “needs and wants.”
- Consider how these concerns relate to the healthcare product or service solution you have proposed for your organization.
BY DAY 3 OF WEEK 3
Post an explanation of what you believe to be the three most important healthcare financing concerns in the United States today. Be specific and provide examples. Then, explain how these three concerns relate to fundamental economic issues, such as “price,” “supply vs. demand,” etc. Explain how any of these concerns relate to the healthcare product or service solution you have proposed for your healthcare organization in Module 1.
A Releases New Report Highlighting Significant
Financial Challenges Facing Hospitals and Health
Systems That Are Jeopardizing Access to Care
AHA, hospital leaders to discuss report during national media briefing today; please
share your organization’s story about challenges you are facing and why additional
federal support is needed to ensure access to essential services for patients
A new analysis prepared by Kaufman, Hall & Associates, LLC and released today by
the AHA shows that hospitals and health systems continue to face intense pressure on
staff and resources while also dealing with rising expenses for supplies, drugs and
equipment, as well as for the workforce. Left unaddressed, these financial challenges
have the potential to jeopardize access to essential health care services for patients.
The trends are expected to continue through 2022, with losses in the billions of dollars
for hospitals and health systems, resulting in the most financially difficult year for the
field since the beginning of the COVID-19 pandemic in early 2020 and threats to access
to care and services.
The first half of 2022 has severely tested hospitals and health systems due to the
impacts of COVID-19 surges, increased expenses and a lack of COVID-19 relief
funding for some of the hardest impacts of the pandemic, including the Delta and
Omicron surges. As a result, even the most optimistic projections for the entirety of
2022 indicate margins will be down 37% compared to pre-pandemic levels, with more
than half of hospitals operating in the red, according to the report. Under a pessimistic
scenario for the rest of 2022, margins could be down as much as 133% compared to
pre-pandemic levels, with over two-thirds of hospitals operating in the red.
“While federal support and relief has tapered off, the fight against COVID hasn’t,” said
AHA President and CEO Rick Pollack. “Managing the aftermath of the pandemic has
placed the vast majority of America’s hospitals in serious financial jeopardy as they
experience severe workforce shortages, broken supply chains, the Medicare 2%
sequester kicking back in and rapid inflation that has increased the cost of caring.
These realities translate into access to services being put in jeopardy. This deserves the
immediate attention of policymakers at every level of government to ensure we are able
to keep people healthy and maintain essential public services that our communities
depend on. America simply can’t be strong without its hospitals being strong.”
MEDIA BRIEFING ON THE REPORT
The AHA this morning is hosting a media briefing to share the report’s findings and
provide perspective from the front lines. Michael Slubowski, president and CEO of
© 2022 American Hospital Association | www.aha.orgTrinity Health based in Michigan, Jack Lynch, president and CEO of Main Line Health in
Pennsylvania, and Peggy Abbott, CEO of Ouachita County Medical Center in Arkansas,
will share with reporters how these challenges are jeopardizing access to care for the
patients and communities they serve.
In addition, during the briefing, Pollack and the three hospital leaders will discuss
actions that Congress can take to support the field, including: extending or making
permanent programs that provide support to rural hospitals; holding commercial health
plans accountable for their behaviors that put further financial strain on hospitals and
exacerbate workforce pressures; making waivers permanent, including flexibilities for
telehealth and hospital-at-home programs that have led to improvements in care; and
stopping additional Medicare cuts to providers. See our advocacy fact sheet for more
details, and watch AHA Today for additional coverage from the briefing.
ADDITIONAL AHA REPORTS HIGHLIGHT FINANCIAL CHALLENGES
Today’s report is the latest in a series of reports the AHA has released during the last
few months highlighting the difficult challenges hospitals and health systems are facing.
These include:
A report released last week on the record number of rural hospital closures in
2020 as well as the financial and workforce challenges those hospitals face.
A report last month on how deferred care during the pandemic has led to
increased patient acuity in America’s hospitals.
A report from the spring that examined the tremendous growth in a variety of
input costs for hospitals and health systems, including expenses for workforce,
drugs, supplies and equipment, as well as the impact of skyrocketing economy-
wide inflation.
SHARING YOUR STORY TO MAKE THE CASE FOR ADDITIONAL SUPPORT
During the next few weeks, we will continue amplifying with policymakers the challenges
hospitals and health systems are facing and why additional support is necessary. We’ll
also be rolling out additional resources to help you tell your story to your lawmakers and
communities. As part of those efforts, we are recording short videos with hospital
leaders, trustees and community members about the challenges they are facing and the
need to ensure hospitals and health systems are strong so they can keep people
healthy and maintain essential public services that communities depend on. If you
and/or members of your board and community are interested in participating,
please contact Jennifer Armstrong Gay at [email protected] or you can
sign up for a filming date and time directly here.
FURTHER QUESTIONS
If you have further questions, please contact AHA at 800-424-4301.
© 2022 American Hospital Association | www.aha.org
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EXPLAINER
FEBRUARY 7, 2023
Value-Based Care: What It Is, and Why It’s Needed
TOPLINES
· Value-based care, which ties the amount health care providers earn to the results of the care they deliver to patients, could correct the misaligned incentives of the U.S. fee-for-service system
· By 2030, the Centers for Medicare and Medicaid Services aims to have all Medicare beneficiaries and most Medicaid beneficiaries enrolled in accountable, value-based care programs
AUTHORS
Corinne Lewis , Celli Horstman , David Blumenthal , Melinda K. Abrams
RELATED CONTENT
· Designing Accountable Care: Lessons from CMS Accountable Care Organizations
· Paying Differently for Primary Care for Better Health and Greater Equity
· Making Health Care Accountable
What is value-based care?
Value-based care ties the amount health care providers earn for their services to the results they deliver for their patients, such as the quality, equity, and cost of care. Through financial incentives and other methods, value-based care programs aim to hold providers more accountable for improving patient outcomes while also giving them greater flexibility to deliver the right care at the right time.
Why is value-based care being tested in the U.S.?
Even though the United States spends much more of its gross domestic product on health care than other countries, it’s not getting the best results . Compared with other high-income countries, the U.S. has the highest rate of infant deaths as well as the highest rate of preventable deaths. And a history of inequality in access to care has meant that people of color and individuals with low income are more likely to experience adverse health outcomes than the rest of the population.
Experts agree that these longstanding, widespread problems stem in part from the misaligned incentives built into the nation’s traditional, fee-for-service payment model. Under fee-for-service, health care providers like physicians and hospitals are paid for each service they provide. In other words, they are rewarded for volume — they are paid more if they deliver more services, even if they don’t achieve desired results. Value-based care programs aim to change that dynamic, so physicians earn more for delivering health care that helps patients get better, while also keeping costs down.
What is the potential benefit of value-based care?
To better understand the potential benefits of value-based care, stakeholders in the public and private sectors have tested a variety of approaches. The Centers for Medicare and Medicaid Services (CMS) has taken a leading role, testing several voluntary and mandatory programs with hospitals, physician groups, health plans, and other health care entities. One example is the voluntary Medicare Shared Savings Program, which allows providers to form groups called accountable care organizations (ACOs). ACOs can earn financial rewards by taking responsibility for caring for a defined group of Medicare beneficiaries and improving the care they receive, largely through better coordination of services. CMS also has tested whether an “episode-based” payment system — in which providers receive a single payment for all the services needed to care for a specific medical issue — can produce savings while maintaining quality of treatment.
Studies of value-based care programs so far suggest that they can reduce costs and improve quality of care, although results have often been mixed and impact modest. Some programs also enable providers to transform the way they deliver care, by promoting collaboration across care teams and encouraging providers to spend more time on services that wouldn’t normally be covered under fee-for-service, such as counseling or screening for social needs.
What are the measures of success that providers are held accountable for?
In value-based arrangements, health care organizations are incentivized, or rewarded, for meeting various, interrelated goals. These goals typically aim to improve measures of quality, cost, and equity. If they’re not met, organizations may forfeit bonuses or lose a portion of their payment from payers like Medicare, Medicaid, or commercial health insurers. Following are some of the key areas measured.
Quality. With so many dimensions of quality and so many ways to measure it, how — and how often — quality should be measured is a matter of ongoing debate. The National Academy of Medicine has described a useful framework for quality in health care that can be used to hold providers accountable in value-based care models. Its components include:
· effectiveness: care is based on evidence and is designed to get results
· efficiency: providers don’t use resources that are not needed
· equity: care does not vary in quality based on personal characteristics such as race, gender, and income
· patient centeredness: each patient’s values, preferences, and needs are respected
· safety: treatment does not cause harm
· timeliness: treatment is available without long delays.
Cost. Health care providers may earn more or avoid penalties if they reduce or maintain costs. So, if providers can reduce unnecessary use of high-cost forms of care like emergency department visits and inpatient admissions, they may share some of the savings they produce.
Equity. Efforts to improve health equity aim to reverse practices and policies that have made it difficult for historically marginalized groups, especially people of color, to access and receive high-quality care. As a result, these individuals have had poorer health outcomes. Until recently, many value-based programs did not prioritize outcomes related to equity, such as requiring care providers to measure and reduce health disparities by race and ethnicity. But it’s becoming more common for providers to receive financial incentives to ensure that high-quality care is accessible for communities of color, low-income populations, and more. Measures of health care equity may include, among others, the collection of demographic data and the development of a plan to ensure equitable care is provided.
What strategies are used to promote value-based care?
Payers and federal regulators can use a variety of incentives and mechanisms to motivate health care providers and organizations to deliver higher-quality, cost-effective care.
Financial incentives. Also known as value-based payments, financial incentives are a key component of value-based care. These payments may link clinician, hospital, or health system compensation to performance on specific cost, quality, and equity metrics. The structure of these payments varies widely , but some factors that may motivate providers include the following:
· Upside and downside risk. Some models have upside-only risk — providers stand to gain revenue if they exceed expectations on quality, cost, or equity targets. Other programs also include downside risk — providers lose revenue if they fail to meet these goals. Some evidence suggests that models that include both upside and downside risk, also known as two-sided risk, may generate better outcomes , such as fewer hospitalizations. Although risk of revenue loss can be a strong motivator, two-sided risk may prevent risk-averse providers from joining a value-based program in the first place.
· Prospective versus retrospective payments. In the U.S., most health care is paid for on a retrospective, fee-for-service basis, with providers reimbursed for services they’ve already delivered. Prospective payments, on the other hand, are given upfront to providers to manage care for a defined set of patients and procedures — and, in some cases, for a defined period. This type of payment is commonly referred to as “capitation.” Prospective payments may create a stronger financial incentive for providers to lower the cost of care so they can retain more revenue.
· Percentage of providers’ revenue tied to value-based payments. Evidence suggests providers are more motivated to change how they deliver care when more of their revenue comes from value-based payments , since more is at stake. When more revenue is tied to value-based payment, there’s also less administrative burden for providers that often receive payment from a variety of sources.
· Timing, size, and delivery of incentives. Providers are more likely to be motivated by financial incentives that are offered to them directly and given without delay. Incentives should be clearly linked to specific outcomes and large enough to be meaningful.
Nonfinancial incentives. Nonfinancial incentives also can encourage clinicians, health systems, and payers to improve quality, safety, and cost outcomes. For example, participation in value-based care models that offer greater flexibility to deliver the right care at the right time can contribute to providers’ sense of purpose, mission, and professionalism. And, when health care entities perform well in value-based care, it can elevate their reputation as a provider of high-quality, affordable care.
Measurement. How health and hospital systems and individual clinicians are paid can depend on how well they perform on measures of quality and safety , such as death rates or patients’ ability to access timely care, as well as measures of equity and cost. To gauge providers’ performance at one moment or over time, public and private sector health care entities and regulators collect and analyze data on specific measures.
Accreditation. CMS can require health care entities to adhere to the quality and safety standards set by certain third parties to participate in the Medicare or Medicaid programs. For example, Joint Commission accreditation is required for hospitals and health systems to receive Medicare or Medicaid reimbursement.
Regulation. Government agencies can create rules that encourage providers to meet specific standards of quality, equity, and cost-effective care. For example, CMS sets rules requiring managed care plans to include a certain number of providers in their network so Medicaid beneficiaries can access services.
Public reporting. Publicizing how well health care providers and health plans perform on certain measures can drive them to improve performance. For example, people can search Medicare.gov to find out the rate of complications for hip and knee replacement surgeries at a hospital. Or, if they are looking to enroll in a particular Medicare Advantage plan, they may search the site to find out how members rate the plan.
What’s next for value-based care?
CMS aims to have all Medicare beneficiaries and most Medicaid beneficiaries enrolled in accountable care programs by 2030, and the agency is committed to promoting health equity through its value-based initiatives. One example of a value-based care program focused on health equity is the ACO Realizing Equity, Access, and Community Health (ACO REACH) Model . In this new voluntary program, providers are required to develop a plan to improve care for underserved communities and are rewarded for providing high-quality, well-coordinated care to Medicare beneficiaries. Interest and participation in value-based care in the commercial sector also appears to be increasing .
Although participation in value-based care programs is on the rise in the U.S., many health care providers are still not in one. To encourage participation, future models in both the public and private sector would likely benefit from being more accessible and financially rewarding, particularly to those serving disadvantaged or rural populations. Moreover, further research is needed about how these programs impact patients, providers, and the health care system overall, as well as which factors are associated with success.
PUBLICATION DETAILS
DATE
February 7, 2023
CONTACT
Corinne Lewis, Assistant Vice President, Delivery System Reform, The Commonwealth Fund
CITATION
Corinne Lewis et al., “Value-Based Care: What It Is, and Why It’s Needed” (explainer), Commonwealth Fund, Feb. 7, 2023. https://doi.org/10.26099/fw31-3463
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HOME FINANCE The Top Financial Challenges in Healthcare Industry
The Top Financial Challenges in Healthcare Industry
FINANCE ISSUES IN HEALTHCARE
March 3, 2023 Aditi Singh Finance 0
Financial Challenges in Healthcare
Day by day, it is becoming difficult for the hospitals to endure in the present atmosphere of healthcare because of matters that are financial. It is tough to discover the finance for funding the initiatives of care quality.
As per the research conducted by the American College of Healthcare Executives, the CEOs of hospitals evaluated a lot of financial challenges. When the vast group of economic difficulties was analyzed, then it indicated that the hospitals are facing the challenges mainly when it comes to the increasing costs for staff, operating costs, and there are many.
Most of the times, hospital management acts in response to the challenges that are related to finance including with the cuts that are immediate and swift such as staff cuts and operating cuts. But this leads to the different aspect.
Enactment of wide cuts in the operational and cuts staff impacts the descending related issues; for example, reduce in the morale of employee, enhanced over time, patients who are dissatisfied, etc. It is relevant to understand the role of financial management in the healthcare industry.
Role of Financial Management in Healthcare
Finances management of any healthcare business these days is like the car driving with the windows that are foggy. The management of finance in the healthcare industry necessitates the skills that are exceptional.
Financial management includes the managing the routine of financial operations, like contracts negotiation, to make the case available for expenses such as payroll, and to maintain the cash for costs that are unanticipated. The role of financial management in healthcare industry aspects are as:
1. Meeting the Different Financial Goals
The strategies of business and finance are tangled. Doctors who vend the practices become the member of staff in the healthcare industry, and it turns out as the regional hospital system. To meet the financial goals healthcare business can build the system that is larger and steadier. It is useful in getting the money from the complete medical care spectrum, from tests to surgery to the rehabilitative services.
Attaining the practice brings in new revenues instantly, so the stream of income is helpful in paying for the buy, and the system of the regional hospital.
2. Management of Treatment Costs
For a health insurer, medicine that is cost-effective that is crucial. The insurers create the drugs lists they are ready to pay for and the guidelines of treatment for their physicians who are on contract. They also make use of the software for tracking the every doctor utilization of their preferences for tests and treatment. It is to ensure that they are following the guidelines.
The effectiveness of cost is so vital to an insurer that the developing guidelines go up to the financial management level. The task necessitates the relevant medical information. The insurer intends the treatment to work for avoiding the increasing costs.
Doctors require being sure about the sound medical treatment as otherwise; they will get into the trouble like lawsuits of malpractice. Thus, this one aspect needs to be followed so that the efficient management of finances is initiated in the healthcare industry.
3. Preventing the Medical Conditions that are Expensive
It is imperative for any healthcare organization that it ensures the medical condition that is cost-effective. But these days, the aspect is opposite. Customers are paying massive money for the general treatment as well. It is something that is causing the financial issues for the healthcare industry as well.
For the efficient management of finances in the healthcare industry, it is essential that the management team should ensure that they are offering the medical conditions that are inexpensive as it not only would be useful for the customers but also for the industry as well. Appropriate financial management is required for accomplishing this goal, and it is something that can be managed by the efficient team.
So, healthcare businesses should see that they are managing the aspect efficiently for the customers as otherwise, it can lead to financial issues. A dedicated healthcare app development services company can help you with a