Question

Hospitals, outpatient centers, and free standing surgical centers are dependent on many funding sources to pay for their services.

   •   Compare and contrast approval/payment from the Patient Protection and Affordable Care Act (PPACA), commercial insurance, and the traditional Medicare program (not a Medicare health maintenance organization [HMO]) available to these types of facilities.

   •   How do the different funding types impact the strategic management of the facility?

Answer 1

Patient Protection and Affordable Care Act (PPACA) is a US health care reform legislation which was planned to enhance the accessibility, affordability and use of health insurance. Many of PPACA provisions involve an expansion of the private insurance market.

It provides incentives to companies for providing health insurance and requires that almost all individuals not covered by their employer or government insurance program for instance Medicare or Medicaid compulsorily purchase individual private health insurance. Furthermore PPACA necessitates a creation of health insurance exchanges which are government regulated and are uniform health plans that are managed and sold by private insurance companies.

In US commercial insurance can be procured either for-profit or not-for-profit from various private insurance companies. Even though there are many health insurance organizations in US however under a given circumstance it has the propensity to have a limited number.

Thus most private insurance is acquired by enterprises as a benefit for workers and expenses are normally shared by company and workers. Furthermore the funds spend by companies on a worker’s health insurance is not regarded as a taxable earning for the worker in fact government is subsidizing this insurance to a certain extent.

In US traditional Medicare program is a national health insurance program managed by the federal government since 1966. US Medicare is funded by payroll tax, premiums and surcharge taxes from beneficiaries and from other wide-ranging income and proceeds. Furthermore it provides health insurance to US individuals aged 65 years or more who have worked and remunerated into the system through the payroll tax.

Traditional Medicare program comprised of Medicare program which funds the health care for older, disabled and individuals getting long-term treatment with dialysis whereas Medicaid funds the health care for certain individuals whose livelihood are below the poverty level and have disabilities

In health care industry as operating margins persists to get more slim revenue constrictions are becoming a more critical and vital concern for many healthcare organizations. In response health care system as a strategic management policy now plan to escalate and grow in scale by enduring in horizontal integration through hospital mergers and acquisitions.

Furthermore scale could conceive more efficiency, improve the spreading of financial risk across the system and facilitate to lessen operating expenditures across the enterprise. Furthermore competition among health service providers and increasing pressure from public and commercial payers to reduce costs and improve health care are pushing the health care providers away from long-standing volume-based healthcare business models to provide effective, efficient and value-based health care business model as these form of business model seeks to more fruitfully align payment with intended quality measures in health care services.