RIVER COMMUNITY HOSPITAL
Section 1
In order to assess hospital financial performance, financial ratios and the statement of cash flows will be considered. To begin with, profitability ratios assist in assessing the ability of the hospital to generate revenue as compared to the expenses incurred and other associated costs it incurred during each year. With these ratios, in case the value obtained is relatively higher than the previous period indicates that the organization is doing well. On the other hand, if the value of the ratios obtained are low, it implies that the hospital have been incurring more expenses (Nikolai et al., 2010). Considering the values of the profitability ratios obtained, it clearly indicates that the hospital have not managed to do well by keeping track of the amount that is spent in handling its day-to-day health care activities. This is because the numbers have been decreasing considerably since the year 2011.
The liquidity ratio is the basically the computations used in measuring the ability of the hospital in settling out its short-term debts when they fall due. Conversely, these ratios assist in determining the how many times the hospital covered its short-term obligations using liquid assets and cash. In case the value obtained is greater than 1, it suggests that the current or short-term obligations of the hospital are managed as required. Basically, a higher liquidity ratio shows that the hospital has higher profit margins of safety that it possess to meet the current liabilities. In other words, higher liquidity ratio shows that the hospital is in a good financial base hence it is less likely to fail or fall into financial constraints (Baker & Powell, 2005). For example, all the current ratios of the hospital for the three years are more than 1. Despite that, it has been declining slightly since 2011. This suggests that the hospital have not been effectively meeting its short-term obligations.
Debt management ratios assist in measuring the manner in which the hospital has been using its financial leverage as well as its capacity of avoiding monetary distress in the long-run. In other words, it is the mechanism of measuring how the operations of the hospital have been coming from debt unlike from other sources, such as stock and funds (Baker & Powell, 2005). This implies that it is one of the measures amongst many of the risks as well as the likelihood of the hospital to default. Considering the debt to equity values obtained from 20111 to 2013, it is clear that the hospital had tried to manage its financial distress although not that effectively.
Asset management ratios offer a means for measuring the success of the hospital in measuring its assets so as to enhance an effective provision of healthcare services. In other words, they offer a clear picture of the success of the credit policy of the hospital as well as the manner in which it manages its inventory. By considering the values of the total asset turnover and fixed asset turnover, it is a clear indication that all the values are less than 1. This implies that the management authority of this hospital had not managed to utilize fixed assets so as to generate revenue (Brigham & Ehrhardt, 2008).
Therefore, the general analysis of all the asset management ratios suggests that have not been in the position of translating its assets into providing effective health care services. The reason for desiring high asset turnover ratios is because it offers an insight of the strategies used by the hospital in generating revenues from the healthcare services it offers to patients.
On the other hand, the values of the net revenue indicates that the hospital have been encountering more expenses in financing its day-to-day health care provision activities as compared to the revenues generated. Conversely, the values of total assets and total liabilities of the hospital ($ 45.738 in 2011, $ 52.964 in 2012, and $ 54.275 in 2013) have somehow remained at bar for the three years although they have not increased significantly. Lastly, the value obtained from the ending cash and investment indicates that it had decreased significantly from $5.069 in 2012 to $2.795 in 2013, a percentage decrease of 44.861%. Thus, the general indication of these values is that the management authority of the hospital had to had the capacity of improving its performance as far as the provision of health care services is concerned (Fridson & Alvarez, 2002).
The graph below can be used to summarize the performance of the hospital from 2011 to 2013
Y-axis
100
80
60
40
20
X-axis
2011 2012 2013
Section 2
Analyze current practices in health care reimbursement
As far as the health care reimbursement is concerned, the modern system is complex framework used to obtain payment and services. It should be noted that the rules governing the modern healthcare reimbursement system also keeps on changing frequently. The government payers equally changes in daily basis. Although the healthcare payers have several healthcare reimbursement strategies, they carry out various contracts with health systems and individual practices. These contracts are negotiated periodically (Buchanan & Minor, 2001).
In addition to that, payers are offered a maximum allowed payment for individual CPT code. This is the initial point that assists in determining the amount to be paid. Next, the payer is allowed to adjust the maximum allowed payments using the ‘claim edits’. The importance of the ‘claims edits’ is that it enables the payers to disqualify payment/s for some services provided as well as the ‘payment rules’ for reducing payments for certain services provided.
Moreover, the establishment of large health care systems as well as the continuation with the private insurance coverage by self-funded workers is also another practice which is affecting the modern healthcare reimbursement system. These changes have been happening rapidly throughout all the healthcare stakeholders (Buchanan & Minor, 2001).
- Using current literature, describe health care reimbursement models, including capitation, fee for service, aggregated caps, and consumer self-pay.
Capitation – in using this healthcare payment model, the per member per month (PMPM) is used to assign all patients based on their lifestyle, sex, race, age, and so on. The rate of payment is purely dependent on the projected usage regardless of whether or not the patient visits will be more or less. As compared to the bundled payment models, the truth is that the healthcare professionals have an incentive of helping patients to avoid costly tests and procedures. The objective behind this is to enable them to maximize their reimbursement. This implies that specified services are the ones which are paid for on the basis of capitation (Langenbrunner et al., 2009).
Fee-for-Service – considering the conventional healthcare payment models, the modern fee-for-service systems requires payers or patients to compensate the healthcare provider for the services offered to him or her. In this situation, there exists no incentive to hospitalization, prevent formulate and implement preventive healthcare strategies or to guarantee a person to take some cost-saving measures (NOT, A. V. A. I. L. A. B. L. E, 2017).
Aggregated caps _ this refers to the amount which is set by the Centers for Medicare and Medicaid Services (CMS) each year to assist in figuring, in aggregate, the maximum amount which the hospital will be compensated for the Medicare hospice services. Moreover, this model assists in limiting the total aggregate payments any hospital can get each year (Langenbrunner et al., 2009).
Consumer self-pay _within this model, when a patient or patients cannot manage to pay for the healthcare services they receive, the days of the account receivable (AR) of the hospital goes up, revenue shortfalls, bad debts escalate, and cash inflow slows down. The general impacts of self-pay are one of the burdening issues that hospitals do struggle with so as to reduce costs as well as increase revenue in return. This model suggests that coming efforts for collecting past due medical debts have the potential of limiting resources being wasted (NOT, A. V. A. I. L. A. B. L. E, 2017).
- Assess one specific current initiative related to the role of government in reimbursement structures
Regulator _ the federal government has the main duty of shaping the various aspects of the modern health care sector. Recent literatures suggest that there is a wider variability in terms of the quality of services by the health care institutions. Similarly, the majority of the health care services offered to patients are have been perceived to be effective but the only issue is that the benefits are not overwhelming as they should be (Nathanson, 2005). This is also what makes resources to be used unnecessarily. A certain proportion of patients also receive improved health care which is consistent with the best practices of the hospital. Therefore, efforts to foster the continued improvement of such services are what make the government to step in as the regulator of the reimbursement structures.
Additionally, it is through acting as the regulator that makes it possible for the federal government to establish minimal health care standards. It is because of these effective regulatory requirements which make it easier for the government to offer protection to beneficiaries from impaired, incompetent, and inadequately trained physicians. Conversely, as a regulator, the government protects patients from health care institutions which lacks the necessary processes and capabilities of offering standard health care services. Despite the fact that the regulatory floors can at times be raised, thus lessening the distribution of health care services by quality, the aim of the regulatory approaches established by the government entails culling standard providers that is to shorten the left tail of such a distribution. In this case, it evident that the governments have set its regulatory requirements at all levels so as to satisfy the needs of all health care providers. Lastly, acting as the regulator of the hospice reimbursement structures assist in creating efficient reporting mechanisms of the hospital.
- Offer a prediction for the future of health care reimbursement, in terms of the government's role in reimbursement structures
As far as government’s role in reimbursement structure is concerned, in the near future, it is expected that the government will make key insurance companies to merge. The idea behind this is to assist in reshaping the health insurance market. The government will also have the potential of encouraging business organizations to serve as the taste cases for any type of government preferred reimbursement model, such as bundle payment (Brown, 1992). This is what will assist in determining the extent of insurance coverage as well as the organization offering it. Improved health care quality standards will be formulated and implemented for the purpose of making the existing the reimbursement models more effective.
References
Baker, H. K., & Powell, G. E. (2005). Understanding Financial Management: A Practical Guide. Oxford: Blackwell Pub.
Brown, M. (1992). Health care management: Strategy, structure, and process. Gaithersburg, Md: Aspen Publishers.
Buchanan, R. J., & Minor, J. D. (2001). Legal aspects of health care reimbursement. Washington, DC: BeardBooks.
Fridson, M. S., & Alvarez, F. (2002). Financial statement analysis: A practitioner's guide. New York: John Wiley & Sons.
Langenbrunner, J., Cashin, C., O'Dougherty, S., & World Bank. (2009). Designing and implementing health care provider payment systems: How-to manuals. Washington, D.C: World Bank.
Nathanson, M. D. (2005). Health care providers' government relations handbook: Shaping policy to win. Sudbury, Mass: Jones and Bartlett Publishers.
Nikolai, L. A., Bazley, J. D., & Jones, J. P. (2010). Intermediate accounting. Australia: South-Western/Cengage Learning.
NOT, A. V. A. I. L. A. B. L. E. (2017). ADVANCED PRACTICE NURSING: Essentials of role development. Place of publication not identified: F A DAVIS.
