Week Five Health Care Financial Terms Worksheet
Understanding health care financial terms is a prerequisite for both academic and professional success. This assignment is intended to ensure you understand some of the basic terms used in this course.
Complete the worksheet below according to the following guidelines:
Save the completed worksheet as a Microsoft® Word document with your name in the file name.
Submit the file to your instructor.
|Electronic health record||Systematic collection of electronic health information about individual patients or population||The admissions person asks to see some form of identification and an insurance card. The information from these sources is entered into the admissions software application and is automatically imported in to the hospitals Certified EHR for clinical use.|
|Electronic prescribing||Computer-based electronic generation, transmission and filing of medical prescription, taking the place of paper and faxed prescriptions||Physicians can use PDA sofeware to check for drug information, such as pricing, dosing, drug interactions, contraindications and off label indications|
|Health information technology||The umbrella framework to describe the comprehensive management of health information across computerized systems and its secure exchange between consumers, providers, government and quality entities and insurers||Patient presents with chief complaint fo shortness of breath when walking, difficulty breathing when laying flat, and leg or ankle swelling in the ER. The patient’s encounter is found in the encounter management module of the HER after registration.|
|Situational analysis||Method mangers use to analyze both the internal and external environments in order to understand the firm’s own capabilities, customers and business environment||Analysis of the possibility of the earth being struck by a large meteor suggests that while the probability is low, the damage inflicted is so high, that the event is much more important than the low probability alone would suggest.|
|SWOT analysis||Strategic planning method used to evaluate the Strengths, Weaknesses/Limitations, Opportunities and Threats involved in a project or in a business venture||Strengths and Weaknesses are factors one controls and can learn to control better. Opportunities and threats are things one doesn’t control, such as the general economy, your competition and the overall size of the market you compete in.|
In this paper you will find information from articles that address financial reporting practices and ethical standards in health care finance. The paper will also address financial management of health care organizations in detail. In this paper there are several summaries that address the four elements of financial management as well as summaries that address acceptable accounting principles and general financial ethical standards. The paper also gives detailed examples from the articles that reflect ethical standards of conduct and financial reporting.
In many cases management are not trained to detect fraud and will not feel the need to question further about the possibilities. They will sign off on the findings without real concerns. Some of the major findings are sometime found later on, and by that time the situation may be very serious. The hire-up may penalize management for not recognizing the problem earlier. For example from the article the managers pointed the finger on the auditors and did not take on any of the responsibility for the overlook. Baker (2007), “When questioned about why it took so long for these problems to come to light, management’s response was ‘well the external auditors signed the accounts and internal auditing said everything was all right,'” Durant says (para. 5).
Managers and staff member responsible for financial reporting are required to do their jobs and do it with the understanding that they represent the organization that they work for. There may be individuals who would be involved in assisting in fraudulent behavior, however down the line they may be criminal charges addressed if those individuals are caught. Staff should be told about those issues and made aware of the consequences. According to Weinheimer (1997) “My experience has been that having high ethical standards and dealing truthfully and honestly with others eases our daily burdens. By trusting those with whom we interact and depending upon the commitments that others make, our work can be accomplished more effectively and efficiently “(p. 5).
Planning is an element that is needed to point out all the steps that must be taken to accomplish and organize. The ability to Control will insure that each area of the organization is following the plans that have been put into place of the success of the organization. When organizing and directing the staff a decision had to be made on how to utilize the most important resources available. Finally make the best decisions among all the choices that were discovered in the planning stage make, and be prepared to so what’s necessary.
These are guidelines rules, regulations and that are followed by accountants in the United States in order to make sure their practices are legal and ethical, in addition that all accounts should be updated in a timely manner, also all tax information should be provided within the time given time. Remain consistent truthful and accurate.
Practice honesty and accuracy maintain the ability to protect and never abuse the financial systems; do your job in good faith according to the legal practices. Many companies are providing their staff with training that will prepare them as well as maintain the reporting practices that are working but at the same show them new techniques. The article spoke of these training practices. Baker (2007), ” The critical next step for the organization, he says, will be to further explore and consider implementing enterprise risk management, so that managers have the processes and tools they need to be more proactive in their assessment of, and response to, risk as a whole, which would include fraud(para. 5).
There is a huge responsibility in financial reporting practices, although management and their staff are responsible for the work, when any auditing take place, they seem clueless and somewhat unconcern until questioned. Managers need to implement the elements of financial management into their daily reporting practices; perhaps they may be prepared and aware. Financial staffs are required to follow certain practices by the United stated and they should be followed when it comes to generally acceptable accounting principles. We know that fraud is sometimes a major issue, ethical standard are important in decision making, doing the right thing as well as making those honest decisions along the way. Organization implementing training that will make their businesses aware and prepared will prove to be very successful in financial reporting practices.
Baker, N. (2007). The fraud disconnect: a shared understanding of where fraud-related responsibilities lie can help internal auditing and management avoid costly short circuits. Retrieved from http://findarticles.com/p/articles/mi_m4153/is_2_64/ai_n19020896/?tag=content;col1
Weinheimer, C. F. (1997, January). Ethical conduct more necessary than ever. http://findarticles.com/p/articles/mi_m3257/is_n1_v48/ai_14980641/, (p.5).
The United States spends more on health care than any other country in the world. The
current level of national health care expenditures is astounding. “In 2011, the anticipated total of
health care government spending in the United States is 1108.2 billion dollars” (Chantrill, n.d.).
Over the years the total of health care spending has increasingly amplified; in 1996 $396.78
Health Care Spending
billion was spent on health care in 2000 $469.80 billion was spent on health care, and in 2009
$989.65 billion was spent on health care (Chantrill, n.d.). Between 1996 and 2009, a period of 13
years, health care spending increased $592.87 billion dollars. In the following I will discuss the
level of current national health care expenditures, whether spending is too much or not enough,
where the nation should add or cut funds and why, how the public’s health care needs are paid
and the future economic needs of the health care system.
The level of current national health care expenditures
The level of national health care expenditures is considerably high in comparison, to
any other country in the world. “Health spending in the United States is much higher than in
other countries – at least $2,535 dollars, or 51% higher than Norway, the next largest per capita
spender” (Kaiser Family Foundation, 2011, para. 3). In addition in 2009 the United States spent
more than 17% of its gross domestic product on healthcare, which is higher than any other
developed nation in the world. The Congressional Budget Office (CBO) predicts “that, without
any revolutions in federal law, total spending on health care will rise from 16% of GDP in 2007
to 25% in 2025, and close to 50% in 2082” (Johnson, 2010, Para. 7).
Whether the spending is too much or not enough
It is controversial if health care spending is enough. In my personal opinion,
health care spending may seem like enough but in actuality it is not, the government needs to
focus on spending the funds wisely. Spending and costs of health care have been a multifaceted
issue over the past several decades. Although 1108.2 billion dollars is a significant amount of
money, and it would seem funds are covering all expenses and providing health care to those
who need it, that is hardly the case. In the state of Washington “during the last legislative
Health Care Spending
session, the state made major cutbacks in health care services. Tens of thousands of people lost
their only access to health insurance through Basic Health. Community mental health services
were scaled back. Family planning clinics statewide are closing. Public health programs were
stripped down. Hospitals cut vital services such as mental health unites, Parkinson’s treatment
services, and maternity support” (Elwart, n.d., para. 2). Keep in mind this is only one state within
our country. “These potential cuts put our economic future and quality of life at risk and wipe
out much of the progress we have made in the last decade” (Elwart, n.d., last para). While on the
other hand spending too much puts our nation in more debt and will only generate additional
setbacks to controlling costs.
Where the nation should add or cut, and why
There are several areas that form the nation’s health expenditures. These areas include
hospital care (31%), physician or clinical services (21%), investment (7%), government public
health activities (3%), program administration (7%), other retail products (3%), prescription
drugs (10%), home health (3%), nursing home care (6%), dental (4%), and other professional
services (6%) making a total of $2.3 trillion in 2008 (Kaiser Family Foundation (n.d.), graph).
To me it seems all of these fields are critical to the health care field. It can be difficult to
reduce expenditures when it is a sensible part of health care practice. Nevertheless, adding
supplementary expenses will only reduce disbursements in other areas and create additional
How the public’s health care needs are paid for while indicating the percent of total expenditures
Health Care Spending
The uninsured public’s health care needs are paid for by the two main sources, Medicaid,
and Medicare. “Federal spending on Medicare accounted for 18 percent of national health
expenditures in 2005, while federal and state spending on Medicaid accounted for 17 percent.
A variety of other public programs accounted for 10 percent of national health expenditures,
including the Department of Veterans Affairs, the Department of Defense, worker’s
compensation programs, and the State Children’s Health Insurance Program (CBO, n.d., para.
10). However, in 2009 “Medicare spending grew 7.9% to 502.3 billion, or 20 percent of the total
national health expenditure. Medicaid spending grew 9.0 percent to 373.9 billion or 15 percent of
the total national health expenditure” (CMS, 2011, para. 1). The CBO (n.d) stated that “federal
spending on Medicare and Medicaid will rise from 4 percent of the GDP in 2007 to 7 percent in
2025, 12 percent in 2050, and 19 percent in 2082” (P. 1, para 4).
Future Economic Needs of the Health Care System
The future economic needs of the health care system are quite complex “given that health
care constitutes roughly one-sixth of the U.S. economy, any changes to the health care system
could affect the operation of the broader economy” (CBO, 2008, Macroeconomic Effects, para.
1). Any extreme change, either cuts or gains in financing health care greatly affects other aspects
of the economy. In addition, focusing on the health care issues is essential in closing the nation’s
looming financial gap. The disproportion is causing the nation to end each day with a larger
negative number. “Spending on health care has consumed an ever-increasing share of GDP over
the past 45 years, and its share will continue to rise unless changes occur to slow the trajectory”
(CBO, 2008, P. 1, para. 3)There needs to be some adjustments to the way financing and
particular programs are governed. “Concerns about the rising cost of health care would be less
Health Care Spending
pressing if there was unambiguous evidence that greater spending meant better health outcomes
or a higher quality of care. The evidence, however; suggests that the nation’s increasing spending
on health care may not be improving the quality of that care or health outcomes (CBO, 2008, P.
1, para. 5 )The government needs to figure out why health outcomes or the quality of health care
are not exceptional when expenditures are excessive.
How you envision these needs will be financed
Any alternations economics of health care will more than likely be financed by the
United States government. The president and legislature are in full control of financing health
care and dealing with associated obstructions. Even more so the president and Congress need to
be on the same page about financing health care, controlling costs, and providing quality health
care to all citizens of America.
In conclusion, the United States spends more on health care than any other country in the
world. Over the past 45 years, the nation’s health care expenditures have only amplified. In 2009
the United States spent more than 17% of its GDP on healthcare, and the percentage is expected
to rise with time. It is debatable whether spending on health care is not enough or too much, both
sides have advantages and disadvantages. Cutting costs does not seem noble as certain areas
are needed, however, adding costs would only cause more complications. The public’s health
care needs are typically paid for by the government funded programs, Medicaid, and Medicare.
In 2009, Medicare was 20% of the national health expenditure and Medicaid was 15% of the
national health expenditure. The future of economic needs of the health care system is there
needs to be changes. Nevertheless, any changes to the health care system can affect other aspects
Health Care Spending
of the United States economy. The governments needs to find a solution to closing the financial
gap, make adjustments to financing health care, and acknowledge with what is spent on health
care the people should be treated with a higher quality of care. Any changes will be funded by
the government itself, as always.
CMS (2011). NHE Fact Sheet. Retrieved from: https://www.cms.gov/
Congressional Budget Office (2008). Chapter 8: Effects on Total Health Care Spending, the
Scope of the Federal Budget, and the Economy. Retrieved from: http://www.cbo.gov/ftpdocs/
Congressional Budget Office (n.d.). The Long-Term Outlook for Health Care Spending.
Retrieved from: http://www.cbo.gov/ftpdocs/87xx/doc8758/maintext.3.1.shtml
Health Care Spending
Chantrill, C. (n.d.).Health Care Spending: Retrieved from http://
Liz Elwart, (.n.d). Rebuilding out Economic Future. Retrieved from:
Johnson, T. (2010). Healthcare Costs and U.S. Competitiveness. Retrieved from: http://
Kaiser Family Foundation (2011). Health Care Spending in the United States and Selected
OECD Countries. Retrieved from: http://www.kff.org/insurance/snapshot/OECD042111.cfm
Kaiser Family Foundation, (n.d). U.S. Health Care Costs. Retrieved from: http://
Economic Terms and Health Care History
Health care economics has gone through many changes over the years. With all of the changes health care organizations have had to adjust their financial strategies as well as their organizational strategies. The economy has had a lot to do with all of these changes. Healthcare organizations have so many demands put on them. Some of the changes that have occurred are due to the advances in medicine such as diagnostic, procedures and pharmaceutical. Insurance Payments over the years have changed. It used to be that you had health insurance and your bills would get paid over the years the payment system has changed and more and more is coming from the patient’s pocket. In this paper the focus will be these key terms supply and demand, microeconomics, microeconomics and elasticity. The issue is not how to fill or reuse empty beds. In this changing environment, hospitals and health systems must focus on streamlining and simplifying operational processes, facilitating case management, promoting the least costly setting for care delivery, and optimizing resource sharing among departments. When hospitals have addressed these issues, then solutions to the “bed problem” will be obvious.Cynthia Hayward, 1996(Marcinko, 2007).
Division of economics focused on evaluating scarcity in health care systems in different economies. (“Health Economics”, 2012). The currents state of our economy is a prime example. Health economics seeks to identify problem areas in a health care system and propose solutions for pressing issues by evaluating all possible causes and solutions. (“Health Economics”, 2012). Healthcare economics is the reason for the government to reform health care.
Supply and demand is one area in healthcare that pharmaceuticals come to mind. Supply and demand determines the price of what commodity is needed that is why over the years certain drugs such as oncology is priced so high because the need is there for the patient so they are will to pay the high price. At some point in time however, the treatment plan is completed, the patient is satisfied, and additional services are not needed. This is known as market equilibrium. (Marcinko, 2007).
Microeconomics is a branch of economics that studies how individuals, households, and firms make decisions to allocate limited resources, typically in markets where goods or services are being bought and sold. (“Science Reference”, 2010). Microeconomics will analyze when there is a failure in the market. Macroeconomics can be used to analyze how best to influence government policy goals such as economic growth, price stability, full employment and the attainment of a sustainable balance of payments. (“Science Reference”, 2010).
Elasticity helps an individual measure the sensitivity of the supply and or demand when it comes to the pricing. Say for instance we know if the price of something decreases then we know that it will be more likely to sell. Price elasticity can help to calculate this. The concept of elasticity can be applied to the impact of both income and changes in the prices of other goods on quantity demanded (“The Economics Of Healthcare”, n.d.).
All of these, key economic terms such as supply and demand, microeconomics, microeconomics and elasticity play a huge part in every Hospital outpatient service and Physician practice. Currently healthcare does represent 17 percent of the United States Gross domestic product. Unless we have so changes in our health care system it has been said that the 17 percent will go to 20 percent in the next decade. More that 50 percent of the bankruptcies in the United States are a result in healthcare cost. This economy has had a huge affect on the economy because individuals do not have the money to just run to their physician. Many people wait until they are very ill to be seen, some even resulting in a trip to the ER to be seen. Remember the First Law of Economics: For every economist, there is an equal and opposite economist–so for every bullish economist, there is a bearish one. The Second Law of Economics: They are both likely to be wrong. (Sherden, n.d.).
health economics. (2012). Retrieved from http://www.investorwords.com/7952/health_economics.html
Marcinko, D. (2007). The Imperfect Competitive Medical Marketplace. Retrieved from http://medicalexecutivepost.com/2007/12/19/demand-and-supply-in-medical-care/
Science Reference. (2010). Retrieved from http://www.sciencedaily.com/articles/m/microeconomics.htm
Sherden, W. (n.d.). Two Laws on Bullish and Bearish Economists. Retrieved from http://www.investorwords.com/tips/1364/two-laws-on-bullish-and-bearish-economists.html
The economics of healthcare. (n.d.). Retrieved from http://oheschools.org/ohech2pg7a.html
Economic Terms and Health Care History
This summary will show the history and evolution of health care economics. The readers will also get a timeline of health care funding. Once you have read everything the summary shows you then you will have an insight to economical terms can help to understand the history and the timeline the terms are going to be: Economics, supply and demand, microeconomics, macroeconomics, elasticity, inelasticity, and gross domestic product. With these words this will show you about economics in the health care history.
Once the American Medical Association (AMA) was founded healthcare was just getting off the ground with hospitals and doctors (American Medical Association, 2011). During this time doctors would see patients on a bartering system. The doctors at this time would make house calls and for the services they gave to the patients the patient at this time would give the doctor goods. The supply and demand at that time would be food, and anything that the people would not have. During this time they would pay with cooked meals, animals, things that they made, and their time such as working for the doctor however he wanted them to.
During the time frame of 1901 to 1940’s healthcare and medicine took made great improvement. Medicine and hospitals became very important at this time. President Truman proposed a national health care plan, but it was shot out of the water by both the AMA and Congress (American Medical Association, 2011). American Association for Labor Legislation (AALL) organizes first national conference on “social insurance” (Health Care Crisis, 2000). In 1930 the social security act was passed so at that time they omitted the health insurance. During this time Blue Cross Blue Shield decided that they would offer private insurance for hospitals in a dozen states.
Over the past fifty years, we’ve seen health care costs continue to rise to the point that some low-income families and the elderly are unable to get medical treatment. Decentralization of the hospital care system has prompted private companies to enter the health care industry. The 21st Century ushered in the biggest “can of worms” our health care system had ever seen!
As time has gone on the economics of health care have changed just as much. The supply and demand of health care and the products that are used in today economics the demand for health care is great. More people are becoming sick and need the treatment from the hospitals and doctors. Health care is accounts for about one-sixth of the entire economy, which is more than any other industry. In 2009 the health care total spending was around $2.5 trillion, with the most of that gross domestic product being about 18% – a measure of the value of all goods and services produced in the United States (USA Today, 2009). “At that time it had a high increase of nearly 14% of gross domestic product in 2000 and a 5% increase in 1960, this health spending totaled just about $27.5 billion- barley a 1% of today’s level, according to the Kaiser Family Foundation, a nonpartisan health policy group (USA Today, 2009).”
Today the supply and demand of health care is big compared to what it might have been back when health care started. We have more people today that have no insurance. Today there is more than 47 million people without insurance. With this a problem it has caused a big issue for people who need treated for health care and cannot afford the medical care.
The problem is that we have such a high demand for the health care that the elasticity for the price is not what everyone needs. The price for health care is so high that it causes people to go get treated and not pay for the treatment that they receive in a emergency visits. With the prices not decreasing this has caused the inelasticity problem for the changes that are needed to happen in this world today for those people who need the healthcare.
Over the last ten years, several government officials have lobbied for a nationalized health care system, and finally on March 23, 2010, the Affordable Care Act became law. The idea is to revolutionize the health care industry, cut down on insurance fraud, make sure everyone is able to get medical services and insurance, and bring down health care costs. All this is supposed to be accomplished by 2014 (Healthcare.gov, 2010). With the Affordable Care Act this will help the microeconomics buy fixing the insurance rate problem, giving the demand to those who need the health care and supplying those with the jobs that are needed.
With macroeconomics this will help to get the supply and demand of healthcare to other countries that are in need of health care. This has become a big thing for doctors to do are to give their services to countries that need healthcare and do not have any or very little care at all.
The goal is to improve the delivery of medical services, fund innovative and cost-effective medical procedures, cut the costs of health insurance, improve the nation’s health through prevention and better nutrition, and eliminate graft and corruption in the health care industry while raising it to a level that’s consistent with the rest of the world. Economics plays a big part of health care from patient care to hospitals and everything else in between.
American Medical Association. (2011). History. Retrieved from http://ama-assn.org/ama/pub/about-ama/our-history.page
Getzen, T. E., & Moore, J. (2007). Health Care Economics. Hoboken, NJ: John Wiley & Sons.
Health Care Crisis. (2000). Retrieved from http://www.pbs.org/healthcarecrisis/history.htm
Healthcare.gov. (2010). The Health Care Law & You. Retrieved from http://healthcare.gov/law/timeline/index.html
USA Today. (2009). Why health care’s economic impact matters.. Retrieved from http://www.usatoday.com/health/2009-06-19-health-economy_N.htm
Economic Terms and Healthcare History
Health care economics have drastically changed over the course of history in the United States. While some can contribute these changes due to the evolutionary changes the US has undergone since the beginning, the major contributing factors that influence the changes in health care economics are advances in technology and medical care. “To help ease the healthcare problem, Baylor Hospital in Dallas created a system – which eventually became Blue Cross – to help people pay their hospital bills. As science, medicine, and hospitals grew more sophisticated and more successful, more people turned to hospitals and doctors for care – and costs continued to rise. Blue Shield insurance for doctors’ services started gaining ground in the late ’30s as a way for doctors to protect their interests and their payments” (“How Did Healthcare Come About In The United States?”, 2012). It is essential to remember that the driving force behind health care economics is money, and it plays a vital part to the success of the health care industry.
In the past, the greater part of us paid medical bills with private funds; today insurance companies cover the bulk of the payment, with people paying only a small portion of the total. It is important to understand healthcare economic history, and the cash flow system. Today, financial managers are able to follow the money through the health care system. History shows that many physicians would trade services for non-money items (such as grain, cotton, livestock, etc.) as forms of payment if the individual were unable to use money. Basically, these physicians were tradesmen, with the patient paying one hundred percent of the cost for medical services rendered. As the US began to progress, with advances in technology and other historical factors (such as the Great Depression and World War I and II), a new system had to be put into place to aid the American population in purchasing medical services (Healthcare Crisis, n.d.).
Spending on health care in the United States has been growing faster than the economy for many years, representing a challenge not only for the government’s two major health insurance programs (Medicare and Medicaid) but also for the private sector. As health care spending utilizes a greater share of the nation’s economic output in the future, Americans will be faced with increasingly difficult choices between health care and other priorities. In December 2007, the Congressional Budget Office (CBO) released a long-term budget projection and spending on Medicare and Medicaid and health care spending generally over the next 75 years. The results of CBO’s projections suggest that in the absence of changes in federal law:
• Total spending on health care would rise from 16 percent of gross domestic product (GDP) in 2007 to 25 percent in 2025, 37 percent in 2050, and 49 percent in 2082.
• Federal spending on Medicare (net of beneficiaries’ premiums) and Medicaid would rise from 4 percent of GDP in 2007 to 7 percent in 2025, 12 percent in 2050, and 19 percent in 2082 (The Long-Term Outlook For Health Care Spending, n.d.).
While most goods and services adhere to the basic economic principle of supply and demand, in many ways healthcare does not. The principle of supply and demand describes a balance that develops between the supply of an item or service and the demand for it. Demand for healthcare is viewed as inelastic, meaning that price changes have a small effect on demand for services. This portion of the healthcare industry allows providers to cost-shift, increase prices more for one group of payors when another group does not increase their reimbursement equal with input price inflation. However, there is a limit to cost shifting that the market will bear. Consumers are self-denying care due to economic concerns. With the rise in unemployment, providers are finding more patients are not able to pay for services. While EMTALA laws dictate that patients will not be refused care, providers are looking to cut cost in order to manage the rising uncompensated care (McConnell, 2009). The problem in healthcare is that the consumer often pays little or nothing for services, despite the current reality of deductibles and copayments. When this is the case, price stops being a factor in demand and demand increases to virtually unlimited levels.
Even now, despite out-of-pocket costs, making use of it is at record levels. Individuals even tend to feel that since they are paying more for premiums, they should get their money’s worth. There is little to stop them from using services except the managed care initiatives that have been implemented in the last 20 years to address this situation. People in the first half of the 20th century paid for healthcare themselves and were cautious about what services they used. When cost stopped being a factor, desire for the product exploded and we have the runaway train that is currently eating up over 15 percent of our gross domestic product.
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