Financial Structures Of Health Care

On the other hand, some believe finance has far too much influence on the structure of health care and directly effects quality of care and patient safety. Furthermore, there are those that heavily advocate for either for-profit or nonprofit health care structures, each having their own rationale for financial health care structures and the role they play.

The purpose of this paper is to examine the financial structures of health care, an analyzation of internal and external financial structures, the financial effects of the Affordable Care Act, how finance may affect quality of care and patient safety, and how ethics plays a role in health care finance.

Internal and External Financial Structures

The financial structure, or capital structure of a health care organization refers to the mix of equity and dept used to finance operations. Within this structure comes internal and external financial structures and both for-profit and nonprofit health care services use similar frameworks to develop their financial structure (Cummins & Weiss, 2016) with each playing a major role in the operation of each health care facility and how they are able to deliver service and influence the organization.

In general, health care is either paid for by government programs to include Medicare and Medicaid, private health insurance plans which are usually paid through employers, private health insurance plans, and an individual’s own personal out-of-pocket funds.

Internal financial structures may include the resources obtained by savings, revenues, or liquidation of assets (Hsiao, 2017). In contrast, external financial structures include the funds that are obtained from outside of the organization. Furthermore, unlike external financing, internal financing consists of the profits retained by the organization for investment (Vassall & Martínez-Álvarez, 2011).

The Financial Effects of the Affordable Care Act

With the overhaul and adaption of the ACA in 2010, comes the possibility of universal health care and was the most important piece of health care reform since the introduction of Medicare and Medicaid in 1965 (Kominski, Nonzee, & Sorensen, 2017).

The Congressional Budget Office (CFO), examined the costs, savings and impact on the economy which the Patient Protection and Affordable Care Act (Public Law 111-148) and the Health Care and Education Reconciliation Act (Public Law 111-152) has directly influenced.

According to the CBO, as of 2019 the ACA has reduced the budget deficit by $143 billion. In addition, the ACA’s biggest savings come from assuring the 95% of citizens had access to health care. Furthermore, the ACA made preventative health care affordable for the previous 33 million people without coverage thus reducing emergency room visits that ultimately slowed the increase of health care costs (Kominski, Nonzee, & Sorensen, 2017).

To get more specific on how the ACA has saved money, we can analyze a number of financial effects of the ACA. First, Medicare payments were reduced by $335 billion since its adaption which included $196 billion annual update reductions and $136 billion savings by reducing Medicare Advantage programs (Hwang et al., 2019).

The ACA also was able to charge drug companies $107 billion dollars by charging fees to help cover the “Doughnut hole” in Medicare Prescription Drug Part D benefits (Shaw, 2018). Finally, the ACA imposed an excise tax on high premium insurance plans, adding $32 billion, an increase tax on those high-income families, adding $210 billion, and a tax to employers, adding $65 billion (Hwang et al., 2019).

The Financial Effect on Quality of Care

Because of the ever-changing structure and evolution of the financial structures of health care, there are many potential influences and how they may affect quality of care and patient safety. Policy and planning for financing within a health care system are usually concerned with how funding is made available and allocated, this funding then has a direct effect on the quality of the health services being delivered.

A fundamental increasing challenge in today’s health care system is how to improve the delivery of health services and improved patient outcomes all while trying to optimize optimal financial outcomes. (Hussey, Wertheimer, & Mehrotra, 2013). Ultimately, health care is a business and if funding is not available for equipment, staff, research, and services, then obviously patient quality of care and safety will be directly affected.

Ethical Concerns Surrounding Health Care Finance

The ethical concerns surrounding finance within the health care industry are becoming increasingly more discussed and are at the forefront of national debate. The United States is unique in that we are one of the most powerful countries in the world, yet our population does not have access to affordable health care.

Both the European Union and the United Nations recognize health care as a basic human right (Jones & Kantarjian, 2015) yet the U.S. is still far behind most all other first world countries when it comes to access, quality, and price of health care.

According to the Southwestern’s Center for Patient-Centered Outcomes Research, financial strain is the single most important factor on whether patients choose to get health services and research shows that many of those low-income patients will forgo health care in order to afford basic life expectancies such as rent and groceries (Lagasse, 2018).

Conclusion

This paper hoped to contrast between for-profit and nonprofit health care structures, an analyzation of internal and external financial structures, the financial effects of the Affordable Care Act, how finance may affect quality of care and patient safety, and how ethics plays a role in health care finance.

The financial structure of health care organizations has been long debated and the question to whether finance has a direct result on the health care organization and the service it provides is still at the forefront of national interest. This paper discussed financial structures and how health care is funded; whether this be by government programs to include Medicare and Medicaid, private health insurance plans which are usually paid through employers, private health insurance plans, and an individual’s own personal out-of-pocket funds.

The Affordable Care Act was discussed and how The Congressional Budget Office (CFO), examined the costs, savings and impact on the economy which the Patient Protection and Affordable Care Act (Public Law 111-148) and the Health Care and Education Reconciliation Act (Public Law 111-152) has directly influenced.

This paper discussed the ever-changing structure and evolution of the financial structures of health care and the many potential influences associated and how they may affect both quality of care and patient safety. Finally, the ethical concerns surrounding finance within the health care industry are were discussed with this topic becoming increasingly more discussed and being at the forefront of national debate.

In conclusion, this paper examined the financial structures of health care, an analyzation of internal and external financial structures, the financial effects of the Affordable Care Act, how finance may affect quality of care and patient safety, and how ethics plays a role in health care finance.

Reference

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