Health Care Financial Reform Proposal



Health Care Financial Reform Proposal

Introduction

Over the next several years, the reform of healthcare can take any direction, where the healthcare organizations still face intense pressure of reducing costs and fix inefficiencies. Today, every area of healthcare lead towards financial pressures, as the payers, the healthcare facilities and government are all striving for greater share of market and also for physicians. In order to maintain the healthcare organizations in this financially pressurized setting, it is essential to firmly handle profitability, where this can only be done by understanding true costs and profit sources (Tatum, Healthcare, 2011). The healthcare facilities that fail to identify and meet this vital will become inefficient in operating and competing as well. Therefore, I recommend that the future financial reforms of healthcare must require healthcare organizations to proactively manage finances by understanding cost structures and accurately recognize opportunities for new developments and enhancements.

Discussion

Although in recent years the healthcare facilities have streamlined their systems, yet there are many healthcare organizations (hospitals or healthcare provider groups) that have not rigorously deployed methodologies like Six Sigma, Dashboard, or Lean process. They even have not understood the importance of and adopted tools such as activity based costing and process analysis (Tatum, Healthcare, 2011). However, with the increasing demand of precise financial results, it is really essential for healthcare organizations to move the expenditure and performance managing utmost responsibility and attention. Therefore, the healthcare organizations are required to obtain a clear picture of their costs by determining their activities and processes that result in value and improve quality, the drivers of profitability like service line, case, or others, comparison of costs and contractual payer prices, usage of capacity, justification of investments on particular equipments, areas that need to be kept in-house, and improvement initiatives that can enhance results. Thus, proactive management of finances by understanding true cost structures and accurately recognizing opportunities for improvement holds an immense importance in order to lead the healthcare facilities towards efficiency and improved transparency.

Cost Transparency for Assessing Process and Resources

In today's rapidly advancing and highly competitive environment, the organizations can only remain competitive by streamlining their inefficient processes and having sound understanding of the resources' forms and quantity that they require, which can be accomplished through transparency of cost.

Unfortunately, many health care organizations still employ ancient standards tools of costing, where this technique results in elementary charge allotment which does not match resources and their associated overheads of the services. So, it results in difficulties to make sound decisions that can enhance financial outcomes. For instance, it is a common practice of many healthcare organizations to allocate the equipment cost to surgical procedures that do not use it. The nature of this allocation is arbitrary and leads to distorted results. Further, the internal support service cost like material management and registration is normally excluded from current cost accounting systems used in healthcare organizations (Tatum, Healthcare, 2011). Therefore, it is essential for operational managers of any healthcare organization to ...