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Health Care Financial Systems

1. Describe health care financial structure and policies.

There are generally five financial structures of health care: social health insurance; general taxation to the state, county or municipality; direct or out of pocket payments by the members; voluntary or private health insurance; durations or community health insurance. All types of health care finance are compatible with an efficient health care system but they have no relationship with cost control.

The health insurances pay for medical expenses and they broadly include disability or long term nursing/custodial care needs. In all cases of social and private insurance companies, premiums and taxes protect the insured from high or unexpected health care expenses. In primary health care also there are also other providers which include government, private, non-governmental organizations and traditional medicine.

 2. Explain financial management practices and challenges.

Financial management in health care organizations provides discussion on the fundamental principles of finance, accounting and budgeting for both short term and long term assets and programs. Health care organizations have various strategies for managing assets, costs and claims. Everything from inventory management to hybrid cost analysis and enhancing revenue cycles is scrutinized.

Various experts examine such pertinent topics as lessons to be learned from market competition, methods for achieving medical objectives, negotiations of cost and volume profit contracts. There are also the risk management issues for example the work place violence and health management. Information technology practices include the security risks and the financial clinical concerns involved in hospital information systems (Fringler 2006).

 3. Distinguish between for-profit and not-for-profit financial environments.

First and foremost difference between for profit and non-profit making business is the profit. It is an objective for both of the institutions to generate profits in order to survive and grow i.e. they have to generate money to pay their bills and if they have to acquire new assets then it needs to have some profits. However in the case of non-profit entity, new investment takes the form of contributions from other people or other corporations. Therefore people in this organization are just reluctant to make contributions and raise money to failing charity.

In for profit making organization, the profits that are not invested are distributed to the organization owners but in a non-profit organization, the profits are used to provide goods or services to groups which the organization formed to help. A for profit corporation is created when investors get together and transfer assets, money or talent in order to acquire shares or ownership but in a non-profit entity, individuals come together and provide assets, money or talent but they do not receive any legal ownership. The main goal for profit business is generally to make money for the owners but in contrast to this, as for the non-profit organizations, they are pure and charity services (Fringler, Ward 2006).

 4. What is meant by heath care financing?

Health care financing is the mobilization of funds to the health care or generally allocation of funds to the regions and population groups and for the specific types of health care. Health services are financed broadly through private expenditure or external aid. Public expenditure includes central and government funds, spent by the state owned and parastatal enterprises as well as government and social contributions. Also taxes and compulsory health insurances are other funding of health care entities. There are also other contributions like the voluntary payments by individuals.

 5. What effect does health care financing have on health care delivery in The United States?

Racial discrimination which is experienced in the health care that affects minority to access health care and quality of care received. The most common types of health care delivery systems in the US are free for service (FFS) and managed cure system which include health maintenance organization (HMO). However it has been reported that some differences in patient outcomes are associated with the type of health care delivery system in which they are enrolled. By use of national health care database, the current study evaluated, the differences in survival of breast and colorectal cancer after diagnosis between two Medicare health care delivery system in the US over a period of 1985-2001 was too wide (Cancer Research 2010)

 6. What are major methods of reimbursement systems for financing in both outpatient and inpatient settings?

Private insures who cover both inpatient and outpatient use ambulatory surgery by offering special incentives to make it more relative to patient surgery. There is an incentive to do a procedure in an outpatient department for example when the payment rate is perceived to be low to cover the cost of inpatient services. There are also concerns that patients who can be treated in outpatient basis would be admitted as inpatient to generate short stays that might be profitable under the inpatient incentive. An empirical assignment is particularly difficult in USA because large health services database, covering residents of states or other well defined populations do not combine inpatient and outpatient utilization data (CBS 2010)

 7. What are some of the main problems and issues pertaining to health care financing?

Cost in health care organization is the main problem. This gives a problem of survival in medical concerns of people. Also there are many people who are not insured in USA therefore health care facilities will be difficult for them.


American Association of cancer Research (20100. effects of medical health care delivery system on survival of patients with breast and colorectal cancer.


Date retrieved 26th Oct 2010

CBS Interactive (2010). Potential for inpatient-outpatient substitution with diagnosis-related groups


Date retrieved 26th Oct 2010

Finkler, S. A. & Ward, D. M. (2006) Accounting Fundamentals for Health Care Management. Jones and Barlett Publishers, Inc.

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