ESSAY PRINCIPLES OF HEALTHCARE BUSINESS & FINANCIAL MANAGEMENT

PRINCIPLES OF HEALTHCARE BUSINESS & FINANCIAL MANAGEMENT

HEALTH CARE REIMBURSEMENT PROGRAMMES.
Health care professionals play an important role in society. As such, there is a need for these professionals to understand the various health care reimbursement systems and methodologies to discharge their duties. There exist various financial systems adopted to cater for the financing of healthcare with each plan posing its risks as well as the incentives these systems exists solely because most patients have an insurance plan.

Fees for service reimbursement program mean that a fee is paid dully to the healthcare provider for each specific service rendered. This system is widely used as it guarantees total independence of which services to sort from whichever healthcare provider. So the more service a provider renders the more reimbursement they get.
Managed care reimbursement methods are whereby the third party payers such as the patient or the insurance company manage the healthcare and the outcome without any input from the healthcare professional. This implies that the third party has set some measures to regulate the cost of health care without compromising the quality of care. The sole purpose of this system is to provide affordable but quality care. The forms of managed care include PPO (preferred provider organization), HMO (heath maintenance organization), and EPO (exclusive provider organization).

The cost-based reimbursement method is whereby health care providers are paid based on the cost that they incur during the provision of the service. The major incentive in this program is the fact that the health care professional can recover what they incurred in providing the service. However, the risk is most patients may fail to cover these costs as they are too expensive.

A charge based payment system is driven by the fees that the provider charges the patient. These fees are based on every single procedure and assessment carried out as pertains to that illness. An example of charge includes: in Nairobi Hospital: caesarian section is $80, herniography is $20, antenatal care and H.I.V testing is free.

Capitation and global payment are examples that fall into a health care reimbursement system called episode of care system. In this payment method, healthcare providers are paid a lump sum amount that covers all services rendered as per the disease. This effectively does away with individual fees and charges. Capitation is a form of healthcare payment method in which the third party payer (the insurance) reimburses a fixed sum to the provider after a fixed period. This is typical of health maintenance organizations. Capitation works on the contractual basis. The incentive of this system is that the patient can access any service from the provider without incurring extra cost while the healthcare provider is guaranteed a fixed sum regardless of the number of procedures. There is also guaranteed customer base for the provider. The risk is that the provider run incurring losses and this may compromise quality if care especially while doing complex procedures e.g. cancer management.
In global payment, the third party pays a combined fee to various healthcare providers undertaking one episode of illness. Usually there’s no additional pay for any expensive or complicated procedure. An example includes Medicare payment system for home health services in the USA; with the services rendered including occupational therapy, social services as well as medical amenities.
Per Diem payment refers to daily payment. It is an example of prospective payment method. The third party payer reimburses the provider a fixed rate for each day he patient is hospitalized. The Indian as uses this system for inpatient services. Normally the per diem rates are set by the third party payers (insurance) based upon the population and history. The advantage is that providers can increase the number of admissions to gain extra fee this leaves the insurance companies incurring extra cost.
Per diagnoses reimbursement method is where the providers receive a fixed predetermined fee for each case handled and diagnoses made. The patients or insurance companies pay for the case handled rather than the service rendered. The fee is determined by the resource needs of the average patient. An example includes: Medicare’s payment method for inpatient services.
Per procedure reimbursement method refers to a system whereby the patient or their insurer pays for every procedure undertaken by the provider in the management of the disease. This is mostly practiced in developing countries. For instance one patient undergoing a laparotomy pays much more than one who undergoes an appendectomy procedure. The fees are determined by the cost and sophistication of the equipment as well as the expertise. The risk involved is the affordability of a procedure to the patient especially if they are poor.

References
Cleverley, W., Cleverley, J., & Song, P. (2010). Essentials of Health Care Finance. London: Jones & Bartlett Learning.
Baker, J. J., & Baker, R. W. (2009). Health Care Finance. London: Jones & Bartlett Publishers.