evaluation of today’s health care organizations
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Health Care Organizations 1
RUNNING HEAD: EVALUATION OF TODAY’S HEALTH CARE ORGANIZATIONS
Research Project A:
Evaluation of Today’s Health Care Organizations
HCMG 630 – 12706
Introduction
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Health Care Organizations 2
This project assesses the structure, the financing mechanisms, and the impact
of managed care on hospital organizations, health maintenance organizations
(HMOs), and long term care facilities. In addition, the strength of the organizational
structure and the financial structure are discussed along with the degree to which
managed care will affect one over the other. Table A outlines the topics:
Table A
STRUCTURE FINANCINGMECHANISMS
IMPACT OFMANAGED CARE
HOSPITAL The structure foundin a hospital is one of multiple tiers and canbe described as afunctional modelbased on certainspecialties (Glickmanet al, 2007). Thesespecialties rangefrom the differentclinical departments(primary care,radiology, cardiology,orthopedics,obstetrics…etc),nursing departments,and laboratories, toname a few. In eachof these departmentsthere is a specificdepartment managerwho then reports to ahigher manager of the hospital, who willeventually report tothe executive officersof the organization.
There is limitedintegration due tofact that eachdepartment isessentially run as itsown business. Thisfunctional model of organization allowsfor efficient
Hospitals arefinanced from amultitude of sectorsincluding public,private, non-profit,and for profit.According to HospitalHealth Care PaymentMechanisms, andarticle listed on theOfficial Website of theState of Connecticut(n.d), a majority of the funding forhospitals around thecountry comes frompublic sectorsincluding local, state,and federalgovernmentreimbursements. Theprivate income isacquired by out-of-pocket payments, aswell as private healthinsurances and otherrevenue not linked to
patient payment –including incomegenerated byinvestors, or frominvestments made bythe hospital group.Hospitals often take ahit in the financialdepartment by
Managed Care hascaused a trend inhospital physicians toperform cost-effectivehealth care, sincemuch of the managecare is not based on aper-service paymentschedule, but rather aper-patient paymentschedule. Thegovernment fundedmanaged care thatdoes offer a per-servicereimbursementgenerally pays lessthan the actual costof the service, so themore treatmentneeded by a patient,the more money thephysician or his or herpractice loses. Thus,physicians areproviding quality carethe first time around,
rather than having tosee patients anumerous amount of times. The fact thatsome reimbursementschedules are merelycents on each dollar,this too puts pressureon health care
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Health Care Organizations 3
operation, especiallyfrom thecustomer/patientstandpoint.
offering charity care,and also by bad debtaccrued by a largenumber of patients.
providers to performan increased amountof health care in adecreased amount of time.
HEALTH
MAINTENANCEORGANIZATION
Health Maintenance
Organizations (HMOs)are structured basedon several differentmodels, with a blendof these modelsdominating thecurrent HMOstructure. Thesemodels include theStaff Model in whichthe physicians aresalaried employees orpartner’s of the HMOwho may receiveincentives oradditional benefitsfrom the group; theGroup Model inwhich the HMOcontracts an entirepractice rather thancontracting individualphysicians; theNetwork Model inwhich groups of practices arecontracted to providecare rather thanindividual physiciansor practices, offeringa multitude of optionsfor the benefit holder,which is the mostcommon model of HMO used today; and
lastly theIndependent-PracticeAssociation Modelalso known as “open-panel plans” whichallows physicians theability to see non-HMO patients in
Health Maintenance
Organizations (HMOs)generally offer a fixedreimbursement rateor salary to individualphysicians, groups, ornetworks of practicesto deliver their heathcare to HMO patients.
The private sector isthe primary source of funding for HMO’s.
The HMO’s sharefinancialresponsibility with theproviders todistribute care at afixed cost. Thecustomers of theHMO enrolls in theprogram for a fixedperiod of time and asmentioned, pays afixed premium inorder to receive thecare offered by thenetwork of providers.
A Health Maintenance
Organization is a typeof managed care thatwas initially createdto offer a lessexpensive alternativefor employers thatprovided healthinsurance to theiremployees. Today,the general impact of HMOs is heavilydebated. According tothe MinnesotaPhysician-PatientAlliance, reportsindicate that somepatients experienceda decreased overheadcost for healthcare,while othersexperienced anincreased overhead(2011). The overallrestrictiveness of HMOs may contributeto the difference inoverhead costs forpatients, dependingon the groupsincluded in theirparticular HMO.
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Health Care Organizations 4
addition to their HMOpatients (USDepartment of Healthand Human Services,n.d.)
LONG TERM
CAREFACILITY
The structure of long
term care facilitiesdiffer vastly from oneto another.Structures includecommunities forretired people, homehealthcare, livingarrangements forthose with disabilitiesor chronic illness –which can be brokendown further intonursing homes, grouphomes, adult daycare, or seniorcenters, to name afew. These areessentially designedto assist individualswith daily activitiesranging anywherefrom cooking, eatingand cleaning, to dailyhygiene and gettingdressed properly (TheOfficial USGovernment Site forMedicare, 2009).
According to Thomas
Day, director of theNational CarePlanning Council,“State and Federalgovernments payabout 70% of nursinghome costs and forabout 85% of allresidents thegovernment payspart of or all of theircosts. Because thegovernment payssuch a large portion,nursing homesstructure their caredelivery systemaround thegovernment paymentsystem” (2011, p.1).
The individual costvaries across longterm care facilitiesbased on a myriad of variables includinggeographicallocation, or fees andsurcharges for privatevs.Medicare/Medicaidpatients, to name afew.
Managed care
organizations whooffer compensationfor long term carefacilities are facedwith massiveexpenses. Whilemany managed careplans (Medicaid forinstance) dramaticallyrestrict the resourcesfor which theyreimburse, theexpenses areextremely costly.“Medicare coversabout 12% of privatenursing home costswhile Medicaid coversabout 50%. TheVeteran'sAdministrationnursing homeoperations bring totalgovernment supportof nursing home coststo about 70% of thetotal. Such a largereliance ongovernment supporthas made nursinghomes vulnerable tovagaries in state andFederalreimbursementpolicies towards
nursing homes” (Day,2011, p.1). Manynursing homes nowclaim that the currentrepayment scheduleis insufficient, and iscausing them to losemoney (Day, 2011).
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Health Care Organizations 5
Conclusion:
The structure of the Health Maintenance Organization (HMO) shows the highest
degree of promise in being the most sound of the three aforementioned
organizations. I believe the idea of HMOs offer an incentive for the patient in the form
of one flat premium rather than a fee-for-service (which would potentially be
devastatingly large), and it also offers an incentive for the physician to provide quality
care, since they are getting paid just once per patient, rather than per visit.
As managed care continues to grow in the United States, I believe long term
care facilities and hospitals will both be negatively affected, with long term care
facilities bearing the worst of the effects. As government funding and
reimbursements continues to decline, long term care facilities such as long term
nursing homes, or senior centers will eventually be unable to maintain themselves
financially. There simply aren’t enough people willing to pay out-of-pocket for such
expenses, and without the proper aide from the government, the program is destined
for failure. While hospitals will also feel the negative effects, managed care can also
provide a bit some benefit. Again, this goes back to an increased quality of care
offered by the physician. Since a doctor will only get paid once per patient in a HMO
type managed care plan, or will receive less than full reimbursements in another type,
we should see physicians beginning to increase their quality of care to ensure that the
patient is properly treated the first time, rather than having to have the patient return
for an additional visit, or a follow up.
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References:
Day, T. (2011). About Nursing Homes. In National Care Planning Counsil. Retrieved
September 15, 2011, from
http://www.longtermcarelink.net/eldercare/nursing_home.htm
Glickman, S., et al. (2007). Promoting Quality in the Health Care Organization. In
International Journal for Quality in Health Care. Retrieved September 15, 2011,
from http://www.medscape.com/viewarticle/568115_4
Managed Care Costs: Where Do Minnesota HMOs Spend Our Money? (2011, January
9). In Minnesota Physician-Patient Alliance. Retrieved September 15, 2011,
from http://physician-patient.org/pages/managed-care-costs-where-do-
minnesota-hmos-spend-our-money/
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Health Care Organizations 7
Payment Mechanisms (n.d.). In Official Site of the State of Connecticut . Retrieved
September 15, 2011, from
http://www.ct.gov/dph/lib/dph/ohca/hospitalstudy/PaymentMechanisms.pdf
The Basics of Managed Care (n.d.). In US Department of Health and Human Services.
Retrieved September 15, 2011, from
http://aspe.hhs.gov/Progsys/Forum/basics.htm
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