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




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




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.




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).




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.




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/

http://www.medscape.com/viewarticle/568115_4

http://physician-patient.org/pages/managed-care-costs-where-do-minnesota-hmos-spend-our-money/


http://www.medscape.com/viewarticle/568115_4






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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