Evaluate the role and impact of financial principles on healthcare organizations.
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Scenario
Metropolitan Memorial is seeking to expand its service offerings into underserved rural communities. The Board of Directors has expressed concerns given the emergence of new payment models, low reimbursement from Medicare and Medicaid, and uncertainty in terms of provider incentives offered through the Affordable Care Act. The Board of Directors has requested an executive summary outlining the organization’s financial viability given the challenges facing health organizations, particularly those operating in rural communities.
Instructions
The CEO has asked you to prepare an executive summary to present to the Board of Trustees, discussing the following information:
Identify the different types of healthcare payment models that could be utilized by Metropolitan Memorial.
Research the Triple AIM and discuss ways the organization can achieve the goals of the Triple AIM (improving the experience of care, improving the health of populations, and reducing per capital costs of health care ).
Discuss possible ways the payer mix may impact hospital revenue.
Explain how value-based healthcare delivery could be utilized to save money.
Full Answer Section
Payment Models
There are a number of different payment models that could be utilized by Metropolitan Memorial. These include:
- Fee-for-service: This is the traditional payment model, in which hospitals are reimbursed for each service they provide. This model is becoming less common, as it does not incentivize hospitals to improve quality or reduce costs.
- Pay-for-performance: This model rewards hospitals for providing high-quality care. Hospitals are typically paid a base rate, and then additional payments are made for meeting certain quality metrics.
- Bundled payments: This model reimburses hospitals for a set of services related to a specific episode of care. This model incentivizes hospitals to coordinate care and reduce unnecessary services.
- Value-based payments: This is a broad term that encompasses a number of payment models that are designed to improve the value of care. Value is typically defined as the combination of quality and cost.
Triple AIM
The Triple AIM is a framework for improving the health of populations. It stands for:
- Improving the experience of care: This means providing care that is patient-centered and that meets the needs of the individual.
- Improving the health of populations: This means reducing the burden of disease and improving the overall health of the population.
- Reducing per capita costs of health care: This means providing high-quality care at a lower cost.
Metropolitan Memorial can achieve the goals of the Triple AIM by:
- Focusing on preventive care: This can help to reduce the incidence of disease and improve the overall health of the population.
- Coordinating care across settings: This can help to ensure that patients receive the right care at the right time.
- Using evidence-based practices: This can help to improve the quality of care and reduce costs.
Payer Mix
The payer mix is the distribution of patients by payer type. The payer mix can have a significant impact on hospital revenue. For example, hospitals that have a high percentage of Medicaid patients typically receive lower reimbursement rates than hospitals that have a high percentage of private pay patients.
Metropolitan Memorial can manage the payer mix by:
- Targeting patients with commercial insurance: This can help to increase revenue.
- Negotiating higher reimbursement rates with payers: This can help to increase revenue.
- Expanding into new markets: This can help to increase the number of patients and improve the payer mix.
Value-Based Healthcare Delivery
Value-based healthcare delivery is a way of providing care that focuses on improving the health of populations while reducing costs. This can be done by:
- Using evidence-based practices: This can help to improve the quality of care and reduce costs.
- Coordinating care across settings: This can help to ensure that patients receive the right care at the right time.
- Using pay-for-performance or other value-based payment models: This can help to incentivize hospitals to improve quality and reduce costs.
Conclusion
Metropolitan Memorial can address the challenges facing health organizations by:
- Adopting new payment models: This can help to improve the quality of care and reduce costs.
- Focusing on the Triple AIM: This can help to improve the health of populations and reduce costs.
- Managing the payer mix: This can help to increase revenue.
- Implementing value-based healthcare delivery: This can help to improve the quality of care and reduce costs.
By taking these steps, Metropolitan Memorial can ensure its financial viability and continue to provide high-quality care to patients in underserved rural communities.