Introduction Hospital Corporation of America (HCA) is a proprietary hospital management company. The company has been following an acquisitive strategy by taking over hospital companies and not-for-profit hospitals. The firm is also considering expanding into new health service areas like home health care and outpatient surgery. The company is at a crossroads with regard to its financial goals; HCA currently faces the likelihood of adverse changes to the Medicare/Medicaid policy which could strain the company’s profitability along with a substantial increase in financial leverage risks coupled with an increase in required expenditure to reap the effect of prospective operating synergies like economies of scale and scope from the …show more content…
This is because there is a lack of growth opportunities through acquisition and construction of new hospitals. HCA is expected to mature and become a cash cow by about 1987. At this stage, it is expected to incur limited capital expenditure. Instead, the company can be "milked" continuously from its existing operations and is expected to generate cash in excess of the amount required to maintain the business. Likely impact of proposed changes to “prospective reimbursement” One of the significant impacts of proposed changes to “prospective reimbursement” is that hospitals will be paid based on expected fixed rates rather than actually incurred costs. Hospitals will no longer be paid using cost-plus basis (costs plus a certain percentage of profits based on costs). As a result of fixed rate payments to hospitals, there will be more incentive for hospitals to reduce costs and improve efficiency in order to maximise profits. The prospective reimbursement program will also result in hospitals not being able to recoup full amount of allowable interest expense. Instead, they can only recoup the interest tax shield portion of the interest expense. Investors
Retrospective reimbursement method was based on actual cost the providers assumed the previous year. On this method rates were evaluated retrospectively and costs were used to determined the amount paid to the provider and had no incentive to control cost. On the other hand, prospective reimbursement methods can determine in advance how much a provider is going to get compensated. (Shi & Sing, 2017) The way retrospective reimbursement contain perverse financial incentives happened when institutions increased their profits by increasing costs and this system payment method was based on costs. Due to this issue the method was changed to the prospective to avoid abuse of the system.
In the past several years, there have been several changes in economic policy at federal and state levels. The two economic policies that present to be the most precedent for healthcare leaders with concern to facility reimbursement are the Affordable Care Act (ACA) and the switch from volume to value reimbursement. First, there is the ACA policy, which have affected healthcare facilities and their reimbursement methods. In fact, ever since this policy was implemented, provider reimbursement has started to decrease in terms of fee-for-service payments (The Common-Wealth Fund, 2015). In other words, the intention of this policy was to provide budget relief to the government payers as well as giving providers an incentive to provider patients with great quality of care.
HCA is a healthcare provider that was established in 1968. Their main focus is on offering cliental with a number of different services to include: inpatient, intensive care, outpatient, diagnostic and emergency services. To achieve these objectives they operate a variety of facilities such as: outpatient, psychiatric, surgery centers, freestanding emergency care facilities, diagnostic / imaging centers and comprehensive rehabilitation / physical therapy centers. They are structured to create increasing earnings for its policy and shareholders. This is achieved by contracting with private doctors to deliver services to its preferred providers members. At the same time, they receive fees from these entities and they negotiate lower group rates.
Although the Affordable Care Act (ACA) became law nearly five years ago, the rhetoric overt the law and its provisions continue in Congress and around every kitchen table in America. While no one disagrees the healthcare system prior to the passage of the ACA was flawed, healthcare reform under the ACA continues to evolve and is likely to continue evolving in the future. Despite this, it is the law, and the healthcare industry is doing its best to keep up with the law’s mandates. For the hospital healthcare administrator, there are numerous changes affecting how hospitals do business, not only with the insurance industry, but with patients as well. The following overview discusses the basics of the ACA, the positive and negative ramifications for hospitals, and the impact the law will have for years to come. Although the final incarnation of the Affordable Care Act will develop over time, its premise of ending healthcare disparities and quality care for all citizens is long overdue.
The real problem as pertains to the reimbursement of managed care organizations is that these managed care has had an effect on slowing the rates of growth concerning the costs of hospitals and specialist physicians. For both the hospitals and practitioners, the sources of revenue have been shifted with over 20 percent of the charges being paid from the pocket, others coming from third parties who demand for complex accounting of the charges, lack a pre-authorization process and they can review in a retrospective manner and deny the reimbursement (Furrow et al., 2013). The
The business goals of modern healthcare include the need to increase patient safety and satisfaction, to eliminate fraud, waste, and abuse, and to maintain employee satisfaction in order to control costs and increase profitability. However, in reviewing the history of healthcare reimbursement, this was not always the case and at a point in time existed where the cost of healthcare was escalating exponentially due to abuses in the way providers were allowed to utilize and bill for services. Due to this, the changes in how healthcare services are reimbursed changed dramatically over the past several decades with those changes designed to create savings for insurers and those entities paying health care premiums.
Pat Geraghty, CEO of Florida Blue, has worked in insurance for three decades and readily acknowledges that the changes due to HealthCare Reform known as Affordable Care Act (ACA) requires radical changes within health insurance companies in order to remain competitive and profitable (Abelson, R., 2013). In order to facilitate this change, Geraghty is seeking a multi-pronged approach for the business model and strategy at Florida Blue. Many people don’t realize but as a former employee I am aware that a large margin of profit for Florida Blue in the past comes from investment earnings. That will continue to occur. Additionally, Florida Blue has sought to leverage into new models of care such with subsidiaries such as Diagnostic Clinic and
HMO’s and enrollees are two important players in the world of health care. Due to uncertainty on the supply and demand, moral hazard, and adverse selection, decision making for HMO’s more complex. The simulation provided me the decision making tools necessary, when making an economic decision for an HMO. Health care can be seen as a good that consumers demand and managed care firms are considered to be suppliers of both health insurance and health care. Economics tells us that rational firms make choices to maximize profits. Managed care firms incur cost when providing health care services to their enrollees and maximize their revenue by
The Centers for Medicare & Medicaid Services (CMS) was made headlines by releasing charge and Inpatient Prospective Payment System (IPPS) installment data at the MS-DRG level for hospitals across the country. In spite of the fact that this data has long been openly accessible, having it provided more easily available brought about it by being reported of various media outlets. Tragically, this information discharge was not accompanied by expert information clarifying what the numbers mean, creating an interest for hospital facilities to react, at the end of the day, to forceful request in regards to their charging practices.
Different types of Health care reform programs are being introduced in order to guide HCOs on preventing complications that are occurring. Reimbursement and payment reforms are the drivers of implementing change in order better utilize health care resources to yield
Aspire Mobile Healthcare Services (A.M.H.S.) will operate in the industry that is a part of Major Group 80 (Health Services), but will be further classified by SIC (Standard Industrial Classifications) code 8011, which is the Offices and Clinics of
Hawaii Health Systems Corporation has twelve facilities across five different islands with 1,275 licensed beds. It consists of five regions: East Hawaii, West Hawaii, Kauai, Maui and Oahu. HHSC is listed as the fourth largest health system in the country and the fourth largest on the islands, outside of Oahu (www.hhsc.org, 2014). In addition, it is the only provider of acute care on Maui and Lanai. In the West Hawaii Region, HHSC operates two facilities, Kona Community Hospital and Kohala Hospital. Kona Community Hospital, opened in 1914, operates a 94 bed acute care facility with a fully operational 24 hour Emergency Room. The East Hawaii region operates three facilities. The largest facility is located in Hilo, with Ka’u being a
I have transitioned with a new team at Hospital Corporation of America (HCA) and have been helping out with cyber security’s operations. With this new assistance comes many applications that I am not familiar with. Some are very good and some are not up to par. One application in particular that amazes me is a big data application, the name cannot be stated due to confidentiality with HCA, which has a web based interface. More specifically, it is a log management application. The reason why I find it so fascinating is because of how easy it is to find the information needed for how much data it houses. Since it is a big data application, it is searching through petabytes of information. The interface is extremely easy to use and the data
The Affordable Care Act puts consumers back in charge of their health care. Under the law, a new “Patient’s Bill of Rights” gives the American people the stability and flexibility they need to make informed choices about their health. The Patient Protection and Affordable Care Act (PPACA) is a multi-faceted reform of the nation 's health care system. The Wow Hospital Association is working with members, stakeholders and lawmakers to facilitate implementation of the law. Wow Hospitals will experience as a result of the ACA. Common themes in all of these reforms are accountability, efficiency, and quality. Furthermore, these plans provide new opportunities for WH to invest in upstream interventions– working to make policy, systems and environment improvements that will impact the communities in which we serve.
Shouldice hospital is a specialized hospital in the repair of external abdominal hernias in Canada. The hospital was established by Dr. Shouldice the founder of a new and superior surgical technique, now known as the Shouldice method, for repairing hernias which yields better medical results as well as a significantly shorter recovery time.