Significance of this Study
This essay contributes to health economics and antitrust literature as follows. First, this essay investigates change in transaction price for cardiac surgery. Instead of using list or average prices, this analysis adopted the transaction price of care, which is a much more accurate measure for price of care (Brooks, Dor & Wong, 1997; Capps & Dranove, 2004; Dor, Grossman & Koroukian, 2004; Dor, Koroukian & Grossman, 2004; Dor et al., 2012; Moriya, Vogt & Gaynor, 2010). Second, this essay applies the comprehensive taxonomy of health systems proposed by Bazzoli et al. (1999) to post-merger pricing studies. Existing studies on post-merger change in price of care have focused more on the size of system formation,
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According to the revised Statements of Antitrust Enforcement Policy in Health Care, health care provider arrangements with a sufficient degree of financial and clinical integration are eligible for the antitrust safety zone (Department of Justice and Federal Trade Commission, 1996). However, the FTC and DOJ have been criticized for not giving clear definitions of clinical integration, and providers have been puzzled about the adequate level of clinical integration that FTC and DOJ will not view as illegal, per se (Burke & Rosenbaum, 2010; Leibenluft, 2011). Considering a paucity of empirical literature on appropriate degrees of financial and clinical integration, the findings of this essay can contribute to the antitrust discussions in health care. 3. Conceptual Framework
Several models of health care pricing exist in the literature, and there are clear trade-offs among the models (Dor, Grossman & Koroukian, 2004; Gaynor & Town, 2011; Gowrisankaran, Nevo & Town, 2013). These pricing models are summarized in the previous essay. This study chose a modified version of Dor, Koroukian & Grossman (2004), because 1) this model does not require restrictive assumptions; 2) this model allows more flexible functional forms; 3) this model does not depend on inaccessible data, including marginal cost of care or profit margin of a hospital. In the conceptual framework of this study, the price of care is defined as a function of patient characteristics, hospital
Regulations that prevent insurance companies from participating in interstate commerce have caused competition to grow stagnant in the United States. This lack of competition has allowed the adoption of wasteful procedures by healthcare providers, which in turn passes the increased expenses back to the insurance companies. Therein, insurance costs increase, crippling consumer’s cash flow and quality of life. While healthcare costs continue to rise, people must scrutinize the current healthcare system.
Currently it is often difficult to make informed decisions about their care because of the opaque nature of health care pricing. Houk and Cleverly (2014) contend that pricing transparency could give health care providers a chance to garner increases in patient census; even if they do not have the least expensive price for a specific procedure, by allow health care providers the qualify why their services cost what they do. The demand for price transparency should be embraced in the future because it could create a forum that allow actual competition for patients and allow health care providers a chance to differentiate
Competition is forcing consolidation of health insurers. Two years ago, there were fifteen major for-profit insurance plans that controlled the national market. They have consolidated into nine players, and further changes are predicted. (Singh & Sawhney, 2006)
Unfortunately, although antitrust agencies are paying attention to recent court actions against mergers, the FTC investigates only 1-2% of consolidations (McCanne, 2014). It is also important to remember than public payers such as Medicare and Medicaid set prices to physicians and hospitals with no room for negotiating and conversely private insurers may use their market-share leverage to negotiate reimbursements. Integrative care in the form of hospital consolidation has been shown to reduce costs by 10-20% but this cost has not been shown to produce a cost savings to private insurers (Cutler & Morton, 2014).
I have chosen the topic “Examine the financial characteristics of health care delivery along with managing costs, revenues, and human
The new social contract between the health care system and employers, patients, and the government has given everyone involved some breathing room. They have provided a clearer picture of the costs of health care; however, it is evident that there is still work to be done regarding the transparency of complete and exact costs. For example; all hospitals have a price list called the chargemaster that includes nearly 20,000 health care procedures. The prices on this list are the prices that patients will most likely see on their bills; however, the terms are not standardized and many are bundled services that make it difficult to compare them with other institutions. It is obvious
Author of the article examines on how managed care have enabled health insurance markets, physicians, and healthcare facilities consolidate as well as change in the responses to health care reform. The article claims that stricter antitrust enforcement concepts will benefits consumers only in a situation where competitive distortions will get government
A challenge that the healthcare nation is facing is to provide the quality of care that is expected and obtain low healthcare cost. Working hand in hand with the private sector and government is in hopes of improving the quality of care that each patient deserves and maintaining the cost so that research can continue. The purpose of this paper is to look into relationships between healthcare cost and quality healthcare.
The external stakeholders are the community, patients, MedKey System members, CMS, HMOs (ie. Blue Cross Blue Shield and Tri-Care), and any other private insurances (Richards & Slovensky, 2004). Medicare reimbursement in Alabama was the lowest rate in the nation. This was a constant struggle for the hospital administrators to try to operate on such low reimbursements for their services, which is a threat. Eighty percent of patients were Medicare or Blue Cross in which there was difficulty-negotiating prices with Blue Cross due to monopoly. Buyers have high bargaining power as reimbursements rates are low from Medicare and Blue Cross held monopoly in the services area so negotiating prices was difficult. Suppliers have lower bargaining power due to low Medicare reimbursements and difficulty negotiating prices with Blue
One area that has contributed to the rise of healthcare costs are the varieties of healthcare services offered to the patient. Competition between providers has caused physicians and hospitals to offer the most current healthcare technologies and modern, eye-catching settings in order to attract and retain clients (Shi & Singh, 2015). Reimbursements for costly procedures and hospital services have been compensated at a higher rate which has also supported the expansion of hospital and specialty procedure settings (Schroeder & Frist, 2013). Renovations of the physical settings and the acquisition of expensive technologies have elevated healthcare services prices to encompass the additional costs of providing high technical services and attracting clients and cause the over-utilization of expensive treatments.
When it comes to health care, cost is one of the biggest problems. Something needs to be done in order to make it possible for patients, families, and businesses to be able to afford health care. US does not always spend health care dollars in the most productive way. The cost of cancer treatments alone can cost up to hundreds of thousands of dollars, and the only way to pay for that is to raise the cost of the insurance to the patients. Cost is defined as the “price” of healthcare. The “price” or cost can come from various places such as, the physician’s bill, the cost of prescriptions, as well as what the employers pay to cover their employees. The cost of treatments, emergency room visits, medicines, the cost of newest technology and etc. is what is making our increase in cost rapidly. The rising costs leads to becoming a financial burden to families, even the ones that have health insurance, which can typically result in individuals not receiving the health services that they need.
After getting the views and suggestions all discuss this with hospital management and other stakeholders of the hospital to come with a reasonable prices which will make sure the health care provide by the hospital is affordable to everyone and is best quality. As much the patient may wish the prices to be reduced the quality of the health care cannot be compromised to the expenses of providing cheap health care. The prices being suggested should be in a position to support the normal functioning of the hospital.
Kenneth Arrow’s classic 1963 article, ‘Improbability and the Welfare Economics of Health Care’ is bright, and leading the economic vision of the many changes in the American health care system (Ruger 581). The health economics that has emerged, based on the demand of the market, are supplies, goods, and services. This theory, of our health care economy, is through market prices. There is no other theory, that of Kenneth Arrow, that makes a similar model of both supply and demand. Arrow’s other theories depend on the characteristics outside patients’ choices, values, principles, and preferences. The allocation could be reached, if the government used tax transfer wealth, to restore market equilibrium for improving the people’s quality of service in healthcare. Kenneth Arrow began to figure out how to engage possible uncertainty, into economic decisions and theories. The government allocation is optimal in order to reach market equilibrium. The government allocation also facilitates the market toward more stability and also encourage the redistribution of wealth and transference of goods (Greenberg & Lowrie 879).
Healthcare is an industry that encompasses various factors to ensure that it’s operating efficiently. Health care professionals have an obligation to comprehend the role that health economics plays in regards to the demand and utilization of health care. The government plays an enormous part in areas such as financing and the delivery of care; therefore, the organization’s decision maker must learn the economic functions and its benefits to the health care sector. Delivering outstanding medical care is equally as important as understanding demand and supply, available resources and the cost to provide care. Consequently, the principals of health economics are essential to meeting the
Healthcare pricing works efficiently when pricing is established in relation to a payer’s payment basis or reimbursement schedule, allowing a facility to exercise more control over profit. For example, if a facility is reimbursed on a fixed-fee schedule, then they will only receive fixed payment regardless of price. Appropriate pricing can accommodate for those amounts not covered under the fixed-fee so that loss can be limited.