Healthcare Payers In Competitive Markets

In a world of budget cut and layoffs, medical corporations face new and different challenges in addition to helping and healing patients. I used to work as a medical biller in a physician’s office for five years and I experienced how difficult for the health care providers to get reimbursed. The government and the insurance companies have been limiting the budget towards the health care services. This action also affects the hospitals greatly because Centers for Medicare & Medicaid Services (CMS) and some policymakers have requested the hospitals to reduce the

The overall problem of incentive misalignment cited above has negative impacts for almost all stakeholders in the healthcare industry. Consumers have become notoriously bad shoppers of healthcare, as they do not bear the real costs of their care or treatments and therefore have no incentive to optimize their healthcare costs. However, even if consumers were to become more shopping savvy, it would ultimately have a very limited impact on such a fragmented and opaque system where reliable and accessible information about relative pricing and outcomes is almost nonexistent. Nor are doctors immune to this incentive misalignment. Regulation and increased litigation around doctor malpractice has cemented an industry obsession with compliance

“Within the health care industry, competition impacts several relational perspectives; with numerous studies reporting the impact of increased competition. For example, several studies have examined the relationships between competition and quality of health care (Zwanziger and Melnick, 1996; Enthoven, 1993; Kassirer, 1995; Chassin, 1997); between competition and health care system costs (Robinson and Luft, 1985; Robinson and Luft, 1987; Robinson and Luft, 1988; Zwanziger and Melnick, 1996; Zwanziger and Melnick, 1988; Robinson, 1991); and between competition and patient satisfaction (Miller, 1996; Brook and Kosecoff,

From 1991 going forward, the health care environment again experienced fundamental changes as a result of the deregulation of hospitals which according to Ingols and Brem (as cited in Swayne, Duncan, and Ginter, 2006) was occurring for the first time in a decade. According to the authors, the impact of the move was immediate. Following the deregulation, the financial viability of most hospitals was

In my opinion, I believe the following national trends affect competition and pricing, access to care, technology, shortage of physicians & reimbursement. Access to care and shortage of doctors increases the competition for consumers. Physicians have to work harder to attract patients to remain relevant in the market. Technology is also important since the organizations that use technology will be more sort after. According to Harris (2017), In some instances, the reimbursement process is now linked to patient’s satisfaction, and this will factor into how the physicians receive payment. These trends occur nationwide and cause both the competition and pricing will continue to vary. Healthcare is an industry that is constantly evolving; therefore,

Third-party payers are significant in healthcare. Many individuals do not have enough money to compensate for healthcare facilities out of pocket. Third-party payers contain insurance firms, administrative agencies, and managers. Managed care plans are a kind of health assurance. They have agreements with health care workers and medical amenities to offer care for associates at reduced prices. These benefactors make up the plan's system. Health Maintenance Organizations (HMO) typically only charge for attention within the system. You select a primary care doctor who organizes most of your upkeep. Preferred Provider Organizations (PPO) typically charges more if you get care within the system. They still pay a portion of the fee if you go separate

Clearly, specialty hospitals have very limited incentives and interest in treating these patients who cannot afford their services. Moreover, as specialty hospitals selectively serve patients with low risk profiles and leave complicated risky cases for community hospitals, community hospitals’ revenues from these specialties and general profitability dramatically decreased. Evidently, this unfair competition left community hospitals unable to provide free services for the uninsured or underinsured patients (Spatz et al., 2012).

President Donald Trump announced last week that his administration will no longer make cost-sharing reduction payments, which have helped nearly 6 million low- and moderate-income Americans afford the health care services and medicines they need. The Affordable Health Care Act requires health insurers to reduce consumer cost-sharing requirements, such as deductibles and co-payments for enrollees who earn between 100 percent and 250 percent of the federal poverty level. The administration's decision to end the cost-sharing reduction payments not only disrupts the health insurance market, but contradicts many of the health reform priorities expressed this year by both the president and members of Congress.

As a health administrator, my priority is to make sure the patient get a good health care which is the value for the money and affordable to all the citizens from all walks of life. Therefore, bargaining for the prices is a welcome initiative since the hospitals is not a profit making institution. Furthermore, all the human beings do not have the same income. This makes it rational to negotiate for prices to make sure the system cover all the patients. Thus, as administrator my first reaction is to listen to the suggestions given by the patients and other organization to get their point of view as to why they think the prices should come down.

There are several business elements of health care that are unique or perhaps define health care as a market place. One of those being the healthcare industry has never been in need of new business, the demand is already high for health care and medication. As a result of this reality, greedy pharmaceutical executives and their drug companies will practice price gouging (pricing above the market price when no alternative retailer is available), in this practice sellers spikes the prices of product and or services, in most cases, to benefit shareholders. Such action will fundamentally contribute to the drastic increase of health care expenditures, and creates inequality in resource distribution. According to Penner (2004), Market Economist defines a market as a mechanism that facilitates the efficient allocation of resources. Compared to the health care industry, traditional marketplace will not benefit from price gouging and other self-centered practice due to other competitors looking to gain consumer business: Consumers are able to find other competitors to conduct business with.

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.

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.

The cost of industry has a significant impact on healthcare, so much so that while health institutions attempt to save money with cutbacks they realize little reward and few gains in return. With technological advances, reduced staff numbers, and further push for greater efficiency in the healthcare industry should realize a significant amount in savings which at that point should be pasted on to patients. Unfortunately, this is not the reality in the current market. With all of the rising health costs and increasing demands, health organizations are being forced to absorb additional costs associated with patient care. A majority of the savings that come from cutbacks are being used to make up for those losses so that the institution can stay in decent financial standing. The challenge becomes how health systems can counter the increasing costs so that their efforts in cutbacks are truly beneficial.

As in all business types, there is always competition between similar companies. The health care industry is no different and in fact, competition has been considered a health way to draw interest to an organization. To quote James Cash Penney (n.d.), "A merchant who approaches business with the idea of serving the public well has nothing to fear from the competition." The better equipped a facility is to handle competing businesses, the better it must be for patients. To stay competitive means being in-tune with the current market, what the consumer wants or expects, knowing what your competitors are doing, and having the best available technology and staff. In fact, the main purpose of remaining competitive is to be the business that gains the most profit from their product. This goal however does not have to mean a business is simply out to make a profit, especially in the health care field. What it should mean is the ability to care for patients better than anyone else.

Analysis of the sampled hospitals’ purchased services showed that smaller hospitals spend more money on these services than larger hospitals. Holding all other factors equal, smaller hospitals spend on average 2% more on purchased services than larger hospitals. The gap between the two is possibly due to the fact that smaller hospitals do not have as much technology and equipment as larger hospitals, which gives them more limitations. For example, larger hospitals may have access to their own HR services or facility support services such as a food cafeteria. Conversely, smaller hospitals not have this privilege, and are forced to outsource these services out to a HR company or food caterer. Another factor that impacted the salaries expense was teaching status. Non-teaching hospitals purchased services expense averaged nearly 2% more than teaching hospitals. There are two potential factors that are driving this statistic. The size of the hospital has a strong correlation with its teaching status.