Planning and Budgeting (Healthcare Financial Mgt)

Planning and Budgeting (Healthcare Financial Mgt)

1. Determine what your selected organization would need to take into account when making pricing and service decisions.

I have selected Housekeeping Service department of The Whitman-Walter Clinic, a multispecialty practice in Washington DC, for my assignment, in order to define the pricing strategy, I will highlight the role of hospital executives, many hospital executives provide little importance to pricing strategy, and hold up to the fixed fee payment. Currently both Medicaid and Medicare programs includes the payment of outpatient and inpatient for providing prospective care to the patient. Several managed care programs provide the inpatient care on the basis per diem base or DRG basis, whereas outpatient care payment is dependent on discounted charges or scheduled fee, this strategy or methodology cannot be used by The Whitman-Walter Clinic, because in this pricing strategy, self pay patients, who are charged for the services cannot have high level of recovery, it may result in charity wire cut offs or high bad debts. With the help of this understanding, one can get an idea that pricing has minimum effect on profitability of health care. After analyzing the current pricing setting of The Whitman-Walter Clinic, I find out that actual percentage of clinic total business charged ranges around ten to twenty five percent, pricing strategy is the certainty factor which helps in increasing the profitability of business. (Samuels, D. I. 1998)

Numerous elements are involved in pricing, which impacts the pricing strategy, particularly in competitive markets; whereas health care sector is concerned it has various price sensitive customers with different degree of price sensitivity. Many medical hospitals or clinical executives believes that approach of outpatient is more price elastic as compare to the inpatient approach, most patients might pay greater proportion of charge or some part of the charge. On the other hand higher prices affects the payment provisions of managed care plans, this provision are based upon the charges to other providers, whereas reaction is not that quick in some cases patients experiences self payments.

In order to recognize the importance of pricing strategy, The Whitman-Walter Clinic must give importance to price elasticity as it is one of the important factor in pricing strategy, whereas in most of the cases clinics faces many pricing variations. If The Whitman-Walter Clinic is taxable or tax exempt, still The Whitman-Walter Clinic maximization of prices could be at higher level. The Whitman-Walter Clinic should set a certain price, which can help them in maintaining the financial stability, I will highlight some of the elements which can help The Whitman-Walter Clinic for setting their pricing strategy, before setting any price The Whitman-Walter Clinic must consider losses from payers, paying less than cost, reasonable return on investment, and average reasonable costs, consideration of these things can help The Whitman-Walter Clinic for setting an effective pricing strategy. (Nowicki, M. 2011)

2. Describe the overall planning process and the likely components of the selected organization's financial plan. Be sure to include discussion as to how ...