FINANCIAL CHARACTERISTICS OF HEALTHCARE DELIVERY

Financial Characteristics of Healthcare Delivery

Financial Characteristics of Healthcare Delivery

Over the last 30 years, the healthcare system has seen unprecedented changes in the economics of healthcare. Thirty years ago, physicians made exclusive decisions regarding when patients were admitted and discharged. Individuals, with employer-paid insurance, received services and the healthcare organization billed and received payment accordingly. The impetus for much of the change has been attempts at controlling spiraling costs. National debate during the early 1990s raised awareness of the industry's need for change. From the mid-1980s to present, declining inpatient census, shortened length of stay and significant changes in reimbursement have contributed to the closure or merger of many hospital units and the development of alternative treatment settings (Caroselli, 1996). The cost of healthcare in the U.S. is an issue of continuing concern for those who manage the economics of healthcare. Close to $2 trillion is spent annually for healthcare (Centers for Medicare and Medicaid Services, 2004). Yet, without close monitoring and effective financial management, organizations will not be able to remain financially viable. Healthcare financial managers and nurse executives are responsible for multimillion-dollar budgets, not unlike budgets of any other private corporation. Effective management of healthcare resources is important in keeping costs contained. Hospitals are the largest sector of health care expenditures. Nursing services represent the largest portion of the personnel budgets in most healthcare organizations. For example, on average, nursing accounts for more than 50% of hospital operating budgets (Caroselli, 1996). Therefore, hospitals are the primary target of efforts to curb rising costs in health care.

Federal and state agencies, as well as private third party payers have developed reimbursement policies designed to encourage cost reduction by healthcare providers. As a result of a highly competitive cost containment environment, health care organizations have been forced to manage their resources more efficiently. Cost containment measures, such as lower length-of-stay averages and eliminating nonessential procedures are examples of maximizing reimbursement (Altman, 2002). Cost categories examined for potential cost savings include physician use of resources, patient expenses, organizational and operational expenses, supplier cost, and labor cost. Additionally, efforts at improved documentation have been shown to improve reimbursement. A trend that has emerged is an examination of who is responsible for financial viability of organizations. Increasingly, as the system continues to undergo responsive changes in structure and processes, healthcare financial managers (HCFM) and Nure Executives (NE) have emerged as an important part of the healthcare reform. There is increasing recognition that the collaboration between HCFMs and NEs has significant potential for providing collaborative leadership in health care delivery restructuring.

This study examined the extent HCFMs and NEs believe healthcare reform initiatives are effective for cost containment given recent healthcare reform initiatives. HCFMs and NEs, leaders in their professional organization (Healthcare Financial Management Association and American Organization of Nurse Executives), from 36 states participated in the study. This nationwide study represents one of the few surveys of HCFMs and NEs and their perceptions of impact of reform initiatives to reduce the ...