HCM 345 CSULB Government Role in Hospital Growth and Decline Discussion
Need help with my Law question – I’m studying for my class.
Government Role in Hospital Growth and Decline
DUE SATURDAY 10/10 – 3 pages APA format
Submit a paper that explains the role of government in the growth, as well as the decline, of hospitals in the United States. Be sure to discuss major legislation and reimbursement factors.
Your paper should be well-written and meet the following requirements:
- 3 pages in length,
- Formatted according to the CSU Global Writing Center (Links to an external site.), and
- Include at least two references from peer-reviewed articles beyond the text or other course materials. The CSU Global Library is a good place to find peer-reviewed articles.
- Be sure to discuss and reference concepts taken from the assigned textbook reading and relevant research.
Reading–
1. For-Profit or Not-for-Profit: Can You Tell the Difference?
There are often misconceptions regarding the difference between for-profit, not-for-profit, and government-owned healthcare institutions.
For-Profits
These institutions pay both property and income taxes. Many are publicly traded companies, and are listed on a major stock exchange. Others are small, privately held companies that do not offer stock to the general public for purchase. They have an obligation to shareholders to produce positive financial results. The for-profits aggressively manage costs and revenue. Some pay dividends, but many do not, instead electing to reinvest profits in the growth of the company.
The majority of the for-profit revenue comes from operations: billing patients and insurance for services rendered. Most accept patients with Medicare. Some limit the number and type of Medicaid patients that they admit. The for-profits generally do not receive donations, as the person making the donation does not receive a qualified tax deduction. The for-profits generally do not receive direct aid programs from the government.
Most for-profits provide some level of community benefit, such as charity care or care at a reduced price. For-profits usually have formal policies detailing their charity-care programs. One study concluded that for-profit hospitals spent 1.4% of their operating expenses on charity care compared to 1.9% at their not-for-profit counterparts (Valdovinos, Le, & Hsia, 2015).
Not-for-Profits
These organizations are exempt from paying income taxes and, generally, property taxes. Because of this status, they are expected to provide some level of charity care, although that level has not been defined by government regulations. Not-for-profits generally have formal policies detailing their charity care programs, which are usually need-based.
Unlike the for-profits, they cannot raise capital via the sale of stock. Like the for-profits, however, the majority of their income comes from operations. A small portion comes from donations, although these are usually restricted (by the donor) for capital purchases (such as equipment or major construction projects). The not-for-profits generally do not receive direct aid from the government. They may compete for grants specific to certain projects or research, but these tend to be a very small portion of the total income.
In general, the not-for-profits aggressively manage their costs and, like the for-profits, work hard to maximize revenue streams. They send bills to patients and expect to get paid.
2. Government-Owned Healthcare Facilities
Many communities have institutions owned by the state, county, or local (i.e., city) government. These institutions do not pay taxes. They typically have policies regarding charity care.
Like the for-profits and not-for-profits, much of their revenue comes from billing insurance and patients for services provided. However, these institutions often receive direct funding from the government as well. They may receive donations, although most would-be benefactors are reluctant to make donations to government-owned institutions. Most of these institutions also seek to minimize costs and maximize reimbursement.
These facilities also tend to serve as “safety net” providers, providing care to those with no insurance or poor-paying insurance, such as Medicaid. They generally bill Medicare and Medicaid, if the patient is covered under such programs, and will attempt to collect co-payments and deductibles. Indeed, Medicare regulations require all providers (whether for-profit, not-for-profit, or government-owned) to make a good-faith effort to collect co-payments from Medicare beneficiaries. These co-payments can only be waived if the provider can prove that the patient has no means to pay.
3. Who’s in Charge—The Doctor or the CEO?
Who’s in charge—the doctor or the CEO? The answer is neither. In most healthcare organizations, we find a dual pyramid of organizational structures, one for administration and another for the organized medical staff. The two are separate, but connected, as they both ultimately report to the governing body (Board of Directors, Board of Trustees, etc.). Thus, the governing body is in charge.
The governing body has the overall responsibility for the organization. Boards have legally-mandated fiduciary duties to their organizations. The fiduciary duties are care, loyalty, and obedience. These duties describe the manner in which board members are required to carry out their roles and responsibilities. Click on the tabs to learn more.
Fiduciary Duties
Board members must have knowledge of all reasonably available and pertinent information before making decisions. They must act in good faith, with the care of a prudent businessperson in similar circumstances, and in a manner in the organization’s best interest.
The Chief Executive Officer (CEO) (other titles may include President or Executive Director) is hired by and reports to the governing body. In some organizations, especially in academic medical centers, the position is held by a physician. In general, this is the only administrator who reports to the governing body. The CEO acts as the governing body’s agent and oversees day-to-day operations. In some cases, the CEO is a member of the board, and may or may not have voting rights.
The Chief of Staff (sometimes known as President of the Medical Staff) is a physician who is generally elected by the members of the medical staff; although in some organizations, the governing body may have to ratify the choice. It is not usually an appointed position. This position reports to the governing body, and is sometimes a member of the board. This may be a paid (usually a relatively small monthly stipend) or unpaid position. The Chief serves as the leader of the medical staff.
In the best of circumstances, the CEO and Chief of Staff have a solid working relationship. This does not imply that the relationship is conflict-free—often it is not.
The following are some of the other positions often found within the organizational structure of a healthcare facility. Click on each to learn more.
The titles and structure differ from organization to organization. Further, a physician may wear multiple hats. For example, a general surgeon could serve as the Medical Director for Surgery (paid by the hospital for part-time administrative work), the Chair of Surgery (elected by his peers), and be a member of the governing body.
The following video discusses how Joint Commission International help organizations worldwide raise the standard for excellence through continuous quality improvement.
4. Cost Allocation: Why the Hospitals Charge $3 for an Aspirin
The hospital patient often wonders, “Why am I being charged $3 for an aspirin?” The short answer is that you are actually paying for the cost to get that drug to the bedside.
Expenses are incurred from many sources. Click the dialog cards to explore the possible sources of expense that may have contributed to the cost of that aspirin:
Additional expenses might include such things as the cost of maintaining a housekeeping staff to clean the pharmacy, and the Human Resources department that helped recruit the pharmacist. This example illustrates how complex healthcare is—and how expensive.
This process of determining the various costs involved in providing a service is called cost allocation, and can include both cost center and revenues center expenses. Cost centers are those departments that do not generate revenue. Examples include housekeeping, dietary, maintenance, accounting, medical records, purchasing, and human resources. Expenses related to these departments are often called indirect costs. Revenue centers are those that do generate revenue, such as nursing (via a room and board charge), laboratory, radiology, pharmacy, and physical/occupational/speech therapy. Costs related to revenue centers are often called direct costs. The indirect costs are allocated to the revenue centers, allowing the organization to develop a price/charge that reflects what is often called the fully loaded cost.
This next video discusses how consolidation appears to be growing among healthcare providers at three different levels: horizontal consolidation, vertical consolidation, and consolidation light.
