Comparing health care Financial Environments Melinda Calhoun HCS/577 May 14, 2013 Nicholas Coburn Comparing Health Care Financial Environments Health care organizations will have similarities and differences concerning finances, depending on the environment of the facility. The three types of health care environments are for-profit, nonprofit, and governmental organizations. Health South Rehabilitation Center is a for-profit facility specializing in rehabilitation. Cabell Huntington Hospital is a nonprofit organization providing different types of services through inpatient and outpatient care.
The Center for Medicaid and Medicare Services is a government program providing health insurance to eligible individuals or families. The health care facilities will have similarities and differences within the financial structure. The person making financial decisions will be different in each environment. Policies are unique to each financial environment and each facility will have financial management practices which are prevalent in the financial environment. Ensuring health care facilities have an effective financial management practice is more difficult than in other industries. Health South Rehabilitation Center
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Health South Rehabilitation Center is the nation’s largest skilled for-profit inpatient organizations specializing in rehabilitation services (“Health South Rehabilitation Center,”n. d. ).
Gapenski (2006) stated, “The size and structure of the finance department within the health services organizations depend on the type of provider and its size” (pg. 9).
The roles in the financial structure at Health South Rehabilitation Center consist of the owner and stockholders, along with other leaders (“Health South Rehabilitation Center,” n. d. ).
The owner and stockholders make the financial decisions in a for profit organization.
Health South has a board of directors, and executive, and senior management. According to Carter (2013), the profits made in a for-profit health care facility are distributed to the owner and stockholders, and donations made to the organization are not tax deductible. A for-profit organization is responsible for paying federal, state, and property taxes (Gapenski, 2006).
Carter (2013) stated, “For-profit businesses may raise money by offering investors a percentage of ownership in the company. In the case of a for-profit corporation, investors can provide property, services, and cash in exchange for shares of the company’s stock (pg. ).
According to Lassiter and Arico (2013), the financial management practices used at Health South Rehabilitation Center has been effective because the consolidated net operating revenues increased. Additionally, income increased, cash flow increased, and adjusted free cash flow increased. Cabell Huntington Hospital Cabell Huntington Hospital is a large non-profit organization providing different services through inpatient and outpatient care (“Cabell Huntington Hospital,” n. d. ).
According to Gapenski (2006), nonprofit organizations are exempt from paying state, federal, and property taxes.
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Carter (2013) states, “the profits raised by the organization must be recirculated back into the organization so it is able to fulfill its mission. ” The assets of a nonprofit organization belong to the organization. If the nonprofit organization closes its doors, the equipment, and supplies will be gave to another nonprofit organization. The person making the financial decisions in a nonprofit organization is the board of trustees. The nonprofit organization raises capital by donations and grants (Carter, 2013).
According to Rosenbaum (2012), nonprofit hospitals must maintain certain practices.
A community health needs assessment must be done every three years, a financial assistance and written policy must be made, and charges are limited in a nonprofit organization. Center for Medicaid and Medicare Services. The Center for Medicare and Medicaid Services is a large governmental organization providing health insurance to eligible individuals and families “through Medicare, Medicaid, and Children’s Health Insurance Programs” (“Center for Medicare and Medicaid Services,” n. d. ).
Gapenski (2006) claims government organization’s gain income by delivering patient care and grants.
According to the Medicare Website (2013), the Department of Health and Human Resources in each state monitors the program. The Hospital Insurance Trust Fund and Supplementary Medical Insurance Trust Fund pay for Medicare (Center for Medicare and Medicaid Services, 2013).
The state government makes the financial decisions with the Center for Medicaid and Medicare Services (“Center for Medicare and Medicaid Services, 2013).
A board of trustees will help make decisions for governmental organizations. According to Gapenski (2006), government organizations are exempt from paying state, federal, and property taxes (pg. 0).
Financial management is important to any health care facility and can be more difficult in a health care facility versus another industry. According to Gapenski (2006), the functions of financial management include the following: “evaluation and planning; long-term investment decisions; financing decisions; working capital management; contract management; and financial risk management” (pg. 6)).
The reason financial management is harder in the health care industry versus another industry is all the challenges the health care industry faces.
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... Integration, and the Organization of Physician Practice,” Journal of Health Policy, Politics, and Law, Retrieved from http://www.ftc.gov/os/comments/aco/2006jhppl.pdf Center for Medicare and Medicaid Innovation Center (2011) “Pioneer ... on an association of independent physician practices. The health plan will be the major financial assets to encourage a more cost-effective ...
Health South Rehabilitation Center, Cabell Huntington Hospital, and the Center for Medicaid and Medicare Services are three health care organizations with different environments. Each type of facility has similarities and differences in the financial department. The financial structure will depend on the type and size of the facility. Each type of facility will have policies unique in each of the financial environments; each type of facility will have financial management practices prevalent in the financial environment.
Health South Rehabilitation Center, Cabell Huntington Hospital, and the Center for Medicare and Medicaid Services can be successful with the right financial team. References Cabell Huntington Hospital. (Novemeber 23, 2012).
About. Retrieved from http://cabellhuntington. org/. Carter, C. (2013. ).
For profit versus not for profit organizations. Retrieved from http://smallbusiness. chron. com/profit-vs-not-for-profit-organization-4158. html. Centers for Medicare and Medicaid Services. (n. d. ).
Home. Retrieved from http://www. cms. gov/. Gapenski, L. C. (2006).
Accounting fundamentals for
