Hcs 577 - the Medical Industry

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Effective Financial Management in the Health Care Industry

The medical sector is an integrated system with many connections to other industries. The main reason that the industry experiences difficulties in the effectively managing their finances are due to the presence of third-party payment systems. For instance, a patient may be treated in a hospital, but he or she would not pay for the services or good offered if they are insured. In this case, the hospital would receive payment through a third party which is the insurance company. And in the case of third party payment system, it can sometimes take relatively longer period before an institution if fully reimbursed for the services provided hence making it difficult to manage the finances effectively. This is different from other industries whose payment comes directly from their consumers. For instance, consider the transport industries where consumers pay directly and before services are delivered. In this case, managing the finances effectively is much easier and simpler than if consumers were to pay for services through a third party. This aspect present in the health care sector is, therefore, the main reason as to why it is difficult to manage the finances effectively (Gordon, 2011).

Conclusion

In the health care system, different kinds of entities have a distinct financial structure that goes hand-in-hand with how they conduct their daily operations. These differ significantly depending on if the aim of the firm is to make profits, non-profit or it is owned by the government. Each entity, in this case, has a set of policies that they must adhere to and use as a guideline through their operations. Additionally, in the health care system, the presence of third-party payment system widely influences the ability to manage financials effectively.

References

AHA Financial Information. (2017). Heart.org. Retrieved 29 March 2017, from http://www.heart.org/HEARTORG/General/AHA-Financial-Information_UCM_303567_Article.jsp#.WNvWPsCGOCg

Gordon, D. (2011). Healthcare finance (1st ed.). Washington, DC: American Health Lawyers Association.

Liaropoulos, L., & Goranitis, I. (2015). Health care financing and the sustainability of health systems. International journal for equity in health, 14(1), 80.

Song, P. H., & Reiter, K. L. (2010). Trends in asset structure between not-for-profit and investor-owned hospitals. Medical Care Research and Review, 67(6), 694-706.

Turner, J., Broom, K., Elliott, M., & Lee, J. F. (2015). A Comparison of Capital Structure: The Use of Debt in Investor Owned and Not-For-Profit Hospitals. Journal of Health Care Finance, 41(4).