Finance for OP Man- Response

1. Mercedes

Financial statements in the medical setting

Patients medical coverage causes financial losses

Operations managers should understand financial statements because it is important to minimize medical loss. Medical losses are defined as “the portion of premium that goes to the medical member’s medical expenses” (Langabeer & Helton, 2021, p. 36). Medicare is the payer that offers the lowest reimbursement for every healthcare service (Langabeer & Helton, 2021, p. 24). The type of healthcare insurance patients have can mean healthcare services are not being covered by the patient’s healthcare insurance, therefore understanding financial statements is important to see in which department is having the most medical losses. It is important to understand financial gross revenues which is all of the finances to cover patients bills offered by patient’s medical insurers, private insurers and the government (Langabeer & Helton, 2021, p. 40). Finally, net patient revenues represent the subtraction total of gross revenues and patient deductions (Langabeer & Helton, 2021, p. 40). The patient deductions off the bill is the amount payable from the medical insurance of customers, going towards medical expenses of that patient (Langabeer & Helton, 2021, p. 40).

Healthcare financial statements can show which medical operations can lower operational costs such as funding preventative care for cancer. “Kane et al. proposes that these professionals could be incentivized to engage in preventive care more than professionals reimbursed under FFS”. (Zwaagstra Salvado et al., 2021, p. 14). Financial operations managers can invest in preventative care for chronic medical conditions because certain medical conditions such as obesity, diabetes and mental illnesses are expensive to treat. Healthcare professionals that prefer treating patients with Fees-for-service healthcare coverage, should understand the danger of the patient staying in the hospital for longer (Langabeer et al., 2021, p. 40). The patient can catch healthcare related illnesses that can kill the patient if their immune system is already compromised (Langabeer et al., 2021, p. 40). In Jeremiah 30:17 it states. “But I will restore you to health and heal your wounds, declares the Lord, because you are called an outcast, Zion for who no one cares” (New International Version, 2011). God can restore our strength and prove wellness when we are searching for it when spending time in His presence. The patients who are underinsured or uninsured are less likely to see the doctor for necessary checkups (Galvani et al., 2020, p. 6). As a financial operations manager it should be brought to their knowledge of this factor of people not being able to afford healthcare services. There can be healthcare insurers that they partner with that can offer their new patients to talk with before having healthcare procedures.

Patients who are uninsured in the United States use less healthcare services than those who are insured (Galvani et al., 2020, p. 6) “Specifically, individuals without any insurance utilize healthcare at 50.1% of the rate of adequately insured individuals” (Galvani et al., 2020, p. 6). The uninsured individuals are undiagnosed for diseases and can lead to comorbidities to forming such as obesity if left untreated (Galvin et al., 2020, p. 6). The second financial problem for healthcare facilities, is the treatment for individuals who are uninsured and are paying high deductibles or copays (Galvin et al., 2020, p. 6). The medical management team must therefore review the patient’s records to see if their condition is severe enough according to the physician treating them (Langabeer et al., 2021, p. 33). Before the patient receives treatment, they have to have eligible coverage from their healthcare insurance prior to receiving the service ( Langabeer et al., p. 33).

References

Galvani, A. P., Parpia, A. S., Foster, E. M., Singer, B. H., & Fitzpatrick, M. C. (2020). Improving the prognosis of health care in the USA. Lancet, 15, Article 395, 524-533. https://doi.org/10.1016/S0140-6736(19)33019-3

Langabeer, J. R., & Helton, J. (2021). Health Care Operations Management: A systems perspective (3rd ed.). Jones & Bartlett Learning.

New International Version. (2011). Jeremiah 30:17. BibleGateway. https://www.biblegateway.com/passage/search=Jeremiah%2030%3A17&version=NIV

Zwaagstra Salvado E., Van Elten, H. J., Van Raaij, E. M. (2021). The linkages between reimbursement and prevention: a mixed-methods approach. Front Public Health, 9, Article 750122. 1-29. https://doi,org/10.3389/fpubh.2021.750122

2. Ester

A healthcare organization is composed of many departments, functions, and managers that play a key role in improving the financial condition of the organization. Operations and finance are two key functions that jointly drive business success; operations management on the one hand is supported by financial activities, and on the other hand drives the financial performance of enterprises (Wang et al., 2020). It is vital that operation managers have a deep understanding of financial statements as they are important to be analyzed to make any financial decision within the organization. In the hospital system, operations managers need to focus on improving quality of care and managing the hospital’s finances. As mentioned in our reading, it is important for operation managers to understand all components of a hospital’s financial including being able to look at all of the key statements such as income statement, balance sheet, and cash flow (Langabeer & Helton, 2021, p. 36). The analysis of these statements allows the operations manager to see where the hospital stands in its financial goal and provides the necessary data to create any strategic plan to improve the financial health of the hospital. Moreover, the income statement is used to analyze the revenues, expenses, and margins of the hospital. Having a deep understanding of the income statement is essential as it tracks a hospital’s profitability. Furthermore, analyzing the hospital’s revenue allows the operations manager to make financial decisions regarding any factor that may affect the profit margin. Financial constraints can cause firms to reduce product quality when quality is difficult to observe (Adelino et al., 2021). Therefore, it is important for the operations manager to focus on the quality and financial aspect of the services being provided within the organization to minimize constraints. Moreover, in a hospital setting there are some factors that constrain the hospital’s revenue. As mentioned in our reading, a hospital’s revenue is being constrained by all payers’ attempt to reduce utilization of services and use competitive means to reduce reimbursement rates; this translates into lower revenues and profit margins (Langabeer & Helton, 2021, p. 46). To battle such constraints, it is essential that operations management focuses on approaches to improve financial performance to avoid bankruptcy. Furthermore, the different reimbursement types on health plans and services rendered by the provider have an operational impact on the hospital. Hospitals are paid through reimbursement; the provider pays for the services and awaits the payment. As mentioned in our reading, payers for hospital services are either government or nongovernment insurers (Langabeer & Helton, 2021, p. 34). Government insurers are commonly Medicare and Medicaid, and nongovernment insurers are commercial insurers. These different reimbursements put pressure on the hospital as they all have different leverage which may influence how the hospital will be paid. Our reading explains, the same services being provided to two different patients may have the same prices billed on the hospital invoice for both patients, but the ability for a hospital to collect depends on the individual payer that is reimbursing the hospital (Langabeer & Helton, 2021, p.34). This concept is important to consider when calculating the profit margin of hospitals as they need to be reimbursed for the services they provide. Operations management is vital for a healthcare organization as they analyze and manage the organization’s financial health. From a biblical worldview, scripture constantly teaches the value of analyzing and planning. In Proverbs reads “Let the wise hear and increase in learning, and the one who understand obtain guidance” (Proverbs 1:5, English Standard Version). This passage emphasizes the importance of listening and analyzing. In healthcare analyzing is of great importance as well for operations management. In terms of operational finance, analyzing statements and calculating ratios are essential for any financial decision and tracking the organization’s financial health.

References

Adelino, M., Lewellen, K., & McCartney, W. B. (2021). Hospital financial health and clinical choices: evidence from the financial crisis. Management Science. https://doi.org/10.1287/mnsc.2020.3944

Langabeer, J. R., & Helton, J. (2021). Health Care Operations Management: A Systems Perspective (3rd ed.). Jones & Bartlett Learning.

Wang, J., Zhao, L., & Huchzermeier, A. (2020). Operations‐finance interface in risk management: research evolution and opportunities.Production and Operations Management, 30(2), 355–389. https://doi.org/10.1111/poms.13269

Thread must include a biblical integration and 2 peer-reviewed source citations, in addition to the course textbook, in current APA format (3 sources and bible quote)

Course textbook :Langabeer, J. R., & Helton, J. (2021). Health Care Operations Management: A systems perspective. Jones & Bartlett Learning.