Financial Management in Healthcare

The Patient Protection and Affordable Care Act of 2010 brought about major changes for the healthcare industry and many new challenges for hospitals, doctors, and other providers. Your textbook presents these impacts under 12 broad headings. Present and discuss any three of these important impacts, and discuss how you, as a healthcare administrator, will respond to these changes.(at least 15 sentences)

Please include the name of the person or question to which you are replying in the subject line. For example, “Tom’s response to Susan’s comment.”



The ACA brought the introduction of the Value-Based Purchasing, VBP, program. This program holds a percentage of Medicare hospital payments back from providers and then evaluates the facility’s performance in a selection of criteria to determine which facilities receive incentive payments. The program uses four measurement categories, clinical process of care, patient experience of care, outcomes, and efficiency. Clinical process of care measurements are based on a baseline for each facility and are scored in both achievement and improvement. Patient experience of care use surveys to determine the facility’s score and measure both achievement and improvement levels. Outcome is measured by a combination of mortality, complications, hospital-acquired infections, and patient safety reports. The efficiency score is based on cost-reduction measures, if a hospital can find ways to reduce overhead they will be more likely to receive increased payments from this program. 

ACA also had an individual and business mandate to provide minimum coverage. Businesses with fifty or more employees were required to provide minimum essential coverage, MEC, for these employees. The penalty was $2000 per full-time employee, after the first 30 employees. Only full-time employees counted for this requirement. The main effect this had on individuals was that any person eligible for MEC from their employer was ineligible for any tax credits or cost-sharing reduction for insurance bought through the state exchanges. The individual mandate required citizens to have some form of health insurance coverage or face a tax penalty. Employers need to ensure that they are offering appropriate health insurance programs for their employees to avoid the penalties.

Another portion of ACA that affected facilities was the reduction of the Medicare and Medicaid Disproportionate Share Hospital program. This program provided funding for hospitals to treat indigent patients. The idea behind reducing this program was the expected drastic reduction in the number of uninsured patients. The manner in which payments are delivered also changed. Now hospitals will receive two payments, one based on patient discharges and a periodic payment based on the amount of uncompensated care. Hospitals need to take into account the reduction in this source of revenue when planning future spending.

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