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Counting the cost of healthcare reform in the US

Nurse managers in the US must consider where reimbursement payments are coming from to avoid absorbing care costs.
budgeting

Fiscal cost containment is an inherent component of any nurse managers job, regardless of practice setting.

It is well known that many nurse managers enter practice unprepared for the fiscal side of management even though understanding financial and budgeting concepts is critical to running a successful healthcare operation.

It is sometimes best to take a top-down approach. Take how reimbursement occurs in healthcare in the US, for example. The reality is that healthcare reimbursement is influenced by governmental bodies, for example through federal and state legislation, and what is occurring in the marketplace. The US healthcare reimbursement system is entrepreneurial. It is market driven, and managed care providers are key players.

Other parts of the system include federal programmes such as Medicare that covers older people and those with disabilities regardless of income, and

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Fiscal cost containment is an inherent component of any nurse manager’s job, regardless of practice setting.

It is well known that many nurse managers enter practice unprepared for the fiscal side of management even though understanding financial and budgeting
concepts is critical to running a successful healthcare operation.

budgeting
Understanding financial structures is crucial for healthcare management
Picture: iStock

It is sometimes best to take a top-down approach. Take how reimbursement occurs in healthcare in the US, for example. The reality is that healthcare reimbursement is influenced by governmental bodies, for example through federal and state legislation, and what is occurring in the marketplace. The US healthcare reimbursement system is entrepreneurial. It is market driven, and managed care providers are key players.

Other parts of the system include federal programmes such as Medicare that covers older people and those with disabilities regardless of income, and state and federal programmes such as Medicaid, and assistance from charities.

In contrast, many countries, such as Switzerland and Canada, have single-payer, government-sponsored reimbursement systems. Some use a mandated form of insurance where the government may sponsor some of the funding although every citizen must obtain healthcare coverage in a defined time frame. 

Major federal legislation affects healthcare reimbursement. The two most significant examples in the US are the Medicare Modernization Act of 2003, passed during George W Bush’s presidency. A significant component of this was the implementation of a prescription drug plan for Medicare recipients.

The other most significant piece of legislation is the Patient Protection and Affordable Care Act of 2010, passed during Barack Obama’s presidency, which:

  • Extended insurance coverage for young adults up to the age of 26.
  • Ended lifetime limits on insurance coverage.
  • Ended preconditions for securing an insurance plan.
  • Covers emergency services when needed.
  • Expanded Medicaid coverage in states that would agree to it.
  • Established a marketplace to get insurance coverage at a reasonable cost if not insured.
  • Established a penalty for not having an insurance plan.

The bottom line

In the US, every nurse manager needs to consider the unit they manage as if it was their own business. It should be managed judiciously and should turn a profit.

Managers need to know what sources fund the care on their units for the patient population the hospital covers and what percentage of payment comes from which payer. For example, 50% of my patient population is reimbursed by Blue Cross, 30% by Medicare and 10% by Medicaid – and 10% have no health insurance and are not eligible for other healthcare coverage.

Social services may need to explore how those who cannot afford health insurance but are ineligible for any funding can be covered by charities, and there can then be some reimbursement from this patient population and less financial loss for healthcare institutions.

No one thought there would ever be hospital closures in the US, but the reality is that many hospitals have had to adapt to the funding implications of healthcare reforms.


References

  • Rundio A (2016) The Nurse Manager's Guide to Budgeting and Finance. Second edition. Sigma Theta Tau International Publications, Indianapolis IN.

About the author

Al Rundio

Al Rundio is associate dean of nursing, chief academic nursing officer and clinical professor of nursing at the College of Nursing and Health Professions, Drexel University, Philadelphia PA

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