Health Care - The Hospital Sector (HCM300 Portfolio)

Health Care
Kelly Shelton
HCM-300
12/12/12
Health Care - The Hospital Sector
Introduction
The chosen sector with regard to health care is the Hospital Sector. This paper covers the historical development of the hospital sector and the role it plays in health care delivery. Moreover, it also covers the main challenges the Hospital sector encountered before the Patient Protection and Affordable Care Act (PPACA) was enacted, and the potential challenges it is likely to face after the passage of the health care reform law as well as associated regulations. Moreover, the paper also analyzes the potential risks and benefits of the health reform law with regard to the hospital sector, and covers the current overriding issues in health care for instance, access, cost and quality. Therefore, the research question to be answered is: What were the challenges encountered by the hospital sector before the enactment of PPACA, and what potential challenges/risks and benefits the sector faces after the passage of the law?
Hospital Sector’s Historical Development and Current Role in Health Care Delivery
According to Wallis (2010), hospitals in the United States account for more than one-third or $715.4 billion of the country’s expenditures on health care, and the Hospital sector employ nearly 4.7 million people. This sector started in the pre-industrial societies whereby, hospitals were operated simply as charitable and religious institutions. Wallis (2010) added that before the end of the 19th century, the goals of the hospitals included taking care of, and housing the sick people who were poor, insane or homeless. Towards the end of the 19th century however, hospitals began to redefine themselves as medical science institutions rather than institutions of social welfare. At this time also, hospitals began to employ health care professionals rather than charity workers. The hospital sector has since transformed into the current sophisticated health facilities mostly due to advances in medical sciences, and the demands of the fast developing and industrializing societies that resulted in huge concentrations of different people into urban areas (Wallis, 2010).
The hospital sector in the United States, which is a subsector of the social assistance and health care industry, provides inpatient health services, and most of these health services can only be provided using specialized equipment and facilities (Bell, 2012). The health services offered include complete medical care that ranges from continuous nursing care to surgery to diagnostic services. Some hospitals in this sector focus only on treating cancer patients, military veterans, children or the mentally ill. Moreover, these hospitals have been shifting to outpatient care from inpatient mainly due to improvement in technology (Bell, 2012). Majority of facilities in the hospital sector are privately owned, while others are federal owned, state-owned or owned by local governments. The health care expenditures in the United States exceeded $2.5 trillion in 2010, and the hospital sector plays a very crucial role in America’s health care system since it consumes the largest share of financial resources spent on health care. The hospital sector has been affected by the recent trends especially with regard to health reform. It has experienced major structural, policy and economic changes. These changes brought about by the health reform have affected the way hospitals operate and the way clients access healthcare services. Nearly one-third of hospitals in the United States are classified as rural (Chandra, Kumar and Ghildayal, 2011).
Challenges and Issues Prior to the Health Care Reform
There were several issues and challenges the hospital sector faced before the enactment of the PPACA reform law. The first was financial challenges mainly because of limited access to capital. According to Barrie (2010), there was a reduction in hospital expenditures as a portion of all the healthcare expenditures, which had been shrinking over time. This reduction in hospital expenditure was attributed mainly to low reimbursement rates and rising costs of health care. This significantly affected the sector’s operations, and some hospitals even closed their operations because of rising costs and reduction in revenue. Competition among hospitals is the second issue, whereby there are very many hospitals offering the same services. However, this has been beneficial in the long run since stiff competition enables hospitals to improve the quality of their services, which in turn is beneficial to the customers (Barrie, 2010).
The growing numbers of the uninsured individuals and rising debts were other challenges. A significant number of uninsured low and middle-income families who could not afford expensive premium health insurance sought health care in hospitals, which they could not afford (Barrie, 2010). This in turn led to these hospitals offering health care services that were not paid for by the patients, and the hospitals ended up with big, increasing debts and inability to fund their operations. Another issue is the shortage of workers and competition with and for physicians. The sector experienced a shortage in skilled labor, especially physicians who also ran their own clinics hence competing with the hospital for customers. Therefore, because of this shortage in labor, various hospitals competed for workers, more so physicians, and this labor shortage was a big issue the hospital sector faced (Bell, 2012).
Lack of standardization was another issue, and it resulted to hospitals incurring significant costs. It happened mostly because providers ordered unnecessary tests or they overused limited hospital’s resources whilst the hospital accepted fixed rates for procedures. With declining Medicare reimbursement, there was the need for managers in the hospital sector to determine how to standardize their practices across the entire hospital sector. Consolidation was also an issue and it involved acquisitions and mergers. Several hospitals consolidated their operations in order to lower costs through levering on economies of scale (Bell, 2012).
Moreover, the divide between non-profit and for-profit facilities was an issue prior to the health reform. This challenge faced the hospital sector since some non-profit hospitals shifted their operations to profit making in order to take advantage of the opportunities in private facilities. An example is Ascension, which used to operate all its facilities as non-profit, but recently opened a for-profit division (Barrie, 2010). Implementing Information Technology (IT) was another issue before the passage of the reform law. Hospital systems rushed to implement IT in order to get stimulus support. Some facilities even sacrificed substantial amount of capital to attain a moderately small initial stimulus support. IT is very necessary for facilities in this sector since it helps to maintain compliance, standardize care and manage populations. The final issue was advances in technology, which resulted in shorter hospital stays and more procedures being performed in the physician’s offices or clinics, rather than in hospital settings (Bell, 2012).
Sector Specific Challenges after passage of the Healthcare Reform
According to Saul (2010), the PPACA is a law enacted in 2010 and plays a significant role in the regulatory overhaul of America’s health care system. This is because it aims to reduce the number of the uninsured and decrease the overall costs of healthcare, and hence improve access to health care and making it more affordable to all Americans. The reform law provides subsidies, tax credits and mandates to workers and employers in order to increase health care coverage rate. Insurance companies will be required to not only offer the same rates, but also cover all applicants without considering any pre-existing conditions. All Americans starting 2014 will be required to have health insurance. Since the enactment of the PPACA reform law in March 2010, the hospital sector has encountered various challenges. Soul (2010) stated that the main challenges include the implementation of the Healthcare reform, patient safety and quality, care for the uninsured, patient satisfaction, governmental mandates, personnel shortages, and technology and hospital-physician relations.
Sage pointed out that the sweeping third-party reimbursement and regulatory changes are a challenge to this sector since there is now a growing focus on increasing quality, reducing cost and adjusting to payment structures that are based on outcomes (2011). Another challenge is with regard to the provision of health insurance coverage to everyone in the United States. PPACA’s mandates and exchanges have excluded illegal immigrants and thus leave many people uncovered, and this has a direct effect on hospitals. Additionally, many PPACA provisions demand expanded reporting requirements in order to promote healthcare quality. However, there will likely be more reimbursement consequences, and this affects the hospital sector (Sage, 2011).
The other challenge is the uncertainty that surrounds the healthcare reform. For instance, more than 25 states are challenging the constitutionality of the reform law, especially the individual insurance mandate, and this directly affects hospitals. The insurance cover providers and Obama administration have been clear in pointing out that removing the mandate would seriously tangle the other provisions in the reform law (Sage, 2011). The other challenge is with regard to the Hospital-Acquired conditions whe...