Healthcare is big business in the United States. The nation spends more on healthcare than any other country in the world. By 2019, $4.5 trillion, or 20.3% of the GDP will be on healthcare and related expenditures. Patients in hospitals are currently covered by private insurers more often than patients covered by Medicare, Medicaid, and the uninsured
Except for the relatively few patients that are private pay, there is a lag time from the time the patients are admitted until the hospital is reimbursed by the insurance companies for their services. Hospitals do receive some of their short-term expenses from patients through co-insurance payments and deductibles. For the most part, health care organizations need to wait to be reimbursed from insurance companies, an average of 30-45 days after services are rendered. Anticipating this delay in payment is a matter of survival for these private, for-profit, and non-profit systems (Diggs, 2012).
Military hospitals have a much different fiscal operating system. There are no uninsured patients. The reimbursement rates are more equitable and consistent than the wide disparities that exist between patients on Medicare, Medicaid, and the range of rates from private insurance companies. The funding for a military hospital is determined during the prior year and is dispersed before the beginning of the year. There is no waiting for reimbursements for insurance companies.
In the military hospital setting, when capacity is diminished, costs increase and costs decrease when capacity increases. To combat uncertainty, excess capacity is anticipated and a goal in computation. Capacity shortages are overcome with the networking of civilian hospitals and the exchange is not charging the civilian hospitals for the referrals, as is the case when civilian hospitals refer to each other. This system has proven highly effective to offset any census shortfalls, and occupancy levels are then consistent to receive adequate funding for the subsequent year. Since there is no lag time between providing services and waiting for reimbursement, the military hospitals are more fiscally stable (Fulton, Lasdon, & McDaniel, 2007).
Diggs, S. N. (2012). Health disparities and health care financing: Restructuring the American
health care system. Journal Of Health Care Finance, 38(4), 76-90.
Fulton, L., Lasdon, L. S., & McDaniel, R. R. (2007). Cost drivers and resource allocation in
military health care systems. Military Medicine, 172(3), 244-249.