The financial management of the healthcare setting determines the success and wellbeing of healthcare organizations. Because of this it is important for these organizations to follow tried-and-true elements of financial management. The four recognized elements of financial management according to Judith Baker and R.W. Baker (2011) are planning, controlling, organizing and directing, and decision making (p. 5-6). The most important of these is planning. Planning involves identifying the organization’s objectives, and then outlining the pathway to accomplishing these objectives. Without appropriate planning and clearly defined goals it will be nearly impossible for an organization to measure any kind of progress or digression. Without goals, the organization’s resources will not be able to be utilized to their fullest extent, and the day-to-day operations will fall into disorder.
There are several ways in which the Affordable Care Act (ACA) has already significantly impacted the financial management of healthcare organizations. Some of these things include linking payment to quality outcomes, requiring that “85% of all premium dollars collected by insurance companies are spent on health care services (U.S., 2011),” increasing payments for rural health care providers, and the right to appeal insurance company decisions.
These changes will influence the financial and clinical processes of an organization. They have been called “transformational” because they are designed to change the care delivery systems that are already in place (Mulvany, p56). According to Chad Mulvany (2010), “Over the long term, the legislation has the potential to radically reshape the care delivery system (p.58).” Whither this will prove to be a positive or negative transformation is yet to be seen, because even though much of the ACA has already been implemented the long term effects will take many more years to be realized.
Financially, many of the way we manage healthcare must be dramatically altered in order to comply with the ACA. There will be a learning curve as organizations adjust and some will suffer and some will prosper.
Baker, J., & Baker, R. (2011). Health care finance: Basic tools for nonfinancial managers (3rd ed.). Sudbury, Mass.: Jones and Bartlett.
Mulvany, C. (2010). Healthcare Reform: The good, the bad, and the transformational. Healthcare Financial Management, 64(6), 52-59.