1. INTRODUCTION
HEALTH CARE FINANCE

2. HEALTH CARE IS A BUSINESS
3T across the world = 2.1 US
Political activity
Largest sector
Employs most people
Largest % of GDP

3. How do we know HC is a business?
A business needs to have sufficient revenue to pay all of the costs associated with creating and selling its good or services

4. Health care is different/health care is the same
Must generate cash flows, just as everyone else

5. Health care is different/health care is the same
Abundance of agency relationship
Health care is delivered by a complex mixture of government, private NFP, and private FP organization
Health care is delivered in a regulatory environment
Wider range of financing options available
Tax-exempt
Bank, Investors

6. Different, cont.
Most of the revenues received comes from third-party payers
Growing more rapidly than other sector in the US economy
Many organizations are not for profit

7. Major industries in the health care sector
Industry
What’s included
Example
Health services
Medical practice, hospitals, clinics, nursing homes, home health, hospice
Health insurance
Gov’t programs; commercial; ESHI; managed care
Medical supplies
Diagnostic equipment, medical supplies, surgical instruments
Pharmaceuticals and biotech
Drugs and other therapeutic products
Other
Educational institutions; research; consultation

8. Hospitals
Provide diagnostic and therapeutic services to individuals that require several hours (overnight) care; also provide walk- in services

9. AMBULATORY CARE Outpatient
Locations- clinics, medical practices, ER, home health, urgent care, retail clinic

10. LONG-TERM CARE
Provide care to individuals who lack all or some functional ability

11. OTHER TYPES
HOSPICE
PALLIATIVE CARE
HOME HEALTH

12. HEALTH INSURANCE
A significant portion of services are paid for by 3rd party payers (AKA insurers)
Public
Private

13. Insurance, cont. Other Organization self-insured Non-health insurance
Home
Car
Boat
Worker’s compensation
Victims of crime