Financial Operating Changes in Healthcare System Reform in the United States

Introduction

The United States has one of the unique and most complex healthcare systems in the world. Its notable features include the absence of central governance with multiple players involved, inequality in access which is based on the type of insurance coverage, and dependence on market conditions and legal issues (Shi & Singh, 2015). The question of its effectiveness relates to the overall population health; however, most of the elements of this system could not be considered without financial context. When speaking about future reform, financial operating changes play arguably the most significant role in cost optimization and efficiency improvement.

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Main body

The financial context appears to be relevant on both individual and country levels. According to Shi and Singh (2015), “the complexity of financing is one of the primary characteristics of medical care delivery in the United States” (p. 136). Financing not only provides access and employs various ways of paying for health care services, but also strongly affects the entire healthcare system. As a part of the financing, the insurance facilitates consumer behavior and provider-induced demand indirectly influences medical technology development and affects the resulting health care expenditures (Shi & Singh, 2015). Moreover, the efficiency of health care relates to financing as well.

The level of efficiency depends on the interaction between health care costs and the degree of its effectiveness. According to Runciman, Merry, and Walton (2017), “increasing efficiency could imply reducing expediture without reducing safety and effectiveness, or increasing effectiveness and safety for a given level of expediture” (p. 6). Either way, financial operations play a key role in the perspective improvement and appear to be a major point of influence for increasing the overall system efficiency.

The history of healthcare system transformation contains many significant milestones, and the Affordable Care Act (ACA) is one of them. President Barack Obama signed it on March 23 in 2010 starting a sequence of profound changes. Among its accomplishments is an increased level of insurance availability and the expansion of health insurance (Blumenthal, Abrams, & Nuzum, 2015). Since its execution, the uninsured rate has reduced by 43% leading to 20 million more people attaining health insurance (Obama, 2016, p. 527). The ACA also induced the beginning of the health care delivery reform.

Medical services provided in hospitals displayed a substantial improvement. According to Sylvia M. Burwell who served as the United States Secretary of Health and Human Services during the Obama administration, “there were 1.3 million fewer adverse events between 2011 and 2013 than there would have been if the rate of such events had remained unchanged, and an estimated 50,000 deaths were averted” (Burwell, 2015, p. 898).

Also, the growth of health care expenditures was at its historic lows: during the period from 2010 to 2013, health care expenditures in the United States showed an increase at the rate of 3.2% per year compared with 5.6% per year during the previous 10 years (Blumenthal et al., 2015, p. 2456). Therefore, changes brought by the ACA confirm that a positive reform of the United States’ extremely complex healthcare system is possible.

The ACA was the first law to achieve substantial results in a transition from a volume-based to quality-based approach in the process of health care delivery. According to Blumenthal et al. (2015), “the ACA creates Medicare payment incentives for hospitals and physicians to improve their performance on a variety of quality and cost metrics other than hospital-acquired conditions and readmissions” (p. 2453).

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Furthermore, due to the Medicare Shared Savings Program created under the ACA, providers who create quality-focused organizations and facilitate the improvement of the health services quality can retain a part of any savings achieved (Blumenthal et al., 2015, p. 2454). Therefore, such an initiative can induce financial operations optimization from inside the system. Despite some critics toward the intrusiveness of the ACA on individual freedom, any future reform would not be possible without this law.

The Department of Health and Human Services (HHS) develops further ways of healthcare system transformation based on the ACA achievements. For example, it is expected that 50% of all Medicare payments would be connected to the quality of medical services by the end of 2018 (Burwell, 2015, p. 897). One of the strategies of a future reform implies the creation of a quality-focused hospital environment. It is implemented through alternative payment models which include accountable care organizations (ACOs). According to Song et al. (2014), an estimated amount of 18 million people in the United States have insurance coverage in which their physicians belong to ACO arrangements (p. 1705).

For example, the payment reform was introduced in Massachusetts in 2009 and resulted in the lower overall growth of expenditures and greater improvements in medical services quality (Song et al., 2014, p. 1705). The success of the Massachusetts reform suggests that the implementation of quality incentives may foster improvement in practice leading to reduced spending and higher health care quality. New payment models would be also beneficial for specialty care, such as oncology care and treatment of other chronic conditions.

The second strategy of healthcare system transformation relates to the improvement of the delivery system aimed to achieve better coordination between providers, which could lead to greater attention to population health on an individual level. For example, readmission rates demonstrate a general reduction due to a national program focusing on patient well-being after discharge from the hospital (Burwell, 2015). Ongoing changes in financial operations also include the investment of $800 million to provide support to 150 thousand healthcare workers to improve medical care delivery and facilitate the employment of alternative payment models (Burwell, 2015, p. 898). Therefore, a future reform should maintain and strengthen such support in all states.

A low level of medical cost transparency appears to be one of the major issues of the existing healthcare system. Due to an absence of equity in access and the generally decentralized nature of health care in the United States, patients tend to feel highly uninformed regarding their medical spending. HHS makes efforts to increase the level of healthcare transparency. In particular, the Medicare website provides an opportunity for data comparison on the costs and charges for hundreds of inpatient, outpatient, and physician services (Burwell, 2015). An ability to access such important information would enable patients to make more confident and reasonable choices.

One of the ACA achievements was the establishment of the Patient-Centered Outcomes Research Institute (PCORI) working with the Agency for Healthcare Research and Quality. The main purpose of the PCORI was to gather practical information for both doctors and patients (Burwell, 2015). Similar measures should be developed and implemented to provide citizens with relevant information on their health, existing options, and available healthcare plans. Moreover, being a core of the whole healthcare system, patients should be more involved in the process of its organization and transformation to ensure that their needs are noticed and adequately addressed. Therefore, technical methods to collect the patients’ feedback and views should be developed and utilized.

The third strategy of healthcare system improvement relates to the adoption of modern information technology (IT) methods, such as electronic health records (EHRs). According to Burwell (2015), “the proportion of U.S. physicians using EHRs increased from 18% to 78% between 2001 and 2013, and 94% of hospitals now report use of certified EHRs” (p. 898). Also, EHRs utilization might allow establishing a more thorough control over the medical services quality compliance. A future reform should facilitate further integration of health IT standards with payment policy leading to a substantial improvement of health care transparency. Ultimately, there is a need for a unified IT system for containing, providing, and analyzing medical information on a country level.

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One more issue needs to be taken into account: financial transformation may encounter various difficulties in different areas of the medical industry. As President Obama stated in his report, successful work has been done with some healthcare organizations and groups “to redirect excessive Medicare payments to federal subsidies for the uninsured” (Obama, 2016, p. 530). However, the pharmaceutical industry still contests any attempts to change drug pricing.

For example, Kantarjian, Steensma, Sanjuan, Elshaug, and Light (2014) reported that in 2011, according to the estimate made by the Canadian government’s Patented Medicine Prices Review Board, American customers paid 100% more for patented drugs than customers in other countries. High prices contribute to the reasons for discontinuing needed treatment for up to 20% of patients (Kantarjian et al., 2014). It is necessary to address such disparity through a future reform; therefore, proposed strategies should envisage different influential measures for every critical player in the healthcare industry.

Recent political events, including the presidency of Donald Trump, reinforced some level of uncertainty in the process of healthcare system improvement aggravating decentralization and organizational estrangement within the medical industry. The ACA repeal would impact the health insurance availability for women; furthermore, individuals with low income that have Medicaid public insurance coverage might lose health insurance completely (Grossman, 2017). Hopefully, the success achieved by the ACA and the implications for future paths of improvement would be retained. Meanwhile, financial optimization of the healthcare system maintains the position of one of the most crucial challenges in the United States.

Conclusion

There is a number of promising healthcare reform strategies, such as the creation of a quality-focused hospital environment with the help of ACOs, achievement of better coordination between health care providers, and improvement of medical costs transparency through various IT innovations. However, their success depends on the ability of the government not only to retain but foster these first steps to a positive transformation.

So-called traditional American values and mostly private infrastructure of the existing healthcare system effectively opposed previous transition attempts. Many factors should be considered when developing a future reform, including those which are impossible to predict, such as changes in the United States economy and employment. Nevertheless, the ACA provided a firm ground for the required transformation, leading to better access and improved health outcomes for the American population.

References

Blumenthal, D., Abrams, M., & Nuzum, R. (2015). The Affordable Care Act at 5 years. The New England Journal of Medicine, 372(25), 2451-2458. Web.

Burwell, S. M. (2015). Setting value-based payment goals – HHS efforts to improve U.S. health care. The New England Journal of Medicine, 372(10), 897-899. Web.

Grossman, D. (2017). Sexual and reproductive health under the Trump presidency: Policy change threatens women in the USA and worldwide. Journal of Family Planning and Reproductive Health Care, 43(2), 89-91. Web.

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Kantarjian, H., Steensma, D., Sanjuan, J. R., Elshaug, A., & Light, D. (2014). High cancer drug prices in the United States: Reasons and proposed solutions. Journal of Oncology Practice, 10(4), 208-211. Web.

Obama, B. (2016). United States health care reform progress to date and next steps. The Journal of the American Medical Association, 316(5), 525-532. Web.

Runciman, B., Merry, A., & Walton, M. (2017). Safety and ethics in healthcare: A Guide to getting it right (1st ed.). London, UK: CRC Press.

Shi, L., & Singh, D. A. (2015). Essentials of the U.S. health care system (4th ed.). United States: Jones & Bartlett Publishers.

Song, Z., Rose, S., Safran, D. G., Landon, B. E., Day, M. P., & Chernew, M. E. (2014). Changes in health care spending and quality 4 years into global payment. The New England Journal of Medicine, 371(18), 1704-1714. Web.

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StudyCorgi. (2021, October 13). Financial Operating Changes in Healthcare System Reform in the United States. Retrieved from https://studycorgi.com/financial-operating-changes-in-healthcare-system-reform-in-the-united-states/

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"Financial Operating Changes in Healthcare System Reform in the United States." StudyCorgi, 13 Oct. 2021, studycorgi.com/financial-operating-changes-in-healthcare-system-reform-in-the-united-states/.

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StudyCorgi. 2021. "Financial Operating Changes in Healthcare System Reform in the United States." October 13, 2021. https://studycorgi.com/financial-operating-changes-in-healthcare-system-reform-in-the-united-states/.

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StudyCorgi. (2021) 'Financial Operating Changes in Healthcare System Reform in the United States'. 13 October.

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