Sources of Revenue Option 1
Option 1: Sources of Revenue
The 2010 HCA 10K report is located within the Securities Exchange Commission at the following Web site:
Review the Sources of Revenue section beginning on page 5 and ending on page 15.
Complete the following:
Write a 2%u0432%u0402%u201C3-page analysis of the sources of revenue.
Describe the advantages and disadvantages for each source of revenue from the viewpoint of a healthcare manager.
Determine the fixed, variable, and semivariable costs.
Use the financial reports (beginning on page 52) within the document to help you. Be sure to exhibit comprehension of the various payment models in your analysis.
Option 1: Sources of Revenue
The hospital depends on the various sources of revenues to support its operations and create wealth for its shareholders. The different sources of revenues depended on the inpatient occupancy levels, the medical and ancillary services demanded by the physicians and offered to the patients, and the prices and payment levels for the medical services. The charges and reimbursement levels for inpatient levels could vary depending on the type of service, payer or even the geographical location of the hospital. The hospital receives payment from the federal government for patient services delivered based on the Medicare program and other services.
The main sources of revenue for the hospital includes Medicare, managed Medicare, Medicaid, Managed Medicaid, Managed care, and other insurers and lastly, the uninsured persons. The revenues obtained from the managed care and other insurer’s accounts for the largest percentage of the hospital’s revenue at 53% with the lowest source of revenue being managed Medicaid at 4%.
Advantages and Disadvantages of the Sources of Revenue
The different sources of revenues for the organization have both advantages and disadvantages. Managed Medicare is used in circumstances when a private firm contracts with CMS to offer members with Medicare Part A, B, and D benefits. The advantages of Managed Medicare includes that it can be structured in different plans including HMOs, PPOs or even private fee for service. It also allows the beneficiaries to select their environment to allow the health care managers to manage the reimbursements to the plan. However, the disadvantage is that during economic downturns, the managed health plans could see a reduction in premium payments which eventually leads to the decrease in the enrollment to the health care plan.
The advantages of managed care and other plans are that it has efficient ways of paying the hospital for its services within the shortest time as possible. The hospitals also enjoy an annual increase in yields from the managed care payers. The disadvantage is that the yields are not assured to increase in the future. Regarding the managed Medicaid, it enables the hospital to increase patient enrollment that is critical. The states also take some responsibility for financing the plan boosting the revenues for the hospital. However, the program varies from one state to another causing regulatory challenge.
From the perspective of the health care manager, the Medicaid program has some advantages and disadvantages includes that the plan is approved for funding by the federal government and the states. The joint administration ensures that the hospitals receive the reimbursement in time. The approval is critical in getting volumes of patients into the pool. The disadvantages include that the reimbursement from this plan is usually lower than the normal hospital cost of services. The Economic downturn also puts pressure on the funding allocated to Medicaid and thus, the financing for the plans will reduce. The health care managers will not depend on the plan to make high revenues.
The revenues obtained from the uninsured patients come from patients mainly admitted into the emergency rooms. The advantages of the uninsured patients are to promote service to clients which could attract more patients in the future. Nevertheless, it has various disadvantages including that it lacks supportive regulations and guidance on the operation of the services to the uninsured persons. Also, only a few persons seek for medical services with the option of uninsured in the U.S.
In 2010, the total fixed costs were $12,484 million while, and the total variable costs are $5,004 million, and the semi-variable costs are $4,961 million. The fixed costs account for 55% of the overall costs incurred in the organization. The remaining 45 percent was either variable or semi-variable costs.
HCA Holdings, Inc. Sec.Gov. Retrieved from http://www.sec.gov/Archives/edgar/data/860730/000095012.
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