The healthcare system in the United States is continually changing due to the rising cost of health and remuneration demand. Due to these changes, there is a need to establish effective and efficient management of financial resources. In healthcare, financial management deals with managing money and risk to achieve overall organizational goals. The major reason for high healthcare costs in the US is the failure by the management and the insurance providers to maintain a reasonable price, and this compromises the affordability and accessibility of healthcare services. In healthcare settings, the financial management personnel are responsible for evaluating, planning, and crafting long-term investment decisions, budgeting, accounting, and working capital. The national government's spending keeps on rising every year, wherein 2018, the cost of healthcare in the US accounted for more than 18% of the gross domestic product. Although several strategies have been established to control the rising cost of healthcare, it is anticipated that the cost will keep on increasing. Due to high costs, many patients do not access the recommended care services, thus increasing chronic, cancer, and diabetes conditions (Shanks,2016). The outdated fee-for-service model is the major cause of the high cost of healthcare.
1. Propose three fiscally sustainable strategies for Seamus Company from the perspective of a CFO moving away from a fee-for-service model to an MCO model
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1 a. Recommend a plan to carry out each of the three sustainable strategies from part A1
A shift to health maintenance organization (HMO) is one of the most effective fiscally sustainable strategies that Seamus Company could apply. HMO is an MCO model that will aid Seamus to end the fee-for-service delivery model currently applied. HMO plan values the benefit of treating diseases and establishing preventive care, especially for communicable diseases (Gapenski, 2013). The adoption of the HMO model can reduce the overall cost of healthcare due to its effective care that aids in minimizing disease burden. HMO model provides a high level of accountability and coordination (Bosko & Hawkins, 2016). As noted in Seamus Company, most employees do not go for a check-up; they only go to the hospital when they fall sick, compromising initiatives for disease prevention. An HMO, patients are encouraged to regularly visit their primary physicians before getting medical assistance from another level of services.
The second recommended sustainable strategy is the adoption of the Preferred Provider Organization (PPO). Preferred Provider Organization is a suitable strategy for keeping costs low for all members provided they stick within the network. Also, PPO is an effective strategy for managed care plans ( Plomondon et al., 2007) . Members are allowed to see a specialist without waiting for a referral. It means that patients will save on additional costs required in booking appointments when seeking referrals. Also, this strategy grants members the freedom to choose their preferred care providers and visit other specialists outside their networks as long as one is willing to pay extra cost.
The third alternative sustainable strategy is implementing Point Of Service (POS), a combination of PPO and HMO models. POS emphasizes preventive care, especially for terminal conditions, which are costly in the long run. This model is expensive compared to HMO and PPO, but it allows members to pay a higher deductible to seek medical help from outside. A high amount is saved when members use hospitals and healthcare providers since the network service lacks deductibles.
b. Discuss two financial management principles of Seamus Company that would support your recommended plan from part A1
The principle of financial management is essential for Seamus as it moves from a fee-for-service model and transitions to the recommended MCO models. First is the principle of cost, which involves any product or service that Seamus spends on. For Seamus to be financially successful, it needs to minimize the cost ( Plomondon et al., 2007) . The other important principle that would support the above MCO recommendations is control. Seamus Company needs to learn how to effectively control its financial and physical resources to protect its future. The selection of suitable MCO enables Seamus to minimize its cost and improve healthcare coverage for its employees.
c. Discuss how the strategies from part A1 align with Seamus Company's goals of reducing the costs of the company's health insurance plans
The three strategies selected in part A1 are essential for Seamus Company to achieve its goals and help reduce the high cost spent on the insurance plan. Fee-for-service currently used by Seamus is an outdated method that hurt both employees and Seamus bank account due to huge cost. A fee-for-service payment system allows providers to request unnecessary tests and appointments to generate higher income ( Joseph, 2017) . Also, the Fee-for-service system does not provide value-based or preventive care; hence the Seamus Company is likely to pay for future health problems.
2. Choose one of the strategies from part A1 to analyze the use of increased service benefits for Seamus Company by doing the following:
Discuss the healthcare utilization risk strategy that Seamus Company may face
The focus of Seamus Company is to change from a fee-for-service model that is used and adopt managed care organizations that will save cost and increase quality service delivery. As the Chief Financial Officer (CFO) of Seamus Company, I have decided to settle on Health Organization Model (HMO) since it seems more suitable and applicable for reducing cost and providing quality care services to employees. HMO model help in estimating the amount of service that used t be assumed by the fee-for-service model. According to Gapenski, the fee-for-service model failed since the insurer bears all utilization risk by paying an extra cost.
b. Describe three financial benefits to Seamus Company with the implementation of increased service benefits
Seamus Company draws a range of benefits by implementing an increased service. First, Seamus Company gains financial benefit due to a reduction in the number of days employees take when they request sick offs. When Seamus Company gives an employee sick off day, the company has to pay extra cost to cover their position. Frequent absenteeism also costs the organization due to a decrease in the production rate and lack of continuity. The second financial benefit is a reduction in the overall long-term costs of healthcare. HMO provides preventive care services like wellness check-ups, cancer screening, flu shots, and others that detect illness and also reduce the likelihood of future complications that might require intensive care, which is costly. Another financial benefit is boosting efficiency. Workplace efficiency is improved by ensuring employees' wellness which results in high productivity.
c. Describe three potential financial drawbacks to Seamus Company with the implementation of increased service benefits
Seamus Company could also face some financial drawbacks after increasing service benefits for its employees. One major drawback is an increase in time off from work by many employees. For employees to benefit from these services, they must request more time off the work schedule to visit their primary physicians and other specialists. Some employees might even extend time off to attend to other personal benefits will leaving their positions and tasks at the organization unaccomplished. Another disadvantage is low employee engagement. Seamus Company might pay for extensive service, yet some employees might show unwillingness to participate in those services. Implementation of increased services comes with extra cost. Thus, the company will get financial loss if it pays for services, yet employees are unwilling to use them. For instance, the company might pay for employee's cancer screening annually, yet most employees refuse to participate in the screening. It means the company will have spent high costs on services that are not utilized. The third drawback, some employees might take advantage of increased services benefits to get extra services that Seamus Company has not budgeted for. It means that the company will have to pay more money than those set aside for these service benefits, affecting other sectors.
d. Explain how an employee’s increased usage of these service benefits can be beneficial to Seamus Company
Seamus Company will benefit when employees make use of the service benefits extended to them. First, the company will create a healthy workforce, leading to high production and reduced medical and absenteeism costs. According to Gapenski (2013), there is a significant relationship between employee wellness and financial success. When employees report to work physically and psychologically wealthy, Seamus management will have confidence in them and will be assured of their high productivity. When employees are healthy, they only request for few off-hours, and when they return to work, they ensure they deliver maximum productivity compared to unwell employees. A reduction in employee turnover also means high productivity for the company. Organizations invest highly in employees during hiring, training, and experience, thus view them as high assets.
3. Analyze external healthcare partnerships and their financial benefits by doing the following:
a. Discuss two financial benefits from external healthcare partnerships
As the healthcare system continues to get more complex and consumers continue to demand more accessible, accountable, and affordable services, healthcare institutions have begun to see the need for forming external healthcare partnerships. Partnership and alliances are being formed in communities across the US as healthcare institutions improve quality care and extend their organizational brad unto strategic positioning. While most of these partnerships and alliances create value to the patients, they also bring a range of financial benefits to the community (Knox, 2019). Partnering with external organizations allows better usage of resources which saves on cost. The partnership allows organizations to effectively locate people and other resources and focus on achieving financial targets. Another benefit that Seamus can draw from an external partnership is a reduction in the amount of time that employees visit the hospital. Through holistic medical care, employees are given an alternative to traditional healthcare treatment. In addition, Seamus company can limit the amount of time employees visit the hospitals, which saves on cost. The external partnership also enhances preventive care services ( Qaisar et al., 2018) . Partnering with institutions like gyms, health, nutritionists, health and fitness lecture classes, and others help employees change their health status leading to improved wellness. When individuals maintain a healthy body, they minimize the potential for future costs. For instance, attending gyms and other physical training keeps one healthy and eliminates the future risk of becoming obese or developing cardiovascular complications. External healthcare partnership encourages employees to lead a healthy lifestyle while observing their well-being.
Discuss two financial drawbacks of external healthcare partnerships
Although most of these partnerships and alliances create value to the organization, they also bring some disadvantages. One disadvantage is the high cost required to pay for these extra services. Despite the huge cost sent for these services, some employees may not be interested in utilizing them; Seamus will use high cost and gain minimal benefit from them. Another disadvantage is that these services do not guarantee the total well-being of the employees. Even after receiving these extra services, they will still visit hospitals and pay extra costs. While eternal partnerships like gym, education, and health and nutrition guides can improve health status, many diseases are genetic. Gyms are only meant to improve well-being and reduce the risk of diseases but cannot prevent individuals from becoming ill. Therefore, external healthcare partnership leads to additional cost on top of other expenses.
Determine whether an external healthcare partnership would be beneficial for Seamus Company
As the Chief Financial Officer of the Seamus Company, I am responsible for thinking on suitable innovative strategies that will minimize cost. After assessing the benefits and drawbacks of external healthcare partnerships, I have decided to implement the plan at Seamus Company to improve the wellness of employees and improve their health status. When employees' health improves, the organization will incur low costs in the long term and create an effective atmosphere for Seamus Company to operate.
i. Justify your determination of whether an external healthcare partnership would be beneficial for Seamus Company
External healthcare partnership is a vital decision for Seamus Company that will benefit both employees and the company. Implementing external healthcare partnerships improves employee's health behavior more than when receiving healthcare from a single provider. External methods have proven effective in keeping employees healthy since it reduces the likelihood of contracting diseases and reduces stress and depression. When employees have good health, they feel relaxed and energized to perform at their best, leading to high overall production ( Qaisar et al., 2018) . When employees engage in other activities outside their daily routine, they increase their work morale and engagement. Seamus Company's decision to invest in employees’ health will create a large overall return hence worth to be invest. The future of Seamus Company depends on how employees are treated. When employees have good health, the company will be assured of high returns in the future due to low turnover and maximum production.
References
Bosko, T., & Hawkins, C. (2016). Evolving physician reimbursement structures: Moving the medical group to value-based success. Journal of Healthcare Management , 61 (3), 176-180.
Gapenski, L. C., & Association of University Programs in Health Administration. (2013). Fundamentals of Healthcare Finance . Health Administration Press.
Joseph, S. (2017). Transitioning from fee-for-service to value-based health care model (Doctoral dissertation, Utica College).
Plomondon, M. E., Magid, D. J., Steiner, J. F., MaWhinney, S., Gifford, B. D., Shih, S. C., ... & Rumsfeld, J. S. (2007). Primary care provider turnover and quality in managed care organizations. American Journal of Managed Care , 13 (8), 465.
Qaisar, M. N., Mariam, S., & Ahmad, F. (2018). Employee wellness as predictor of productivity from public sector management perspectives: Conditional process analysis. NUML International Journal of Business & Management , 13 (2), 104-116.
