Healthcare Finance Term Paper

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Healthcare Finance

Government rules:

In United States the Congress had passed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 or MMA and with this imposed a stoppage for 18 months on the starting of new physician owned specialty hospitals. At the same time, they also wanted to know the position regarding certain matters of physician owned heart, orthopedic and surgical specialty hospitals through MedPAC. The team visited sites, made legal analysis and met the share owners in these hospitals and finally presented a report to the Congress. It had also gone through the cost reports received from Medicare and inpatient claims of 2002, which was the most recent at that time. This will naturally form the basis of such hospitals being permitted or not. (Physician-owned specialty hospitals)

Findings of MedPAC:

The findings of this committee showed that:-

Physician owned hospitals generally treated patients who had less severe problems and concentrated on specific diagnosis related groups and the reason for both of this was that these were expected to be more profitable than other patients.

These hospitals do not treat as many Medicaid patients as community hospitals.

Regarding the costs of patients in these hospitals for the patients, the Medicare patients did not get benefits of lower costs though the inpatients had shorter periods of stay.

There was no appreciable impact of physician owned specialty hospitals on the community hospitals as seen in 2002, and there was also no impact on the financial performance of the community hospitals.

Most of the differences in profitability can be rectified by improving the prospective patient system for inpatients that are made by Medicare.

Thus according to the findings there are not major differences between the community hospitals and physician owned specialty hospitals in terms of costs or capability for services. (Physician-owned specialty hospitals)

Differences among types of hospitals:

We shall make comparison of the hospitals in India and USA. In India, apart from the government hospitals, there are a number of large hospitals run by trusts or large corporations. In the city of Bombay or Mumbai, the hospitals named Jaslok or Hinduja are run by trusts and Wockhardt Heart Hospital is run by a major pharmaceutical company. Even when the hospital has been promoted by a physician, still the hospital is run like a corporation as is seen in the case of Apollo Hospitals. There is now a new hospital named as Asian Heart Hospital in Bombay which has been promoted by a physician team and they have a large stake in the hospital. The team of physician is led by one Mr. Panda who is now the CEO of the hospital. These physicians have all invested their own funds, and to get more funds, they have even asked for more contributions from other physicians who are now not resident in India. The hospital is the result of a plan by these physicians in 1993-94. The hospital took about 10 years to complete. Thus one should realize that a hospital takes a long time to take shape up. (Doctors in arms)

The biggest problems in the management of hospitals come from physicians and renowned physicians are sought for empanelment by hospitals. The physicians then continually force the hospitals to upgrade their infrastructure and also charge heavy fees from the patients. At the end of the services by the physicians, it is they who get the biggest returns. It is also difficult to retain the physicians as they leave at the earliest opportunity, and this statement is from one of the promoters of the hospital, GW Capital. They are now investing money in the concept of physician managed private hospitals. This resulted in its investment of Rs 150 million or about 3 million dollars in buying a 26% stake in another hospital group in Hyderabad, in 2000 called the Care Group. That group has expanded very fast and now has over a 1000 beds in its operations in six centers. (Doctors in arms) Thus the costs of the hospitals will require about 12 million dollars for a 1000 bed operation. At the same time, not all hospitals are made with money in mind and there are hospitals in Chennai or Madras in India which have 150 physicians, 500 nurses and 371 Para-medical staff.…[continue]

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