Sources of Revenue for Hospitals

Revenue Generation and Management: Nightingale Home Care Inc. in La Mesa.

The main source of daily operation in the health care facilities is the revenue since almost all the services provided are dependent on the revenue generated hence it is important to understand the sources of the revenues and the way should be are managed. This paper will delve into the various sources that hospitals and Nightingale Home Care in La Mesa in specific often use as their reliable sources of revenue, it will also find out how the money is managed and any possible loose ends that predisposes the revenue to mismanagement.

Government aid is seen as one of the most significant source of revenue for hospitals including Nightingale. The government provides revenue in form of grants and subsidies for health care programs which helps in the running of hospitals. Though the main foundation of these grants and subsidies are the taxes that are generated from the citizens, the government also often borrows some money which forms part of its annual budget, part of which goes to the health care system. The government funding often comes in form of Medicaid and Medicare, where Medicare revenues include Medigap, Mdicare advantage and Medicare prescription drug plans (PDP)

Out of pocket direct payment has also been another source of revenue for hospitals. Patients are seen to contribute immensely to the health care revenue which ultimately takes care of the hospitals and the services provided whenever they cover the costs of their care without the help of a third party. The revenue quantities that a facility generates largely depend on the rates that the facility has set for their services.

Insurance premiums are yet another reliable source of revenue for hospitals including Nightingale. Health care insurance often operates on the presumption that the clients will be well more than they will fall ill and need medical attention hence the insurance gaining from the paid premiums than they will have to pay for the medication. The cover money that the insurers often pay to the hospitals to cover their clients often forms one of the biggest sources of revenues for the hospital.

There are individuals or organizations that choose to channel their regular funds or one off funding to particular projects or programs within their chosen hospitals. Such donations form significant part of sources of revenue for many hospitals since the donating organizations or individuals strongly believe in the services that are provided in those hospitals and would like to make them even better through their donations, or believe that through their financing, the bad services in the institutions will be made better. It is instrumental to note that such funding seldom comes by chance but the hospital administration often engages in lobbying for them within the community. It is a very unstable source of revenue since the hospital administration is not assured of the next batch of such income.

There is also the employer-sponsored coverage which acts as an insurance for the employees. This is estimated to cover more than 149 million non-elderly Americans which is 48% of the entire population. This has been over the years a source of revenue for hospitals, however, by 2020 at least 90% of the employees whoa recurrently enjoying the employer sponsored cover will be expected to move to individual cover. Under the Affordable care Act the employer will be expected to pay a stipend for employees that will help pay for the health insurance as opposed to paying for the plan themselves (Patrick M., 2015). It is worth noting that the employer as a source of insurance will still remain only that they will not be paying for the entire plan as it is now but will remain a viable source of revenue for the providers.

There is also the individually purchased private health insurance. These are plans that are made available through the new health insurance marketplace. Here, the individual may choose to pay for an insurance cover on his own from the business sources such that when he will need the medical attention the cover will help in covering for the costs accrued.

The last of these categories are the private payers who include the preferred provider organizations (PPOs), Health maintenance organizations (HMOs) and Point of service (POS) plans as well as the indemnity insurance. These are the private health care coverage and their beneficiaries may be required to pay part of the health care charges in a plan called cost sharing which includes co-pay, co-insure as well as deductible payments.

Private health insurance groups often negotiate the rates with the providers or the hospitals in order to get better discounts. However, the Medicaid hospital payment rates and the Medicare are often non-negotiable since they are set by law and the existing administrative rules. The Medicare pays the hospital a lump sum payment for each patient which is determined by the diagnostic related group (DRG) for the condition of the patient and these payments vary in every state (Florida Hospital, 2013).