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In: Finance

How effective are current organizational financial models within the health care industry? Please be specific with...

How effective are current organizational financial models within the health care industry? Please be specific with your response!

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Expert Solution

Financial models in the health sector are a subgroup of the overall set of financial models. They describe the expenditure and financing of the national health care delivery system and permit the projection of the future financial status of the system, provided that future income and demand resemble those assumed in the model. They provide a mapping of the complex interactions between financiers, third party financial intermediaries, providers and beneficiaries in the healthcare sector.

A financial model can help hospitals and health systems prepare for and make a successful transition to accountable care. A good financial model is comprehensive, including enrollment and claims data, hospital financial data and local market condition information. It arms hospitals and health systems with predictive insight to make decisions about strategic next steps and investments needed to transform their organisations, reshape revenue models and make money in a value based care model.

More specifically, a financial model allows hospitals and health systems to analyze different investment scenarios.

For example- a hospital may want to invest in care managers as part of their ACO. The model would show the impact of that investment.

The organisation can then tailor investments to achieve the desired outcome.

Putting together a financial model can make the challenging transition to accountable care a little easier for hospitals and health systems.

4 ways financial modelling helps-

1. Anticipate case mix change

2. Leverage competitive advantages in the market.

3. Understand the impact of a specific contract.

4. Communicate better witj physicians.


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