Question

discuss the role of finance in the healthcare services industry. Has this role increased or decreased in importance in recent years? What is the impact of the Affordable Care Act (ACA) on the role of finance?

Answer 1

Role of finance in the health care service industry:-

Until the 1960s, financial management in all industries was generally viewed as descriptive in nature, its primary role being to secure the financing needed to meet a business’s operating objectives.

But today, finance plays a much larger role in the overall management of a business.

Now, the primary role of financial management is to plan for, acquire, and utilize funds (capital) to maximize the efficiency and value of the enterprise. Because of this role, financial
management is known also as capital finance.

Role of finance in healthcare organizations is to manage money and risk in a way that helps to achieve the financial goals of the organization.

When a healthcare organization has strong and organized financial management plans, they're able to provide efficient healthcare to all their patients.

The financial team has a hierarchy, but in general, input is taken from all the managers at all levels when it comes to big investments in the business. Long-term investment decisions involve analyzing implementation strategies and determining how the investment might affect the financial future - for the better or for the worse.

The financial team must also raise funds for expenditures. This might involve things like fundraising, grants, loans, or using internal funds.

Because of the diverse advantages, role of finance has increased in the recent years.

The Affordable Care Act was a vision of former President Barack Obama of a better system of healthcare delivery and execution. The campaign promises of sweeping healthcare

reform were made manifest in what is the Patient Protection and Affordable Care Act.

Impact of ACA on the role of finance:

• Patient protections for all new plans: This provision protects patients’ choice of doctors by allowing plan members to pick any participating primary care provider and ensuring access to emergency.
• Extension of dependent coverage for young adults: Young adults can stay on their parents’ insurance until age 26, even if they are not full-time students.
• “First-dollar” prevention benefits: All new health insurance policies must cover preventive care and pay a portion of all preventive care visits.
• Restricted annual limits on coverage: This eliminates any limits or maximum payouts from the health insurance company.
• Prohibits rescission: The ACA prohibits rescission when a claim is filed, except in the case of fraud or misrepresentation by the consumer.
• Federal subsidies for health insurance coverage: People buying insurance on their own get subsidies to help them pay their monthly insurance premiums. Premiums are allocated on a sliding scale, as determined by income. Any individual earning over 400% of the poverty level ($43,320 in 2009) doesn’t qualify for subsidies.
• Small business tax credits: When health insurance exchanges are operational, tax credits are up to 50% of premiums.
• No restrictions on pre-existing conditions: Insurance companies are required to provide health insurance to any adult aged 19 to 64 who applies for coverage.

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