19 Jun Compare and contrast the key conflicting financial values identified by your peers against your own initial post. Identify one other essential value conflict your peer

Terica Discussion:

Public and private hospitals regularly operate under different financial values and occasionally have different management and operation processes. Three conflicting financial values for public facilities are financial stability and quality of care, equity and access to services, and cost-shifting and pricing. Because public hospitals are government facilities, public resources usually finance them and could face challenges in maintaining financial stability. Financial stability is fundamental to supporting dependable organizations and resources for quality improvement (Dubas-Jakóbczyk et al., 2021). Public hospitals often struggle with access to care due to large patient populations. This struggle can lead to increased wait times, overcrowding, and a strain on resources, all of which could affect the quality of care. Public hospitals also may participate in cost shifting. Cost shifting is when organizations increase the payer rates of the private payers to make up the difference for public payers. This process can lead to higher costs for the private payers and possibly influence the hospital's financial operations (Gee & Waldrop, 2022).

The three conflicting financial values in private hospitals are financial incentives and overutilization, regulatory and payment policy instruments, and financial performance and quality of care. In a for-profit healthcare system, there may be financial incentives for overutilization of services. For instance, if a physician schedules or performs additional services on their patients, the medical provider could be incentivized to increase those services to boost their financial return. This issue can cause financial conflict for the patients, leading to higher healthcare costs for all. Private hospitals can also face challenges with payment rates and regulatory policy instruments, which are crucial to ensure efficiency, equity, and quality in healthcare systems that share public and private medical providers. Currently, most private hospitals participate in value-based care programs, and their financial performance is linked to quality and safety measures. This process can create a conflict between financial incentives and quality of care, as providers may need to balance financial rewards with improving patient care through better coordination of services (The Commonwealth Fund, 2023). 

Both public and private hospitals are influenced by market factors in their financial management. However, the incentives for financial management and quality control differ. For-profit hospitals are primarily driven by contractual and market demands, while public and non-profit hospitals are more likely to be influenced by reputation concerns. The financial models of these hospitals are shaped by a variety of institutional, market, and value-based considerations, which ultimately impact their financial performance and the quality of care they provide. Considering these factors is vital for healthcare policymakers and administrators. 

The financial values of public and private hospitals can significantly affect health policies and laws. For example, evidence suggests that private hospitals perform better to financial incentives than public hospitals. This evidence could include studies or reports that compare the financial performance of private and public hospitals in response to similar financial incentives. Seeing this, policymakers may consider carefully developing a satisfactory incentive structure or being cautious in accommodating the growth of the private hospital division. Hospitals can face much pressure to decrease costs while maintaining and improving quality of care (Akinleye et al., 2019).

References

Akinleye, D. D., McNutt, L. A., Lazariu, V., & McLaughlin, C. C. (2019). Correlation between hospital finances and quality and safety of patient care.  PloS one,  14(8), e0219124.  https://doi.org/10.1371/journal.pone.0219124

Commonwealth Fund. (2023).  Value-based care: What it is, and why it’s needed. 

Commonwealth Fund.  https://www.commonwealthfund.org/publications/explainer/2023/feb/value-based-care-what-it-is-why-its-needed

Dubas-Jakóbczyk, K., Kocot, E., Tambor, M.  et al. The association between hospital financial performance and the quality of care—a scoping review protocol.  Syst Rev  10, 221 (2021).  https://doi.org/10.1186/s13643-021-01778-3

Gee, E., & Waldrop, T. (2022).  Policies To Hold Nonprofit Hospitals Accountable.  https://www.americanprogress.org/article/policies-to-hold-nonprofit-hospitals-accountable/

Erin Discussion:

6-1 Discussion: Stakeholders’ Financial Value Conflict

            Cheney (2019) noted three strategic characteristics of nonprofit and for-profit hospitals: community emphasis, cost consciousness, and planning horizon. Although nonprofit and for-profit hospitals are engaged in the same fundamental guiding principle, patient care, there are differences. Nonprofit healthcare organizations often have a strong sense of community. These organizations have community-based governance, with delegates of the board of trustees being local leaders who significantly impact a nonprofit organization's services. In contrast, for-profit healthcare organizations tend to have a blend of investor representatives and community leaders. For-profit organizations are driven by their ability to derive financial benefits for stakeholders more than community-oriented ones (Cheney, 2019). 

Cost-consciousness is a hallmark of for-profit organizations as these organizations can often operate cheaper than nonprofit organizations. Furthermore, for-profit hospitals operate more efficiently than nonprofit hospitals as they shy away from offering tertiary and quaternary care, as these programs often tend to have operating losses. For-profit organizations can more quickly operationalize cost-conscious decisions than nonprofits (Cheney, 2019). 

Lastly, the planning horizon of for-profit organizations has a greater focus on short-term profitability. In contrast, nonprofit organizations focus more on the long-term organizational vitality of the healthcare system that is serving the community. For-profit organizations are less tolerant of financial losses or struggles than nonprofit organizations. Furthermore, nonprofit organizations are more likely to invest in the community they serve with a nontraditional view on return on investment that supports the organization's mission. For-profit organizations address a community-based mission with a financially driven outcome (Cheney, 2019). 

The Affordable Care Act (ACA) requires all nonprofit hospitals to have charity care policies, which is a money-losing endeavor. These policies require nonprofit hospitals to allow people to receive free healthcare if they qualify. Additionally, nonprofit hospitals can meet a “community benefit standard” through participation in community benefit activities, including Medicaid shortfalls, health professions education, research, community health improvement efforts, subsidized health services, and donations to community groups. Nonprofit hospitals are incentivized to provide charity care and meet the community benefit standard by reducing the tax burden through designation as nonprofit hospitals. For-profit hospitals are not required to report their community benefit activities (Valdovinos et al., 2015).

It’s also important to highlight that 60% of United States hospitals in 2014 were nonprofits. Tax exemptions encourage nonprofit hospitals to give back to their communities. However, current community benefit spending levels nationally are nowhere near the value of the tax exemptions nonprofit hospitals receive. This uneven balance of outward funds with incoming puts financial strain on nonprofit organizations. Being that for-profit organizations do not have the exact requirements lessens the financial burden on these organizations and leaves it to choice. To curb the financial losses, it would be wise to create a mandatory minimum amount of community benefits rather than leaving it up to each organization, riding off inequity (Gingold, 2021). 

References

Cheney, C. (2019). 3 strategic differences between nonprofit and for-profit hospitals.  Health

Leaders.  https://www.healthleadersmedia.com/clinical-care/3-strategic-differences-between-nonprofit-and-profit-hospitals

Gingold, M. (2021). Using community benefits to bridge the divide between Minnesota’s 

nonprofit hospitals and their communities.  Minnesota Law Review,  105(5), 2505–2550.  https://eds-p-ebscohost-com.ezproxy.snhu.edu/eds/pdfviewer/pdfviewer?vid=6&sid=bf0ab07b-81ab-4190-94a6-52fa07644f89%40redis

Valdovinos, E., Le, S., & Hsia, R. Y. (2015). In California, not-for-profit hospitals spent more 

operating expenses on charity care than for-profit hospitals spent.  Health Affairs,  34(8), 1296–1303.  http://dx.doi.org/10.1377/hlthaff.2014.1208