1. 1. What are the factors that have contributed to the high costs of health care? How do these factors relate to a consumer’s access to quality health care?
    a. The factors of high costs of health care is the cause of nursing staff, higher nurse-patient ratios, and higher productivity expectations as values seemingly moved from quality or care to cost-effectiveness and profits
  2. 2. What are the possible consequences of imbalances between the demand for and supply of health care?
    • a. Imbalance in supply and demand is created by the resulting increased cost of insurance coverage in the private sector
    • b. When there is an imbalance of supply and demand, an outcome may be rationing of healthcare. No country can afford to provide unlimited amounts of medical services to everyone, and each must decide on a mechanism to ration, or limit access to, healthcare services.
  3. 3. Describe two methods of rationing health care. What are the differences between these methods? How do you feel about the idea of rationing health care?
    • a. Freedom of the individual – to choose the amount and type of health care used and to select who should deliver it.
    • b. Ability to pay – a consumer can spend as much as he or she can afford
  4. 4. What are the two ways in which the US federal government provides health care funding?
    • a. Medicare
    • b. Medicaid
  5. 5. Go to for information about Medicare, a government provided health care funding. What are the criteria for health care under Medicare?
  6. 6. Go to for information about Florida Medicaid, a government provided health care funding. What are the criteria for health care under Medicaid?
  7. 7. How are nursing services billed for?
  8. a. Bills submitted to third-party payers and consumers from health care organizations such as hospitals continue to bundle nursing services with flat daily charges, such as the cost of the room and housekeeping
  9. 8. List and describe seven cost-containment strategies.
    • a. Competition
    • b. Price control
    • c. Alternative insurance delivery systems
    • d. Managed care
    • e. Health promotion and illness prevention
    • f. Alternative care providers
    • g. Vertically integrated health service organizations
  10. 9. What is the prospective payment system? What are the advantages/disadvantages of this system?
    a. Prospective payment system – this legislation limits the amount paid to hospitals that are reimbursed by Medicare. Reimbursement is made according to a classification system known as diagnosis-related groups. The system establishes pretreatment amount for clients with a specific diagnosis.
  11. 10. What are the similarities/differences between health maintenance organizations (HMOs), preferred provider organizations (PPOs), and physician/hospital organizations (PHOs)?
    • a. Health maintenance organizations (HMOs) – are group health care agencies that provide basic and supplemental health maintenance and treatment services to voluntary enrollees. The enrollees or their employers prepay a fixed periodic fee that is set without regard to the amount or kind of services provided
    • b. Preferred provider organizations (PPOs) – emerged as another alternative health care delivery system. It consists of a group of physicians or a hospital that provides companies with health services at a discounted rate.
    • c. Physician/hospital organizations (PHOs) – are joint ventures between a group of private practice physicians and a hospital. PHOs combined both resources and personnel to provide managed care alternatives and medical services.
  12. 11. What is managed care? Nurses often function as case managers in managed care organizations. What are the responsibilities of case managers?
    • a. Managed care – describes a health care system whose goals are to provide cost-effective, quality care that focuses on improved outcomes for groups of clients. In managed care, health care providers and agencies collaborate so as to render the most appropriate, fiscally responsible care possible.
    • b. Case Managers
    • i. Assessing clients and their homes and communities
    • ii. Coordinating and planning client care
    • iii. Collaborating with other health professionals in the provision of care
    • iv. Monitoring clients’ progress
    • v. Evaluating client outcomes
    • vi. Advocating for clients moving through the services needed
    • vii. Seeking appropriate resources to fit a client’s needs
    • viii. Serving as a liaison with third-party payers in planning the clients care.
  13. 12. What is the difference between a vertically integrated health organization and a horizontally integrated health organization?
    • a. Vertically integrated organizations allow hospitals to reduce inpatient costs and receive additional Medicare revenues
    • b. Horizontally integrated health organizations
  14. 13. Describe the three types of billing for health care services: fee-for-service, capitation, and fee-for-diagnosis.
    • a. Fee-for-service – clients pay the practitioner for each health service they receive. Physicians are not fiscally responsible for whatever they prescribe or for any resulting hospital cost.
    • b. Capitation – health providers are paid a fixed dollar amount per person for providing an agreed-upon set of health services to a defined population for a specific period of time.
    • c. Fee-for-diagnosis – is a type of prospective payment system (PPS). Agencies are provided with a fixed dollar amount for the care of a client based on the client’s main and secondary diagnoses, demographic information, and the usual treatment provided for the health problems
  15. 14. On page 326, Table 18-1, there is a comparison of health care values between the United States and other developed countries based on health care systems. In your own words, describe the difference between:
  16. a. Pluralism/choice and universality
    • b. Individual accountability and equity
    • c. Ambivalence toward government and acceptance of the role of government
    • d. Progress, innovation, and new technology contrasted with technology assessment and innovation control
  17. 15. Describe the difference between socialized medicine, socialized insurance, mandatory health insurance, and voluntary insurance. Give an example of a country for each of these health care payment systems.
    • a. Socialized medicine – the state owns and controls production
    • b. Mandatory health insurance – (found in Germany and Japan) nonprofit health insurance organizations called “sickness funds”. These sickness funds are usually organized around large employers or work-based associations.
    • c. Voluntary insurance – provides no guarantee of universality. The United States and South Africa both provide this kind of coverage. They are the only two developed countries where significant proportions of the population are uninsured.
  18. 16. What is meant by the term “skill mix”?
    a. Skill mix – ratio of registered nurses to licensed practical nurses and nursing assistants.
  19. 17. How is the nursing shortage influenced by economic theory?
    a. The reason for a nursing shortage is that organization cannot hire enough nurses at the wage offered. If the demand for nurses exceeds the supply, then organizations will compete to employ them and wages will increase.
  20. 18. What are the differences between public, for-profit and not-for-profit organizations?
    • a. Public – Federal, state, or local government agencies govern public nonprofit hospitals, which provide care regardless of the client’s ability to pay.
    • b. For-private – private for-profit hospitals are owned by private investors to make profits, and they primarily serve paying clients.
    • c. Not-for-profit – Private not-for-profit hospitals are owned by a voluntary board of trustees to provide care for both paying clients and those who require charitable care.
  21. 19. What is meant by the phrase “corporatization of health care”?
  22. 20. Why is it important for nurses to understand the business of health care?
  23. 21. What is meant by the terms cost accounting, total costs of care, fixed costs, variable costs, full costing, direct costs, indirect costs, productivity measures? Where do you think nursing services are included in these cost types?
  24. a. Cost accounting – is used by hospitals and other organizations; it is a method of accounting for total costs of the business and tracking and allocating those costs to the specific service
    • b. Total costs of care – a sum of fixed costs and variable cost
    • c. Fixed cost – are those that do not fluctuate with census or volume
    • d. Variable costs – are a function of census or volume and are over and above the fixed patient
    • e. Full costs – includes direct and indirect costs
    • i. Direct cost – compares a department’s actual outflow with its inflow from the services it delivers
    • ii. Indirect cost – are necessary but not directly related to delivery of services
    • f. Productivity measures – determining costs, measures how efficiently resources are utilized in providing the service.
  25. 22. List and describe the four variables involved in marketing.
  26. a. Product – the service to be provided
    • b. Place – the agency where the service is to be provided
    • c. Promotion – advertising and publicity
    • d. Price – the charge for the service
  27. 23. It is sometimes stated that the US health care system is not a system. What do you think is meant by that statement?
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