IHP 620 milestone one (1)
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IHP 620
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Apr 3, 2024
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3-2 Final Project Milestone One: Propose Organization for Analysis
Sname Wilson
Southern New Hampshire University
Dr. Karen Myers May 7, 2022
Introduction
Yale New Haven Hospital is a non-profit hospital that belongs to the healthcare sub-
industry. It operates as a teaching hospital and a research center affiliated with Yale University School of Medicine. The hospital is located in New Haven, Connecticut, and serves as the primary teaching hospital for Yale School of Medicine. It is also a major healthcare provider for the surrounding community and beyond. Yale New Haven Hospital provides a wide range of clinical services, including cancer care, cardiology, neurology, surgery, and primary care. The hospital employs over 12,000 people and has over 1,500 beds.
Yale New Haven Hospital is a non-profit organization, which means that its primary objective is not to generate profits, but to provide healthcare services to the community. Being a non-profit organization, Yale New Haven Hospital is exempt from paying federal and state income taxes, and it is eligible for a range of tax benefits and exemptions. In contrast, for-profit hospitals are owned by shareholders who expect to make a profit from their investments. The profit motive can often lead to a focus on cost-cutting measures that may compromise the quality
of care provided. From an economic policy perspective, non-profit hospitals like Yale New Haven Hospital have a different impact on the economy than for-profit hospitals. Non-profit hospitals are often seen as a public good, providing essential services to the community, while for-profit hospitals are viewed as a business that exists to generate profits for shareholders. This difference in perception can impact how policymakers approach healthcare policy, such as tax policy, regulation, and funding.
In terms of financial background, Yale New Haven Hospital is a non-profit organization that relies on government funding and donations to cover its operating expenses. As of 2021, the
hospital had an operating revenue of $5.5 billion and an operating expense of $5.3 billion. The hospital's net income was $186 million, with a profit margin of 3.4%. The hospital's financial position is stable, with a current ratio of 1.3, indicating that it has sufficient resources to meet its short-term financial obligations. The economic principles of demand and consumer behavior have significant impacts on Yale New Haven Hospital. As a healthcare provider, the hospital must consider the demand for its services from its patients and the community in order to optimize its operations and resources. In addition, understanding consumer behavior enables the hospital to tailor its services to better meet the needs of its patients. For instance, if the hospital notices that a particular service is in high demand during certain times of the year, it may adjust its staffing and resources to meet that demand, optimizing its operations. Additionally, by understanding consumer behavior, the hospital can develop targeted marketing strategies that will attract more patients and improve its bottom line. Overall, the principles of demand and consumer behavior are critical to the success of Yale New Haven Hospital and its ability to provide quality healthcare to its patients.
Policy Research
Applying economic principles in the healthcare industry involves using cost-benefit analysis and other economic tools to improve the efficiency and effectiveness of healthcare services. This can include analyzing the costs and benefits of different treatment options, determining the optimal allocation of healthcare resources, and designing healthcare policies that
promote affordability and accessibility while maintaining quality. “Understanding the social conditions that affect resource allocation is at the heart of economic thinking.” (Scott et al, 2001)
Economic principles can also be used in healthcare funding, such as insurance markets and billing systems, to make sure that patients and healthcare providers are motivated to make
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decisions that increase benefits for everyone involved. All things considered, using economic concepts in healthcare can result in better outcomes, reduced costs, and a more sustainable healthcare system.
Economic Disparities
The financial well-being of the healthcare industry is heavily influenced by the availability of healthcare services. Industry functions according to the laws of supply and demand in an economy based on free markets. “The law of supply predicts a positive relationship between pricing and supply. As prices of goods or services rise, suppliers increase the amount they produce, as long as the revenue generated by each additional unit, they produce is greater than the cost of producing it.” (Luther, 2022) When there is a significant demand for healthcare services, the industry flourishes and earns more revenue. However, when healthcare services are limited, the industry finds it difficult to meet demand, which results in a loss in revenue. This is due to the fact that customers may look for substitutes or delay getting medical care completely, both of which could be harmful to their health and wellbeing. Therefore, to ensure financial success, the health care industry must maintain an adequate level of availability.
According to the demand theory, consumer willingness to pay for healthcare services has an impact on the financial well-being of the healthcare industry. Healthcare providers can charge
higher fees and make more money when patients are willing to pay more. In contrast, the industry must decrease prices when customers are unwilling to pay for healthcare services in order to remain competitive. To ensure the financial sustainability of the industry, the availability
of healthcare services must be matched with customer willingness to pay. Economic Theories
There are several economic theories that are useful when applied to the healthcare
industry. One of the most widely used applicable theories as stated earlier, is the concept of supply and demand. In healthcare, the demand for services is high due to the constant need for medical attention and treatment. The supply of healthcare providers, however, is limited, resulting in higher prices for services. Another useful theory is the idea of moral hazard, which is
an assumption made in healthcare insurance that insured persons tend to overuse health care services because they have insurance coverage. (Geyman, 2007) This suggests that individuals may consume more healthcare services if they are not responsible for the costs associated with their care. This may result in increased healthcare costs and systemic inefficiencies.
Use of economic principles
Organizations utilize economic principles to guide strategic short-term and long-term decision making for several reasons. Economics provides a framework for understanding how resources are allocated in an economy, including within an organization. Examining resource allocation in the healthcare sector is challenging because the market conditions differ from those in a market with ideal competition. The market for health care services is viewed as being inefficient. (Scott et al, 2001) By understanding the principles of supply and demand, opportunity cost, and marginal analysis, organizations are better equipped to make informed decisions about how to allocate their resources most effectively. Overall, utilizing economic principles is a valuable tool for organizations to make informed decisions and achieve their strategic goals.
Financial Differentiation
For-profit and nonprofit healthcare organizations differ financially in several ways. For-
profit healthcare organizations aim to generate profit for their owners or shareholders, whereas nonprofit healthcare organizations reinvest any profits back into the organization to support their
mission. As a result, for-profit organizations may prioritize profitability over patient care, while nonprofit organizations aim to provide high-quality care to their patients. For-profit healthcare organizations are typically funded by investors or loans, while nonprofit organizations rely on grants, donations, and fundraising efforts to support their operations. This can impact the level of
financial risk each type of organization is willing to take on. Additionally, for-profit healthcare organizations may be subject to taxation, while nonprofit organizations are exempt from most taxes. This can impact their ability to reinvest profits back into the organization. Economic Differentiation
For-profit and nonprofit healthcare organizations can be differentiated in terms of economic policies and legislation. Economic policies for nonprofit healthcare organizations often
include tax breaks and other incentives to encourage reinvestment in the community, while legislation may mandate that nonprofit organizations meet certain requirements in terms of the services they provide and the populations they serve. Ultimately, the difference in economic policies and legislation between for-profit and nonprofit healthcare is reflected in the different priorities and values of these two types of organizations. In recent years, there have been several economic policies that have impacted both for-profit and nonprofit healthcare organizations. One
example is the Affordable Care Act (ACA), which aimed to increase access to healthcare for all Americans, regardless of income or pre-existing conditions. The ACA included provisions that required all individuals to have health insurance and prohibited insurance providers from placing
a financial cap on the amount they can spend on an individual care for certain essential health treatments. (HHS, 2022) This legislation had a significant impact on both for-profit and nonprofit healthcare organizations, as it increased demand for services and required healthcare providers to adapt to new payment and reimbursement models.
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Economic Policy and Disparities in Care There is a growing body of research that highlights the significant impact of economic policy on healthcare disparities. For example, studies have shown that Medicaid expansion under
the Affordable Care Act has been a proven tool for reducing racial disparities in access to healthcare services and improved health outcomes for low-income individuals. (Baumgartner et al, 2020) Similarly, policies that increase the minimum wage have been linked to improved health outcomes for low-income workers, including reduced rates of chronic disease and mental health problems. On the other hand, economic policies that prioritize tax cuts for the wealthy can
exacerbate healthcare disparities by reducing funding for programs that support vulnerable populations. It is important to note that economic policy and healthcare disparities are not separate issues but are interconnected. For instance, disparities in healthcare can result in higher healthcare costs, increased rates of disability from complications and premature death. These outcomes can lead to increased healthcare spending and reduced economic growth. On the other hand, economic policies that promote social and economic equity can lead to better health outcomes and reduced healthcare costs. Policy changes Recent legislative changes in healthcare economic policy can have a significant impact on both patients and providers. These changes can affect the way healthcare providers are reimbursed, the pricing of drugs and medical devices, and the availability of funding for research
and development. For instance, a recent legislative change called the Medicare Access and CHIP
Reauthorization Act (MACRA), which was signed into law in 2015. MACRA introduced new payment models for healthcare providers under Medicare, with a focus on value-based care. (Cheng, 2020) New regulations may also impact the way insurance companies operate and how
they offer coverage to patients. These changes may have an impact on the overall cost of healthcare, affecting both patients and providers. The impact of these legislative changes will be determined by the specifics of the new regulations and how they are implemented. To achieve the best results for all parties involved, it is crucial for healthcare stakeholders to remain aware and adapt to these developments. Disparities planning Disparities of care are factored into healthcare strategic planning because they have a significant impact on healthcare outcomes, healthcare costs, and patient satisfaction. By taking into account disparities of care, healthcare organizations can better understand the needs of their patients and develop strategies to address these needs. For example, healthcare organizations may allocate resources towards providing services in areas with high rates of health disparities or
may implement training programs to address healthcare provider bias. Moreover, addressing disparities of care can improve patient outcomes and reduce costs associated with healthcare utilization. In conclusion, factoring in disparities of care in healthcare strategic planning is essential to improving patient outcomes, reducing healthcare costs, and promoting health equity. By prioritizing healthcare access and outcomes for all patients, healthcare organizations can improve
the quality of care and strengthen their relationships with patients and the communities they serve.
Organizational Analysis
Demand Theory
Demand theory suggests that the quantity of a good or service demanded by consumers is influenced by factors such as price, income, and the availability of substitutes. "Applying demand theory to healthcare markets can help us understand how changes in healthcare prices and income affect the quantity and type of healthcare services demanded by individuals and populations." (Ringel et al, 2002) In the case of Yale New Haven Hospital, the demand for its healthcare services is reflected in its financial statements. The hospital's revenue is primarily derived from payments received for patient care services, which includes charges for inpatient and outpatient services, emergency department visits, and diagnostic tests. The amount of revenue earned by the hospital is directly linked to the demand for its services, which in turn is influenced by factors such as the hospital's reputation, the availability of alternative healthcare providers, and the health insurance coverage of the patient population. To meet the demand for its services, the hospital must also incur expenses related to staffing, supplies, and facilities. The financial statements of Yale New Haven Hospital, therefore, provide a snapshot of the demand for healthcare services in the community it serves and the hospital's ability to meet that demand.
Market Behavior Impact
Market behavior can have a significant impact on the financial statements of Yale New Haven Hospital at various times throughout the calendar year. “Not-for-profit hospitals with strong financial performance provide more unprofitable services for the insured and uninsured than do not-for-profit hospitals with weaker conditions. For profit hospital provision of these services is not influenced by their financial condition and instead may reflect actions to meet community expectations or to offer a sufficiently broad service array to maintain the business of insured patients.” (Bazzoli et al, 2007) For instance, changes to Medicare or Medicaid reimbursement rates can affect the hospital's revenue, while changes to regulatory requirements
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can impact the hospital's expenses. As a result, market behavior is closely monitored by the hospital's management team, and financial statements are regularly reviewed and updated to reflect changes in the market environment.
Legislative Changes
Several economic and legislative changes are likely to impact Yale New Haven Hospital in the coming years. One of the most significant changes is the ongoing shift towards value-
based care, which emphasizes outcomes and quality of care over the volume of services provided. “Changes in healthcare payment, arising in part from the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), have focused on redesigning healthcare payment so that
it rewards better quality care, increases cost effectiveness, ensures appropriate compensation for patient-centered care, and supports both practice improvements and clinician-driven innovations in care delivery.” (Healthit.gov, 2019) This shift is likely to impact the hospital's revenue, as it may be required to adjust its pricing model and focus on providing more efficient and effective care. Another significant change is the increasing use of telemedicine, which allows patients to receive care remotely. This trend is likely to impact the hospital's expenses, as it may be required
to invest in new technology and infrastructure to support telemedicine services. Overall, Yale New Haven Hospital will need to be vigilant and adapt to these changes in order to continue providing high-quality healthcare services while maintaining its financial stability.
Policy Changes and Impact
As a hospital organization, Yale New Haven Hospital may be impacted by legislative changes related to healthcare policies, funding, and regulations. For example, as previously stated, if there are changes to healthcare funding or reimbursement policies, the hospital may need to adjust its financial policies and operations to maintain its financial stability. This could
include changes to billing and coding practices, cost-cutting measures, and resource allocation. Additionally, changes to regulations related to patient care, safety, and privacy may result in new
policies and procedures for the hospital to follow.
In response to these possible legislative changes, Yale New Haven Hospital may need to revise its organizational policies and procedures to ensure compliance and improve patient care. For instance, new policies related to telemedicine, patient access to electronic medical records, and patient safety protocols may need to be developed and implemented. The impact of these policy and legislative changes on the hospital will depend on the specific changes that are made and how well the hospital is able to adapt to them. Statement Impact
Legislative changes could have a variety of effects on Yale New Haven Hospital's financial reports. The hospital may see changes in revenue and costs associated with patient care,
for instance, if healthcare payment regulations change. Changes in the quantity and timing of payments from insurance providers and government programs like Medicare and Medicaid could
also have an effect on the hospital's funding and overall financial stability. Changes in tax regulations, labor laws, and other legal requirements could further increase the hospital's costs for compliance and legal expenses
.
Potential Disparities
Changes to healthcare funding or reimbursement policies that disproportionately impact low-income or uninsured patients could result in reduced access to care for these populations. This could result in increased use of emergency services, higher rates of preventable illnesses, and increased costs for the hospital related to uncompensated care. Additionally, changes to regulations related to patient care, safety, and privacy may have a greater impact on smaller or
under-resourced hospitals, resulting in disparities in the quality of care provided.
To combat these potential impacts, Yale New Haven Hospital may need to consider initiatives aimed at improving access to care for vulnerable populations and reducing disparities in health outcomes. This could include outreach programs targeting underserved communities, partnerships with community organizations and clinics, and investments in telemedicine and other technologies to improve access to care. Additionally, the hospital may need to prioritize efforts to reduce costs and improve operational efficiency to maintain its financial stability in the
face of potential legislative changes.
To plan for these impacts, Yale New Haven Hospital should closely monitor legislative developments and engage with policymakers and industry stakeholders to advocate for policies that promote access to high-quality care for all patients. The hospital should also conduct regular assessments of its financial and operational performance to identify areas for improvement and develop contingency plans to address potential risks and challenges. Additionally, to improve equitable care for all patients, the hospital should prioritize investing in workforce development and training geared towards addressing economic barriers and cultural competency to ensure that
its staff is equipped to provide high-quality care in a diverse and constantly changing healthcare landscape.
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References
Yale New Haven Health (2022) about yale New Haven hospital. https://www.ynhh.org/about
Yale New Haven Hospital annual fiscal year report (2021) https://portal.ct.gov/-/media/OHS/HSP/Financial-Stability-Report_2021.pdf
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U.S Department of Health and Human Services (2022). About the affordable care act. https://www.hhs.gov/healthcare/about-the-aca/index.html
Baumgartner, J., Collins, S., Radley, D., & Hayes, S. (2020). How the Affordable Care Act (ACA) Has Narrowed Racial and Ethnic Disparities in Insurance Coverage and Access to Health Care, 2013‐18. Health Services Research
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