Health Financial System: Revenue and Expenditure in Healthcare

This study material discusses the revenue and expenditure in healthcare, including insurance billing, patient care, research, and liability cost. It also explains the importance of activity based funding and casemix classification in healthcare management. The material is relevant for students studying Health Financial Management.

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HEALTH FINANCIAL
MANAGEMENT

Health financial system
1. When it comes to health care system, the revenue comprises of various items such as
insurance billing, patient care, research, doctors visit, etc. Such items help the hospital
business to flourish and in the majority of the cases, the revenue ranks higher when it is from
the patient visit. Moreover, the hospital even gets funds and reimbursement from various
bodies. Moreover, patient care is another area where the hospital extracts the maximum
revenue (Feigenbaum, 2015). On the contrary, expenditure is those elements that the health
system needs to incur. It needs to spend on the tests and technology, liability cost and the
labor cost. The health system needs to have a proper operating system for the functioning and
where it needs to spend. Further, for treating and diagnosing patient it needs to have a strong
system and technology and for that, it needs to spend and hence accounts for the expenditure
part.
2. An activity based funding is a management tool that helps in planning and assessing the
performance and other clinical needs. ABF provides more effectiveness to the public health
funding as the health service management can provide their share of available State and
Commonwealth funding linked to the real level of patient care. It is a way of funding the
hospitals whereby the payment is done for the patient mix and number when they treated.
When a hospital provides treatment to more, patient they receive more funding. It is because
the conditions are more complicated as compared to others. The NSW health system operates
and funds are allocated as per the requirement of the local health district. It is planned
strategically the areas that require more funding (Brigham & Daves, 2012). As per the needs
and the complexity of the problem, the allocations of funds are determined.
3. Casemix classification boosts the industry of the health care with a regular method of
patient classification, the treatment, and costs that are associated. In the current scenario,
casemix pertains to the patient mix types of the patient that is treated by the hospital or other
healthcare safety. Such classifications are necessary because it helps to shed light on the link
between the activity of health care and the costs. The data about the patient are being utilized
that are clinically helpful and explains the variations that are present. The Australian-DRG
system of classification is utilized for the classification of acutely admitted patients with
other classification of casemix being used in the classification of other patient care (Foo,
2017). The patient who is admitted to hospital has their disease and other regulations that are
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Health financial system
considered during the coding of the admission ICD-10-AM/ACHI/ACS. DRG assignment is
undertaken by the clinical order by the hospital or any authority of the state health.
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Health financial system
References
Brigham, E. & Daves, P. (2012) Intermediate Financial Management. USA: Cengage
Learning.
Feigenbaum, E. (2015). Categories of Expenses & Revenues in the Hospital Business
Setting. Retrieved from: http://smallbusiness.chron.com/categories-expenses-
revenues-hospital-business-setting-4882.html
Foo, M. (2017) A review of socially responsible investing in Australia [online]. Retrieved
from: https://business.nab.com.au/wp-content/uploads/2017/06/socially-responsible-
investing-in-australia.pdf [Accessed 10 April 2018]
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