Understanding Healthcare Revenue and Expenditure

This article provides an overview of healthcare revenue and expenditure, including definitions of terms like revenue and health expenditure. It also covers activity-based funding, budget allocations, and the Australian DRG system of classification.

Running head: HEALTHCARE REVENUE
HEALTHCARE REVENUE
Name of the student:
Name of the university:
Author note:

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HEALTHCARE REVENUE
Question 1:
The Healthcare Financial Management Association or HFMA has defined revenue as the
allocated sum that remains associated with the administrative as well as the clinical functions
which is seen to contribute for effective capturing, management and hence collection of patient
service revenue. This can be defined as the term that includes the entire life of the patient
account from the start of the creation of the account to that of the payment. On the other hand,
health expenditure can be defined as the health spending that mainly comprises of the health as
well as health related outflows. Expenditures can be defined mainly based on their primary or
predominant purpose of improvement of health irrespective of their primary function or activity
of the entity that is providing as well as paying for the associated health services (Paleri et al.,
2016). It can be stated as the activities performed by either insitututions or individuals through
effective application of paramedical, medical and nursing knowledge and technology. The
primary purpose remains is to maintain or restore health.
Question 2:
Activity Based Funding can be defined as the way of funding healthcare centres like
hospitals whereby the hospitals get paid for a reason of number as well as mix of the patient they
are treating. If the hospital treats more patients, they are seen to get more funding. If the hospital
takes more critical patients who require complex treatments, the ABF takes this attribute in
account (Braithwaite, 2018).
Ministers approve the budget allocations done to ministry, Local heath districts,
speciality networks and pillars on the recommendations of the director general. Ministers
determine the conditions of the subsidy that cover standards for accounting and procedures,

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requirements needed mainly of two of the bank accounts like general fund as well as that of the
special purpose and trust fund it should also include mental health budget for being utilised in
services for mental health patients. Moreover, they also fix the operating as well as that of the
capital expenditure separated and also include the approval of MOH that is in turn required for
transferring between these. Ministers also fix the fees for various types of the most chargeable
services that are seen to come under the Health service act. In consideration with that of Public
finance as well as the audit act, ministry is held accountable for different types of government
responsibilities through ERC for development and maintenance of budget performance of public
healthcare system.
Question 3:
Casemix is considered to be a general term that is seen to be mainly describing of the any
system that is seen to aggregate different kinds of information about the patients. It also contains
the associated procedures into different groups that are based on the types as well as mix of the
patients treated. The value of casemix helps in allocation of the resources for caring and for
treating the patients in a group (Hopfe et al., 2015).
Australian DRG system of classification mainly codes the admitted acute episodes of care
in the Australian private hospitals and in the public healthcare systems based on three important
codes. The first one is used to code diseases and problems called the International Statistical
Classification of Diseases and Related Health Problems, Tenth Revision, Australian
Modification (ICD-10-AM). The second one is used to code procedures and different
interventions called the Australian Classification of Health Interventions (ACHI). The third one

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is to assist clinical coders for the perfect use of classifications and called the Australian
Classification of Health Interventions (ACHI) (Jackson et al., 2015).
References:
Braithwaite, J. (2018). Health Reform in Australia: Activity Based Funding, My Health Record,
AI Big Data, Nursing System (Doctoral dissertation, Macquarie University).
Hopfe, M., Stucki, G., Marshall, R., Twomey, C. D., Üstün, T. B., & Prodinger, B. (2015).
Capturing patients’ needs in casemix: a systematic literature review on the value of
adding functioning information in reimbursement systems. BMC health services
research, 16(1), 40.
Jackson, T., Dimitropoulos, V., Madden, R., & Gillett, S. (2015). Australian diagnosis related
groups: Drivers of complexity adjustment. Health Policy, 119(11), 1433-1441.
Paleri, S., Lovell, J. J., Peverelle, M., Lior, T., Darby, J., Newcomb, A., & Wilson, A. (2016).
Healthcare Expenditure and Mortality Profile Associated With Acute Bacterial
Endocarditis: Comparison Between Public and Private Health Systems.