Think about how the healthcare industry is impacted by economic factors as heavily as any other industry. Now that your project is complete, reflect on the relationships betwee

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IHP-620 Course Paper 2

A policy research and organizational analysis report

Deanna Buchanan

SNHU

IHP-620

A policy research and organizational analysis report

Introduction

Based on the data in the sources, the topic of this study is Memorial Health System, a healthcare organization (Memorial Healthcare System, 2023). Well-known healthcare organization Memorial Health System provides various medical services to its neighborhood. When the business's sub-industry is examined, a hospital or healthcare system offering full medical treatment might be identified as the organization. With a significant presence in the healthcare industry, the company will likely face the financial possibilities and risks of doing business in this vital and dynamic area.

Economic Theories and Principles

Economic Disparities

In healthcare, economic disparities can manifest as differences in access to healthcare services, quality of care, and health outcomes based on an individual's socioeconomic status or location (Donkin et al., 2018). Due to financial barriers, communities with lower economic well-being may face challenges in accessing adequate healthcare services. For example, low-income communities may have limited access to primary care physicians, specialists, or hospitals in their vicinity. The availability of healthcare resources may also be influenced by the local economy, with economically disadvantaged areas having fewer healthcare facilities and providers (Donkin et al., 2018).

Economic Theories

One economic theory applicable to the healthcare industry is the theory of supply and demand. Healthcare services, like any other goods or services, are subject to the forces of supply and demand (Tzenios, 2019). When demand for healthcare services increases, there is a need for a corresponding increase in the supply of healthcare providers and facilities. This theory helps explain the importance of healthcare workforce planning to ensure enough healthcare professionals meet the population's needs. For instance, the demand for healthcare services may increase with an aging population, requiring more doctors, nurses, and other healthcare professionals (Tzenios, 2019).

Another economic theory relevant to healthcare is the concept of opportunity cost. This theory suggests that there are alternative choices and associated costs in healthcare decision-making (Henderson, 2022). For example, investing in a new state-of-the-art medical facility would involve significant financial resources, and that investment may mean forgoing other potential uses of those resources, such as funding community health programs or medical research (Donkin et al., 2018).

Use of Economic Principles

Hospitals use strategic planning to set both short-term and long-term goals. In the short term, they might improve patient satisfaction or reduce wait times for certain services. In the long term, they might aim to expand their healthcare services to meet the community's growing needs or invest in new technologies to improve patient outcomes (Henderson, 2022).

The process of strategic planning involves:

1. Environmental Analysis: Assessing the current healthcare landscape, economic trends, and regulatory changes that might impact the hospital's operations (Herring et al., 2018).

2. Goal Setting: Defining specific and measurable objectives aligned with the hospital's mission and vision.

3. Resource Allocation: Allocating financial and human resources to achieve the set goals (Herring et al., 2018).

4. Implementation: Executing the plans, which may include initiatives to enhance patient care, improve operational efficiency, or expand services.

5. Monitoring and Evaluation: Continuously evaluating progress towards the goals and making adjustments as necessary (Tzenios, 2019).

For-Profit and Nonprofit

Financial Differentiation

For-profit and nonprofit healthcare organizations differ significantly in their financial structures and objectives.

For-profit organizations are driven by the goal of making a profit for their shareholders or owners. They aim to generate revenue that exceeds their expenses. This profit-seeking motive can lead them to focus on high-margin services and markets (Henderson, 2022). They may invest more in marketing and expanding services in areas with higher demand, potentially neglecting underserved communities if they are not financially lucrative.

Nonprofit organizations, on the other hand, reinvest any surplus back into the organization to fulfill their mission and provide better healthcare services (Herring et al., 2018). Their primary objective is to serve the community's needs, regardless of profitability. Nonprofits may be more inclined to offer services to low-income populations, prioritizing social welfare over financial gain.

Economic Differentiation

The reaction of nonprofit and for-profit healthcare organizations to economic policies can differ based on their financial structures and objectives.

For example, consider the newest CHIP legislation. A nonprofit facility might view this legislation positively as it aligns with its mission to improve the health of children from low-income families (Donkin et al., 2018). The legislation might provide additional funding and resources to support their services, which can positively impact their ability to provide care to more underserved children.

In contrast, a for-profit facility might have mixed reactions to the CHIP legislation. While they may recognize the importance of providing healthcare to children, the potential financial burden of compliance and increased regulation might concern them (Tzenios, 2019). They may need to allocate resources for implementing the required changes, and the reimbursement rates for CHIP patients might be lower than what they usually receive for privately insured patients.

Policy, Changes, and Disparities

Economic Policy and Disparities in Care

Healthcare economic policies can significantly impact healthcare disparities. For example, reimbursement rates set by government payers (such as Medicare and Medicaid) can affect the financial viability of healthcare providers in underserved areas (Tzenios, 2019). If reimbursement rates are low, providers may be reluctant to serve patients relying on these programs, leading to disparities in access to care.

Moreover, economic policies that address social determinants of health, such as housing, education, and employment, can influence healthcare disparities. Improving these social factors can lead to better overall health outcomes and reduce the burden on healthcare facilities (Herring et al., 2018).

Policy Changes

The Anti-Human Trafficking Law aims to combat human trafficking and protect victims. While the primary goal of this legislation is not directly related to healthcare, it can have implications for the healthcare industry (Henderson, 2022).

Healthcare providers may be required to participate in identifying and reporting potential victims of human trafficking. This could increase their administrative burden and necessitate staff training on recognizing signs of trafficking. Additionally, the law may have financial implications for healthcare organizations, especially if it requires additional staff or resources to comply with reporting requirements (Donkin et al., 2018).

Disparities Planning

Disparities of care are a crucial consideration in healthcare strategic planning. Hospitals must assess the healthcare needs of their community, identify underserved populations, and develop strategies to address disparities in access and quality of care (Donkin et al., 2018).

Strategic planning for disparities may involve:

1. Community Needs Assessment: Identifying vulnerable populations and their specific healthcare needs.

2. Resource Allocation: Allocating funds and resources to improve services in underserved areas (Tzenios, 2019).

3. Partnerships and Outreach: Collaborating with community organizations to reach out to underserved populations and improve health education.

4. Cultural Competency Training: Providing training to healthcare staff to ensure they can effectively address the needs of diverse patient populations (Henderson, 2022).

5. Outcome Monitoring: Regularly measuring and evaluating the impact of implemented strategies on reducing disparities and improving healthcare access and outcomes (Tzenios, 2019).

In conclusion, economic theories and principles play a vital role in shaping the healthcare industry's behavior and decision-making. Healthcare organizations, both for-profit and nonprofit, must consider economic factors when planning their short- and long-term goals. Economic policies can impact healthcare disparities, and strategic planning should take into account disparities in care to improve overall community health (Tzenios, 2019). Understanding these economic aspects is crucial for healthcare organizations to deliver effective and equitable care to their communities.

Organizational Impact

Organization Introduction

Springfield, Illinois-based Memorial Health System is a nonprofit healthcare institution that provides top-notch medical treatment to its local population. "Memorial Healthcare System," 2023, describes the nonprofit hospital's core values as "integrity, stewardship, and giving back to the community." Through its patient financial aid and community investment programs, the organization seeks to enhance lives and address the socioeconomic determinants of health.

Memorial Health System's main business or mission is Healthcare, including a wide variety of medical services and care delivery to the community. Memorial Health System contributes to various sub-industries and its main healthcare offerings. These include community outreach, social assistance, and partnerships with charitable groups like the Shemilah Outreach Center, which focuses on the safety and development of children.

Regarding the financial backdrop, the dedication of Memorial Health System to its objective is visible in its financial operations. The company was ranked 15th in the country for a "fair share" surplus, demonstrating its commitment to patient financial help and community engagement that went above and beyond the value of its tax exemptions ("Romano," 2022). The dedication of Memorial Health System to carrying out its goal is evidenced by the fact that it invested $31 million more in community investment and patient financial help than it did in tax incentives ("Romano," 2022).

Regarding the hospital's ability to pay its bills, although precise yearly income and expense figures are not given in the information provided, the fact that Memorial Health System was able to surpass its tax exemptions through patient assistance and community investment suggests that the hospital is in good financial standing. The ability of the organization to direct resources to its mission-driven projects demonstrates its financial stability and appropriate money management.

Nonprofit or For Profit

Memorial Healthcare System, a nonprofit healthcare institution, is committed to delivering healthcare services and improving the community's quality of life ("Memorial Healthcare System," 2023). Because Memorial Health System is a nonprofit organization, it differs from healthcare businesses that make a profit, which has repercussions for economic policy.

Because Memorial Health System is a nonprofit organization, its operations are driven more by fulfilling its goal than maximizing profits. With this classification, the organization is given certain tax advantages and exemptions, enabling it to return any extra money to its operations, buildings, and neighborhood projects, including patient financial help and community investment ("Romano," 2022). Healthcare nonprofit organizations frequently emphasize community welfare and social responsibility more than financial success.

Memorial Health System's nonprofit status might impact economic policy by affecting the organization's eligibility for grants, tax breaks, and government financing to promote its mission-driven projects. The objectives of nonprofit healthcare organizations like Memorial Health System will likely be well-aligned with economic policies supporting community investment, patient care, and healthcare accessibility. This covers community involvement initiatives, patient support programs, and policies dealing with socioeconomic health determinants.

Nonprofit healthcare institutions may, however, come against certain difficulties. Because it relies on contributions, grants, and reimbursements, its financial stability may be impacted by changes in healthcare regulations or the economy. For instance, the organization's capacity to sustain its high degree of patient financial aid and community investment might be impacted by decreases in government funding or changes in reimbursement rates.

Memorial Health System's tax-exempt status enables it to devote greater resources to its mission-driven projects rather than paying taxes. As a result, the organization is better equipped to broaden its influence, improve patient care, and make significant contributions to the community. The financial environment for Memorial Health System may be further shaped by economic legislation, such as tax laws or incentives for nonprofit organizations, which may affect its capacity to carry out its goal.

Financials, Market, and Demand

Demand Theory

The financial accounts of Memorial Health Hospital demonstrate the demand theory, revealing its popularity and the level of demand for healthcare services in the neighborhood. One important measure of demand is the hospital's overall revenue, which was $1,384,680,779 for the fiscal year that ended in September 2020 (ProPublica, 2023). The high income highlights its significance as a crucial healthcare provider in the community and suggests that its services are used to a large extent.

The hospital's demand patterns can also be better understood by looking at the significant sources of revenue. The significant demand for the healthcare services offered by Memorial Health Hospital is shown in particular by the high income obtained from program services, which accounts for 90.0% of the total revenue (ProPublica, 2023). This shows that the hospital receives much of the community's medical care.

According to ProPublica (2023), the $30,296,383 increase in asset sales over the prior fiscal year may indicate growth initiatives or the launch of new services. This growth is consistent with the demand hypothesis since it reflects the hospital's attempts to fulfill the community's increasing requirements successfully. Additionally, the hospital's $18,297,842 net income demonstrates a successful financial outcome, suggesting a balance between service demand and effective financial management (ProPublica, 2023). It shows that the hospital is giving the community services that are both required and desired, which helps to ensure its financial stability. The hospital's assets, which amount to $1,959,133,277 in total (ProPublica, 2023), should also be considered. This high asset value can signify infrastructure and technological upgrades for the community's healthcare requirements.

Market Behavior Impact

The healthcare industry's market behavior greatly impacts Memorial Health Hospital's financial statements, which causes fluctuations in income and spending all year round. A closer look at important elements, including fundraising efforts, pro bono cases, and neighborhood publications, is necessary to comprehend these variations.

Fundraising efforts significantly impact the hospital's financial accounts. Increased donations, which directly improve the hospital's overall revenue, can result from well-planned fundraising events (ProPublica, 2023). This cash might go toward improving patient care, growing services, or purchasing cutting-edge medical equipment. Conversely, times when there are fewer or less effective fundraising efforts may result in a decline in donations, impacting the hospital's income and even its capacity to launch strategic programs.

Conversely, pro bono instances where the hospital offers free or discounted care to marginalized people might increase expenditures as the institution incurs costs without commensurate income. These instances meet the hospital's commitment to community service but might also create variation in functional expenditures, affecting the hospital's net profitability (ProPublica, 2023). In line with the hospital's purpose and principles, such pro bono work aims to enhance lives and address societal determinants of health.

Publications in the community have an impact on market behavior as well as the financial health of the hospital. Increased demand for the hospital's services may be influenced by public awareness campaigns, community health initiatives, and instructional materials it publishes. Increased patient enrollment and increased program service revenues may result from these initiatives. Furthermore, community involvement and favorable opinions might improve the hospital's reputation and encourage increased donations and contributions.

Economic Legislative Changes

Legislative Changes

Organizations like Memorial Health System are significantly impacted by the healthcare industry's economic and legislative developments, which affect their strategy, day-to-day operations, and bottom-line results. The shift to Value-Based Care (VBC) is an economically significant measure (Romano, 2022). Value-Based Care (VBC), a departure from the conventional fee-for-service paradigm, incentivizes healthcare professionals to concentrate on patient outcomes and cost-effectiveness. This strategy encourages hospitals to improve patient outcomes, reduce unneeded hospitalizations, and coordinate treatment better (Ramian, 2021). Value-Based Care (VBC) marks a substantial change in how healthcare is delivered and paid for, even if it is not specifically tied to the ACA.

Memorial Health System must modify its internal policies in response to Value-Based Care (VBC) to conform to the new value-driven methodology. The company established procedures to enhance care coordination amongst multiple departments, ensuring patients get thorough, well-coordinated treatment throughout their healthcare journey (Ramian, 2021). This internal policy change will enhance patient outcomes while successfully controlling expenses.

Policy Changes and Impact

The Value-Based Care (VBC) philosophy has significantly influenced Memorial Health System's financial statements. The move to value-based compensation encourages the hospital to concentrate on preventative treatment, managing chronic diseases, and lowering hospital readmissions (Ramian, 2021). As a result, the revenue structure of the hospital might alter, with the possible loss of revenues from particular services that were before compensated using the fee-for-service model. In contrast, if the hospital effectively satisfies quality and outcome measures and receives larger payments, its financial situation may be improved.

As an illustration, under Value-Based Care (VBC), Memorial Health System may concentrate on implementing patient education programs to support the management of chronic illnesses like diabetes. As a result, there may be fewer hospital admissions for those with uncontrolled diabetes, but less money may be made from such hospitalizations (Ramian, 2021). However, if the hospital successfully treats the illness and assists people in maintaining better health, it may be eligible for increased payments because of improved patient outcomes.

Statement Impact

Memorial Health System's financial statements have undergone a considerable transformation due to the implementation of value-based care. The revenue structure changes when the hospital shifts its focus to value-based reimbursement (Romano, 2022). There may be a decrease in income for some previously paid services under the fee-for-service approach. In contrast, the facility will profit financially if the hospital successfully satisfies quality and outcome measures, which results in increased reimbursements.

For instance, Memorial Health System could introduce patient education programs aimed at treating chronic illnesses like diabetes. This program may lead to fewer hospital admissions for uncontrolled diabetes but also result in lower admissions-related revenue. However, if the hospital successfully treats the illness and assists people in maintaining better health, it may be eligible for increased payments because of improved patient outcomes (Romano, 2022).

Potential Disparities

Value-Based Care (VBC) can reduce healthcare inequities, but there is also a danger of doing so. There is a worry that during the shift to value-based care, vulnerable groups with little access to resources or preventative treatment may not get attention. People with greater healthcare requirements but fewer means to follow preventative measures may suffer if the hospital concentrates its resources on value-driven care programs, for example (Fouladvand, 2018). As a result, there could be differences in health outcomes between various socioeconomic groups.

Memorial Health System may look into specialized outreach initiatives for marginalized populations to address this possible inequality in healthcare. These initiatives could give people access to preventative care, education, and assistance managing chronic illnesses. The hospital may contribute to closing healthcare inequalities and ensuring that everyone in the community benefits from value-based care by focusing on the unique needs of vulnerable groups (Fouladvand, 2018).

Conclusion

In conclusion, this policy research and organizational analysis report focuses on Memorial Health System, a nonprofit healthcare organization. The paper explores the impact of economic theories and principles on healthcare, emphasizing economic disparities, theories such as supply and demand, and opportunity cost. It also delves into the differentiation between for-profit and nonprofit organizations, discussing their financial and economic distinctions. Overall, the paper underscores the importance of economic considerations in shaping healthcare behavior and decision-making, particularly in the context of strategic planning and addressing disparities in care.

References

Donkin, A., Goldblatt, P., Allen, J., Nathanson, V., & Marmot, M. (2018). Global action on the social determinants of health.  BMJ global health,  3(Suppl 1), e000603.

Fouladvand, S. (2018). Decentering the prosecution-oriented approach: Tackling both supply and demand in the struggle against human trafficking.  International journal of law, crime, and justice,  52, 129-143.

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