Options for Financing Healthcare - Essay Example

?Options for Financing Healthcare Health care organizations depend of funding to enable it deliver quality health care services to patients (Lu and Jonsson 2008, p.2). Many health care institutions in the U.K. are reported in need of financing in order to be able to deliver equality services to patients. This follows the recent financial crisis that hit the country making it had for many health care organizations to get enough funds to sustain operations. The NHS hospital in England, for instance, is reportedly having a financial shortfall of close to ?10 billion cumulatively from 2011 (NHS 2012). This implies that the organization has to seek for funding in order to be able to operate fully and deliver quality services to patients. This paper will examine the various financing options for health care organizations and their implications for managers, patients, and practitioners in light of NHS hospital in the U.K. Mossialos et al. (2002, p.1) argues that any sustainable health care system should have reliable access to workforce, consumable resources and capital. However, in order to have in place these inputs, there must be enough financial resources to enable the institution has all the resources necessary such as doctors and nurses to administer treatments, drugs and equipments to aid administrations of treatments to patients (Abel-Smith 1994, p.10). As a result, there are a number of financing options usually available for health care institutions for securing the funding needed. However, the options also vary from one country to another. Hereunder is some of the financing options available for health care organizations in the U.K. General Tax General tax system is the most common type of health care financing options for health care organizations in the U.K. The tax is generated from the tax levied by the government from its citizens to fund health care organizations. For example, the U.K. government usually taxes its citizens on their employment incomes and parts of these taxes are used for financing health care organizations. The government also obtains money for funding health care from the indirect taxes levied on goods and services such as VAT (Mossalios et al. 2002, p.5). NHS hospital is particularly being funded by the government from the general taxes collected from citizens of the country. So far the government has funded NHS hospital to the tune of billion shillings, to enable the hospital acquire the resources necessary to provide quality health care services to its citizens. The funding has been of immense benefit to the hospital and the management since they have been able to use the funds provided by the government from the general taxes to acquire equipments, health care providers such as doctors and nurses. In addition, the funds have enabled the hospital to expand its facility in order to improve the quality of health care provided to patients (Abel-Smith 1994, p.11). The patients have benefited greatly because of the funding because it enabled NHS hospital to acquire vital facilities and human resource that has improved the quality of health care delivery in the hospital. The funds generated from the taxation have been used by the hospital to improve the quality of service delivery by using part of money to acquire hospital equipment. In addition, some of the funds have been used by the hospital for training, research and development, which has enabled heath care practitioners advance their health care profession (Lu and Jonsson 2008, p.29). User-pay-out pocket User-pay-out pocket is another method used by NHS hospital to obtain funding. This type of payment is divided into two namely those covering the entire costs of treatment and those used for toping up insurance schemes such as the prescriptive charges. This type of payment is made by the patients once they visit the hospital, which is expected to come out of their pockets (Gottrett and Schrieber 2006, p. 6). This type of funding has been good to the managers because the payment is prompt making planning easier. Nevertheless, it is prone to default especially with regard to poor patients who have difficulty in financing their bill on their own. This method of funding is also not favorable to many patients especially those with low levels of income. Nevertheless, some favor it because they pay in accordance with the cost incurred in administering the treatments (Greener 2008, P.114). Social insurance NHS hospital also receives a huge part of its funds from the country’s national health insurance scheme. Under the insurance scheme, the government requires employees and employers to make compulsory contributions and premiums to the scheme to help the needy in the society. NHS hospitals receives part of these funds from the scheme to enable the hospital to treat even the poor, disabled and the old in the society who are not able to fund the hospital bills on their own (Abel-Smith 1994, p.21). This funding has been beneficial to the managers of the hospital since the funds have enabled them cater for the needs of everyone in the society regardless of their status, or disability. The funds have also helped the managers acquire facilities aimed at improving the quality of service delivery in the hospital. Such funding has expanded the scope of health care delivery to patients in the society, which has enabled even the poor receive quality health care since, through the insurance scheme, they have been able to seek for medical care at no cost. NHS Hospital reveals that part of money has been used to fund research, which has enabled the medical practitioners advance their health care profession (Glennerster 2009, 26). Private medical insurance Private medical insurance is a profit making institutions obtaining contributions from the members of the public on a monthly basis. In such a situation, when a member of the medical scheme falls sick, it becomes the responsibility of the private medical insurance company to service all the cost incurred to administer the treatments. NHS hospital depends heavily on the funding it receives from the private medical insurance companies whose members seek for treatment in the hospital (Bodenheimer 2005, p.26) This type of funding has enabled managers to develop a good budget plan since they are not prone to default. This type of payment has been of benefit to patients because it is the responsibility of the company to service their bills once they have made their contributions to the scheme (Bodenheimer and Fernandez 2005, p. 16). Prescription Charges Prescriptive charge is another method of financing adopted by health care providers. NHS hospital is an example of a health care organization, which highly depend of prescription charges as its source of finance. In the U.K., particularly in England, patients are required to pay a prescriptive charge amounting to ?7.20 for every item. Harker (2012, p.3) reports that England managed to raise ?450 million through prescriptive charges during 2010/11 financial year. Of this amount, 0.5% was used to finance NHS Hospital. Harker (2012, p.3) notes that the amount received from the prescriptive charges on patients has been used to raise the quality of service delivery in the hospital. In this case, Davis (2007, p.102) notes that a large portion of the amount has been used to purchase hospital equipment needed to enable health care providers improve the quality of service delivery to patients. The acquisition of the health care facilities has also helped health care practitioners improve their efficiency in service delivery to patients, who in turn has benefited a great deal. Dental Charging NHS also derives a significant portion of its finances from the dental charges for treatment of dental related illnesses. Harker (2012, p.3) reveals that, in England, patients are required to pay between ?17.50 and ?209 depending on how difficult the dental operation is. Harker also reports that, in England, a total of ?614.3 million was raised through dental charges for the period of 2009/10. NHS notes that a large portion of this fund has been to expand the dental facilities within the hospital in order to cope with the ever-increasing number of patients with dental-related illnesses. In this case, the hospital has been able to purchase some of the most modern dental facilities, which has indeed helped improve the quality of service delivery to patients. To the dentists, the financing will be of great help since the equipments bought using the money will make their work simpler thereby increasing their efficiency in the delivery of services to patients (Davis 2007, p.102). It is evident that this method of financing puts a lot of cost burden on patients, meaning that patients who are not capable of financing their dental charges will be offered the services. However, NHS points out that there are exemptions for the poor and the under privileged in the society (Gottrett and Schrieber 2006, p. 9). Other source of funds for NHS includes land sales, and lottery funds. In addition, hospital also gets significant portion of its finances from trust funds, which helps in payment of health care practitioners and meeting other hospital expenses to promote efficiency in service delivery to patients (Davis 2007, p.103). Harker (2012, p.3) reveals that NHS trusts makes about 0.6% of its revenues from privately sponsored patients. The money generated from these sources has mainly been used for the expansion of operations in the hospital, as well as meeting the hospital’s expenses. Many hospitals throughout the U.K. depend on donation from charitable organization (Bodenheimer 2005, p.27). NHS hospital is among the many that have begun receiving donations from charitable organization to help fund its operations. The hospital is reported to have received huge amount of funding in form of donation from international organizations. In fact, it is thought that the government will soon reduce its funding to the NHS the more the charitable organizations increase fun ding to the hospital. These charitable organizations have been donating some of the health facilities used for treatments. The donations received from the charitable organizations have enabled the hospital to acquire equipment that has helped in improving the quality of service delivery in the hospital. NHS also reports that part of the money received from charitable organization have also been used to purchase equipment needed to ensure that patients are provided with quality care (Bodenheimer 2005, p.27). The provision of the funding has also been of great help to the health care practitioners since it provides them with an assurance that that their salaries will be paid on time. This certainly boosts their morale leading to efficiency in service delivery. Since some of the funding is used to train health care practitioners, this has helped improve professionalism among the hospital’s health care practitioners. Patients, on the other hand, have benefited from the funding in that it has enabled the hospital acquire the facilities that have helped in enhancing the capacity and quality of service delivery in the hospital. This in turn, has helped reduce deaths from the hospital, which could have occurred if the hospital could not have been provided with the funding necessary to improve service delivery in the hospital. Overseas visitors NHS hospital also receive considerable portion of its finance from the overseas visitors. The funds are mainly received from the insurers of the foreign visitors who are required by the hospital to pay for the treatments received. Harker (2012, p.3) notes that NHS receives millions of pounds every year from overseas visitors because of diagnosis and treatment services administered. The funds have helped the hospital meet most of its pressing needs, which has helped in maintaining quality assurance to patients who receive treatments from the hospital. Patient telephone services and packing fees is also reported as being a major source of revenue for the hospital (Bodenheimer 2005, p.28). NHS hospital is said to collect huge sums of money from patients for the telephone service rendered and the packing fees charged during the patients stay in the hospital. The money received from such services is mainly used to conserve and improve the hospital’s environment, which ensures the well-being of patients and visitors of the hospital. Conclusion Certainly, there are different methods of financing for health care. However, the methods vary from one country to another. In regard to NHS hospitals, general taxation, user-pay-out pocket, social scheme, private medical scheme, prescription and dental charges are the most commonly used methods for obtaining finance. The implications of these methods of funding have been very significant as far as the management and service delivery is concerned. References Abel-Smith, B. (1994), An Introduction to Health: Policy, Planning, and Financing. London: Longman. Mossalios E, Dixon A, Figueras J, & Kutzin, J. (2002). Funding health care: options for Europe. Maidenhead, Open University Press. Bodenheimer T, & Fernandez, A. (2005), High and Rising Health Care Costs. Part 4: Can costs be controlled while preserving quality? Ann Intern Med. vol. 143:pp26-31. Davies, P. (2007), The NHS in the UK 2007/08: A Pocket Guide. London: The NHS Confederation. Harker, R. (2012), NHS funding and expenditure. House of Commons Library. SN/SG/724. Pp. 3-11. Glennerster, H. (2009), Understanding the finance of welfare: What welfare costs and how to pay for it. (2nded,) Bristol, The Policy Press. Gottrett, P., & Schrieber, G. (2006), Health Financing Revisited: A practitioner’s guide. 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