Cost Shifting In Health Care Essay
Cost Shifting and Uncompensated Care in Health Care
Cost shifting has been and continues to be a problem for many hospitals and insurance companies. In broad terms cost shifting is defined as hospitals making up their losses they obtain from treatment of uninsured patients by charging higher prices and implementing higher costs towards privately insured patients. This approach in tittles claims of large rates that in return drive health care premiums to a peak cost. The continuing debate on cost shifting has brought stakeholders to provide an approach towards health care policy makers to understand that cost shifting can be both at large and inevitable in providing cost effective health care. The cause of cost shifting can be seen from many hospitals due to uncompensated care. In terms, uncompensated care is the care provided by the hospital for which the cost of treatment was not received neither from the patient or the insurer. This type of financial assistance reimburses funds or reduces costs, which can have an effect on the hospitals bad debt (Kim et al., 2009). …show more content…
To understand further, the breakdown of uncompensated care costs between private not-for-profit hospitals (4.8%) shows a slight difference than for for-profit hospitals (4.2%) (Frakt, 2014). Despite the benefits of cash flow, which is another concern for not-for-profit and for-profit hospitals as the excess cash flow for not-for-profit hospital goes towards charity and community care, where as for-profit hospitals use cash flow towards investments and paying back stock holders dividends instead of providing higher levels of uncompensated care. This effect causes health care to focus on cost shifting form means of balanced profit for the losses acquired from charitable financial
Cost shifting has been and continues to be a problem for many hospitals and insurance companies. In broad terms cost shifting is defined as hospitals making up their losses they obtain from treatment of uninsured patients by charging higher prices and implementing higher costs towards privately insured patients. This approach in tittles claims of large rates that in return drive health care premiums to a peak cost. The continuing debate on cost shifting has brought stakeholders to provide an approach towards health care policy makers to understand that cost shifting can be both at large and inevitable in providing cost effective health care. The cause of cost shifting can be seen from many hospitals due to uncompensated care. In terms, uncompensated care is the care provided by the hospital for which the cost of treatment was not received neither from the patient or the insurer. This type of financial assistance reimburses funds or reduces costs, which can have an effect on the hospitals bad debt (Kim et al., 2009). …show more content…
To understand further, the breakdown of uncompensated care costs between private not-for-profit hospitals (4.8%) shows a slight difference than for for-profit hospitals (4.2%) (Frakt, 2014). Despite the benefits of cash flow, which is another concern for not-for-profit and for-profit hospitals as the excess cash flow for not-for-profit hospital goes towards charity and community care, where as for-profit hospitals use cash flow towards investments and paying back stock holders dividends instead of providing higher levels of uncompensated care. This effect causes health care to focus on cost shifting form means of balanced profit for the losses acquired from charitable financial