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HA 516 Park University Price Regulation in Health Care Summary

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Health & Medical

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Park University

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Unit Two Application Assignment
By: Courtney Pittman
Park University
HA516
Instructor: Alla Adams
June 20th, 2021

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Charge Rates
When it comes to hospital billing and charge rates many factors are at play. When it
comes to the methodologies that hospitals use to determine pricing and charging it is largely
dependent on whether they are billing an insurance company or an individual. Oftentimes
hospitals will mark up costs when billing insurance providers because they expect to only be
reimbursed a fraction of this amount, but while the insurers can get off the hook with only paying
a fraction of the total amount, single patients are held liable for the entire bill (Belk, 2021). In the
example scenario the importance of using correct charge rates is shown by the fact that even a
$20 difference per patient could result in a deficit for the hospital. After some research it was
determined that the necessary charge per patient in this scenario in order to break even is $3,120.
It is also important to note that there are many other factors that may complicate the setting of
charge rates. Some of these factors include the size of the hospital, the number of beds available,
the percentage of each type of payer, and the amount that each patient costs the hospital in
charges (Probasco, 2021).
Cost Based Price
Another important billing concern for hospitals and patient treatment centers is how to
price services. Looking at the initial plan the scenario provided the cost per physical would be
approximately $342, which is $142 over the target cost of $200. Looking at the fact that this plan
did not meet the target it is clear that some adjustments must be made, and one element that
could possibly be redesigned is the minimum $20,000 per year of profit contribution. One of the
essential things every healthcare startup should know is setting up reasonable expectations, and
looking at the current price per physical, this expense, along with all the other startup costs, just
might not be possible the first year (Mychkovsky, 2020). Some other important factors that

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1 Unit Two Application Assignment By: Courtney Pittman Park University HA516 Instructor: Alla Adams June 20th, 2021 2 Charge Rates When it comes to hospital billing and charge rates many factors are at play. When it comes to the methodologies that hospitals use to determine pricing and charging it is largely dependent on whether they are billing an insurance company or an individual. Oftentimes hospitals will mark up costs when billing insurance providers because they expect to only be reimbursed a fraction of this amount, but while the insurers can get off the hook with only paying a fraction of the total amount, single patients are held liable for the entire bill (Belk, 2021). In the example scenario the importance of using correct charge rates is shown by the fact that even a $20 difference per patient could result in a deficit for the hospital. After some research it was determined that the necessary charge per patient in this scenario in order to break even is $3,120. It is also important to note that there are many other factors that may complicate the setting of charge rates. Some of these factors include the size of the hospital, the number of beds available, the percen ...
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