HCM 3501 : Health Financial Management

1. In any existing health system, one of the essential components is the finance part as this is where all the money necessary for running the system is sourced from and they ensure to assign each element in the health system enough money. Some of the things that this department manages are the revenue and expenditure within the health system which is entirely different from each other. Revenue is described as the income a hospital receives from its daily activities such as money charged to patients when they require the various services in the hospital. It, therefore, includes the entire history of a patient from when their account in the hospital was created until when the pay for the services they received. On the other hand, expenditure is described as the amount that health facilities spend so that they can offer the services. It also includes the amount spent to fund the different health programs in public hospitals in the health system and also the amounts made by the government managing the health system in private hospitals (Singh & Wheeler, 2012).

2. The NSW Health System uses the Activity Based Funding to determine the amount of funding public hospitals receive. ABF is used by the NSW Health System to monitor, manage and give funding to the various public hospitals. This method determines the number of funds allocated to each public hospital by monitoring and determining the number of patients the hospital serves and also the mix of services provided to patients by the hospital. Therefore this means that the more patients a hospital treats, the more the funding the hospital receives. Hence, this approach allocates funding based on the services provided by the hospital (Mitchell, McClure, Olivier, & Watson, 2009). The funds gotten from ABF should allow the hospitals to provide excellent quality health services and should enable the existing public hospital networks to function well thus ensuring patients receive top quality services. This approach is appropriate as it helps the health system to allocate the available funding correctly based on the levels of patient care thus ensuring there is accountability in expenditure (Eagar, 2011).

3. Casemix system of classification is a method used by healthcare facilities to classify the different types of patients that they serve, the treatments that they receive and how much it costs to do all of this. Therefore, the term casemix is used to describe the mixture of different kinds of patients that a healthcare facility treats. This system assesses information on patients and their treatments then it classifies them into groups based on the health condition they suffer from or the type of procedure they require to get treated. It is important since casemix is used by the hospital to explain the use of their resources by assessing the patient information available thus increasing accountability. The Australian DRG system of classification is described as a method used by hospitals to classify the different kinds of patients who are admitted to the hospital. The method classifies patients based on the diagnosis they receive, the surgical procedures performed on them and any other data that is collected as routine (Goldfield, 2010).

References:

Eagar, K. (2011). What is activity-based funding. ABF information series, (1).

Goldfield, N. (2010). The evolution of diagnosis-related groups (DRGs): from its beginnings in case-mix and resource use theory, to its implementation for payment and now for its current utilization for quality within and outside the hospital. Quality Management in Healthcare, 19(1), 3-16.

Mitchell, R. J., McClure, R. J., Olivier, J., & Watson, W. L. (2009). Rational allocation of Australia's research dollars: does the distribution of NHMRC funding by National Health Priority Area reflect actual disease burden?. Medical Journal of Australia, 191(11), 648.

Singh, S. R., & Wheeler, J. (2012). Hospital financial management: what is the link between revenue cycle management, profitability, and not-for-profit hospitals' ability to grow equity?. Journal of Healthcare Management, 57(5), 325-341.