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INTRODUCTION

In this chapter, we will discuss the following topics:

  • What is the current cost of healthcare in the United States?

  • What changes are being faced in healthcare reimbursement models?

  • How does a hospital chief financial officer (CFO) measure success?

  • What are some of the key payment mechanisms received by a hospital?

  • How does a physician benefit by understanding hospital finance?

CURRENT COST OF HEALTHCARE IN THE UNITED STATES

The Centers for Medicare and Medicaid Services (CMS) calculate the historical and projected National Health Expenditure (NHE) data. The historical spending NHE measures annual health spending in the United States by the type of good or service delivered (hospital care, physician and clinical services, retail prescription drugs, etc.) and the source of funding for those services (private health insurance, Medicare, Medicaid, out-of-pocket spending, etc.), and the NHE projections are estimates of spending for healthcare in the United States over the next decade using the same information as the historical NHE.1 Included in Table 11-1 are the historical NHE for 2015 and the projected NHE between 2016 and 2025.

TABLE 11-1Historical and Projected NHE

In 2015, hospital expenditures were $1.361 trillion, which accounts for approximately 32% of the total NHE of $3.2 trillion; physician and clinical service expenditures were $634.9 billion, which accounts for approximately 20% of the total; and prescription drug spending was $324.6 billion, which accounts for about 10% of the total.2

HISTORY OF AND SUBSEQUENT CHANGES TO HEALTHCARE REIMBURSEMENT MODELS

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