In most countries healthcare is operated by the government and is funded by the people of the country; usually those in the work force and as in the United States of America the payers of health insurance bills, share holders and contributors to the health. The government serves as the largest purchaser of healthcare services through Medicare and Medicaid insurance schemes.
The major revenue for health care services is patient services, and some additional revenue generators includes gift shops, entertainment facilities, meal and cafeteria outlets, snack bars, and also other diversity activities like sale days from garden planting and from fairs where services or supplies can be introduced and sold to clients and their families. Other revenues include third party payers and revenues from services like social workers, homecare programs and other non-medical services.
It is essential to have several revenue providers within the healthcare system as having something to cushion any loss will be advantageous to the services being offered. Money from one program can offset the negative balances in another that could be the deciding factor in whether or not a program is saved and or maintained. A disadvantage of this; however one service area or program may be burdened to sustain the other, while not making enough revenue to support itself. Also, with third party payers like Medicare and Medicaid the healthcare institution will need to maintain certain limits and margins in order to receive reimbursement from the insurance scheme.
It is safe to say that having clients pay out of pocket would be advantageous for the healthcare institution however this will be at a disadvantage to clients as healthcare costs are very high. As such expecting the patient/client to pay out of pocket will have clients turning away from that particular healthcare institution. This will have devastating effects on the institution on a whole.
As it regards to planning and reporting, the institution may have difficulty planning on revenue that is unsure especially when there are clients who may default on bill payment, when there is delay in Medicare or Medicaid reimbursement and as such it makes for poor reporting and maintaining of balances. It is therefore beneficial to have other services that will maintain a steady flow of revenue to maintain the institution.
Deloitte 2017. Navigating the New revenue Standard. Extracted from http://www.revenuerecognition.com/indusrty/healthcare-providers
NA, 2013. Prospective Care Management. Gateway Health. Extracted from http://gatewayhealthplan.com/node/82
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