UM Health Insurance and Managed Care Key Concepts Discussion Replies

Respond to peers separately at least 8 sentences each.

Peer 1: 

Part 1:

1. Health insurance involves the assumption of the risk of financial loss by a party other than the patient. Describe how insurance companies can afford to assume such risk.

Insurances obtain monthly premiums from those who are insured. In return from those premiums, insurers pay for a portion or all of the patients visit. Some of these visits could be very expensive, these insurers are willing to take the risk of payment because the patient pays these premiums, but they will not cover more than what the patient has paid. Let’s say we are dealing with a very popular insurance company. They have hundreds of thousands of patients paying monthly for coverage. Not all of these patients are high-risk or sickly, therefore the insurance does not usually pay large amounts for these patients when they go to a doctor. But the few individuals who are very sick have outrageous bills compared to the vast majority who are not. This allows the insurance to afford taking a loss on a big payment due to the steady income of the individuals who pay monthly and aren’t as dependable on their insurance company because they rarely see a physician. 

2. What are the financial risks in health care delivery for providers, third-party payers, and patients?

When a provider performs a surgery, a yearly checkup, or even a follow up appointment with a patient, they expect to be paid for their work and the knowledge they have to assist these patients in all ways. These providers are not compensated right after their visits, they are paid by the facility or company they work for. These companies would not be able to afford paying their personnel without getting reimbursement from the visits their providers conduct with the patients. For example, a patient has an open heart surgery due to an active myocardial infarction. This is a very complex and time consuming surgery and requires an educated surgeon to successfully operate. This surgery is not free, in fact it is incredibly expensive. But the surgeon takes the risk of performing the surgery expecting to be fairly compensated. Third party payers are similar to primary insurers when it comes to risks. The third party payer is risking that their patients will require healthcare services and are willing to pay for some or all of that service. This type of insurance helps limit costs requiring co-payments for certain visits. Third party payers make healthcare more accessible and affordable. When it comes to patients needing certain amenities, they assume the risk of the cost because these things are needed for them to stay alive or healthy. For example, if a patient has diabetes they will visit their doctor as directed and the doctor will perform blood tests, vitals and send prescriptions to keep the patients glucose at a manageable level. The patient will risk having to pay for these necessities if the insurer does not because they are vital to live a normal everyday life. 

3. Explain the ways managed care plans seek to lower costs.

Managed care plans work continuously to lower costs for healthcare. A popular way that they conduct this is requiring their patients to only see providers who are within the insurers network. For example, if a patient has medicaid they are limited to the providers they can see. Some offices will not take medicaid resulting in the patient having to be self-pay. If the patient sees a provider who is in network, it will reduce the cost for the patient due to the contract this provider or company has with the insurer, resulting in more coverage for the visits. 

Part 2:

1. What is the difference between data analytics and health informatics?

Data analytics take information from raw data and dives deep into how well something is working giving accurate and timely information on that matter. This data could be retrieved from a doctors office or a hospital in regards to patient care or even other amenities provided. Health informatics uses the data retrieved from the analytics to improve whatever is being studied. This provides an insight on what the company needs to do in order to continue having a successful future with their patients and providers.

2. What is a key performance indicator (KPI)?

KPI’s are a set of measures that target overall long-term performances. These indicators could measure a company’s success and performance over a period of time to give an insight on what is needed to further succeed or improve what’s essential. For example, a hospital wants to look at their breast care centers performance with the patients who were treated in the previous year. Using all the data consumed, they can determine whether they need to buy newer equipment or hire more staff to accommodate the large number of patients being treated so they can continue to treat these patients, as breast cancer diagnoses are on the rise.

3. How do KPIs aid administrators in decision support?

Obtaining vital information from KPI’s are a huge aid in supporting a company’s decision to possibly forego a huge purchase or improve the indicators studied. It would be nearly impossible to persuade a company to purchase new medical equipment without the research to support the need for the new equipment. These KPI’s give administrators a clear insight to how the company has evolved and what is needed to continue to evolve in a positive way. Imagine a community owned hospital has only one MRI machine because the patient intake has been so low for the years it has been operating. Within the previous year, the hospitals intake has increased and the need for more equipment is vital to treat emergency patients in a timely manner. The administrators would want proof that this second machine is needed before they spend thousands of the communities dollars on a machine that they possibly could bypass buying that year. These KPI’s help give solid, research-backed information on the hospitals patient intake to comply with the need of a second machine.

Peer 2: 

Part 1

Please address each of the following topics in your posts.  For each, please include one or more examples as needed to demonstrate you understand the meaning of the terms and can apply them in practice.

Health insurance involves the assumption of the risk of financial loss by a party other than the patient. Describe how insurance companies can afford to assume such risk.

Insurance companies assume the financial risk in exchange for a fee known as a premium and a documented contract between the insurer and individual. The contract states all the stipulations and conditions that must be met and maintained for the insurer to take on the financial responsibility of covering the risk. By accepting the terms and conditions and paying the premiums, an individual has managed to transfer most, if not all, the risk to the insurer. The insurer carefully applies many statistics and algorithms to accurately determine the proper premium payments commensurate to the requested coverage. When claims are made, the insurer confirms whether the conditions are met to provide the contractual payout for the risk outcome. Each party would like to minimize its financial loss.  The provider wants to minimize the chances of receiving less payment for services than it costs to provide those services.  The insurance company wants to minimize the potential loss of paying out more for healthcare than it receives in premiums (Davis, 2020).

What are the financial risks in health care delivery for providers, third-party payers, and patients?

Healthcare providers provide services in which they expect to be compensated for, risking that they will be paid for their time and effort. They risk that their expertise will lead to the correct diagnosis and treatment plan. The patient faces the risk that the healthcare cost will be high and unaffordable. Third-party payers (insurance), assume the risk of having to pay for expensive healthcare services that may exceed what they bring in through premiums. Third-party payers risk the chance that they will lose clients due to raising the cost of premiums.

Explain the ways managed care plans seek to lower costs.

• Insurance companies negotiate with providers to agree on how much clients can be charged for different services, and under what circumstances those services can be rendered.
• The provider agrees to the amount that they may charge for their services.
• Patients must stay within network for their healthcare visits to be covered under insurance.

Part 2

Please address each of the following topics in your posts.  For each, please include one or more examples as needed to demonstrate you understand the meaning of the terms and can apply them in practice.

What is the difference between data analytics and health informatics?

Data Analytics:

• Understanding statistical concepts
• Database management
• Database query languages – using raw data
• Computer programming
• The goal is to identify strengths, weaknesses, efficiencies, and inefficiencies in process.
• Providing feedback through key performance indicators (KPIs).

Example of data analytics would be a healthcare employee in internet technology (HIT) writing a code that would go out and extract data from the system.  A medical center wants to know which of its departments have seen the most growth in a year.  The programmer can write a programming code that goes through the databases and develops the statistics for each medical center department.

My ex-husband is the chief technological officer for a large investment company.  He writes code that goes out and collects statistical information with stocks, the stock market, and foreign markets.  It’s very complicated, math related, and requires a high understanding of several different computer coding languages.

Health Informatics:

• Using technology to development and implement data to improve the delivery, management, and planning of healthcare services.
• Collect data efficiently, real time if possible, so that interventions can be made on a timely basis.
• Supports a variety of applications, particularly decision-support systems.
• Identifying, controlling, managing, securing, and preserving electronic records and information.
• Less technical and less theoretical than data analytics.

Example of health informatics would be health information management (HIM) maintaining, upgrading, and re-evaluating EHR systems. Working with health information exchange, cyber security project teams, medical software companies, and collecting patient input on how the medical center could better serve them, and to hear what they are doing right.

What is a key performance indicator (KPI)? How do KPIs aid administrators in decision support?

A KPI stands for a key performance indicator, a measurable and quantifiable metric used to track progress towards a specific goal or objective. KPIs help healthcare organizations identify strengths and weaknesses, make data-driven decisions, and optimize performance. KPIs provide teams with targets to aim for, milestones to gauge progress, and insights to help guide decision-making throughout an organization. By monitoring KPIs, HIM can identify areas of strength and weakness, make data-driven decisions, and take actions to optimize performance. Peter Drucker famously said, “What gets measured gets done.” Measurement is an essential management tool, as it helps us determine if our work is making an impact, demonstrate value, manage resources, and focus improvement efforts (Harlow, 2023). 

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