Financial Analysis & Decision Making
Health service departments can move from a cost center to profit center models based on their financial obligations and goals. The implication is that through instruments like balanced scorecards, novel ways emerge of looking at the traditional organizational models of costs and profit centers (Harrington, 2015). Imperatively, every unit, through its contribution to effective strategy implementation, gets the opportunity to support as well as create profits for a health service department.
Differences between the cost center and profit center
A profit center is a small unit of a firm that focuses on revenue generation and costs. Therefore, a profit center generates and maximizes revenue streams by identifying and enhancing activities that include sales. A profit center model is more complex and has increased scope. On its part, a cost center is a unit within an organization which is responsible for identifying as well as maintaining the overall costs of the entity. Cost centers analyze processes and make necessary adjustments aimed at reducing the overall expenses (Niles, 2016). As such, a profit center operates as a single department or unit while the cost center functions in different units within the organization.
Decentralization and Centralization
Decentralization in healthcare services’ provision is hard as people do not have sufficient knowledge about the functions that should be decentralized and not. Imperatively, types and levels of decentralization are not well demarcated in healthcare service provision. A decentralized health system is essential in making decisions, especially among local players (Harrington, 2015). This perspective is important since local decision-makers have adequate knowledge on the effective utilization of resources. Conversely, in a centralized system, funding, staffing, and all other resources are managed from one central point. Based on this model, resources are allocated to particular programs as well as functions in a health service department or unit.
Decentralizing services and functions in a health service department are more accountable to local communities leading to improved access by the members. Through this approach, participation and accessibility are enhanced in a health care system. The decentralized system assists in meeting the healthcare needs of community members and ensuring that users are closer to providers (Niles, 2016). However, in a centralized model, health care programs are closer to those in administrative positions. The implication is that lower administrative staff have a reduced impact on decision making.
Sticking to Historic Mission
Health service departments have an obligation to stick to their historic mission and offer care to those without medical cover as well as underserved populations. Therefore, through the implementation of expanded Medicaid, healthcare service units can realize their historic mission. Medicaid program allows those without insurance and underserved people to access healthcare services in their localities (Niles, 2016). Medicaid ensures that low-income earner and poor people access healthcare services and plays an effective role in ensuring that the organization harnesses the ability to attain its mission of offering services to individuals with no insurance.
Effect of not Permitting Public Providers to Have Reimbursable Codes
The effect of not allowing public health providers to have reimbursable code includes the probability of inadequate quality health service provision. The use of reimbursable codes ensures that providers get compensation for the costs of services offered. Therefore, it implies that if a provider does not have a reimbursable code, they are likely to receive no compensation or reimbursement from federal agencies. The implication is that service delivery deteriorates.
Secondly, lack of reimbursement will lead to boredom as well as fatigue in the sector as reimbursement is motivation and encourages engagement of healthcare professionals (Niles, 2016). Further, lack of reimbursement may occasion an increase in the cost of care for patients as the providers seek ways to increase their compensation. The implication is that inequalities will persist in healthcare without the reimbursement of service provision.
References
Harrington, M. K. (2015). Health Care Finance and the Mechanics of Insurance and
Reimbursement. Jones & Bartlett Publishers.
Niles, N. J. (2016). Basics of the US health care system. Jones & Bartlett Learning.