C428 Task One - Passed- first attempt- make sure to review your document with the rubric chart PDF

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Passed- first attempt- make sure to review your document with the rubric chart in the task assignment...

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Lisa A Wolf Student ID#: 001307518 C428 Financial Resource Management in Healthcare November 5, 2021 A. 1. Three strategies for Seamus Company to exit a fee-for-service model to a Managed Care Organization would require transitioning to one of the following:  HMO- (Health Maintenance Organization)-HMO’s use diverse methods to control costs. The chief approach is to have a network of providers in which the patient must utilize or risk noncoverage. This is enforced by using a primary care provider who acts as a gatekeeper and will make an outbound referral to networked/preferred providers when necessary. Utilizing only networked providers who are either owned or contract by the organization cap the costs of care to both the patient and the insurance carrier as they are typically under financial contract. HMO’s were also the commencement of preventative care programs that enforced an ideology of screening and prevention to maintain healthcare costs through early detection. While HMO’s were highly popular in the past, they have lost their appeal to patients due to the lack of freedom. Physicians grew suspicious of them as reimbursement rates were further cut and network requirements grew stricter.  PPO- Preferred Provider Organization)- PPO’s were created as a response to the negative feedback of HMOs and a desire to have the freedom to choose the provider. These organizations set reimbursement rates for both in and out-of-network providers under discount contracts. This allowed patients to exercise their freedom of choice with different percentages of coverage based on the provider status. While these plans are not the most cost-effective and quality of services are a concern, the organizations' inability to handpick the providers places a certain amount of liability on the patients that the organization previously held. PPO’s do not promote prevention as heavily as HMOs due to the freedoms offered.  HDHP (High Deductible Health Plan)- HDHP is the newest option that can benefit both the employer and the patient but is situational. These plans are structured under the premise that the patient will be responsible for meeting a high set deductible and out-of-pocket costs. The insurance carrier will provide 100% coverage once these aggregates are met. These plans can offer the opportunity to set up an HSA/FSA once specific qualifications are met. These accounts can also be advantageous from a taxation perspective as well. a. Plan to carry out each of the three sustainable strategies: • Cost saving measures afforded to Seamus Company vary by the selected organization. The premiums for HMO plans are universally less than PPO plans. HDHP plans offer an even lower premium rate than HMO’s but are typically paired with an HSA/FSA program. While these extra programs don’t usually incur more than an administrative fee, some obligations may drive away enrollees, thus creating employee dissatisfaction. HMO plans can offer a middle-of-the-line option for Seamus and its employees; however, they restrict the provider selection, which can also be seen as a negative factor when attracting human capital. PPO plans are most attractive for their freedom of choice options, but they are less desired for their high premiums, resulting in higher costs to the employer and possibly

the employees. The position of employee satisfaction is a priority to be considered when deciding to make these kinds of changes. • Company tax deductions are determined based on the size of the company and average employer wages. In an assumption that Seamus employees over 50 employees, they would fall under the large employer group. Non-profit groups of this size are eligible for up to 35% tax credit, though this amount can dwindle based on the number of employees and average wages (Canopy, 2017). This would apply to all three options listed above. • Other tax advantages offered would be the possibility of the employee to have their portion of the premiums deducted from their gross income, meaning it will reduce their taxable income. This would apply to all three options. If an HDHP plan is offered, a tax-advantage savings (HSA) account can be created to offset these high financial expectations. This is another opportunity to make a pre-tax adjustment to the employees' gross figures. • Fiscal management will improve where budgeting is concerned. When Seamus exits the unpredictable costs of the fee-for-service plan, it will be able to take control of its budget and accurately anticipate employee benefit costs. This preciseness could reveal further cost savings and reassign funds to an area of need that always arises in non-profit agencies. This financial conviction can also allow accurate future forecasting, leading to expansion, growth, and security. This would pertain to all three options as well. b. Two financial management principles of Seamus Company that would show evidence of the cost-saving measures are:  Costs- Cost-effectiveness in all aspects of the company is key to its success and longevity. As a non-profit company, Seamus has to be very particular about its expenses. If they receive any grants or governmental assistance, they will be required to report such information for renewals and further assistance. Suppose Seamus elects to change its path for healthcare coverage. In that case, it will need to be confident it is a costsaving benefit for the company that aligns with its mission and recruitment of human talent to benefit the company. This could be shown by comparison reporting with cost projections of reach HMO, PPO, and HDHP options to show statistical advantages and disadvantages to each.  Control- As mentioned above, forecasting the costs of employee healthcare benefits contribution from Seamus’ budget will allow better resource control. This will contribute significantly to analyzing operational and financial conditions, ultimately contributing to the business’ performance and success. As a non-profit company, one measurement of success will be if the needs of society are being met. c. The strategies above align to Seamus Company’s goals of reducing the costs of the company’s health insurance plans by allowing for predictable healthcare expenses that can also benefit the company from a tax perspective. The variation of options should be explored to see what is best for Seamus, the talent resources already on staff, and future needs. The predictability will allow for improved budgetary control and effortless cost efficiency and evaluation. This will enable Seamus to continue to grow and serve the community well. 2. The strategy I selected to utilize the overall cost reduction of healthcare services is the High Deductible Health Plan (HDHP) with Health Savings Account (HSA)

options. Increased service benefits for Seamus Company with these options will also include the use of tax-free HSA accounts and Centers of Excellence. a. The healthcare utilization risk that concerns Seamus Company is the lack of use by the members due to the requirement to cover the high-rate deductible. We have strategized to alleviate this through education of the HSA account and $1000.00 initial contributions made to this account by Seamus Company. Seamus can further promote utilization of Centers of Excellence for high quality, diagnostic and preventative care. Access to COE’s are a perk of joining large carrier networks. Seamus can incentivize its members through premium reduction rewards and PTO free time off to utilize these services. b. Three financial benefits to Seamus Company with the implementation of increased service benefits are:  Shared Premium Expense- Seamus will be sharing the premium expenses with its employees. The HDHP was selected to keep premiums low for both parties and allow an affordable option for Seamus staff to add their family members at their own expense. We will be utilizing an annual enrollment program allowing these expenses to be captured on the budget planning for the following year.  Talent Acquisition- Having a competitive benefits package that includes fair and reasonable healthcare coverage will give Seamus a competitive edge when vying for strong employment candidates. Respectively, this will also align Seamus to compete with larger for-profit organizations as they are typically able to capture more innovative human capital with enhanced benefits. Attaining high-demand personnel will strategically promote growth and prosperity for Seamus.  Tax Deduction- When Seamus engages in monthly fixed premium payments, they now qualify for up to 35% tax credits when they supply this benefit to their staff. Seamus is also free from paying payroll taxes on any funds they contribute to the HSA. c. Three financial drawbacks to Seamus Company with the implementation of increased service benefits are:  Underutilized- As Seamus strives to provide a fair and reasonable plan, it does not guarantee usage. Sticker shock from the high-rate deductible, even when education is provided, can be discouraging. This could lead to wasted monthly premium payments by both Seamus and the employee.  Overutilized- Since Seamus offers an affordable and comprehensive plan with deductible assistance, this may appeal to employees receiving previous coverage through alternate means. A competitive program may attract additional participants. This could create an unpredictable expense increase for Seamus.  Premium increases- As with any service, there is a likelihood of premium increases over time. With the transparent monthly premiums, Seamus will predict their budgetary needs to cover these increases or evaluate them to make plan changes. d. Employee’s increased usage of these service benefits can benefit Seamus Company through high employee engagement, elevated employee satisfaction rates, and quality talent acquisitions. There was no incentive for better health practices or employees to use the benefits with the previous fee-for-service plan. This will allow for ease of encouragement without the background thought of costs. Another advantage is that when employees feel valued and are healthy typically don’t have attendance issues and perform

well. Staff can also be challenged when new employees have new ideas and avenues to meet company goals. 3. Seamus is considering engaging in two external healthcare partnerships to benefit its employees. The first is a partnership with the local gym to offer membership discounts to employees and their families. The second is a healthy meal delivery program that will be provided to the staff with bulk rate discounts. These partnerships were built to promote healthy living, which will benefit the Seamus work environment and keep premium rates capped. a. One financial benefit from external healthcare partnerships is minimizing onthe-job injuries when people are physically fit. This can also assist in offsite injuries, resulting in decreased failed attendance and increased job performances by consistency. Another benefit is the meal delivery service being used to deliver nutritious lunches to employees while at work vs. going offsite for fast food. This could increase production and consistency as well as further enhance the ideology of healthy living. b. A financial drawback from external healthcare partnerships is that they could go underutilized. It is not unusual for gym memberships to be acquired but not used. The same could be said for the meal delivery plan as well. Another finical mismanagement of these partnerships could be poor quality service that discourages the employees and creates a feeling of distrust. They might no longer engage in the benefits, further wasting funds. c. After careful evaluation and research, I have opted to move forward with the gym partnership. i. Justification of this decision is based on overall healthy living. A partnership with a local gym has many overlapping benefits for Seamus. The gym will provide weight loss programs, stress maintenance programs such as yoga, and personal fitness trainers. These memberships can be used in conjunction with their new health insurance coverage benefits and COE to meet weight loss goals, reduce mental health disease, recover from minor injuries, and achieve overall better living.

“A Beginner's Guide to Healthcare for Nonprofits.” Canopy Health, December 5 2017, https://www.canopyhealth.com/en/employers/articles/a-beginners-guide-to-healthcare-fornonprofits.html#:~:text=If%20your%20business%20has%20fewer%20than %2050%20FTE,number%20of%20employees%20and%20their%20average%20annual %20wage....