Having researched in the sphere of financial support in the USA, it may be stated that one of the main problems which exist in the country is underutilization of health care services by some and overutilization by others. Such inequality exists due to the huge differences in funding which do not correlate with expenditures. Even though the hospitals have the greater expenditures, they are also largely financed by different sectors. Differences in applying to technology and prescription drugs method lead to the differences in spending funds, however, the financial aid is still distributed in the prescribed amount (U.S. Health Care Costs, 2012). Therefore, some sectors manage to distribute received aid while others do not. Moreover, recent health care reform has created some difficulties in distributing financial aid which does not correspond to the number of expenditures, thus, some healthcare institutions manage to cope with required finances and others do not have enough funds to cover their costs (Lowering Health Care Costs, 2012).
Looking at the international experience, it is possible to apply one critical change that could be made to alleviate this issue. By providing financing based on the “pay-for-performance” (Reid, 2008), the financial situation in many hospitals would improve. Relying on the data about the completed tasks, the government should share funds between healthcare sectors offering more to those where more work was done. The benefit of this strategy is in reward and competitive desire to increase the number of patients who turn to the healthcare institution. Still, the rate of chronic diseases is also considered, therefore, the lower level of chronic diseases and the better their consideration, the higher percentage of financing may be expected.
Hospital expenditures are in the first place and comprise 34% (Barton, 2009). This is much more than in other sectors. For comparison, in the second place among expenditures takes physician and clinic service which comprises 25% (Barton, 2009). Considering the sources of funding of the hospital sector, the greatest one is the federal government which comprises 44.3% of the whole funding sum. 37% comprises personal insurance (Barton, 2009). Hospitals are also funded by state and local government (11%), out of pocket (3.3%) and other types of funding comprise 4.6% (Barton, 2009). Considering the distribution of expenditures in hospitals and for home health care between 1960 and 2007, it should be stated that the difference is dramatic. In 1960 and 1970 the expenditures on home health care were less than 1% while on hospitals government spent more than 34% and 41% respectively (Barton, 2009). The situation with financing home health care has not changed too much as since 1980 when 1.1% was spent in this sector the expenditures raised to 3.0% in 2007 that cannot be even compared to hospital expenditures which managed to reduce since 1980 (47.3%) up to 37.0% in 2007 (Barton, 2009). Such data shows that hospitals managed to find some particular ways for reducing costs. However, looking at the research conducted in the sphere and possible measures which may be taken for reducing the expenditures in hospitals, such as increasing nurses’ knowledge (Sterns, 2007) and reducing the cost of pharmaceuticals (OECD, 2008), it is possible to pay more attention to other sectors of healthcare and change funding there. In case of increasing nurses’ knowledge and reducing the cost of pharmaceuticals, hospitals will win have more patients as the qualified staff and cheaper medicine is appreciated by the patients.
Barton, P. L. (2009). Understanding the U.S. Health Services System. New York: Health Administration Press.
OECD. (2008) Improving cost-effectiveness in the health-care sector. OECD Economic Surveys: Iceland 2008. London: OECD Publishing.
Lowering Health Care Costs: It’s About Spending Dollars Wisely. (2012). Web.
Reid, T.R. (2008). Sick around the world. Frontline. Web.
Sterns, J. B. (2007). Quality, Efficiency, and Organizational Structure. Journal of Health Care Finance, 34(1), 100-107.
U.S. Health Care Costs: Background Brief. (2012). Henry J. Kaiser Family Foundation. Web.