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Health Care - the Hospital Sector

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Health Care



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Health Care - The Hospital Sector


The chosen sector with regard to health care is the Hospital Sector. This paper discusses the historical development of the hospital sector, and highlights the role it plays in health care delivery. Moreover, it also discusses the main challenges the Hospital sector encountered before the Patient Protection and Affordable Care Act (Obamacare) was enacted, and the potential challenges it is likely to face after the passage of the health care reform law as well as associated regulations. Moreover, the paper also analyzes the potential risks and benefits of the health reform law with regard to the hospital sector, and discusses the current overriding issues in health care for instance, access, cost and quality. Therefore, the research question to be answered is: What were the challenges encountered by the hospital sector before the enactment of PPACA, and what potential challenges/risks and benefits the sector faces after the passage of the law?

Hospital Sector's Historical Development and Current Role in Health Care Delivery

According to Wallis (2010), hospitals in the USA account for more than one-third or $715.4 Billion of the country's expenditures on health care, and the Hospital sector employ nearly 4.7 million people. This sector started in the pre-industrial societies whereby, hospitals were operated simply as charitable and religious institutions. Wallis (2010) adds that before the end of the nineteenth century, the goals of the hospitals included taking care of, and housing the sick people who were poor, insane or homeless. Towards the end of the nineteenth century however, hospitals began to redefine themselves as medical science institutions rather than institutions of social welfare. At this time also, hospitals began to employ health care professionals rather than charity workers. The hospital sector has since transformed into the current sophisticated health facilities mostly due to advances in medical sciences, and the demands of the fast developing and industrializing societies that resulted in huge concentrations of different people into urban areas (Wallis, 2010).

The hospital sector in the US, which is a subsector of the social assistance and health care industry, provides inpatient health services, and most of these health services can only be provided using specialized equipment and facilities (Bell, 2012). The health services offered include complete medical care that ranges from continuous nursing care to surgery to diagnostic services. Some hospitals in this sector focus only on treating cancer patients, military veterans, children or the mentally ill. Moreover, these hospitals have been shifting to outpatient care from inpatient mainly due to improvement in technology (Bell, 2012).

Majority of hospitals in this sector are privately owned while others are either federal, state-owned or owned by local governments. The health care expenditures in the US exceeded $2.5 trillion in 2010, and the hospital sector plays a very crucial role in America's health care system since it consumes the largest share of financial resources spent on health care. The hospital sector has been affected by the recent trends especially with regard to reform and it has experienced major structural, policy and economic changes, which have affected the way hospitals operate and the way consumers access healthcare services. Nearly one-third of hospitals in the US are classified as rural (Chandra, Kumar and Ghildayal, 2011).

Challenges and Issues Prior to the Health Care Reform (Patient Protection and Affordable Care Act (PPACA))

There were several issues and challenges the hospital sector faced before the enactment of the Health Care PPACA reform law or Obamacare as commonly known. The first was Financial Challenges mainly because of limited access to capital. According to Barrie (2010), there was a reduction in hospital expenditures as a portion of all the healthcare expenditures, which had been shrinking over time. This reduction in hospital expenditure was attributed mainly to low reimbursement rates and rising costs of health care. This significantly impacted on the sector's operations, and some hospitals even closed their operations because of rising costs and reduction in revenue. Competition among hospitals is the second issue, whereby there are very many hospitals offering the same services. However, this has been beneficial in the long run since stiff competition enables hospitals to improve the quality of their services, which in turn is beneficial to the customers (Barrie, 2010).

The growing numbers of the uninsured individuals and rising debts were other challenges. Millions of uninsured low and middle income families who could not afford expensive premium health insurance sought health care in hospitals which they could not afford (Barrie, 2010). This in turn led to these hospitals offering health care services that were not paid for, and the hospitals ended up with big, increasing debts and inability to fund their operations. Another issue is the Shortage of workers and competition with and for physicians. The sector experienced a shortage in skilled labor, especially physicians who also ran their own clinics hence competing with the hospital for customers. Therefore, because of this shortage in labor, various hospitals competed for workers, more so physicians, and this labor shortage was a big issue the hospital sector faced (Bell, 2012).

Lack of standardization was another issue, and it resulted to hospitals incurring significant costs. It happened mostly because providers ordered unnecessary tests or they overused limited hospital's resources whilst the hospital accepted fixed rates for procedures. With declining Medicare reimbursement, there was the need for managers in the hospital sector to determine how to standardize their practices across the entire hospital sector. Consolidation was also an issue and it involved acquisitions and mergers. Several hospitals consolidated their operations in order to lower costs through levering on economies of scale (Bell, 2012).

Moreover, the divide between non-profit and for-profit facilities was an issue prior to the health reform. This challenge faced the hospital sector since some non-profit hospitals shifted their operations to profit making in order to take advantage of the opportunities in private facilities. An example



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