Describe about the impact of financial crisis 2007 on the financial management of health care industries?
The financial condition of 2007, also called as the global economical crisis and 2007 economical crisis, this is measured by the economists to have been the most horrible economical crisis after the recession in the year of 1930. According to Warren,(2015) after the great depression of the global economy on the year of 1930 the world was experiencing the recession again. This recession impacted greatly on the finance condition of the hospitals greatly. More than a 50% of health financing drive the millions of people into the poverty. Major decrease in finance is due to the less hospitals are for the patients and decrease in the insurance policy for the employees and the unemployment of the people. This exposed the fall down of large health care organizations, and the stock market was still dropped worldwide. The financial crisis begins in the August 2007 in health care industries. There was a significant slowdown in health cost was an outcome of wider financial factors in this year of 2007 (John, 2013). The structural changes in the health care system that had lead to slower growth as well. The main root of the crisis has started from the year of 2000 as stated by Tuffs, 2007. The inflation starts to increase despite the effort from the regulatory authorities and the central banks. The prices begin to fall and the loans started to be bad (Vithessonthi & Tongurai, 2015). There was a severe sock in the finance of the health care industries. There are some cases of financial fraud had noticed in the year 2007. The most of the financial fraud has been done because some dishonest health cares providers. The most common types of fraud includes the billing for the health care services that never rendered, billing for most costly services, Wrongly diagnose patients for tests, surgeries etc. Also this includes accepting kickbacks for patient referrals. This had main insinuations for strategy, as health expenditure growth is a key driver of federal and state financial plan throughout the Medicare plan. The financial impact of the ailment related malnutrition at the hospital admission had been noted. The frequency of the disease related mal nutrition for the patient’s admission to the hospitals had been calculated to be very high. The changes in the economy had impacted greatly in the development of the hospitals.
The health care industries were going through recession since the year 2007 to 2011. As per Sheel, (2008) the global economy was also under a high decline. The decrease in the global finance impacted greatly to the development and financial structure of the hospitals. After the year 2011 and in the year of 2012 the global economy was increasing slowly that also resulted in the increase in the financial condition of the hospitals. Between the years 2007 to 2011 the financial condition of the healthcare industries considerably low due to sluggish economic recovery and continual increase in the price of the price sharing devices for privately insured, slow growth of the people programs. The above factors go ahead to projected expansion rates of close to 4 percent throughout 2012. Over the year of 2012 period, national health spending is projected to grow at an average annual rate of 5.8 percent. There was noticed a slowdown in the health spending due to the recession in the years 2007 to 2012 that had been noticed to be slightly increased in the year 2012. As a result of the slowdown there was a decline in the growth of the hospitals. There was a strong statically connection between recession and national health care spending noted in this year 2012 (Shortt, 2014). The outcome of financial activity on the health price and consumption is measured and extremely lagged. The health spending growth charge in progress to drop earlier than the vast recession but there was a remarkable progress in the health spending and financial condition of the hospitals.
The key financial management shifts were there was a low rise in the financial condition of the healthcare industries as compared to the year of 2007 (Krueger& Kuziemko, 2013). It has been noticed by the researchers that there was a steady increase in the health care spending since the year of 1930 although the rate of increase is very slow between the years 2007 to 2011. In the instant consequences of the economical crisis palliative economic and monetary plans were accepted to weaken the distress to the financial condition (NPR.org, 2007). It had been observed that the slowdown in the economy of the hospitals had been due to the extensive failures in the regulation of the hospital finances that also includes the Federal Reserve’s breakdown to stalk the wave of deadly mortgages. Roehrig, (2012) has mentioned that after the year of 2011 there is a noticeable increase in the rise in the economy of the world. That had impacted greatly on the increase of financial condition of the health care organization.
The changes occurred due to the changes in the global economy and that effect the health industry too. The changes that occurred to the health care industries are the increase in the health spending by the people. Increase in employment also increases the policies for health care insurances (Karanikolos et al, 2013). The people who are insured had a financial defensive effect in defensive people as of the full price of care for their health. Customers can perceive health care as a necessity that is different from other economic supplies. The companies cannot make instant changes in the benefits of the health care. The health care organizations were very much deliberate in their decision regarding whether to increase or pact services and wealth expenditures. As stated by Kondilis et al. (2013). The legislated vary in expenditure beneath Medicaid with Medicare might require an extensive process of discuss before any considerable alterations are completed. In detail, as joblessness increases and incomes go down, Medicaid expenses have a tendency to rise up as much people turn into qualified for the plan, while affirms in reaction may respond by cutting the eligibility or expenditures to the suppliers (Schneider et al. 2015). From an analysis it has been noticed that the decrease in health expenditures growth in the years what was occurrence more generally in the financial system. The slowdown in the financial management was may be due to the slowdown in the health spending by the people.
There was an increase in the financial condition of the health care organizations since the recession age of 2007 to 2012. As the financial condition recovering slowly the health spending is also at a rise. Although growth taxes are improbable to go back to the two digit levels that were in the past years (Frayss, 2015). The increase in the future healths spending also depend on whether the extra health expenses stay at the comparatively self-effacing level of current years or return to the past standard. It has been shown from the past that earlier hard work to control the costs of the health care had only a short time effect, and there were initial signs that the recessions or slowdown (self-determining of the belongings of the financial state) is beginning to wane (Hall, 2015). Changes in the affordable care act can also affect financial condition of the health care industry. Rise in treatment will encourage a unassuming, one-time bang of a pair percent in expenditure as public who are earlier were not insured acquire insurance and improved entrance to health care services. As mentioned by Schaumburg, 2013, this was proved to match through a predictable financial recovery, so an increased rate of growth in health expenditure because of facilitate recovery must not be accredited to the affordable care act just because of the concurrent timing.
Yes the rise in the economy has always a positive effect on the long term financial management of the health care organizations as stated by Fairlie, 2013. Since the increase in the economy may increase the rate of employment and financial condition of people. So there is a better chance of rice in economy of the hospitals and health care organizations. The rise in global economy will develop new organizations and firms. The employers may opt for some medical policies for the employees so there is a chance of growth in the financial condition of the health care organizations. As per Fox, (2013) there is also a chance of fall in to the recession that can fall the global economy. This may also decrease the health spending of the employees and the public which could lead to the decrease in the financial condition of the hospitals. These changes are may be increase the increase the financial level of the hospitals but there is not any long term improvement in the financial management of the health care organizations. As per the perception from the policy considerate example of health expenditure in the past is first and foremost of importance as a conduct for that occur in the near future.
References list:
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Hall, S. (2015). Everyday family experiences of the financial crisis: getting by in the recent economic recession. Journal Of Economic Geography. doi:10.1093/jeg/lbv007
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