Answer

Cost Savings Plans for Company’s Health Insurance Plans

Fee-for-service or FFS plan is a model of payment where all services are unbundled while payments are separately made. It acts as an incentive for more provision of services to physicians in healthcare management to offer quantity other than quality of care. MCO’s or Managed Care Organizations are healthcare providers who provide managed healthcare plans (US Legal, n, d). It contracts and delivers healthcare based on specific agreements with the contractor. Managed healthcare providers minimize medical costs largely through patient education, preventative medicine and other ways. Some MCO’s are purely made up of and managed by physicians while others partner with hospitals. Major shortcomings for  MCO’s is that they in most cases may cover only limited medical conditions for the employees and in cases of complicated medical procedures the employees may be in future be compelled to pay such medical expenses from personal savings

1. a) i.) Fiscal Management

Fiscal management systems entail the application of effective financial planning, cash management, budgeting and transparent accounting systems. Non-profit making organizations must operate effective cost allocation, fiscal reporting, grants management, accounts receivable and payables management and other essential accounting systems (NMAC, 2015). Financial strategic plan ensures that financial planning in an organization is aligned to the company mission, goals and desired programs. Internal control systems assists in ensuring that the organization receives all the revenues that is due for it while it also spends only on authorized and approved expenses. The system ensures that no fraudulent activities take place in company operations.

                           ii.) Cost Saving Measures – Financial Planning and Budgeting

Financial planning refers to the process income and cost expenses planning, identification of required resources that the organization requires to institute strategic planning. A financial plan is almost similar to a budget that identifies all expenses and revenues that the company can generate over a period of one year. Financial strategic plan ensures that financial planning is aligned to the company mission and desired programs as shown in figure 1 below. The only difference between financial budgeting and planning is that in financial planning the period ranges from two to five years while budgeting is usually restricted to one financial period mostly one year (NMAC, 2015).

                                    Figure 1   Strategic Financial Planning

                                                iii.)    Cash management

The organization must have clear guidelines on handling cash, banking, reconciling cash and bank records, revenues control and statutory deductions like taxes and other standard employee deductions.

1. ) Fiscal Management

       The fiscal management strategy for Seamus would be based on non-profit organization set-up where the major source of revenue is grants or donations. The major expenditure besides salaries would be the healthcare provision for all the staff. The main input in fiscal management would be in financial planning and budgeting.            

                                      Figure 2 Fiscal Management System

Source: (NMAC, 2015).

ii.) Cost Saving Measures

The cost saving measures would generally be on procurement of services like requirements for awareness creation and sensitization expenses. Payroll management would require effective payroll systems while the accounting system would require internal control systems that are effectively controlled. For example, any expenses to be incurred must be properly authorized and approved by several appointed officials.

                                    c.) Cost Reduction Effectiveness

Fiscal planning assists the management in aligning its objectives with the resources available. The revenues available are equated to the expenses required to honor the obligations and commitments that the company has to shoulder in order to deliver on its goals (NMAC, 2015). The company plans all its operations to be in conformity with the revenues that the organization has at its disposal ensuring that no projects would be left halfway complete due to inadequate funds hence save the company any wastage that may accrue to the organization due to lack of planning.

Internal control systems in cost saving measures assist in ensuring that no unnecessary expenditure is incurred. Only the approved expenses and other costs that are required are the only ones that are authorized for payments.

                                 2) a.) Healthcare Utilization Risks That Seamus May Face

The main risk in utilizing the services for manage healthcare organization is that such organizations are built on the premise of making profits and not on basic provision of healthcare services. Just like Fee-for-service or FFS plan their model of payment is largely for profits. Such organization may be driven with the desire to make profits making then to compromise on quality of healthcare to gain in profits hence exposing their client’s not necessary patients to risks (NMAC, 2015).

                                     b.) Benefits of Increased Service Risks

i.). Financial Planning

The major benefit that would accrue to Seamus would be the information that financial planning would provide to the managers of the organization. For example, forecasting financial needs of the company would allow the company to plan ahead and even be aware of the resources that would be required in future. In case of any foreseeable deficits the organization can arrange for cheaper and affordable financing much earlier (NMAC, 2015).

ii.). Internal Control Systems

Internal control systems assists in ensuring that the organization receives all the revenues that is due for it while it also spends only on authorized and approved expenses. The system ensures that no fraudulent activities take place in company operations.

iii.). Transparent and Accurate Financial Systems

Transparent and accurate financial records assists in ensuring that all records reflect fair financial statements as required by the regulators of non-profit making organizations.

           c.) Drawbacks to Seamus Company Increased Service Benefits Implementation

i.). The major drawbacks of the increased service benefits implementation is that they require more manpower which may be expensive to the organization (NMAC, 2015).

ii.). The company may also incur extra costs in implementing the measures to be undertaken.

iii). The MCO’s may cover only limited medical conditions for the employees and in cases of complicated medical procedures the employees may be in future be compelled to pay such medical expenses from personal savings.

d.) The increased usage of the recommended services would benefit the organization in several ways;

a.) The move towards contracting MCO’s would allow Seamus to control its healthcare expenses. The expenses to be incurred by MCO’s would be limited to the amounts agreed between the two organizations.

b.) The detailed financial planning would allow Seamus to organize its operations more effectively.

c.) The internal control systems would ensure Seamus receives all the revenues that are due to the organization while all the expenses would be limited to the ones authorized only.

d.) The various cost saving measures would ensure that the company spends minimum amounts on all its expenses.

                               3). Benefits of External HealthCare Partnerships

a). The major financial benefit that can be attained by the external healthcare partnership is that the physicians and other consultants in medicine and surgeries do not have to be on the hospitals payroll and they can be paid based on commission for work done(Pawlak, and Colby, 2015). When the hospital has not patient who require their services then it does not incur any expenses (Pawlak, and Colby, 2015).

b). The other financial benefit is that the hospital is not responsible vicariously for any operations carried out in the facility as they are independent professionals. Any claims of negligence would be instituted directly on the doctor concerned hence the hospital does not need to incur any insurance costs on behalf of the doctors (Pawlak, and Colby, 2015).

                                  Drawbacks of External HealthCare Partnerships

a). The major drawback of external healthcare partnership is that the rates of payments for doctors are very high. Since they are not on the payroll of the hospitals they dictate their rates. The rates are also not constant and may fluctuate frequently as the hospital has no control (Pawlak, and Colby, 2015).

b). The other drawback is that the independent doctors cannot be controlled and minor surgeries may require longer periods based on the availability of the respective doctor or surgeon. The hospital maybe required in certain circumstances to foot the living expenses for patients waiting for doctors to be available (Pawlak, and Colby, 2015).

External HealthCare Partnerships is the best option for Seamus as it seeks to cut down costs in healthcare management. Having an agreement between the company and a healthcare provider would allow Seamus to bargain for better terms as it an entity that has a potential market for healthcare services requirements. The company would be eligible to access specialized medical care at bargained costs (Pawlak, and Colby, 2015).

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