Introduction to Healthcare Finance

By Aniket Bose. Edited by Arjun Chandrasekar and Swastik Patel


Historically, large public policy and insurance company-driven initiatives were focused on fundamentally changing the way that the U.S.’s healthcare is financed and delivered to American citizens. U.S. healthcare is often in an unsustainable financial trajectory, as the rate of spending continues to grow at a faster rate than inflation. Despite the money spent by the U.S. on healthcare, the health outcomes of patients in the U.S. are behind those of countries that spend less on healthcare. 

How does Healthcare Financing work?

We live in a society right now where the healthcare industry attempts to try various structural changes to healthcare financing that hasn’t been seen or done before. Physicians and other healthcare professionals are reimbursed for the services that they provide in the midst of unprecedented changes. As healthcare systems are continuing to reinvent and establish new practices and payment models, it is essential for physician assistants (PAs) to be able to adapt to the lifestyle post-pandemic in healthcare. One of the critical concepts in health care at the moment is the value that it provides to customers. The value that healthcare providers offer to patients can have different interpretations depending on who the person is and what their situation is in the healthcare system. For example, in the reimbursement part of the healthcare system, the value is determined by the overall health outcome achieved per the dollars allocated for the procedure/checkup. 

The main idea behind value-based reimbursements for patients in the healthcare industry is that it deals with providing preventive care and intervention earlier in the disease process of a patient, resulting in lower-cost settings. The transition of the healthcare industry towards a more innovative healthcare delivery system would consist of concepts of population health, value-based reimbursements, and bundle payment options. However, with this great plan of innovation, the rate at which the transformation has been occurring has been a lot slower than many people had anticipated. 


Essentially, healthcare financing refers to the management of funds for the medical resources that it provides. On a personal scale for the healthcare industry, the type of financing refers to payments for hospital care, physician care, dental care, medicine prescriptions, and other forms of healthcare services. It is implemented through specific activities such as the planning and budgeting for the various healthcare services provided to patients around the world. 

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