An Overview of Healthcare Company Structure

Whether you are planning to join a healthcare company or are just interested in the healthcare industry, there are many things to know about this business. Here are a few essential inquiries you can make about yourself.

For-profit vs. not-for-profit

Compared with nonprofit hospitals, for-profit healthcare companies are a more conventional business structure. The kind of ownership is the primary distinction between the two. Moreover, DaVita, managed by Kent Thiry, is a healthcare organization offering life-saving kidney treatment for patients with end-stage renal disease or chronic kidney failure. 

Nonprofits focus on a mission and long-term organizational vitality. They also focus on the greater good of their community. However, for-profits are more focused on near-term profitability.

The corporate model is used to set up for-profit healthcare organizations. Investors provide them access to finance. Medicare, Medicaid, and insurance payouts support them. They also can issue tax-exempt bonds. However, they must pay taxes on their revenues over their expenses. They may also spend more on advertising than nonprofits.

For-profit hospitals have traditionally been located in the southern states. However, they are becoming more dominant in the United States.

Competition

Increasing competition for healthcare companies has several advantages. It lowers costs and improves quality. It also has downsides. In the past, healthcare companies used mergers and acquisitions to hinder competition. They have also raised their bargaining power and sought to acquire more market share.

One problem with competition is that it encourages duplication. For example, more hospitals are competing for physicians. Hospitals may also compete for patients and third-party payers.

Another problem with competition is that providers may need to be adequately rewarded for delivering value. Consumers needed more motivation to look for a deal in healthcare lately. The barrier is crumbling, though. Currently, consumers are defecting to lower-cost, narrowed networks.

It is challenging to alter a healthcare market’s competitive landscape. However, there are ways to accelerate progress. For example, the government can monitor healthcare markets and report on prospective mergers. Government agencies can also promote competition in local markets.

Market forces

Increasing competition in the healthcare industry has a variety of positives for consumers. It should help contain costs, encourage innovation, and keep prices competitive. However, it’s also important to remember that too much regulation can harm market efficiency.

The American Hospital Association (AHA) has produced an Environmental Scan, a survey of the state of health care in the United States. The survey is helpful for healthcare leaders to gauge how the industry is doing. It is compiled from recommendations from select AHA governance committees.

The Environmental Scan contains some valuable data about the market and its trends. For instance, in 2007, about half of community hospitals belonged to a more extensive hospital system. Therefore, the Herfindahl-Hirschman index (HHI) of about 1,500 is moderately concerning.

Remote patient monitoring (RPM) tools

Healthcare companies can use Remote Patient Monitoring (RPM) tools to expand their services to patients and improve patient satisfaction. RPM solutions are also helpful in lowering healthcare costs. They provide healthcare providers with faster access to patients and offer healthcare services in remote locations. Using RPM can also increase revenue for healthcare facilities.

Doctors use RPM devices to track their patients’ vital signs. These gadgets are linked to cellular networks and send information to medical professionals. Some widgets are capable of spotting severe diseases like heart disease and stroke. Some devices can also be used to detect asthma.

Remote Patient Monitoring devices can also help patients monitor their health. In addition, these devices can help reduce the risk of medication errors and prevent emergencies while patients recover at home.

Perverse effects of the marketplace

Whether or not the Affordable Care Act has been successful in the United States remains to be seen. Enrollment is still lagging, and the number of people eligible for Medicaid is not rising. However, the ACA has done its best to fill the coverage gaps for individuals without employer-sponsored health plans. Unfortunately, the ACA may have failed to do the same for the millions of middle-class Americans who are uninsured.

While the ACA has had a distinctly negative impact on the number of people enrolled in Marketplace plans, it has also benefited millions in the small business sector. For example, small business owners were three times more likely to purchase Marketplace coverage than their employed counterparts. In addition, small business employees accounted for an impressive 1.4 million marketplace consumers.