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Saint Paul University Philippines Tuguegarao City, 3500 Cagayan North

GRADUATE SCHOOL

Master of Science in Nursing

AY 2014-2015

MODULE

IN

ADVANCED HEALTH CARE ECONOMICS with

ENTREPRENEURSHIP IN NURSING

ANUNCIACION T. TALOSIG, DNS

Professor

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Saint Paul University Philippines Tuguegarao City, 3500 Cagayan North

COURSE TITLE: ADVANCED HEALTH CARE ECONOMICS with Entrepreneurship

COURSE LEARNING OUTCOMES: At the end of the course the student will have been able to:

1. Discuss major trends that affect the delivery of health care.

2. Discuss the changing role of nurses and other allied health care providers

within health services.

3. Appreciate the significance of the changing role of management and the

competencies required to function in the managerial role to optimize utilization of

resources.

4. analytically evaluate business opportunities through SWOT analysis and Market

research

5. Develop a business plan (in health or nursing).

6. Show evidence of research skills in accomplishing course requirements.

MODE OF STUDY:

I. FOR INDEPENDENT STUDY:

There are three modules in this course:

Module A – Concepts in health care economics, perspective, economic history,

population growth, health care and factors affecting health care costs.

Module B – Focus on Economic Concepts of Cost Management

Module C – Entrepreneurship in Nursing

II. DISCUSSION

Students can email the professor for questions, clarifications as needed.

How To Use the Modules:

Advanced Health Care Economics with Entrepreneurship in Nursing course is conducted using the

modular approach. It has been designed to accommodate the needs of the working nurse. The module

requires a lot of independent reading, study and writing. You have to research in order to answer each

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module and to have proper time management. Answers to the assignments must be submitted a month

after receipt of the module.

Materials You Will Need:

You may use available resources in the SPUP Library or in the area where you are, surf the net or

any other materials/references you can take hold of on Health Economics, Scientific Publications, costs

and quality, RA 78759 (National Health Insurance Program) which created Philippine Health Corporation.

If you are not in the Philippines, please use the appropriate bill/law that governs or covers health

insurance in your country. Please take responsibility in surfing, downloading and reading the materials

you need.

EVALUATION:

You will be evaluated depending on how well you complete the modules and the assignments

outlined. The following table shows the point and percentage value of each of the instructor-

evaluated activities for the modules.

Placement

Type of

Assignment

Points

Percentage of

Module Grade

PART I

Module A to B

Module Completion

100

50%

PART II Module C

Completion of Module C

Submission of Business

Plan

100

50%

The minimum passing grade based on the accumulated point scores – 85%.

Reminder: Scholarly papers and project based on the stated assignments in Parts I and II, must

be submitted to the professor both in print and soft copy. Thank you.

----------------

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MODULE PROPER:

MODULE A – Introduction to health economics by highlighting the following:

1. Economic history, population growth and health care

2. Factors affecting health care costs and implications of these factors on

economics and quality care

3. Insights/perspective

Objective: Identify major trends likely to affect the delivery of health care and the role

of health care providers.

A. OVERVIEW:

Health Care Economics as a course discusses fundamental concepts/principles/theories of cost

management and its application to the Health Care Industry.

Economics as a science

• Study of men at work against scarcity

• A battle of matching resources against vast needs and wants (scarcity)

Economics is the social science concerned with production and distribution of goods and

services produced by forms employing workers and other scarce factors of production of an

economy.

Man’s Needs and Wants

• Basic needs (food, shelter, clothing)

• Needs essential to decent and comfortable living (beyond basic needs)

• Luxury goods

• Created wants (created by advertising and marketing)

• Varying needs and wants (child, children versus adults)

• Public wants- (parks, malls, internet cafes, beach resorts, etc.)

B. ECONOMC GROWTH DETERMINES THE SHAPE OF HEALTH CARE

The following terms are important in this module. You should be able to provide definitions

before you start:

Health Economics Macro Health Economics

Costs Cost Benefit Analysis

Created wants versus Public wants Microeconomics

Managed care Third party transaction

Capitation Health Management Organization

Preferred Payment Organization Republic Act 7875

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1. The chapter begins by asserting that four preconditions are necessary for the

establishment of modern medical care: effective medical technology, sufficient

wealth, low risk of death, and insurance financing.

QUESTION: Explain why each of the following is necessary? How are they

interrelated?

a. Effective Medical technology

b. Low Risk of Death such that improving health is worthwhile

c. Adequate wealth to pay for advanced medical treatment

d. Financial Organization/Insurance to pool funds from many people

2. It is economic development that creates the foundation for modern medicine.

QUESTION: Explain why the statement is true.

_____________________________________________________________________

_____________________________________________________________________

3. Economic development, population growth and medical technology are linked.

The growth of humanity is divided into 4 periods-

A. Stone Age

B. Agricultural Age

C. Industrial Age and

D. Information Age

QUESTION: Discuss these 4 periods in terms of:

a. Population

b. Technology

c. Knowledge transmission

d. Economic/political Organization

e. Income distribution

C. FACTORS AFFECTING HEALTH CARE COSTS AND IMPLICATIONS

INSTRUCTION:

Before proceeding further, get the most recent data from the Department of Health

in terms of Morbidity and Mortality for the country where you live.

For foreign students you can get your data from your own country.

Health Status – is the actual health status of an individual or a population. Health status can be

Measured by:

• Morbidity- number of individuals who are ill

• Mortality- number of individuals in a population who passed from one

State (alive) to the other (dead)

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• Health Outcome- net impact of health care on health status

Two activities can be measured: Cost of medical care and cost of illness-

QUESTION : The economy as a whole is measured by the Gross National Product. From 2005 to 2012,

what percentage of the GNP was allocated to Health? What is Gross National Product?

YEAR

GROSS NATIONAL

INCOME per capita

GROSS NATIONAL

PRODUCT

at current price

BUDGET

FOR HEALTH

PERCENTAGE

FOR HEALTH

2007

2008

2009

2010

2011

2012

2013

SOURCE:_______________________________________________

Date as of:_______________________

QUESTION : It is clear that national health expenditures rise with income per capita. Do health

outcomes improve in the same way? Explain

The price of health care is determined by the cost of accessing and utilizing health care. It is important to

know that seeking health care includes costs other than what people pay health providers for health

services rendered or goods assured. (Policarpio, 2006)

So, there are factors that can be considered that can cause high cost of health care.

Factors that cause high cost of health care:

1. Increased use of health agencies

2. Inflation

3. Population increase

4. Demography

5. Focus on illness care

6. Cost reimbursement

7. Fee for service reimbursement

8. Technology

9. Indigent care

10. Malpractice (House Bill 4955 or whichever is present in the country you are analysing)

11. Health pattern changes ( Impact on HIV-AIDS, SARS, DENGUE, etc.)

QUESTION 4:

Discuss why and how these 11 factors identified have contributed to the high cost of health care.

------END of MODULE A-------

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MODULE B:

In the previous module, you learned the economic history, population growth and

health care including the factors that affect the cost of health care. This module focuses

on the discussion and economic concepts in cost management and management of

hospital cost and how quality care is affected by these costs.

Objective: Discuss the changing role of management and the competencies required to function in

the managerial role as well as to optimize utilization of resources.

You should be able to define these terms before you start-

Standard cost profile Cost determination

Patient care classification Cost center

Quality indicators Revenue center

A. CONCEPT of COST:

Costs are expenses or assets having utility for future periods

1. Cost information in relation to time frame

2. Costs that change in relation to volume or time

3. Cost data utilized for product pricing

4. Costs related to strategic and operational planning and control

B. WHAT IS COST MANAGEMENT?

It is an ongoing process of ___________ ______ and __________________ to meet

strategic directions of the organization. Its uses are product pricing, inventory valuation

and income determination as well as product planning and control.

There are 5 functions of cost management systems:

a. Cost determination

b. Activity forecasting

c. Functional Cost - Center Budgeting

d. Performance reporting on a product level

e. Performance reporting on a functional level

QUESTION 1. Explain the 5 functions of cost management. You may use any journal on Health

Economics, on managing health care costs, quality and technology.

QUESTION 2:

Select a unit of your hospital (e.g. ICU, NICU, DR, OR, Ward, etc.) and answer the

following questions: In case of those who are working in Health Centers you may get

your own workplace and the same with those in the academe- the Skills Laboratory.

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C. WHAT IS SETTING PROCEDURE STANDARD COST PROFILES?

WHAT IS FUNCTIONAL COST CENTER BUDGETING?

You need to peruse the literature for the above concepts before answering the question

below.

QUESTION: Final Product Nursing Care

Select a unit of your hospital and answer the following questions:

1. What are the clinical nursing needs?

_______________________________________________________________________

_______________________________________________________________________

2. What is their prevalence?

_______________________________________________________________________

_______________________________________________________________________

3. What are the diagnostic problems and how they are resolved?

_______________________________________________________________________

_______________________________________________________________________

4. What are the therapy options?

_______________________________________________________________________

_______________________________________________________________________

5. What are the costs of developing or continuing to develop the product?

_______________________________________________________________________

_______________________________________________________________________

6. What are the costs of producing the product?

_______________________________________________________________________

_______________________________________________________________________

7. What resources are required?

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

8. What new information must be learned?

_______________________________________________________________________

_______________________________________________________________________

9. What are the critical success factors?

_______________________________________________________________________

_______________________________________________________________________

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10. What is the likelihood of success?

_______________________________________________________________________

_______________________________________________________________________

D. QUALITY AND COSTS

Introduction:

Hospitals are complex institutions and different parts of the hospital actually produce different

products. The average is made up of some basic services for routine admissions, along with some

specialized units as heart transplant, oncology and respiratory intensive care.

Hospitals exist to allow a large number of doctors to share expensive capital, equipment and

cooperate in the care of many patients. Since many of these costs are fixed, hospitals should show

economies of scale (average cost per patient per day falling as more patients are treated). The need

to accommodate random fluctuatios in the number of admissions and to preserve some buffer of

empty beds for emergencies create economies of scale.

Diseconomies of Scale arise from the difficulties of coordinating and managing a larger

institution.

• If more than 500 bed hospital- becomes costly, patients have more complaints

About getting lost in the system and being part of a factory rather than a caring

institution.

Learning Activity:

Read on the following:

1. Evaluation of Nursing care in terms of process and outcomes

2. Issues on Research and Quality Assurance

3. Evaluating Quality Care

4. Concepts on Quality assurance

5. Costs

6. Budgetary and Utilization Review

7. Republic Act 7875 ( NHIP)

Competition among hospitals

1. Most care decisions are made by the doctors hence, hospitals compete for doctors.

2. If ability to decide on hospitalization is taken out of the doctors, compete for contracts and

appeal to payors – lower prices

Note: Hospitals must compete for the party that has the power to make the revenues come to them,

not the patient

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Quality is the most important aspect of medical care-

• Show reputation for outstanding care and scientific process

• Customer satisfaction

QUESTION:

Discuss how the hospitals compete in the following instances:

1. Competing for Patients

_________________________________________________________________________

_________________________________________________________________________

2. Competing for Doctors

_________________________________________________________________________

_________________________________________________________________________

3. Competing for Contracts

_________________________________________________________________________

_________________________________________________________________________

E. NATIONAL HEALTH INSURANCE PROGRAM – Republic Act 7875

For foreign students they may discuss their own health insurance program available in their

country.

QUESTION:

A. Discuss the NHIP in terms of:

1. Purpose

2. Coverage

3. Nature

4. National Health Insurance Program Fund

(where, whom and percentage how the fund is appropriated)

B. Answer the following questions based on your readings on NHIP:

1. Several guiding principles were adopted in the pursuit of NHIP. Explain each one:

a. Allocation of national resources for health

b. Universality

c. Equity

d. Responsiveness

e. Social Solidarity

f. Cost Sharing

g. Professional responsibility of health care providers

h. Quality of services

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i. Cost Containment

j. Maximum community participation

2. A requisite for accreditation – is the existence of a formal ongoing quality assurance

program (QAP). The objective of the program is to:

2.1 ensure health care professionals of accredited health care institution possess the

training and credentials to render quality health care services

2.2 Work towards the promotion of uniform health care standards

2.3 Ensure appropriateness of medical procedures and administration of drugs and

medicines consistent with generally accepted standards of medical practice and

ethics

3. During inspection the Phil Health monitors and verifies compliance to the requisite of a

Quality Assurance Program (QAP)

4. Gross violation of this QAP requisite shall constitute a ground for suspension/ revocation

of accreditation.

QUESTION: Identify 10 activities of the program (QAP) in each institution:

Reference: Rule XVII , section 92 of the Revised Rules and Regulations implementing the

National Health Insurance Act of 1995 (R.A. 7875). Activities of Quality Assurance

Plan specific for health care providers. (Or a more appropriate law existing in the

country where you are)

F. MONITORING NURSING CARE QUALITY

Nursing often has taken the lead in patient care quality assurances by investigating the quality of

service delivered by practitioners.

QUESTION:

Briefly discuss the following issues related to the development of criteria and methodologies in

patient care quality assurance

G. Quality Nursing Care

A review mechanism should replace group accountability and care activities maybe tracked for

individual patients and compared against a set of clearly defined standards. Such a system

provided an excellent framework for quality assurance systems.

How can nursing establish an environment and structure that facilitates QA mechanism?

1. Communication through rapid and accurate data retrieval and analysis

______________________________________________________________________________

______________________________________________________________________________

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2. Technology such as bedside based automation, etc

______________________________________________________________________________

______________________________________________________________________________

3. What are the advantages of automation in quality assurance mechanisms?

H. CONTROLLING HOSPITAL COSTS THROUGH REGULATION-

Please explain each one of these:

1. Phil Health Corporation created by the R.A. 7875 (NHIP)

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

2. Budgetary Review

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

3. Utilization Review

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

4. Administered Prices (Preferred Provider Organization-PPO/ Health Maintenance Org.-HMO)

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

Summary:

Health care providers should identify the inefficiencies that have developed in the industry,

largely because of the manner in which hospitals have been financed. Prospective Payment (PhilHealth)

is designed to encourage hospital administrators to manage the process in the most cost-effective

method possible while simultaneously assuring quality health care.

Nurses have a significant impact on quality assurance programs. Nurses are the only providers

who directly care for the patient 24 hours a day from admission through discharge. Therefore, they are

in a position to identify inefficiencies, redundancies, and omissions. Nurses must develop a formal

review mechanism that will trace the care of specific patients by specific nurses.

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MODULE C: Entrepreneurship in Nursing

The health care industry is gradually transforming to be more market-focused. This is brought about by

budgetary cut-backs in health care, escalating costs of health and medical care, sky-rocketing insurance

premiums and the like. The idea that entrepreneurship plays a crucial role in transforming the health

care industry is supported by empirical data. Yet little attention is given for the adequate orientation

and preparation of health care professionals to become entrepreneurs. This Module therefore provides

you the opportunity to learn about entrepreneurship and its role and relevance in health care and in

nursing.

It is necessary that you read the literature on Entrepreneurship and its application in Nursing and health

care. Some materials attached here are recommended as part of your readings.

NURSE ENTREPRENEUR

Nurse Entrepreneurs use their nursing education and business background to start ventures within the

healthcare industry—establishing, promoting and running their own companies. Some develop medical

devices, computerized systems, or home health products. To set out on your own as a Nurse

Entrepreneur, some key skills to have include: creativity, business savvy, ability to find funding and

identify a niche market, as well as a consistent customer base.

What can you do as a nurse entrepreneur?

• You can create a business that could provide patient care, nursing education, home health or

consulting

• You can seek out business opportunities and funding

• Your experience in healthcare and business skills can be used to build a relevant business.

Attached herewith is a material about business planning.

REQUIREMENT: Develop a Business Plan for health/nursing.

References:

(Indicate here the various sources/references you used to study Modulea A, B, C. Please use APA

format.)

A. Books

B. Journals

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C. Web Sources

THANK YOU for choosing Saint Paul University Philippines.

Note: This module was based partly on the Advanced Health Care Economics Module developed by Dr. Grace Valderrama.