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Changing the Paradigm of the Emergency Medical Services

 

Can the Emergency Medical Services Evolve to Meet the Needs of Today?

Click here to view the PowerPoint PDF

The emergency medical services (EMS) provide a means of rapid treatment and transportation to definitive care for those people who suffer immediate life-threatening injuries or illnesses (Department of Transportation, National Highway Traffic Safety Administration, n.d.; Mayer, 1980). There are a number of models across the country and the world that are seeking to redefine EMS in a way that is more meaningful in both of its missions, public safety and public health (Washko, 2012). However, financial constraints and overzealous regulations serve only to pigeon-hole EMS into the decade of its birth and refinement, the 1970s, by restricting incentive and growth and limiting the efficacy of directed research and its application towards the much needed restructuring of EMS.

In this brief literature review, I will examine the roots and context of EMS, its mission and current application, as well as possibilities for research, growth, and development. It is important to recognize that EMS is a grand resource for both public safety and public health, especially in light of the growing body of legislation that officials are using to redefine the current health care system within the United States. As we continue to develop EMS, other nations will look to us as they have in the past to adopt and adapt our system for use throughout the world.

A Brief History of Contemporary EMS

There were many forms of organized out-of-hospital medical aid provided throughout history from the biblical good Samaritan to the triage and extrication from the battlefields of the Roman conquests and the Napoleonic wars through the U.S. Civil War and every major war and conflict in U.S. history; however, it was not until the advent of combined mouth-to-mouth resuscitation and closed chest massage (what we know today as cardiopulmonary resuscitation, or CPR), enhanced 9-1-1 for use by the public in summoning emergency services, and the release of a 1966 white paper prepared by the Committee on Trauma and Committee on Shock of the National Academy of Sciences, National Research Council, that we have the EMS system that we are familiar with today (Department of Transportation, National Highway Traffic Safety Administration, 1996). It was about this time that the Department of Transportation (DOT) was given purview over EMS at the national level with the passage of the National Highway Safety Act of 1966.

During the 1970s, EMS had transitioned from mostly untrained funeral home drivers to providers trained by emergency physicians to treat many of the life-threatening scenarios that prevent people from seeking medical attention at hospitals, such as traumatic injuries, cardiac arrest, and many breathing problems. Since this time, there have been a number of concerted efforts and official recommendations by the DOT to augment and improve the delivery model of EMS throughout the country (Department of Transportation, National Highway Traffic Safety Administration, n.d., 1996, 2008). As early as 1996, the DOT published the vision of the future of EMS:

Emergency medical services (EMS) of the future will be community-based health management that is fully integrated with the overall health care system. It will have the ability to identify and modify illness and injury risks, provide acute illness and injury care and follow-up, and contribute to treatment of chronic conditions and community health monitoring. This new entity will be developed from redistribution of existing health care resources and will be integrated with other health care providers and public health and public safety agencies. It will improve community health and result in more appropriate use of acute health care resources. EMS will remain the public’s emergency medical safety net. (Department of Transportation, National Highway Traffic Safety Administration, 1996, p. iii)

Even as today’s emergency rooms, operating suites, and trauma centers throughout the world are overflowing capacity with an increasingly deficient workforce, EMS is expected to answer the call for help as the front-line of a fractured and inefficient health care system (Kellermann, 2006; Mason, Wardrope, & Perrin, 2003; O’Meara et al., 2006; Washko, 2012).

Hampered Efforts

EMS is known throughout the United States as rapid responders in times of medical and traumatic emergencies; however, ever-increasingly, EMS is being used as the front-line alternative to primary care for the non-emergent uninsured and under-insured patient population (Heightman & McCallion, 2011; Washko, 2012). There is a limited number of ambulances, EMTs, and paramedics available at any given moment, which is subject to financial constraints, and non-emergent use of these resources prevents their availability for when a true emergency arises. Secondary to the mission of providing care to the public, EMS is also needed to provide services for fire department and police department operations, such as firefighter rehabilitation at fire scenes and tactical medicine in concert with bomb squads, S.W.A.T. teams, and hazardous materials teams.

EMS resources are costly, and overburdened systems are negatively affected when these resources are misused, especially by those who are unwilling or unable to pay for the services.

Financial Impact

According to the DOT (2008) EMS workforce report, employers reported difficulties in retaining EMTs and paramedics partly due to the inability to raise wages or provide better fringe benefits. The report goes on to show that EMTs and paramedics suffer a wage disparity when compared to other similar public safety ($12.54/hr vs. firefighters: $26.82/hr; police officers: $22.25/hr) and health care workers (licensed vocational nurses and licensed practical nurses: $16.94/hr; respiratory therapists: $21.70/hr; registered nurses: $26.28/hr). In the five years leading up to 2005, the average wage for EMTs and paramedics grew only by $0.29/hr. It is important to note that these numbers do not take cross-trained firefighters and police officers into consideration.

Furthering the concern of wages, as the DOT (2008) report shows, is the lack of growth potential within EMS as most systems lack the ability to provide a meaningful career ladder to the EMTs and paramedics in their employ. These circumstances together create the scenario that EMS is an underpaid dead-end job causing high attrition as most EMTs and paramedics either suffer from burnout, culminated psychological stress from the job, or use the profession as a stepping stone into other health care fields, such as nursing, respiratory therapy, or physician-level medicine.

The DOT (2008) report provides evidence that transport-based reimbursement policies are likely to blame for the unusually low profit margin in EMS (Heightman & McCallion, 2011). The Medicare and Medicaid programs, as well as many private insurers, require documentation that the transport of a patient be medically necessary before they will pay; however, the Medicare and Medicaid reimbursement rates are very low and do not cover the cost of EMS operations. To complicate the matter, EMS providers are mandated by law to provide care to the public regardless of their insurance status or ability to pay (Heightman & McCallion, 2011). EMS is subsidized by either taxes or insurance reimbursement or some combination of the two.

Broad Mission

In addition to providing for the mundane care and transportation of the ill and injured and performing ancillary duties for the police and fire departments as noted above, EMS is tasked with disaster preparedness – preparing for the major incident that is highly unlikely to occur but would be devastating to lives and infrastructure if it does. That is if the EMT or paramedic is employed for an emergency service. Many of the EMTs and paramedics, today, are employed by private ambulance services who transport non-emergent patients to and from skilled nursing facilities and doctors’ offices. The multitude of these EMTs and paramedics are not considered when planning for emergency response schemes.

I consider EMS to be the caulking used to fill many of the fractures and gaps in today’s health care system. If it occurs outside of the hospital, then EMS will take responsibility, yet, they seldom get paid for their actions.

Proposed Solutions

There has been much talk over the past few years regarding the efficacy and efficiency of EMS, and all agree that the current definitive model is inefficient with, at best, questionable efficacy. Washko (2012) describes in detail the number of EMS schemes and their shortfalls. In his article, Washko is correct in stating that transport-based reimbursement policies fail to reward the greater EMS community for their willingness to take on further responsibility within the two scopes of operation: public health and public safety.

Wingrove and Laine (2008) explore the opportunity for training and equipping the most experienced paramedics for a public health centered role delivering community-based care. These community-based paramedics are described as augmenting the traditional emergency responder role with opportunities to direct patients to more appropriate care, such as doctor’s offices and urgent care centers instead of hospital emergency departments when appropriate to their condition. This model was researched recently in Australia with good results, and is now a recommended career path both there and in the United Kingdom (Mason, Wardrope, and Perrin, 2006; O’Meara et al., 2012). In the U.S., EMS professionals feel a responsibility to participate in disease and injury prevention efforts, and research on models that utilize specially-trained paramedics to perform home safety inspections, hazard mitigation, and reduce the risks of injuries to children have proven effective (Hawkins, Brice, & Overby, 2007; Lerner, Fernandez, & Shah, 2009). Hennepin Technical College, in Minnesota, now offers certification in Community Paramedic training when the recommended curriculum is provided by an accredited college, according to Wingrove and Laine.

Other, more immediate (but, arguably, less meaningful) solutions, as Washko (2012) describes, are incorporating operational tactics that better utilize ambulances by attempting to predict call volumes and locations based on historical data, the high-performance model. This, however, creates high-call volume, less resource driven scenarios with ambulances idling on street corners awaiting the next call. As mentioned earlier, attrition is a significant concern in EMS and these tactics are demanding on providers physically and psychologically leading to high incidences of burnout and injury (Department of Transportation, National Highway Traffic Safety Administration, n.d., 2008).

Discussion

The standard operational benchmarks of EMS – response times and mortality and morbidity of cardiac arrest – are antiquated measures and typically distract policymakers when they are considering financial incentives for EMS (Heightman & McCallion, 2011; Washko, 2012). EMS needs to evolve with the changing health care system, and I feel that it is poised, specifically, to help address disparities in health and health care. Using the community-based paramedic model of health care delivery, we can address many public health concerns, provide for public safety, and still maintain the traditional role of emergency responder. The community-based paramedic model will provide an acceptable alternative to the options that lie ahead.

The economics of health care is a reality that must be considered by every EMS operation when approaching growth and change. As long as EMS can fill the gaps in the current health care system, it will be worth the money required to subsidize a robust, well-trained, and well-equipped contingent of emergency medical professionals. In the meantime, though, EMS agencies will have to seek more efficient models that maximize reimbursement while minimizing costs.

References

Committee on Trauma & Committee on Shock, Division of Medical Sciences, National Academy of Sciences, National Research Council. (1966). Accidental Death and Disability: The Neglected Disease of Modern Society. Washington, D.C.: Author.

Department of Transportation, National Highway Traffic Safety Administration. (n.d.). A leadership guide to quality improvement for emergency medical services (EMS) systems (Contract DTNH 22-95-C-05107). Retrieved from http://www.nhtsa.gov/people/injury/ems/Leaderguide/index.html

Department of Transportation, National Highway Traffic Safety Administration. (1996). Emergency medical services: agenda for the future (DOT HS 808441 – NTS-42). Retrieved from http://www.nremt.org/nremt/downloads/EMS%20Agenda%20for%20the%20Future.pdf

Department of Transportation, National Highway Traffic Safety Administration. (2008). EMS workforce for the 21st century: a national assessment. Retrieved from http://secure.naemse.org/services/EMSWorkforceReport.pdf

Hawkins, E. R., Brice, J. H., & Overby, B. A. (2007). Welcome to the World: Findings from an emergency medical services pediatric injury prevention program. Pediatric Emergency Care, 23(11), 790-795. doi:10.1097/PEC.0b013e318159ffd9

Heightman, A. J. & McCallion, T. (2011). Management lessons from Pinnacle: Key messages given to EMS leaders at the 2011 conference. Journal of EMS, 36(10), 50-54.

Kellermann, A. L. (2006). Crisis in the emergency department. New England Journal of Medicine, 355(13), 1300-1303. doi:10.1056/NEJMp068194

Lerner, E. B., Fernandez, A. R., & Shah, M. N. (2009). Do emergency medical services professionals think they should participate in disease prevention? Prehospital Emergency Care, 13(1), 64-70. doi:10.1080/10903120802471915

Mason, S., Wardrope, J., & Perrin, J. (2003). Developing a community paramedic practitioner intermediate care support scheme for older people with minor conditions. Emergency Medicine Journal, 20(2), 196-198. doi:10.1136/emj.20.2.196

Mayer, J. D. (1980). Response time and its significance in in medical emergencies. Geographical Review, 70(1), 79-87. Retrieved from http://www.ircp.info/Portals/22/Downloads/Performance/Response%20Time%20and%20Its%20Significance%20in%20Medical%20Emergencies.pdf

National Traffic and Motor Vehicle Safety Act of 1966, Pub. L. No. 89-563, 80 Stat. 718 (1966).

O’Meara, P., Walker, J., Stirling, C., Pedler, D., Tourle, V., Davis, K., … Wray, D. (2006, March). The rural and regional paramedic: moving beyond emergency response (Report to The Council of Ambulance Authorities, Inc.). Retrieved from http://www.ircp.info/Portals/22/Downloads/Expanded%20Role/The%20Rural%20and%20Regional%20Paramedic%20Moving%20Beyond%20Emergency%20Response.pdf

Washko, J. D. (2012). Rethinking delivery models: EMS industry may shift deployment methods. Journal of EMS, 37(7), 32-36.

Wingrove, G. & Laine, D. (2008). Community paramedic: A new expanded EMS model. Domain3, 32-37. Retrieved from http://www.ircp.info/Portals/22/Downloads/Expanded%20Role/NAEMSE%20Community%20Paramedic%20Article.pdf

Discussing Cost-Effective Analysis

This week I was directed to provide insight to the cost-effective analysis (CEA) provided by Penner (2004) in A Cost-Effective Analysis for Proposed Alternative Interventions to Post-Procedure Surgical Pain Reduction. Within the CEA, three alternative treatments (guided imagery, hypnosis, and biofeedback) are proposed to reduce post-operative pain. The CEA is used to determine the efficiency that each intervention offers comparably to each of the other two alternatives.

I developed a PowerPoint™ presentation [click here] to provide a summation of the CEA and visually present the information for a quick rationalization of the chosen intervention. I will explain each slide of the PowerPoint™ as it pertains to the CEA.

The Cost-Effective Analysis

The CEA provided by Penner (2004) describes the various costs and benefits of using guided imagery, hypnosis, and biofeedback therapies to reduce post-operative pain (as defined on slide #3), which improves the overall healing process. The objective, as noted on slide #2, is the importance of effective pain control. The author of the CEA concedes that all three interventions similarly meet the therapeutic objective of limiting post-operative pain in a safe and low-risk manner; however, the cost differences are significant.

Benefits

As provided in the CEA, the most significant tangible benefits, as mentioned above, are providing effective pain management in a safe, low-risk manner. Additionally, and as a result of reducing pain effectively, increased patient satisfaction, better patient compliance, and overall better healing leads to reduced costs associated with post-operative recovery, such as reduced length of stay and reduced need for post-surgical care (e.g. nursing care, physician care, rehospitalization, medications). Slide #4 of the presentation outlines these similar benefits.

Costs

The costs of each intervention are significant factors in deciding which intervention to promote. Once the annual cost for each intervention if figured, each of the identified costs are distributed across the expected patient volume of 197 and further distributed over the likelihood of each of three surgical procedures (spinal fusion, total hip replacement, and auto hema stem cell transplant) being performed. Though this is largely unnecessary, it does provide perspective for how the costs will be distributed and raise the overall cost for each surgical procedure performed, as shown on slide #8. The total annual cost for each intervention, as well as the per-patient cost, is outlined on slide #5 and graphed on slides #6 and #7.

The fixed costs for guided imagery include a psychology consultant, a surgery PA coordinator, wages for clerical staff, and training for the surgery PA.

The fixed costs for hypnosis includes a psychologist skilled in hypnotherapy and wages for clerical staff. The amount of resources for hypnosis are significantly less than for guided imagery; however, the intervention is more substantial requiring significantly more hours per week paid (12 for hypnosis vs. 2 for guided imagery).

The fixed costs for biofeedback are more equivalent to, though slightly more than, those of guided imagery. Biofeedback requires a psychology consultant, a surgery PA coordinator, wages for clerical staff, and training for the surgery PA, but the fixed costs for biofeedback also include specific equipment, including skin sensors, two video monitors, VCRs, and carts.

The total identified costs for guided imagery is 32.18% less than biofeedback and 64.56% less than hypnosis.

Result

Based on the CEA, the most cost-effective intervention for impacting and controlling post-operative pain on patients undergoing one of the three surgical procedures outlined is guided imagery. This result is stated on slide #10.

Discussion

The appropriate management of pain is crucial to patient care. Assuming that the three interventions investigated are equally effective towards the objective of reducing and controlling pain, the cost of each intervention is the deciding factor when considering which of the three interventions to employ. In this case, guided imagery is the most cost-effective intervention and is the recommended intervention, per the CEA.

It is important to understand that these costs will be borne by not one but three different departments – the pain clinic, the orthopedic surgery department, and the patient education department. This cost-sharing removes the burden of providing the intervention from a single department and disperses the burden over the budgets of three different departments.

References

Penner, S. J. (2004). Introduction to health care economics & financial management: fundamental concepts with practical applications. Philadelphia, PA: Lippincott Williams & Wilkins.

Financial Statements:

What to Use, When to Use It

Accounting in health care is very important in order to understand the economic health of the organization. Without understanding the financial status of the organization, directionality of growth and prosperity is certainly in question; however, with financial statements as a guide, one can make informed and logical decisions to develop a strategic plan to direct organizational growth in a fiscally responsible nature.

Ittelson (2009) and Penner (2004) outline the various financial statements and how they are used. I will review three financial statements (the balance sheet, the income statement, and the cash flow statement) and the means to use the values on these statements to provide meaning, through the use of ratio analysis, of the fiscal health of the organization.

Financial Statements

Balance Sheet

The balance sheet is one of two main organizational financial statements. Ittelson (2009) outlines the balance sheet as showing assets = liabilities + worth, in that the value of an organization’s assets (or, what an organization has) is the sum of the organization’s liabilities (or, what is owed) and worth (or, the value of the organization to the owners).

Assets are usually listed on the balance sheet in order of liquidity and include everything valuable within an organization, including cash, accounts receivable, any inventory (included at depreciated value, if applicable), expenses that were prepaid, and any other intangibles that offer intrinsic value to the organization (Ittelson, 2009; Penner, 2004).

Liabilities, according to Ittelson (2009), are listed on the balance sheet as groupings of term (short- and long-term) and include current liabilities (accounts payable, expenses, portions of contracted debt currently payable, and taxes), long-term debt (or, contracted debt payable outside of the bounds of the current statement), and shareholder equity (or, the sum of capital stock value and the amount of retained earnings). The shareholder equity is also the worth of the organization.

By definition, the balance sheet must be balanced in the end with the value of the assets being the total liabilities and equities offset by the shareholder equity. The balance sheet, with this comparison, provides the fixed financial picture of the organization at any particular date.

Income Statement

The income statement, which describes an organization’s profitability, is the other main financial statement of an organization (Ittelson, 2009). The income statement details the value of inputs and expenses required to develop a specific income for a defined period of time; however, according to Ittelson (2009), it does not provide timing on payments or an assessment of how much cash the organization has on hand.

The income statement accounts for the gross margin (net sales vs. cost of goods sold), operating expenses (e.g. sales and marketing, research and development, and general and administrative expenses), interest income, and income taxes to derive net income (Ittelson, 2009; Penner, 2004).

As the organization’s net income increases, reflections of increased assets or decreased liabilities will be seen on the balance sheet. Likewise, this link will also show the reverse to be true as decreased assets or increased liabilities (Ittelson, 2009).

Cash Flow Statement

The cash flow statement, as noted by Ittelson (2009) and Penner (2004), simply describes the movement, or flow, of cash within the organization. Starting with the amount of cash on hand at the beginning of the reporting period, the cash flow statement tracks how cash is paid and received, such as cash receipts and disbursements, purchases of fixed assets, money borrowed, stock sales, and taxes paid, ending with the amount of cash on hand at the end of the reporting period. However, this statement does not account for receiving inventory or delivering finished products to customers as these would account for non-cash transactions. Only when the organization pays for the inventory or the customer pays for the product would it affect the cash flow statement.

According to Ittelson (2009), the cash flow statement describes the velocity of cash, exclusively, within an organization, and accounts for a portion of the organization’s assets as well as some new liabilities (such as a new mortgage or loan) and old liabilities (debt being paid).

Ratio Analysis

Although the financial statements described above describe the general financial health of an organization, the relationships of particular items within those reports can provide more specific indicators of financial condition (Ittelson, 2009; Penner, 2004). The use of these relationships is called ratio analysis.

Ratio analysis can help to determine factors, such as profitability, liquidity, asset management, and leverage. Ratio analysis can also help to compare various organizations among various industries by using a statement conversion to “common size” (Ittelson, 2009, p. 194), which represents items as percentages of the largest item on each statement.

Profitability, according to Ittelson (2009), is the ability of an organization to generate a return of profit on equity, sales, and assets. The gross margin, as a percentage, is also a profitability ratio analysis.

Liquidity, as opposed to the measure of returning a profit, is a measure of an organization’s ability to maintain a financial cushion and show financial strength.

Asset management ratios are measures of the efficient or inefficient use of assets and the time generally taken from using inputs to receiving payment. According to Ittelson (2009), “asset management ratios provide a tool to investigate how effective in generating profits the [organization’s] investment in accounts receivables, inventory [sic] and fixed assets is” (p. 198).

Leverage, much like liquidity, is a safety measure that describes the organization’s ability to absorb loss and meet obligations. The leverage safety cushion is also referred by Ittleson (2009) as the “equity cushion” (p. 202). Too much leverage is risky, but too little leverage decreases the ability to maximize profit and growth. Leverage is the use of other people’s money to augment the owner’s investment in order to maximize profits.

Discussion

By using strict accounting guidelines and keeping accurate records, financial statements can be prepared that will provide insight into the financial health of an organization. These statements can help to compare the financial status of the organization at different times or to compare the organization with other organizations. Also, accurate financial statements will help to draw investors, secure lending opportunities, and comply with legal requirements.

References

Ittelson, T. R. (2009). Financial statements: A step-by-step guide to understanding and creating financial reports (Revised and expanded ed.). Pompton Plains, NJ: Career Press.

Penner, S. J. (2004). Introduction to health care economics & financial management: fundamental concepts with practical applications. Philadelphia, PA: Lippincott Williams & Wilkins.

Budget Forecasting Models

Forecasting, according to Menifield (2009), is an important component of budget preparation and analysis. Using the Putnam police department (Putnam, CT) as an example, I will show how forecasting can benefit the budget process.

The Putnam police department is a small local department that relies heavily on public support. In order to forecast the economic condition that provide insight to the budgetary needs of the department, I would normally suggest using simple time-series forecast model. Due to the wavering economy over the last few years, however, I would start to consider using a multiple regression model that could take into account decreases in property taxes, real inflation, and the poor business environment for many of the small businesses that contribute a sizable portion of the tax base (Spencer, 2009). Menifield (2009) suggests that many localities can get by using the simpler, non-multivariate analysis, though as I point out, economic trends should be considered, lately.

The Putnam police department has annual purchases very typical of other similar sized departments and the single capital program (for the K-9 division) is being paid for by grants and donations. It is these donations that promote the need for additional fiscal responsibility; the public may be less willing in the future to offset major purchases through donations if property taxes rise significantly.

References

Menifield, C. E. (2009). The basics of public budgeting and financial management: a handbook for academics and practitioners. Lanham, MD: University Press of America.

Spencer, M. (2009, January 5). Current economic situation vs. the Great Depression: Striking comparisons with the current economic situation to the Great Depression. WTVY.com. Retrieved from http://www.wtvy.com/home/headlines/29813759.html

Government Budgets

Every line item of a government budget must be an expenditure necessary to achieving the goals of the organization (Menifield, 2009). The governmental budgetary process provides transparency to the economic demands of the organization allowing for oversight by the people directly and by committees of elected officials dedicated to fiscal responsibility. It is this fiscal responsibility that ensures government spending is controlled and necessary for the purposes of government.

As Menifield (2009) points out, there are four dominant areas of concern, typically, when addressing governmental impact: political, tax, demographic, and administrative. Within each of these areas of concerns, aspects of efficiency, effectiveness, and equity must be addressed. While political concerns are more about the soundness of the overall plan, other concerns are more focused on specific aspects of the plan, such as who will be impacted and how

The budget process is the government’s means of allocating funds to departments within its jurisdiction in order to perform efficiently and effectively. The transparency of this process allows the people to offer criticism and promote their values and views on the process. This is important to ensure that people understand the necessity of each expenditure.

Though there are few people that pay attention to every aspect of the budget process, there are programs, usually expensive ones, that empassion people towards action in the way of participation in the process. Politicians should envision and anticipate many of the questions and concerns that the public might have for any program that they are seeking to funding. By being prepared, politicians will serve their constituency well by allaying fears and providing information.

References

Menifield, C. E. (2009). The basics of public budgeting and financial management: A handbook for academics and practitioners. Lanham, MD: University Press of America.

Investment in Capital Improvements

To Buy or Not to Buy, That Is the Question

Outlays for capital improvements can be daunting, whether for a business or within a personal budget. It makes sense to invest in capital improvements when a realistic return on the initial investment can be expected. Computers, motor vehicles, and homes are all good examples of large personal investments that can generate significant returns or provide security that increases stability. In health care, outlays for expensive imaging devices, real property, and specialization programs can generate the same returns or stability to seek returns, especially when resulting from strategic business planning. Penner (2004) describes these outlays, or expenses, “as inputs or costs incurred in the process of producing goods and services” (p. 65). These inputs are designed to enhance existing revenues streams or provide for additional revenue streams.

Although health care budgeting is much more complicated than personal budgeting, the concepts are very similar. Penner (2004) demonstrates various types of budgets that account for many more revenue and expense items than is typically seen in personal budgeting. For instance, a hospital would account for every charge for every patient seen in each department seen. The hospital would also have to account for a number of expenses, such as personnel costs and the cost for each piece of patient care equipment (Penner, 2004). However, budgets can be consolidated and simplified the further they move from direct care (e.g. budget overviews used by the board of directors would not be so specific to account for each patient’s stay; instead, the budget overview would reflect revenues and expenses departmentally with references to the budgets of each specific department).

Recently, I made two large purchases that had to be budgeted: a) a Chevy Suburban (financed) and b) a Harley-Davidson motorcycle (cash). With both purchases, I needed to be sure that I needed the vehicle and I would benefit from the purchase. For the Suburban, because it was financed, required me to budget $500.00 / month; however, the vehicle allows me to get back and forth to work to earn my living, is reliable in all types of weather (important because I am required to report to duty even in severe weather), and maintains a high resale value. This purchase also required me to budget increased fuel costs due to poor fuel economy. The motorcycle purchase, admittedly largely recreational, also required significant forethought and budgeting; however, the excellent fuel economy certainly allows me to offset the Suburban’s fuel consumption during moderate weather. The motorcycle was also priced at a significant discount and requires little maintenance.

Again, the basics of budgeting are the same for business and personal finances; however, business budgets can get fairly complicated fairly quickly. For personal budgeting, the level of complexity is mainly determined by the needs of the individual. Tracking income and monthly bills requires little detail, though planning for a major future purchase or savings goal requires more significant accounting and detail.

References

Penner, S. J. (2004). Introduction to health care economics & financial management: Fundamental concepts with practical applications. Philadelphia, PA: Lippincott Williams & Wilkins.

Political and Technical Budget Strategies

When preparing an agency or department budget, two strategies may be employed, usually in combination: political budgeting and technical budgeting (Menifield, 2009). While most budgets are defended politically, the technical budgeting stategy is most useful when defending mandatory and base expenditures of a legally mandated service, such as a police or fire department (Menifield, 2009). New programs, especially those viewed largely as ancillary, or “nice to have,” would be largely defended using a more polital than technical strategy.

Menifield (2009) explains the technical budgeting strategy as “[concentrating] on the numbers or budgetary facts [and] split into two categories: mandatory, [sic] and discretionary spending” (p. 43) with base expenditures “to maintain the same level of service” (p. 44) identified for each. Efficiency and productivity are foci of the technical budgeting strategy. The political budgeting strategy, according to Menifield (2009), is used to “sell” a program based more on its merits or public demand than on mandate or efficiency and productivity.

In the emergency medical services, since its provision is usually not a legal requirement of the government, it would make sense to defend the budget politically if the service was started within the last few years; however, a more technical budget in continuing years might help to buttress the perceptions of the public that it is actually a needed service. Continuing to defend an emergency medical services budget with a more political strategy could make it actually appear less important and subject to tighter budget controls. Additionally, as the emergency medical service is the only public safety entity that routinely charges user fees, the structure of a technical budget would plainly show revenue offsetting expenditures, making it less likely to suffer cuts. Again, both strategies would be used proportionally to their need.

References

Menifield, C. E. (2009). The basics of public budgeting and financial management: A handbook for academics and practitioners. Lanham, MD: University Press of America.

Mind Your Own Business: Health Care Economics

Regardless of funding levels or overhead, health care must be provided ethically. The goal of the health care industry is to improve health, and unlike other industries, this market is driven not by choice but by need. Other markets perform, according to Friedman and Friedman (1980) and Smith (1910), only when mutual benefit can be achieved, that is, without external force, coercion, or unnatural limitation. Penner (2004) presents the economy of health care representative of many of the ideals that were accepted at the turn of this century. However, the current state of health care economics is the result of the unnatural force of these ideals in attempting to mold the market against natural market pressures, as described in detail and warned against by Friedman and Friedman and Smith.

Health care demand is based on need. Within that need, demand is reflective of pricing. For example, patients do not elect coronary bypass surgery, but if needed, the demand could be reflected by pricing constraints realized in negotiations of hospitals and insurance carriers. In this case, the patient may be transferred to a center that has negotiated reduced rates with the carrier for coronary bypass procedures. Ergo, health care demand is reflective of patient need and is variable only in the context of insurance pricing. It is within this negotiation that the aspects of quality, access, and cost are accounted. Government policy, however, has a negative and downward effect on these negotiations. If health care institutions are perceived to be able to provide the same services at discounted prices for government payors, then the institution should be able to provide these same services to private payors for the same or similar cost. This cost adjustment conversely affects quality and access.

Penner (2004) makes a logically flawed argument in respect to regulation arguing that increases in skilled nursing facility (SNF) safety regulations created a demand for more nursing assistants; however, this is an increased input to be provided by the SNF, not an output to be demanded by the patient. The cost will be borne by the private insurance payor, ultimately, and not the regulatory agency or the patient, which increases premiums decreasing access to private health insurance. Regulations negatively impact the relationship between supply/demand, quality, access, and cost. This is not to say that safety should not be a concern, as it is one of the few areas that I agree should be regulated, though, minimally.

Penner (2004) goes on to state “one role of government is to intervene in cases of market failure” (p. 21), using the pharmaceutical industry as an example. Unfortunately, with the focus on the new and significant health care and health insurance legislation and regulation, many academic discussions surrounding health care economics are now outdated and trivial. Without entertaining a constitutional debate, recently, governmental involvement has shown to have a negative effect on the health care industry actually causing market failures instead of alleviating them. Recent over-regulation by government on the pharmaceutical industry has resulted in a significant and dangerous shortage of life-saving emergency medications (Malcolm, 2012). This economic constraint will lead to higher demands of other, inferior, medications and increase the price, effectually increasing cost and decreasing both access and quality. This effect is also seen in the emergency medical services when states fix the price that can charged to users leaving the municipal taxpayer to face tax increases or decreases in access to emergency services and the quality of the services delivered (American Ambulance Association, 2008). Over-regulating an industry without regard to survivability is inefficient and unethical, limiting access and quality while increasing costs.

Insurance companies have sought to minimize their exposure to the rising costs of health care (Penner, 2004). By developing common sense incentives, insurers can advocate for their customers financially while expressing desire for optimal outcomes. By maximizing consumer and provider choice, these incentives can be used as natural pressures within the market to improve upon cost, quality, and access (Penner, 2004). This realization, according to Penner (2004), resulted in the emergence of the health maintenance organization (HMO) — the first widely accepted form of managed care. Unfortunately, HMOs faced scrutiny in the 1990’s and later augmented business models to reflect newer preferred provider organizations (PPO) and point-of-service (POS) plans. PPO and POS plans were created to promote the more inexpensive use of general providers and those providers that have negotiated fees. Unfortunately, Penner writes, the pressures of these PPO and POS plans on the consumer limit choice within the market; however, the consumer still has a choice of insurance carrier, which minimizes the pressure faced within each plan. This freedom is not expressed in governmental plans, such as Medicare and Medicaid.

As health care costs rise, the writings of Friedman and Friedman (1980) and Smith (1910) would suppose that we lessen regulation within the industry, allow new and novel approaches to insurance paradigms, and create an environment with as little unnatural market pressures as possible in order to allow natural market pressures to ensure equitable cost, access, and quality through competition

References

American Ambulance Association. (2008). EMS structured for quality: Best practices in designing, managing and contracting for emergency ambulance service. Retrieved from fitchassoc.com/download/Guidebook-April08-V2.pdf

Friedman, M. & Friedman, R. D. (1980). Free to choose: a personal statement. Retrieved from http://books.google.com/

Malcolm, A. (2012, January 4). Vast web of federal regulation causing drug shortages. Investor’s Business Daily. Retrieved from http://news.investors.com/article/596775/201201041859/big-government-behind-drug-shortages.htm

Penner, S. J. (2004). Introduction to health care economics & financial management: Fundamental concepts with practical applications. Philadelphia, PA: Lippincott Williams & Wilkins.

Smith, A. (1910/1957). The wealth of nations (Vol. 1). Retrieved from http://books.google.com/

Private vs. Public Budgets

Budgeting is an important concept that is pertinent to any organization. According to Menifield (2009), budgeting is a financial planning function that creates accountability for the funds made available to meet or work towards some goal. In the private sector, budgets create the bottom line, or the amount needed to earn making a profit. In the public sector, however, budgets reflect the accountability and stewardship of tax revenue and its application towards maintaining and improving infrastructure. Although Menifield focuses on public budgets and compares them to private-for-profit business models, many not-for-profit corporations and other philanthropic ventures use budgets to account for funding and spending without focusing so much on profit, much like public budgets (Maddox, 1999). Not-for-profit corporations still need to focus on maximizing funding and reinvesting gains, though — a difference of public budgeting (Maddox, 1999; Penner, 2004). Most important, a budget provides a sense of direction for the organization and should reflect the stated vision and values.

Menifield (2009) describes the primary difference of public versus private budgeting as public budgets are prepared based on organizational needs and the funding for the budget is directed through tax revenue. Private organizations, according to Menifield, do not have the luxury of compulsory funding enjoyed by public organizations and must generate revenue through a prospective business model that maximizes income while minimizing expenditures. Both types of budgeting have intrisic responsibilities inherent to the process, which, if ignored, could result in severe penalties to those responsible.

Additionally, there are functions of government which are served by private contractors. Employing this concept would be rationalized, planned, and tracked by utilizing both private and public budgets — the contractor would utilize an internal budget reflective of private organizations, and the contracting governmental entity would use its public budget to plan and track the contract. Whereas typical criminal justice agencies, such as local police departments, judicial systems, et al., rely on public budgeting, the recent use of private contractors to manage some federal prisons reflect this use of private-public budgeting (Austin & Coventry, 2001; Nelson, 2005).

Budgeting is a form of financial planning. A budget also serves as an important document that can be used to focus an organization towards specific goals and provides overall accountability in financial management.

References

Austin, J., Coventry, G. (2001). Emerging issues on privatized prisons (NCJ No. 181249). Retrieved from http://www.ncjrs.gov/pdffiles1/bja/181249.pdf

Maddox, D. C. (1999). Budgeting for not-for-profit organizations. Retrieved from http://books.google.com/

Menifield, C. E. (2009). The basics of public budgeting and financial management. Lanham, MD: University Press of America.

Nelson, J. (2005). Competition in corrections: Comparing public and private sector operations (IPR No. 11647 [Revised]). Retrieved from http://www.bop.gov/news/research_projects/published_reports/pub_vs_priv/cnanelson.pdf

Employee Retention

I am familiar with a local EMS organization where the perception of the employee-base is that middle management sacrifices requisite supplies in order to regain budget losses, losses that were incurred due to their overall mismanagement. Sacrificing supplies in the emergency medical service arena equates to negligence and could, indeed, prove harmful to patients. This, coupled with the notion of incompetence, has a negative effect on morale, especially as this is one of the only divisions within the larger company that experiences these types of problems. Many have considered leaving (in fact, I have been told that most consider it quite often); however, the compensation package that they receive cannot be met by any other provider in the area. This leaves the employee in an ethical quandary. This issue is not isolated to this particular company, though. Although many private ambulance companies in the region face the same mismanagement, they do not offer comparable compensation packages and are much easier to leave.

Fallon and McConnell (2007) discuss how pay and benefits are vitally linked to overall job satisfaction, and I agree with their determination. However, there are other components, such as conscience. Duffy (2010) explains, in the light of pharmacists refusing to dispense abortion pills as a right of conscience, how “medical professions are among those where ethics and morality are of paramount concern” (p. 509). Consider Duffy’s explanation in reverse as this particular company is forcing their employees not to care for patients who they would otherwise be able to treat. The result is a significant emotional and psychological toll, I can imagine, but the employees cannot just walk away from their paycheck. This company, I feel, has learned to balance some of the positive working conditions with some of the negative working conditions, and the company relies heavily on wages and benefits to do so. According to Fallon and McConnell (2007), this tactic helps to relieve employee turnover rates; however, if the company would mitigate the negative aspects of the job, the wages and benefits offered could be used to attract employees with higher skill levels. Instead of leveraging ambition and affecting positive psychology within the workforce, as Amabile and Kramer (2011) recommend, the typical leverage is financial at a cost of ambition and morale.

In contrast, I have worked for agencies that paid far less in compensation than their competition, but the appreciation on the part of management was evident and allowed me to overlook the compensation gap with the other companies where the employees were always complaining and just seemed unhappy. Unfortunately, the gap grew to a point that was unbearable and I had to ultimately leave, but it was quite a while before I found another agency that commended professional evolution and progress, such as described by Amabile and Kramer (2011) — the company discussed above, however, is not.

Amabile and Kramer (2011) describe the withholding of resources to be a “toxin” that negatively effects morale. By improving supply requisition, a “catalyst” to improve morale, and improving recognition and supporting a free exchange of ideas, this company could improve morale significantly and focus on hiring skilled and experienced providers rather than those that will merely acquiesce to their ambiguous demands.

References

Amabile, T. M. & Kramer, S. J. (2011). The power of small wins. Harvard Business Review, 89(5), 70-80.

Duffy, M. E. (2010). Good medicine: Why pharmacists should be prescribed a right of conscience. Valparaiso University Law Review, 44(2), 509-564.

Fallon, L. F. & McConnell, C. R. (2007). Compensation and benefits. In Human resource management in health care: principles and practice (pp. 201-218). Sudbury, MA: Jones & Bartlett.