Article 2
Getzen’s Health Economics & Financing, 5th Edition
Copyright © John Wiley & Sons, Inc.
Chapter 12: Financing and Ownership of Health Care Providers
QUESTIONS
How much is a year of medical education worth?
Which faces greater risk of bankruptcy: a nursing home company or a pharmaceutical company? Which has the more diversified “portfolio” of assets?
What are the major financial risks facing an insurance company?
Does financial innovation in health care improve productivity and consumer welfare the way technological innovation does?
QUESTIONS cont.
Do changes in Medicare change the value of hospitals? Do they change the value of the hospitals’ bonds?
Is an insurance company more concerned about fixed capital or working capital? Does this make it easier or harder to finance rapid growth?
Why did hospitals borrow so much and load up their balance sheets with debt during the 1980s?
Who owns a nonprofit hospital? Who gets the profits?
12.1 WHAT IS FINANCING?
12.2 VALUE AND RATE OF RETURN
- The Time Value of Money
- Interest Rates and Present Value
- Present Value of a Perpetuity = ($ amount)/(interest rate)
- IRR: The Internal Rate of Return
- IRR = the interest rate at which Net Present Value = 0
12.2 VALUE AND RATE OF RETURN cont.
- Human Capital: Medical Education as an Investment
- Risk
- Valuing Assets
12.3 UNCORRELATED (INDEPENDENT) AND CORRELATED (SYSTEM) RISKS
- Which Is Riskier: Nursing Homes or Drug Companies?
- Assessing Business Risk
- Business Risk=(Revenue Risk)×(Operating Expense Leverage)×(Financial Leverage)
12.4 OWNERSHIP AND AGENCY
- Equity and Debt
- Who Owns the Business? Who Owns the Patient? Agency Issues
- The Role of Financial Intermediaries
- Health Insurers as Financial Intermediaries
12.5 CAPITAL FINANCING: HOSPITALS
12.6 HMO OWNERSHIP AND CAPITAL MARKETS: SUCCESS
AND FAILURE
- Business Risks for an HMO
- Kaiser Health Plan: The Evolution of an HMO
- GHA: A Consumer Co-op Gets Bought Out by a Franchise Chain
12.7 ENTREPRENEURSHIP AND PROFITS
- U.S. Healthcare: A Profitable Growth Company
12.8 HEALHCARE FOR PROFIT, OR NOT
- Differences Between For-Profit and Non-Profit Behavior
- Charity Care: for Real or for Show?
- For-Profit or Not-For-Profit: Which is Better?
- Medical Care is Difficult: Risk, Information Asymmetry, Social Justice
Copyright 2013 John Wiley & Sons, Inc.