Essay

Analysis Report

Maria Williams

Southern New Hampshire University

08/06/2020

1. Organizational Impact and Recommendations

a. Organizational Introduction

The University of Maryland Medical Center Corporation (UMMC) is one of the leading health care organizations in the United States. The company operates as a subsidiary of the University of Maryland and provides not only health care services, but also education and research to the residents of Maryland and the Mid-Atlantic region. Headquartered in Baltimore, Maryland, the United States, the organization has expanded its operations to different parts of the country (UMMC, 2019). Currently, the company offers a wide range of health care products and services, which include trauma treatment, cancer care, high-risk obstetrics, neurocare, neonatology, as well as transplants. The organization has the capacity to admit and accommodate approximately 2500 people because it has more than 2500 beds for acute care. Such inpatient care services are often allocated to critically ill patients who require special treatment for problems such as trauma care, coma emergence, kidney transplants, orthopedic, stroke, and pediatric services.

b. Non-Profit or For-Profit

Maryland Hospital operates as a not-for-profit organization that earns more than $700 million annually on its operations alone. Approximately $700 million of the organization’s 2017 bottom-line was concentrated across 24 facilities in Baltimore. The company’s profitability increased in 2018 by 5 percent. Additionally, it accumulated an extra financial cushion, ending its 2018 fiscal year with approximately $1.3 billion in cash and investments, according to a report tabled by the federal tax filing system. As a not-for-profit organization, Maryland is not bound by the International Financial Reporting Standards (IFRS). Rather, it operates as an entity whose principal objective is not to generate profit but to provide health care services to Maryland residents and other parts of the country. Not-for-profit companies can be categorized into government or public sector firms and private sector entities. Maryland belongs to the former category, because it has been established by the state government to provide services such as provision of health care services, prevention of disease spread, and increasing accessibility and availability of quality and affordable health care services to disadvantaged and underserved populations. Not-for profit organizations that are formed by the government may be fully owned or their shares issued to members of the public. For a government enterprise to be categorized as a non-profit institution, its primary focus should be on providing more services than merely earning profits.

As a not-for-profit institution, Maryland Hospital is required to support community benefit programs such as providing health services at discounted rates to marginalized groups. Part of this responsibility includes covering medical care costs for the uninsured patients and launching health promotional initiatives to provide preventive, response, and treatment programs to vulnerable individuals in low-income neighborhoods. Approximately half of the financial resources that the organization spends on community benefit initiatives stem from the rates insurers, Medicare, as well as different forms of pay for hospital services. The remaining funds come from the organization’s own coffers. In 2019 alone, the organization allocated approximately $309, 401 to promote charitable activities across the state of Maryland.

2. Financials, Market, and Demand

a. Demand Theory

The demand theory can be used to explain the organization’s financial statements and performance over the last three years. The company’s financial statements from 2017 to 2020 show that it has been witnessing an increase in profitability and revenue. In 2017, the organization earned an average annual profit of $700 million from its operational activities. This figure grew by 5 percent in 2018 and $1.1 billion in 2019. From the above patterns, it can be said that the organization has been witnessing a steady rise in demand for health care services every year. There are various explanations for this phenomenon. For instance, the populations of people who need health services continue to increase over time. Additionally, demand for health care services stems from increase in the number of insured populations. This is because consumers’ levels of income significantly affect the quantity of goods or services demanded by members of the population.

From the perspectives of the law of demand, consumer behavior is often expressed as a utility maximization problem subject to a particular constraint. The demand functions are often derived by solving the optimization problem. Demand refers to the quantity of commodities or services per unit of time that individuals purchase and consume within a set of the prices and income of the consumer (Adhikari, 2011). Demand models are often founded on the continued choice or discrete decisions. Continuous choices are premised on neoclassical theory of consumer behavior whereas the relatively new discrete choice model is drawn from the random utility theory. Within the econometrics modeling of demand function, the dependent variable often represents the use of health care services. In this respect, the observed utilization levels are representative of the points of intersection of demand and supply functions, a situation referred to as the market equilibrium. In addition, the utilization of health care services represents the satisfied demand or observed demand (Adhikari, 2011). In some cases, it is often difficult to succinctly distinguish between these two functions from the observed data. In this situation, the explicit and implicit presumptions often facilitate the estimate of the demand function.

The continued use of health care services has become an issue that attracts widespread attention by health care economists. Indeed, the factors that influence demand for health care services are important for many reasons. For instance, the task of quantifying such factors is often necessary to examine medical care needs at the community and potential impacts of utilization on health care medical needs of the community for which the organization services. Additionally, demand patterns can inform the organization of the possible impacts of customer decisions on utilization of health (Adhikari, 2011). The understanding of demand patterns can also suggest to the policymakers at the state and federal levels the role of consumers’ level of awareness and literacy on improving the use of highly cost-efficient health interventions or health care services.

b. Market Behavior Impact

The changes in market behavior and patterns influence demand and supply of health care services. The behavior of consumerism in health care, for instance, has resulted in the significant rise in the number of patients who seek medical care at a particular point in time. This trend has been occasioned by the change of employers’ health benefit packages into one that places economic purchase power, and decision making in the hands of participants (Vogenberg & Santilli, 2018). This pattern is best attained by supplying employees with the decision-making information and support tools they require, including the financial rewards, incentives, and other benefits that promote personal involvement in altering health and health care purchasing power and behaviors. Additionally, as the health care costs continue to increase for consumers, they are increasingly getting conscious on how prudent they are getting the best value for their money. As such, they continue to ask for transparency and choice in their health care experiences. The success of the organization rests on its ability to meet customers’ health care needs and expectations (Vogenberg & Santilli, 2018). As such, providers are expected to be the main source of education, information, and the resources that penitents require to take ownership of their health. Additionally, there has been an increase in consumer engagement in health care, which has occurred alongside the increase in their benefit choices that are provided to workers by their employers. As a consequence, more firms are particularly providing HDHP, coupled with the traditional plans as employers shift some of the health costs to employees.

3. Economic Legislative Changes

a. Legislative Changes

At the legislative levels, the company should focus on pushing for changes that increase access to health for disadvantaged and underserved groups. For instance, the organization should collaborate with its multidisciplinary teams of professionals to formulate proper legislative proposals to policymakers. Teams comprising professionals such as physicians, nurses, lab technicians, and clinicians can collaborate to petition the state government to allocate more funds towards increasing insurance cover and promoting health literacy programs to prevent diseases (Žibert & Starc, 2018).

b. Policy Changes

There are various policy changes that the organization should consider for it to effectively meet the health care needs of its target population and groups. For instance, the company should consider introducing corporate policies, procedures, and guidelines that facilitate the adoption of technical and technological implementation in its operations. This can be done to increase access to care for patients who are located in remote parts of the country. Additionally, it should introduce policies that enable it to serve uninsured patients. Other policy considerations should include introducing organizational restructuring and process improvement initiatives that can help it to enhance efficacy and serve many clients.

c. Statement Impact

The changes are likely to increase people’s ability to access health care services, which in the long run, can increase the demand for health services. For instance, developing policies and procedures that target social determinants of health such as employment opportunities will increase people’s ability to afford quality health care. This can reflect in the financial statements in terms of changes in the organization’s profitability, return-on investment, growth, as well as market share.

d. Potential Disparities

The proposed legislative changes are less likely to cause disparities. On the contrary, they will promote equitable access to health care by eliminating the structural barriers such a level of income and educational challenges that limit people’s access to care. The legislative proposal also advocates for the adoption of technologies that can extend care to rural dwellers thereby increasing their access to quality health.

References

Adhikari, S. R. (2011). A methodological review of demand analysis: An example of health care

services. Economic Journal of Development Issues, 119-130.

UMMC. (2019). University Of Maryland Medical System Corporation.