Please, answer all prompts fully; this is an ESSAY STYLE exam designed to demonstrate depth of understanding; single sentence, single paragraph, and otherwise incomplete responses will not be accepted

Expert Solution Preview

Introduction:

As a medical professor in charge of creating college assignments and answers for medical college students, it is important to provide comprehensive and well-researched answers to each question. In this essay, we will be discussing the difference between present and future value of a dollar, debt financing, equity financing, budgeting, copayments, deductibles, Medicare’s hospital readmission reduction programs, and the Affordable Healthcare Act.

1. What is the difference between present and future value of a dollar? Using an example you understand, explain the concept of the time value of money.

The present value of a dollar is the current value of money based on today’s value, while the future value of a dollar is the value of money at a future date based on today’s value. For example, if you hold $100 today and invest it for one year with an interest rate of 5%, the future value of that investment will be $105. This demonstrates the concept of time value of money, which indicates that the value of money changes over time due to factors such as inflation, interest rates, and risk.

2. What is debt financing? What is equity financing? In terms of tax liability to a for-profit entity, what are the advantages and disadvantages of using debt versus equity to raise capital?

Debt financing refers to raising capital by borrowing money from creditors, while equity financing involves raising capital by selling shares of ownership in the company. The advantage of using debt financing is that interest paid on the debt is tax-deductible, while interest paid on equity is not. However, the disadvantage of debt financing is that the company has to repay the principal and interest regardless of the profitability of the business. In equity financing, the company does not have to repay the capital raised, but the owners give up a portion of their ownership stake in exchange for the capital, which also dilutes control and profits.

3. What is a budget? List and explain the advantages and disadvantages of the participatory approach to budgeting?

A budget is a financial plan that outlines expected income and expenses for a given period. The participatory approach to budgeting involves involving various stakeholders in decision-making and planning the budget. The advantage of this approach is that it increases the buy-in and support for the budget from stakeholders, which leads to better implementation and adherence. However, the disadvantage is that it can be time-consuming and complicated to involve multiple stakeholders, and it may lead to compromises and delayed decision-making.

4. What is the difference between copayments and deductibles? What is the purpose behind building them into insurance coverage plans? Given a choice, would you rather have a high deductible or higher copayments? Explain your rationale.

Copayments refer to the fixed amount that an insured person has to pay for a medical service, while deductibles refer to the amount that an insured person has to pay before the insurance plan starts to cover the medical expenses. The purpose of both copayments and deductibles is to share the cost of healthcare between the insured person and the insurer, which helps to control healthcare costs and encourage appropriate use of medical services.

If given a choice, I would prefer a high deductible over higher copayments because a high deductible reduces the monthly insurance premium and provides protection against catastrophic medical expenses. Moreover, I can save money by pairing a high deductible plan with a health savings account (HSA), which provides a tax-advantaged way to save for medical expenses.

5. What is Medicare’s hospital readmission reduction programs? Why has the federal government implemented HRRP’s? What are the risks hospitals face with respect to HRRP’s? What can these facilities do to minimize the impact on their bottom lines?

Medicare’s hospital readmission reduction programs (HRRP) aim to reduce the number of hospital readmissions for patients with certain medical conditions such as heart failure, pneumonia, and chronic obstructive pulmonary disease (COPD). The federal government implemented HRRP to reduce healthcare costs and improve patient care outcomes. Hospitals face risks with respect to HRRP as they may face financial penalties for excess readmissions, loss of reputation, and reduced patient referrals. To minimize the impact on their bottom lines, hospitals can improve patient care quality, coordination, and communication, invest in technology and staff training, and develop care transition programs.

Extra Credit:

As the future of the Affordable Healthcare Act (ACA) remains uncertain, it is important to address various concerns. Access to healthcare, quality, affordability of coverage, and increasing healthcare costs are major concerns. Medicare and Medical solvency, consumer choice, the role of technology in the healthcare system, and the cost of drugs are other pressing issues that need to be addressed. To ensure access to healthcare, it is important to expand Medicaid coverage, improve price transparency, and invest in rural healthcare. Quality can be improved by implementing evidence-based practices, promoting preventive care, and reducing medical errors. To improve affordability of coverage, the ACA can be improved by reducing premium costs and out-of-pocket expenses. Medicare and Medical solvency can be achieved by reducing fraud and abuse, improving care coordination, and increasing funding. Consumer choice can be improved by increasing competition and reducing barriers to entry. The role of technology can be expanded by increasing telemedicine, promoting digital health innovation, and improving health information exchange. Lastly, the cost of drugs can be reduced by improving price transparency, reducing regulatory barriers, and promoting generic drug use.