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Challenges in the Healthcare System

What are the three most significant challenges facing the healthcare system due to changes in financial mechanisms?

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Interesting question, indeed. Please see response attached (also below). I hope this helps and take care.


1. What are the three most challenges facing the healthcare system due to changes in financial mechanisms.

The reasons sited differ somewhat across different healthcare systems and authors, but there seems to be several common threads. It seems that the main challenges that the healthcare system faces due to changes in the financial mechanisms are:

1. Rising costs,
2. Declining reimbursement, and Limited resources.
3. Privacy and confidentiality of medical and financial records
4. Other challenges

1. Rising financial and operational costs

The ever-increasing rise in healthcare cost is often sited as the biggest challenge to healthcare today. Technological change in billing and finacial expenditures. In one report, annually, spending on equipment exceeded spending on buildings, with spending on equipment making up 51 percent of capital spending for fixed assets in 2001 This pattern of spending a higher proportion of capital on equipment shows the importance of equipment investment to keeping up with health and safety code requirements, efficient and high quality practice of medicine, efficient operations, and strategic business expansion (

Specifical challenges are of setting up of financial and accounting computer systems is one of the financial and operational challenges facing healthcare today. Most industries recognize that world-class quality cannot be produced without automation. However, the LTC, for example, industry expects perfect execution and documentation from a labor source that is scarce and sometimes unskilled. Without IT solutions, those expectations are unrealistic.

Managed care has demanded the transition to integrated delivery system, which is another challenge. The optimal organizational form or model for structuring relationships between hospitals and physicians, which allows for a cooperative rather than competitive relationship is open to much debate. Local market forces will influence the feasible range of options available. However, the more successful models succeed in creating shared economic incentives for both the hospital and the medical staff. This alignment of financial incentives remains one of the most difficult challenges facing systems today, affecting both hospitals' strategic choices. As stated in the Bristol Review, Stephen Shortell in Remaking Health Care in America defines functional integration as "the extent to which key support functions and activities (such as financial management, human resources, strategic planning, information management, marketing, and quality improvement) are coordinated across operating units so as to add the greatest overall value to the system." An area that most organizations immediately recognize as needing to be integrated is information systems, which would link providers and patients across the continuum of care and sites. This is the link that allows information both clinical and financial, to be available where and as needed ...

Solution Summary

This solution explains the three most significant challenges facing the healthcare system due to changes in financial mechanisms.