Question

1. What are the financial implications of Health Care Organisation charges versus actual payments (net realized payment). Why bother setting prices for charges?

Answer 1

Health care organisations basically go through a rough process initially to setup a price. First of all health care organisations consider the condition of patients and which type of treatment they need and after that it have a overview of financial conditions of those patients after that organisations how set the price disccused below.

Every hospital maintains a file system known as the chargemaster, which contains all billable procedure codes performed at the hospital, along with descriptions of those codes and the hospitals’ own list prices. The format and contents of the chargemaster vary from one hospital to the next, although the source codes are derived from the American Medical Association’s (AMA’s) Current Procedure Terminology (CPT) system and the International Classification of Diseases (ICD) procedure coding system. Chargemasters can include tens of thousands of line items(procedure codes), depending on the type of facility, and can be maintained in spreadsheet or database formats.10 Dollar amounts(charges) for all codes are uploaded into the hospital’s main billing system and from there flow to each patient’s bill. The dollar amounts, in turn, reflect a combination of factors that are briefly described in this section and include the hospital’s actual costs, the accounting system (measured costs), the payer mix, and relative strength in the marketplace to set its own prices.
Two types of instruments to control the level and growth of public health expenditure are considered: (i) provider payment methods that influence the price and quantity of health care, and (ii) cost-containment measures that influence the behaviour of patients. Belonging to the first type of instruments, we have: fee-for-service, per diem payment, case payment, capitation, salaries and budgets. The second type of instruments consists of patient charges and reference price systems for pharmaceuticals. Secondly, we provide an overview of experience in high-income countries that use or have used these particular instruments.

Basically healthcare organisations bother setting prices because it overview different factors to decide price as sometimes it considers the financial conditions of patients so as to increase its charge in accordance to that and when it gets complexity in setting up of price then it starts bothering to make that patient uncomfortable and force to take organisations consideration seriously . After all problems regarding prices resolve healthcare organisations  start providing it's services.