Week 12- Healthcare Finance

Within the health care system, finance may be one of the most convoluted and confusing topics. The current climate within health care dictates that each of us has a basic understanding of what drives cost and expenditures. By the year 2037 healthcare spending is expected to reach 25% of the gross domestic product, accounting for 40% of Federal expenditures (Emmanuel et al, 2012). This growth will surpass expected economic growth significantly. Thus, both policy makers and the public are seeking high quality-low cost interventions to support. Palliative care provides one such avenue.

Both the quality and the quantity of services offered should be evaluated to clearly reflect where change may occur. The Affordable Care Act is set to decrease Medicare spending, however this alone is not thought to control spending enough to sustain the system.  Many innovative solutions have been proposed. The Center for American Progress cited payment reform as well as extending the scope of non-physician providers to foster competition in the market and thus reduce prices (Emmanuel et al, 2012).

The cost for palliative care services often falls within Federal spending. Many of those who receive services utilize Medicare insurance providers. SB 1004 provides palliative care services within the Medicaid benefit in the state of California. Although expanding this service would initially add to federal and state healthcare expenditure, ultimately a savings could be demonstrated. In fact, SB 1004 is proposed to be a cost-neutral plan- the implementation cost should be covered by the savings in lengthy hospital stays, emergency room visits etc.

A systematic review published in Palliative Medicine (Smith, 2014) found that both hospital and home-based palliative care programs demonstrated cost savings relative to the control group. This savings was found primarily in the decreased hospital readmission costs, $6421 for palliative care patients vs $13,275 for individuals receiving usual care (Smith, 2014). This review focused primarily on the cost to the provider or third party payer, it did not take into account out-of-pocket spending.

The literature is consistent in evaluating palliative care services as an affordable delivery model for many patients. A clear definition of palliative medicine and a nationwide expansion of service availability should be considered within the health policy discussion. Medicare, Medicaid and private insurers should include this benefit for their members. Additionally, creative ways to promote these services should be designed. The public deserves to understand this valuable service. Greater patient satisfaction, higher quality of life scores and increased life expectancy should capture the attention of reformers within healthcare.


Emanuel, E., Tanden, N., Altman, S., Armstrong, S., Berwick, D., de Brantes, F.… Topher, S. (2012). A systemic approach to containing health care spending. New England Journal of Medicine, 949-954.

Smith, S., Brick, A., O’hara, S. and Normand, C. (2014). Evidence on the cost and cost-effectiveness of palliative care: A literature review. Palliative Medicine, 28(2), 130-150.


3 thoughts on “Week 12- Healthcare Finance

  1. clarinet20 says:

    You shared some interesting facts and I love how you tied healthcare finance into your topic of palliative care. It is interesting the amount of money spent on healthcare and how that is expected to rise exponentially. You mentioned expanding the scope of non-physician providers to drive down the cost. That is so important to allow for more competition and hopefully reduce costs. I wonder if it actually will. I thought the reason to expand the scope of practice for non-physician providers would be more to meet the increasing population needs with the shortage of physicians. Yet, it would help with healthcare costs too, perhaps.
    I think that palliative care offers such wonderful things to patients and it is not understood, yet, according to your post, it can decrease healthcare costs overall. It seems as if this is a clear indication to support palliative care, and I think many people are coming around to the concept. Do you agree?


  2. marnibailey says:

    I cannot agree with you more. Palliative care should be expanded and offered more. As you indicated, palliative care reduced care by nearly 50%. Those number in and of themselves demonstrate the effectiveness of palliative care on healthcare expenditures and finance, not to mention, palliative care may provide patients the ability to remain in their homes and with their family spending quality time. I believe palliative care has the capability of reducing healthcare expenditure even more. Given that 30% of Medicare costs are incurred by 5% of Medicare recipients who die within one year, palliative care has the potential to make a huge impact in this arena alone (Barnato, McClellan, Kagay, & Garber, 2004). This figure was from a 2004 study. I anticipate additional research would show this number to be even greater.


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