Sample Nursing Essay Paper on Financial Factors Influencing Health Care Today

Financial Factors Influencing Health Care Today

With a rising demand for better health care services in the U.S., care providers must understand the economic determinants of the sector. As opposed to earlier times, the masses are more concerned about how financial resources, especially in the public health sector, are utilized. Additionally, the public is demanding better health care facilities at a lower cost. Balancing these trade-offs is a crucial skill that ought to be understood by all health care professionals. In particular, nurses have a central role in ensuring that the financial goals of health care institutions are met. These professionals are usually at the front line in serving patients. They can, therefore, device mechanisms and ways of cutting costs while at the same time ensuring that quality of care is not compromised.  In the light of this statement, thus, this paper discusses the different financial and economic factors that influence health care, funding sources, reimbursement methods, business influences, cost containment, and the role of nurses in all these aspects.

Health Care Funding Sources

The provision of health care services comes at a cost that needs to be met by stakeholders. Funding is, therefore, a key factor governing the delivery of quality care. In the U.S., health care services are funded in three main ways; private insurance, government insurance programs, and personal out-of-pocket funds (Singh, 2015). Additionally, the government may also provide services directly through government-run facilities. Typically, private insurance is purchased from either not-for-profit or for-profit organizations. Many companies have bought these insurance schemes for the benefit of their employees. In some cases, the cost is shared between the employee and the employer.

Government insurance programs are majorly created to cater to the health care needs of special people in society. Such groups include the elderly, veterans, refugees, and persons living with disabilities (McColl-Kennedy et al., 2017). Examples of insurance programs run by the United States government include Medicare, Medicaid, Tricare, and Refugee Health Promotion Program. Another critical source of health care funding is out-of-the-pocket financing. In such circumstances, people pay money from their savings to cater to their health care needs.  Lately, crowdfunding and fundraising have also become other primary sources of health care funding.

Reimbursement Methods

Health care reimbursement is the process through which a physician or health care facility receives payments after providing a medical service. Usually, a health insurer or the government pays full or part of the total cost incurred during treatment. Typically, reimbursements occur after a medical service has been rendered. Primary reimbursement methods used in the U.S. health care system include discount for billed charges, a fee for service, value-based reimbursement, bundled payments, and shared savings.

Discount for billed charges is the easiest to calculate. The payer agrees to reimburse the service provider at a negotiated discount using a standard charge description master (CDM). On the other hand, fee-for-service method of reimbursement uses specific negotiated rates for each service or procedure performed (Singh, 2015). Value-based compensation incorporates the aspects of efficiency and quality, thus, encouraging positive outcome rather than increasing volume. Shared savings improve care coordination and outcome within the health recipient population. In bundled reimbursement, payments are made for specific episodes of care.

Socioeconomic Factors Influencing Health Care

Several economic factors influence health care today. The most common ones are income and poverty structure and financial hardships. Income enables families to live in health-friendly housings and access better health care. People with higher incomes tend to have better access to health care services. Through employment income, employees can access better health insurance plans, thus promoting health care delivery (Singh, 2015). Income is heavily intertwined to social factors that affect health care delivery. Such may include housing, social support, education, and economic discrimination. To a large extent, there is a strong relationship between socioeconomic status and health care outcomes. People with a better socioeconomic status can access better health services, live in more health friendly environments, and access better health technologies, hence better health care outcomes.

Business Influences in Health Care

Health care provision is a massive industry with both for-profit and not-for-profit players. For the for-profit organizations, health care facilities are organizations that should have financial returns just like any other corporate businesses. Over and above providing health care services to the public, they need to minimize operational costs while at the same time maintaining or increasing revenues (McColl-Kennedy et al., 2017. This aspect brings in the business influences in the health care provision. In a drive to reduce operational costs, hospitals are starting to limit patient stay lengths. This translates to lower hospital census, thus acting as an incentive for administrators to lower costs. Additionally, hospitals are also trying to reduce costs to bid lower prices necessary to win more managed contracts of care.

Cost Containment and the Financial Responsibility of the Nurse

Cost containment strategies revolve around the best practices for maintaining hospital expense levels as a way of preventing any unnecessary spending. It also entails thoughtfully and systematically reducing expenses to improve profitability without risking the reputation of the health care facility. As key players in the industry, nurses have a huge role to play in cost containment in hospitals (McColl-Kennedy et al., 2017). Some of the ways through which nurses can engage in cost containment include the use of telemedicine whereby patients are attended to without having to incur additional costs such as urgent care drips and office appointments. Nurses can also engage in strategies such as universality, budget shifting, value and service coverage, and setting of budget caps. They have the financial responsibility of ensuring that their organizations operate within a budget. This can be done by ensuring that the right scheduling is done, supplies are utilized optimally, optimizing the payroll, and using insurance.

Affordable Care Act, Health Care Rights, and Ideal Vision for America

Commonly referred to as Obama care, the Affordable Care Act (ACA) was signed into law by the former U.S. President, Barack Obama in 2010. The bill was aimed at ensuring that more people access health insurance, thus improving the quality of health care, reduce health spending, and regulate the health insurance industry (Obama, 2016). Although the Act faced significant resistance during its introduction, it has dramatically expanded Medicaid by allowing even poor people to access health insurance, thus, promoting universal health. ACA is a good step towards achieving comprehensive health coverage in the U.S. By large, health care is a right and not a privilege that should only be accessible to the rich. In an ideal world, health care vision for America should seek to provide affordable, quality, and timely health care to all citizens irrespective of their social, economic status. The poor and people living with disabilities should be able to access the same care as the rich and those with higher social status.


Acquisition of cutting edge technologies to foster enhanced care provision, improving funding structure, reducing costs, and reimbursement schemes are essential financial aspects that professionals need to understand. The need to involve citizens in decision-making areas revolving around finance and quality has also created the urgency for nurses to understand how financial systems in health care settings work. Health care institutions get funded by a different source such as medical health insurance and out of the pocket. The U.S. government should ensure that all citizens have access to affordable, quality health care.


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Obama, B. (2016). United States health care reform: progress to date and next steps. Jama316(5), 525-532.

Singh, D. A. (2015). Essentials of the US health care system. Jones & Bartlett Publishers.