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By CPA Nyakoi Godfrey Oreko

Based on the recent reports as regards world health, the focus shifts to the integral role and value of the health systems. Inclusive world health reflects the need to ensure that there is universal coverage. Nonetheless, it is imperative to note that universal healthcare should be premised on the ideology of being socially good and inclusive, economically viable, as well as having a degree of political correctness. To ensure that universal health coverage works seamlessly, more so in the interconnected global economy, the need for a well‐financed health system comes up. Even so, the evidence that guides the health system financing in terms of the policy is ambiguous. Notably, the health financing mechanisms should be applicable for each nation with a huge degree of prominence placed on equity, income, as well as the need to subsidize the risks. Such an instance would be relevant and significant given that it would portend to inculcate a trend that reduces reliance on out‐of‐pocket payments. In essence, the health systems financing would create a leeway for acquiring an ideal Bismarck Model or Beveridge Model that curtails the detrimental trend as regards the continued reliance on the out‐of‐pocket form of payments in terms of healthcare. Innovative financing mechanisms have been identified as having the boundless capacity to encounter the healthcare financing needs devoid of giving rise to untenable pressure on government resources. However, while innovative bankrolling can seal the financing gap that helps in transitioning to more even-handed models of healthcare financing in many developing economies, challenges that should be addressed still do exist.

The challenge of managing the investment in a capital-constrained setting is a key issue in terms of achieving a sustainable healthcare financing system. Resources are vital for the engendering of an environment that makes it easier for the development of healthcare services and operations. A sustainable health financing system would mean that hospitals across the world, whether in low-income countries or high-income nations, have to find the resources needed for funding quality initiatives as well as other enhancements. Such a situation further becomes bleak in the context that the health facilities have to attain sustainability while at the same time trying to stay afloat in an already competitive market. Moreover, this challenge is further exacerbated by the constant changing of the laws that guide the provision of healthcare services, having an impact on the rate of healthcare access to the ever-expanding demands of the patients. In addition, in an interconnected worldwide economy that has been upheld by the internationalization of services, healthcare being one of them, the need to eliminate the pressure of costs while at the same time improving the outcomes puts limitations on how much financing and resources healthcare institutions can use to propel the healthcare of the patients.

Another critical challenge can be pointed out in the scope of the need to find alternative ways of generating revenues. Of notice is that the health systems that have adequate cash reserves, and are buoyed by the high net income generation, are ahead of the game to make investments that subsidize the business of caring for patients. In essence, while the need for having alternative revenue streams is vital for the sustenance of the healthcare systems in terms of financing, such substitute options hardly come by. The core issue with the challenge of alternative revenue streams is that it constrains capital improvements, making it hard for hospitals to survive within the current and demanding healthcare environment. While it is tough to attain the resources and money for purposes of funding healthcare services, declining revenues pose a more challenging situation. The need to contain core operating costs brings to the fore another challenge given that hospitals and other healthcare players continue to seek techniques to contain operational costs. Moreover, hospitals have found themselves in a tricky situation that requires a reduction of their costs by decreasing utilization via standardization as well as managing the different healthcare variations. While high-performing organizations in the healthcare industry can get extra cost control measures by acquiring a system approach that is stringent and lucid, it as well adds to the cost incurred. While some investments in healthcare such as pharmaceutical research, telemedicine, leasing and renting equipment, ambulatory care centers, and business software development, can supplement declining revenue, increased costs associated with such schemes challenge the sustainability of the inclusive healthcare financing systems.

Additionally, the rapid change towards the embracement of a value-based model in healthcare financing brings another challenge. The need to shift to value-based models means that the relevant infrastructure, as well as governance practices, are needed to have a positive impact on the holistic healthcare industry. Nonetheless, most healthcare providers show concerns that the shift to the value-based model call for more fee-for-service reimbursement. The situation, therefore, implies that the healthcare industry finds it hard to effectively respond to the economic fluctuations of home markets. Moreover, healthcare entities that are shifting towards value-based models have to contend with the harsh realities and limitations within the realm of their local economies. Furthermore, the infrastructure that is needed to support value-based purchasing of equipment continually calls for more resources that may push healthcare entities to the edge. As the surge and movement towards the value-based form of purchasing continue to speed up, more investments will be needed, indicating the surge in the use of the already constrained resources.

The fast-changing market forces mean that healthcare entities have to continuously adopt new approaches. However, the process of adapting new approaches to these prevailing market changes forms immense challenges to the integration of healthcare financing systems. Of notice is that mergers, as well as acquisitions, have become a significant part of the modern healthcare landscape. It is based on this point that large entities are even consolidating into larger companies. The situation has led to compelling factors that make hospitals come together and join forces to operate under a strong corporate brand. The underlying problem with such a situation is that the pressures from government agencies as well as other regulatory entities indicate that such arrangements have to be above board. In essence, the pressures emanating from such instances portend to augment the pressures on the healthcare organizations, formulating an overstretched budget that may not have the capacity to effectively support the financing systems. These pressures are further enhanced as the need to secure and grow the market share keeps on being manifested. It is in this context that it can be pointed out that the need to gain market share remains a big worry notwithstanding the rapidity of the payment model change. More damaging is the fact that the providers have to weigh the market strategies, including the consolidation, and traditional, along with the non-traditional partnership that has the potency to influence the strategic relationships. Overall, hospitals and other healthcare providers continue to face challenges in the form of acquiring the skills needed to operate and thrive in a continually fast-changing healthcare market.

Access to the relevant forms of digital innovation and technological transformation comes out as another challenging scenario concerning the adoption of a cohesive and inclusive healthcare financing system. Notably, there has been a plethora of new medical technology that is developed at a rapid pace. However, owing to other external factors, hospitals cannot always optimize the usage of their equipment and resources. It is based on this failure to take advantage of its benefits that recurrent cost constraints are witnessed. Owing to the increased pressure to use technology as regards instigating improved patient outcomes, there has been more pressure on the part of the hospitals. In essence, such a scenario calls for the need to use more facilities as a means of exploring how they can come up with the finances to adopt new medical devices. For this reason, the pressures are witnessed in the scope of the constant adoption of interoperable electronic health records and innovation systems. Another observable challenge arises in the need for meeting regulation and compliance requirements. Hospitals and healthcare providers have to make sure that they are compliant with the different rules and regulations that govern everything from patient privacy to outcomes from procedures. As such, any endeavor by the hospitals to make shortcuts as regards policies and observance of the regulations could lead to detrimental consequences. Overall, these discussions have showcased that the constraints in terms of the funds to support and meet compliance guidelines come up as a key challenge. 

By CPA Nyakoi Godfrey Oreko

ICPAK Member


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