Corporations generally have no shareholders and hence

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: their malpractice actions A significant proportion of HC business, particularly hospitals, are categorized as non- profit corporations For- Profit Corporations: investors become owners by purchasing shares of common stock o Primary market transactions- initial public offerings, new common stock sales o Secondary market transactions- on exchanges, in the over- the- counter market o Stockholders have: right of control, claim on residual earnings and residual liquidation proceeds o Primary goal: shareholder wealth (stock price) maximization o Primarily concerned with satisfying owners Non- Profit Corporations: generally have no shareholders, and hence do not have a single clientele to which managers are responsible, receive various tax exemptions, can be roughly thought of as being owned by “the community” o Primary goal: generally given through mission statement, often in terms of service to the community o Must satisfy all stakeholders Stakeholders: are parties that have an interest (usually financial) in the business • o They include the owners, managers, employees, suppliers, patients, and even the community at large Taxes- federal vs. state vs. local taxes, personal vs. corporate, ordinary income vs. capital gains o Individual: pay federal taxes on salaries, interest, and other income at rates that can approach o Corporate taxes Investor- owned corporations: pay federal and state taxes on corporate income at rates that can exceed 40% Non Profit corporations: for the most part, are not subject to taxation For profit corporations: can issue tax- exempt bonds, can receive tax- exempt contributions CHAPTER 3- Paying for Health Services • • • • • For insurance to “work”, it must have these basic characteristics: o Pooling of losses, payment only for random losses, risk transfer, indemnification 2 problems arise in insurance programs- o Adverse selection: those with greater risk are more likely to purchase insurance The problem exists because of adverse selection Cross- subsidies may exist among different groups o Moral hazard: the overuse of health services or forgoing of prevention because the individual does not bear the full cost of the consequences Insurers protect themselves through – deductibles, copayment, coinsurance, and policy restrictions Provider revenue generally comes from third party payers, rather than patients o Private insurers- blue cross/blue shield, commercial insurers, self- insurers o Public insurers- Medicaid and Medicare Managed Care Organizations: combine insurance and provider functions o Types of MCO’s- Health maintena...
View Full Document

This document was uploaded on 03/12/2014 for the course HCM 4550 at University of Minnesota Duluth.

Ask a homework question - tutors are online