The importance of and the Effect of Legislation on Healthcare Accounting Practices

The availability of various ways of accounting for healthcare and the rapid development of new other ways of reporting the financial statements in health organizations , the laws put in place help prevent fraud activities thus reducing the burden on the third party payer i .e the consumer

Report provided by the general accounting office in US (1987 ) indicated that there were observed effect of major legislative changes on Medicare and Medicaid programs costs and cost to the beneficiary . Out of the 30 laws enacted by congress (1980 - 1986 ) 5 showed great effects

on costs of the two programs , they contributed to slowdown in Medicare cost growth (Medicare and Medicaid , 1987

Some legislative changes led to increase of the costs by expanding program services . Although the changes in Medicaid recipient out-of-pocket costs couldn 't be measured , it was observed that many states expanded their cost sharing requirements because certain legislations had been enacted

There are two motives observed in he formation of local multihospital system this is according to a study done by David and Mark in 1992 Cost reduction and reputation enhancement . The system may eliminate redundancies and reduce administrative costs . Integration may also lower the costs but have no reputation benefits

Conclusion

By keeping proper books of accounting , a health care organization is able to note its progress as to whether it 's running at a loss or profit in to have enough cash flow to pay its day to day bills of running the health care . Hence , it is important for health care organizations to have legislation on health care accounting practices

References

Dranove , D , and Shanley , M (1995 : Cost Reduction or Reputation Enhancement as motives for Merger . Strategic management journal : Vol 16 , pages 55 -74

Medicare and medic ail (1987 : Effects of Resent Legislation on Program and...