Healthcare Finance




Profitmaximization is not the same thing as shareholder wealthmaximization. Shareholder wealth maximization is a long term goalthat is aimed at increasing the stock price of a corporation therebyincreasing the wealth of shareholders. This means if a shareholderbought a stock at $10 and then the share price rises to $15 then thewealth of the shareholder will have gone up by $5 per share he or sheholds. Profit maximization on the other hand is a short term goalaimed at increasing the profits of a corporation the short run(Gapenski,2012).


Prospectivepayment plans are a payment plan advanced to health care providerswhich is based on predetermined factors. This payment plan does notaccommodate the individual patients. The rate is revised to take intoaccount factors like inflation and cost of living. On the other hand,retrospective payment plan is based on actual charges. Once a healthcare provider attends to a patient, the provider is expected to givea bill of the services extended to the patient. Based on this, thehealth insurer will may then pay or decline to pay the bill. However,the insurance company is expected to pay the full amount as indicatedwithout dispute (Gapenski,2012).


TheUnreimbursed cost of Medicare is the amount of unpaid cost intendedto provide care to Medicare patients. It basically describes thebalance between the amount received from the government and theamount that was actually used to provide care to Medicare patients(Eastaugh,2004). This amount is not included as an element of communitybenefit since it is considered as charity and further it doesn’tmeet the criteria to be categorized as an element of communitybenefit (Cleverly,Cleverley &amp Song, 2011).


Cleverly,W., Cleverley, J., &amp Song, P. (2011). Essentialsof health care finance.Sudbury, Mass.: Jones &amp Bartlett Learning.

Gapenski,L. (2012). Healthcarefinance.Chicago, Ill.: Health Administration Press.

Eastaugh,S. (2004). Healthcare finance and economics.Sudbury, Mass.: Jones and Bartlett Publishers.