What comes to mind when you think of the word “bilingual”? Maybe it is someone who grew up speaking two languages at home or, conversely, started learning a second language later in life. For most, what it boils down to is the level of proficiency in two languages, whether it comes naturally or is maintained through practice.
In health care, speaking the language used by colleagues in other departments also requires learning and practice. Yet, it is worthwhile because when teams can use the same terminology, it helps make collaboration more efficient and effective.
The recently released IHI/NPSF toolkit, Optimizing a Business Care for Safe Health Care: An Integrated Approach to Safety and Finance, calls for safety and finance leaders to begin to speak the same language. To achieve this – just like you would when learning any new language – you start with the basics.
Depending on your own level of fluency, we invite you to brush up on or review for the first time a few terms from the language of finance.
Cost: The definition of cost varies by the party incurring the expense.
- To the patient, cost is the amount payable out of pocket for health care services, which may include deductibles, copayments, coinsurance, amounts payable by the patient for services that are not included in the patient’s benefit design, and amounts balance billed by out-of-network providers. Health insurance premiums constitute a separate category of health care costs for patients, independent of health care service utilization.
- To the provider, cost is the expense (direct and indirect) incurred to deliver health care services to patients.
- To the insurer, cost is the amount payable to the provider (or reimbursable to the patient) for services rendered.
- To the employer, cost is the expense related to providing health benefits (premiums or claims paid).
Dark Green Dollars (Hard Dollars): Actual savings on the bottom line or well documented savings in budgeted items.
Light Green Dollars (Soft Dollars): Theoretical cost savings that cannot be tracked to the bottom line or savings that cannot be accounted for.
Payer: An organization that negotiates or sets rates for provider services, collects revenue through premium payments or tax dollars, processes provider claims for service, and pays provider claims using collected premium or tax revenues. Examples include commercial health plans (also known as insurers), third-party health plan administrators, and government programs such as Medicare and Medicaid.
Performance Budgeting: Linking funding of a program to its demonstrated effectiveness and efficiency.
Pricing Transparency: Making hospital prices widely available to patients who may want to shop around for certain services; usually applicable to elective services, where the patient can afford to take the time to shop around; empowers patient with high deductible health plan as well as consumers to find value and quality when comparing health care procedures and services.
Quality Assurance (QA): Evaluation of health care services based on set criteria. Quality Assurance Reporting Requirements (QARR): A set of data that includes performance measures related to many preventative health services and public health issues.
Return on Investment (ROI): A calculation of discounted cash flow from an investment over a specified period of time.
Risk: The chance or possibility of loss; in insurance terms, risk is the probability of loss associated with a given factor or exposure.
Value: Monetary worth, either currently or at some future time (Value = Quality/Payment). Value is the quality of a health care service in relation to the total price paid for the service by care purchasers.
Becoming familiar with these terms may help you spark up a conversation at your next meeting or with a colleague from another department. Which must-know finance terms would you add to this list?
Editor's note: The list above was adapted from the full glossary available in the Business Case toolkit.
You may also be interested in: