Briefing Memo


You are the Chief Operating Officer of a large healthcare system, composed of acute, long-term care, and community-based organizations in addition to long-term care managed care plans.

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Given your current studies in health policy and management, the Chief Executive Officer of this large healthcare system has requested that you prepare a high-level briefing for the system’s Board of Directors in which you describe:(a) factors that have contributed to dramatic growth in health care spending over the past 50 years; and(b) how health care payment and delivery models are transforming to promote greater accountability for cost and quality in the health care system.

Please conclude your memo with your analysis of the most promising approaches for constraining cost growth while maintaining or improving quality, as well as the limitations or open questions that accompany new reimbursement and delivery models that are intended to promote “accountable care.”The memo must be four pages in length. Please include references to course readings as well as any relevant outside sources that support your analysis. Citations and a references page (not included in page length) are required.**You must use a recognizable memorandum format for this exercise—and it is recommended that subject areas be segmented using sub headers. Include your institution’s logo on the first page of the memo (fictitious). Be creative.


Sample Answer




Ref: MNGT/123/06/2019

To: Board of Directors

From: Chief Operation Officer

Date: 15th November 2019



First and foremost, let me take this opportunity to commend the board for the remarkable stewardship and exemplary leadership skills. It is this prowess that has enabled this firm to soar great heights in the healthcare sector. Notably, there has been a surge in demand for healthcare services; consequently, healthcare spending over the last fifty years. For better strategy formulation, accurate insight into the contributors to this increased healthcare spending is mandatory. This memo briefs about the factors that promoted the dramatic upsurge in healthcare spending over the past five decades. In addition, the role of payment and delivery models in the promotion of accountability and quality is explored herein.

  1. Causes of Increased Healthcare Spending

As stated earlier, healthcare costs in the United States have grown drastically over the past five decades. According to a study in the Journal of American Medical Association, medical expenditure rose by almost a trillion dollars in the last two decades alone. The individual spending in 2017 was about $11,000. This increased spending is attributed to the following factors;

Growth of Aging Population

As the aging population increases, the cost of healthcare also rises due to the urgent medical attention needed by the aging population. The costs of treating patients over sixty-five years is expensive compared to that of younger patients. According to a report by Global Aging, there has been a change in the cause of death, from infections to chronic non-communicable diseases such as cancer, hypertension, arthritis, and heart failure. This has translated into increased life expectancy. The cost of treating the above infections among the aging population is considerably high. Consequently, the aging population accounts for 12% of the increase in healthcare spending.

Increase in Chronic Diseases

The incidences of chronic illnesses have been on the rise in the last five decades. They account for 85% of the total healthcare spending. These illnesses are difficult and expensive to treat. According to the Journal of American Medical Association (JAMA), diabetes is the most significant contributor to increased health spending over the last fifty years. Other illnesses responsible for the upsurge in healthcare costs are high blood pressure, high cholesterol, urinary infections, depression, and osteoarthritis. Caring for these patients takes a fourth of the total medical budget. This proves the burdening financial implication of chronic illnesses.

Rising Health Assurance Premiums

The increased health assurance premiums lie at the center of concerns about increasing healthcare costs. There has been a substantial rise in family healthcare coverage premiums. This change has been instigated by lifestyle change and government policies on healthcare. Government initiatives such as Medicaid and Medicare have catapulted the demand for medical services, consequently leading to higher costs.

Increased Out-of-Pocket Costs

Currently, the out-of-pocket amounts paid by patients seeking healthcare services has been the highest in the last five decades. The adoption of high-deductible health plans as a way of curbing increased demand is a significant contributor to high healthcare costs (Mullahy, 2019).

Lack of Transparency and Inefficiency in the Existing Healthcare System

Currently, there is no elaborate criterion for determining the cost of healthcare services. This leaves a loophole that healthcare providers exploit to overcharge patients for services. According to the Wall Street Journal, hospitals are charging exorbitant fees for relatively cheaper operations. This is a significant contributor to the rising costs of healthcare.

  1. Payment and Delivery Models in Promoting Accountability and Quality

It is worthwhile to note that the enactment of the Affordable Care Act has spurred the development of robust delivery and payment methods (Kominski, 2014). These have reduced the cost and improved the quality of healthcare services. Noteworthy models include the Accountable Care Organizations and Patient Centered Medical Homes. The models have enhanced accountability and quality by transforming the healthcare system in the following ways;

Altering the Organizational Structure

The payment and delivery models have played a fundamental role in changing the structure of several health organizations. Healthcare providers have changed their organizational models by merging or affiliating with other physician practices or changing ownership to other hospitals. The cause of this change of ownership or mergers has been necessitated by the intensive capital requirement to implement specific payment models (Canady, 2015). Other factors include boosting the ability to negotiate contracts and achieving a sense of security in numbers. This has, in turn, improved the quality and accountability in healthcare services provided.

Altering Practice Operations

The introduction of alternative payment model has resulted in the development of competent management teams that incorporate notable roles for the involved health professionals. Shared savings and medical home programs have enabled the employment of care managers. These managers major in patient management and reducing pressure on physicians. The alternative payment model has also changed the relationship between primary care and subspecialist physicians as opposed to the initial models that focused on primary care for performance evaluation and patient attribution. This, in line, has augmented competency and improved quality in the sector.

Enhancing  Data Collection and Analysis

The recent payment models have placed importance in data and subsequent analysis. This has led to massive investments in data management systems through the use of electronic health records, which have facilitated the management and analysis of entered data. The overall effect of this is the improvement of claims query generation and billing, thereby improving accountability.


Having noted the upsurge healthcare spending, there is a need to curb this growth ( without compromising on the quality) before it goes out of hand. As a major stakeholder in the country’s healthcare system, active involvement in the process is obligatory. The most auspicious approaches in limiting this growth are;

Reducing the Use of Healthcare Services

This is only achievable through advocating for a change in lifestyle because the strategy is majorly preventive. It is attainable by advocating for healthy habits such as exercising and taking unprocessed foods. This will eliminate unnecessary physician visits.

Reducing Reimbursement for Services

This strategy calls for negotiation between insurance companies, hospitals, other healthcare providers, and the government for lower fees. Alternatively, the government may dictate fees payable for each service.

The introduction of payment and delivery models has significantly improved the healthcare sector. However, healthcare providers should evaluate their readiness to adopt the models and select the best model by addressing these questions;

  • What is our capacity for change?
  • What is our financial capability?
  • Will the change affect our mission?
  • What is the effect of this to relevant stakeholders(both internal and external)?




Chief Operation Officer


Chief Executive Officer



Canady, V. (2015). Value-based payment models to improve care, lower costs gaining traction. Mental Health Weekly25(9), 1-7. doi: 10.1002/mhw.30093

Global Aging. (2019). Retrieved 15 November 2019, from

Kominski, G. (2014). Changing the U.S. health care system. San Francisco, Calif: Jossey-Bass.

Mullahy, J. (2019). Health and evidence in health economics. Health Economics28(10), 1163-1165. doi: 10.1002/hec.3926

Trends in health care spending. (2019). Retrieved 15 November 2019, from

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