Fundamentals of Health Care Financial Management:

Description

Fundamentals of Health Care Financial Management: A Practical Guide to Fiscal Issues and Activities Contents Figures, Tables, and Exhibits Preface Acknowledgments The Author Chapter 1: January What Is Health Care? What Is Management? What Is Financial Management? Why Is Financial Management Important? Ridgeland Heights Medical Center: The Primary Statistics Managed Care Inroads RHMC’s Actions to Counter Dwindling Inpatient Census RHMC Decision Time Financial Management Implications Pro Forma Development Net Present Value and Internal Rate of Return Volume Assumptions Revenue and Expense Assumptions Living with the Finance Committee and Board of Directors’ Calendar Routine Matters Periodic Review Matters Year-End Closing Chapter 2: February Accounting Principles and Practices Objectives of Financial Reporting Basic Accounting Concepts Basic Financial Statements of a Health Care Organization Uses of Financial Information The Financial Statements Balance Sheet Statement of Operations Statement of Changes in Unrestricted Net Assets (or Equity) Statement of Cash Flows Notes to the Financial Statements Preparing for the Auditors Analysis of Sensitive Accounts Contractual Adjustments Accounts Receivable Allowance for Doubtful Accounts Provision for Bad Debts Allowance for Contractual Adjustment Third-Party Settlements February Finance Committee Special Reports Bond Debt Status Health Insurance Annual Review Chapter 3: March Strategic Financial Planning: Five-Year Projections Strategic Planning Converting Vision (the Strategic Plan) into Financial Reality RHMC Strategic Financial Planning Volume Assumptions Payer Mix Rates and Reimbursements Implications for Operating Expenses Ratio Analysis Bonding-Related Ratios Other Ratios Operating Ratios The Capital Plan and Its Relationship to the Strategic Plan Routine Capital Items Information Technology Facility Improvements and Upgrades Property Acquisition Physician Recruitment Physician Medical Offi ce Space Capital Affordability Chapter 4: April Medicare and Medicaid Net Revenue Concepts The History of Medicare and Medicaid Impact of Medicare and Medicaid on Provider Net Revenues Implications for Ridgeland Heights Medical Center Calculation of Medicare and Medicaid Contractual Adjustments Medicare Hospital Net Revenue Concepts Medicaid Net Revenue Concepts Implications of the Balanced Budget Act of 1997 Balanced Budget Refi nement Act of 1999 Benefits Improvement and Protection Act of 2000 Impact of the Balanced Budget Act on Medicaid Implications of the Medicare Modernization Act of 2003 Implications of the Patient Protection and Aff ordable Care Act of 2010 (PPACA or ACA) Reduction in the Annual Medicare Market Basket Payment Updates (APUs) Penalties for High Readmission Rates Establishment of ACO Contracts with Medicare Bundled Payment Pilots Value-Based Purchasing Program Calculating Performance CMS-TJC Core Measure Set Reduced Payments for High Levels of Hospital-Acquired Infections Individual and Business Mandates Establishment of Health Insurance Exchanges and Affordability Credits Medicaid Expansion Medicare and Medicaid DSH cuts Managed Care Net Revenue Concepts Preparation of the Medicare and Medicaid Cost Report Ratio of Costs to Charges Implications and Sensitivity of Medicare Cost Reporting Presentation of the Audited Financial Statements to the Finance Committee Implications of Management Letter Comments Proposed by the Auditors Chapter 5: May Fundamentals of Revenue Cycle Management (RCM) Preregistration, Precertifi cation, and Insurance Verification Charge Capture and Price Setting Coding and Reimbursement: Documentation Capture and Review Coding and Reimbursement: Coding 2013 Coding and Reimbursement: Coding 2014 Coding and Reimbursement: Timeliness Denials Management Denials Management: Fraud and Abuse Issues Related to Billing Denials Management: Recovery Audit Contractors (RAC) Follow-Up: Managed Care Arrangements and Negotiations Performance Monitoring Calculation of the Allowance for Doubtful Accounts and Bad-Debt Expense Calculation of the Allowance for Contractual Adjustments Chapter 6: June Budget Preparation: The Beginning Budget Calendar Presentation of the Budget for Approval Budget Calendar Time Frame Detailed Budget Calendar Steps Volume Issues Historical Perspective Demographic Changes New Services Impact from the New ACA Law Physician Issues and Input Wishful Thinking June 1: Volume Kickoff Meeting June 26: Approval of Projected 2013 and Budgeted 2014 Inpatient and Outpatient Volumes Capital Budgeting: June Accounting and Finance Department Responsibilities June Finance Committee Special Agenda Items Human Resources Report Pension Status and Actuary Report Review Chapter 7: July Budget Preparation: The Middle Months Which Is Better: Top-Down or Bottom-Up Budgeting? July 1: Issuing the Budget Calendar July 11: Computation of Gross Revenues and Contractual Adjustments July 14: Review of Salary and Nonsalary Assumptions July 15: Review of Gross Revenues and Contractual Adjustments and Validation of Payer Mix July 18: Review of the 2014 Budgeted Income Statement, Determination of Price Increase Targets, and Revision of Salary and Nonsalary Assumptions July 25: Releasing 2013 Projected and 2014 Budgeted Worksheets to Department Managers Capital Budgeting: July Regulatory and Legal Environment Medicare and Medicaid Fraud and Abuse Other Regulatory and Business Compliance Issues Corporate Compliance Accreditation Issues Patient Satisfaction Issues Chapter 8: August Capital Budget: August August 12: Detailed Discussion for All Proposals over $100,000 and Training of All Proposal Evaluators August 13: Discussion of All Pool Proposals with the Pool Evaluators Funding Availability Automatically Approved Capital Funding Items August 13–16: Online Evaluation of Proposals August 19–22: Consensus Meetings with Pool Evaluators August 29: Consensus Meeting for All Proposals over $100,000 August 29–31: Online Revision of Ratings, If Necessary Operating Budget August 15: Return of Department Managers’ Operating Budget Work to Their Vice Presidents August 19–28: Review of the Proposed Operating Budget by the Divisional Vice Presidents and Its Return to Finance Budget Variance Analysis Budget Variance Parameters Flexible Budgeting Cost Accounting and Analysis The Impossibility of Determining “True” Cost August Finance Committee Special Agenda Items Review of Next Year’s Budget Assumptions Review of Annual Materials Management and Inventory Level Chapter 9: September Operating Budget September 9: Last Look at Budget Assumptions and Semifi nal Budget Approval September 17: Final Review and Approval of the Operating Budget and Review of the Human Resources Committee Package September 18–October 14: Preparation of the 2014 Budget for the Finance Committee Electronic Budgeting System for the Following Year Capital Budget: September Cash Budget Physician Practice Management Issues Physician Office Management From PPMC to MSO The Management Services Organization Patient Throughput The Hospital-Owned PPMC Current Physician Practice Issues—2013 Additional Physician-Hospital Integration Issues Monthly Physician Reporting Chapter 10: October Information Systems Implications for Health Care Financial Management Information Technology Strategic Plan Initiatives Systems to Support Enhanced Clinical Process Management and Data Access Integrating Data and Reporting to Support Enhanced Decision Making Maximizing the IT Infrastructure and Delivery Capabilities HIPAA Implementation Issues Selection of a New Health Care Information System Features and Functions of the Selected IT System Financial Implications for RHMC How Improvements to Clinical Systems Benefi t RHMC’s Financial Outcomes Budget Presentation to the Board Finance Committee October Finance Committee Special Agenda Items Chapter 11: November Preparation of the Budget Results and Delivery to the Department Managers Budgeting and Spreading Contractual Adjustments by Department Issues Involving RHMC’s Cost Structure How to Improve the Organization’s Cost Structure Enhancing Communication with Physicians Standardizing the Organization’s Supplies Reducing Utilization of Services and Supplies Obtaining the Best Pricing for Supplies and Products Attaining Optimum Productivity and Staffi ng Levels Supply Chain Management in Health Care Obtaining the Best Pricing Developing Close Relations with Distributors Applying Just-in-Time Inventory Management Establishing In-Service Training Adopting a Consignment Policy Implementing E-Commerce Benefits of Tax Status for Health Care Organizations Preparation and Implications of the Annual IRS 990 Report Chapter 12: December Getting Ready for Year-End Reporting—Again Open-Heart Surgery Pro Forma Development of Volume and Revenue Financial Conclusion: Open-Heart Surgery Program December Finance Committee Special Agenda Items Review of Malpractice Insurance Coverage Review and Approval of Auditors and Their Fees for the Current Year Finance Committee Annual Achievements Looking into the Future of Health Care Finance General Macro Health Care Trends Industry Payer Trends Hospital Segment Trends Health Care IT Trends Future Conclusions References Index End User License Agreement