Health Care Finance: Basic Tools for Nonfinancial Managers

Description

Health Care Finance: Basic Tools For Nonfinancial Managers Is The Most Practical Financial Management Text For Those Who Need Basic Financial Management Knowledge And A Better Understanding Of Healthcare Finance In Particular. Using Actual Examples From Hospitals, Long-Term Care Facilities, And Home Health Agencies, This User-Friendly Text Includes Practical Information For The Nonfinancial Manager Charged With Budgeting. The Fourth Edition Offers: -An Expanded Chapter On Electronic Records Adoption: Financial Management Tools & Decisions -New Chapter: “ICD-10 Adoption And Healthcare Computer Systems” -New Chapter: “Other Technology Adoption And Management Decisions” -New Chapter: “Strategic Planning And The Healthcare Financial Manager” -New Case Study: "Strategic Planning In Long-Term Care" That Connects With The Chapter On Strategic Planning -New Appendix: "Appendix C: Employment Opportunities In Healthcare Finance" Title Page Copyright Page Table of Contents New to This Edition Preface Acknowledgments About the Authors About the Contributor Part I: Healthcare Finance Overview Chapter 1: Introduction to Healthcare Finance The History The Concept How Does Finance Work in the HealthCare Business? Viewpoints Why Manage? The Elements of Financial Management The Organization’s Structure Two Types of Accounting INFORMATION CHECKPOINT KEY TERMS Discussion Questions Notes Chapter 2: Four Things the Healthcare Manager Needs to Know About Financial Management Systems What Does the Manager Need to Know? How the System Works in Health Care The Information Flow Basic System Elements The Annual Management Cycle Communicating Financial Information to Others INFORMATION CHECKPOINT KEY TERMS Discussion Questions Notes Part II: Record Financial Operations Chapter 3: Assets, Liabilities, and Net Worth Overview What Are Examples of Assets? What are Examples of Liabilities? What Are the Different Forms of Net Worth? INFORMATION CHECKPOINT KEY TERMS Discussion Questions Chapter 4: Revenues (Inflow) Overview Receiving Revenue for Services Sources of Healthcare Revenue Grouping Revenue for Planning and Control INFORMATION CHECKPOINT KEY TERMS Discussion Questions Notes Chapter 5: Expenses (Outflow) Overview Disbursements for Services Grouping Expenses for Planning and Control Cost Reports as Influencers of Expense Formats INFORMATION CHECKPOINT KEY TERMS Discussion Questions Notes Chapter 6: Cost Classifications Distinction Between Direct and Indirect Costs Examples of Direct Cost and Indirect Cost Responsibility Centers Distinction Between Product and Period Costs INFORMATION CHECKPOINT KEY TERMS Discussion Questions Notes Part III: Tools to Analyze and Understand Financial Operations Chapter 7: Cost Behavior and Break-Even Analysis Distinctions Among Fixed, Variable, and Semivariable Costs Examples of Variable and Fixed Costs Analyzing Mixed Costs Contribution Margin, Cost-Volume-Profit, and Profit-Volume Ratios INFORMATION CHECKPOINT KEY TERMS Discussion Questions Notes Chapter 8: Understanding Inventory and Depreciation Concepts Overview: The Inventory Concept Inventory and Cost of Goods Sold (“Goods” Such as Drugs) Inventory Methods Inventory Tracking Calculating Inventory Turnover Overview: The Depreciation Concept Book Value of a Fixed Asset and the Reserve for Depreciation Five Methods of Computing Book Depreciation Computing Tax Depreciation INFORMATION CHECKPOINT KEY TERMS Discussion Questions Notes Appendix 8-A: A Further Discussion of Accelerated and Units of Service Depreciation Computations Chapter 9: Staffing:The Manager’s Responsibility Staffing Requirements FTEs for Annualizing Positions Number of Employees Required to Fill a Position: Another Way to Calculate FTEs Tying Cost to Staffing INFORMATION CHECKPOINT KEY TERMS Discussion Questions Note Part IV: Report and Measure Financial Results Chapter 10: Reporting as a Tool Understanding the Major Reports Balance Sheet Statement of Revenue and Expense Statement of Changes in Fund Balance/Net Worth Statement of Cash Flows Subsidiary Reports Summary INFORMATION CHECKPOINT KEY TERMS Discussion Questions Notes Chapter 11: Financial and Operating Ratios as Performance Measures The Importance of Ratios Liquidity Ratios Solvency Ratios Profitability Ratios INFORMATION CHECKPOINT KEY TERMS Discussion Questions Chapter 12: The Time Value of Money Purpose Unadjusted Rate of Return Present-Value Analysis Internal Rate of Return Payback Period Evaluations Resources INFORMATION CHECKPOINT KEY TERMS Discussion Questions Note Appendix 12-A: Present-Value Table (The Present Value of $1.00) Appendix 12-B: Compound Interest Table Compound Interest of $1.00 (The Future Amount of $1.00) Appendix 12-C: Present Value of an Annuity of $1.00 Part V: Tools to Review and Manage Comparative Data Chapter 13: Trend Analysis, Common Sizing, and Forecasted Data Common Sizing Trend Analysis Analyzing Operating Data Importance of Forecasts Operating Revenue Forecasts Staffing Forecasts Capacity Level Issues in Forecasting INFORMATION CHECKPOINT KEY TERMS Discussion Questions Notes Chapter 14: Using Comparative Data Overview Comparability Requirements A Manager’s View of Comparative Data Uses of Comparative Data Making Data Comparable Constructing Charts to Show the Data INFORMATION CHECKPOINT KEY TERMS Discussion Questions Note Part VI: Construct and Evaluate Budgets Chapter 15: Operating Budgets Overview Budget Viewpoints Budget Basics: A Review Building an Operating Budget: Preparation Building an Operating Budget: Construction Working with Static Budgets and Flexible Budgets Budget Construction Summary Budget Review INFORMATI ON CHECKPOINT KEY TERMS Discussion Questions Notes Chapter 16: Capital Expenditure Budgets Overview Creating the Capital Expenditure Budget Budget Construction Tools Funding Requests Evaluating Capital Expenditure Proposals INFORMATION CHECKPOINT KEY TERMS Discussion Questions Note Appendix 16-A: A Further Discussion of Capital Budgeting Methods Part VII: Tools to Plan, Monitor, and Control Financial Status Chapter 17: Variance Analysis and Sensitivity Analysis Variance Analysis Overview Three Types of Flexible Budget Variance Two-Variance Analysis and Three-Variance Analysis Compared Three Examples of Variance Analysis Summary Sensitivity Analysis Overview Sensitivity Analysis Tools INFORMATION CHECKPOINT KEY TERMS Discussion Questions Note Chapter 18: Estimates, Benchmarking, and Other Measurement Tools Estimates Overview Common Uses of Estimates Example: Estimating the Ending Pharmacy Inventory Example: Estimated Economic Impact of a New Specialty in a Physician Practice Other Estimates Importance of a Variety of Performance Measures Adjusted Performance Measures over Time Benchmarking Economic Measures Measurement Tools INFORMATION CHECKPOINT KEY TERMS Discussion Questions Note Part VIII: Financial Terms, Costs, and Choices Chapter 19: Understanding Investment Terms Overview Cash Equivalents Governmental Guarantor: the FDIC Long-Term Investments in Bonds Investments in Stocks Privately Held Companies Versus Public Companies Investment Indicators INFORMATION CHECKPOINT KEY TERMS Discussion Questions Notes Chapter 20: Business Loans and Financing Costs Overview of Capital Structure Sources of Capital The Costs of Financing Management Considerations About Real Estate Financing Management Decisions About Business Loans INFORMATION CHECKPOINT KEY TERMS Discussion Questions Appendix 20-A: Sample Amortization Schedule Chapter 21: Choices: Owning Versus Leasing Equipment Purchasing Equipment Leasing Equipment Buy-or-Lease Management Decisions Accounting Principles Regarding Leases INFORMATION CHECKPOINT KEY TERMS Discussion Questions Note Part IX: Strategic Planning: A Powerful Tool Chapter 22: Strategic Planning and the Healthcare Financial Manager Major Components of the Strategic Plan: Overview Introduction Six Major Components Varied Approaches to Strategic Planning Examples of Mission, Vision, and Value Statements Recognizing a Special Status or Focus Within the Statements Financial Emphasis Within the Statements Relaying the Message The Strategic Planning Cycle and Its Process Flow Process Flow for Creating Goals, Objectives, and Action Plans Process Flow for Creating Action Plans and Their Performance Measures The Planning Cycle Over Time Managers’ Responsibilities Federal Governmental Agencies Must Prepare Strategic Plans Why are Federal Planning Requirements Important to Us? Introduction: Requirements, Plans, and Performance An Example: the VA Office of Information Technology It Strategic Planning Cycle Introduction The VA Office of Information Technology It Strategic Planning Cycle: An Example The VA Planning Cycle’s Process Flow Planning Cycle Definitions for this Example Management Responsibilities Within the Planning Cycle Tools For Strategic Planning: Situational Analysis and Financial Projections Situational Analysis (SWOT) Financial Projections for Strategic Planning Case Study: Strategic Financial Planning in Long-Term Care Appendix 22-A: Sample SWOT Worksheets and Question Guides INFORMATION CHECKPOINT KEY TERMS DISCUSSION QUESTIONS Notes Appendix A: Sample SWOT Worksheets and Question Guides Chapter 23: Putting It All Together: Creating a Business Plan That Is Strategic Overview Elements of the Business Plan Preparing to Construct the Business Plan The Service or Equipment Description The Organization Segment The Marketing Segment The Financial Analysis Segment The “Knowledgeable Reader” Approach to Your Business Plan The Executive Summary Assembling the Business Plan Presenting the Business Plan Strategic Aspects of Your Business Plan INFORMATION CHECKPOINT KEY TERMS Discussion Questions Part X: Technology as a Financial and Strategic Tool Chapter 24: Information Technology and EHR: Adoption Requirements, Initiatives, and Management Decisions Introduction The Beginning of Adoption Requirements: Electronic Data Interchange and Paperless Processing Current Adoption Requirements That Force Management Decisions Why Is EHR Adoption Required Through Legislative Initiatives? The HITECH Initiative: Medicare and Medicaid EHR Incentive Programs Overview The EHR Incentive Programs: Introduction HITECH Deadlines and Payments Program Eligibility “Meaningful Use” Within the Hitech Program Certified EHR Technology Defined HITECH Medicare and Medicaid EHR Incentive Programs and Related Management Decision Points Further Choices Between Two HITECH Programs Are Required Consider Program Benefits and Costs Making Strategic Management Decisions About Multiple Initiative Choices is Also Required The Private Sector’s Management also Contributes to EHR System Advances Conclusion: Management Decisions and Leadership The Process of Innovation and Leadership Decisions Changes in Leadership May Impact the Strategy and Progress of Healthcare Information Management The Future Technology in Health Care Mini-Case Study APPENDIX 24-A: THE E-PRESCRIBING (eRx) INCENTIVE PROGRAM FOR PHYSICIANS AND OTHER ELIGIBLE PRESCRIBERS: A MATURED INITIATIVE INFORMATION CHECKPOINT KEY TERMS Discussion Questions Notes Appendix 24-A: The E-Prescribing (eRx) Incentive Program for Physicians and Other Eligible Prescribers:A Matured Initiative Chapter 25: Electronic Health Records Framework: Incentives, Standards, Measures, and Meaningful Use WHY EXPLORE HOW THE HITECH EHR INITIATIVE WORKS? THE INITIATIVE: BACKGROUND WHY EXPLORE? What is The Framework, or Structure, of the Hitech EHR Initiative ? Incentives and EHR STANDARDS AND EHR Meaningful Use and EHR How Do You Establish Meaningful Use? Meaningful Use Progresses in Stages Timelines: Rolling Implementation in Stages Measures of Meaningful Use and EHR Introduction Meaningful Use Objectives: the Reason for Measures Stage 2 Core and Menu Sets of Objectives The Measures That Support the Objectives STAGE 2 MEASUREMENT METHODS Three Types of Meaningful Use Measures Percentage-Based Measures as Reporting Requirements Percentage -Based Measures for Eligible Professionals Stage 2 Denominators Available for EPs Definitions for the EP Denominators Eligible Professional (EP) Stage 2 Reporting : An Example Percentage-Based Measures for Hospitals Stage 2 Denominators Available for Hospitals Definitions for the Hospital Denominator Hospital Stage 2 Reporting: An Example MORE ABOUT STANDARDS AND THEIR IMPACT SUMMARY Supplementary Materials: The Mechanics of Percentage Computations INFORMATION CHECKPOINT KEY TERMS DISCUSSION QUESTIONS Notes Chapter 26: New Information Systems: ICD-10 Implementation and the Manager’s Viewpoint ICD-10 E-Records Overview and Impact Overview Of the ICD-10 Coding System ICD-10-CM and ICD-10-PCS Codes E-RECORD STANDARDS AND THE ICD-10 TRANSITION ICD-10 Benefits and Costs ICD-10 Implementation: Systems Affected and Technology Issues Systems and Applications Affected by the ICD-10 Change Understand Technology Issues and Problems An Example: Comparison of Old and New Angioplasty Codes ICD-10 Implementation: Training and Lost Productivity Costs Who Gets Trained on ICD-10? Costs of Training Costs of Lost Productivity ICD-10 Implementation: Situational Analysis Implementation Planning Recommendations Situational Analysis Recommendations Commencing an Information Technology SWOT Matrix for ICD-10 Project Management from the Manager’s Viewpoint The Manager’s Challenge Project Management by Phases The Manager’s Role Appendix 26-A: ICD-10 Conversion Costs for a Midwestern Community Hospital Information Checkpoint Key Terms Discussion Questions Notes Appendix 26-A: ICD-10 Conversion Costs for a Midwestern Community Hospital Part XI: Case Studies Chapter 27: Case Study: Strategic Financial Planning in Long-Term Care Background Framework of the Board’s Mandate Industry Profile Feasibility Determination Notes Chapter 28: Case Study: Metropolis Health System Background MHS Case Study Appendix 28-A: Metropolis Health System’s Financial Statements and Excerpts from Notes Appendix 28-B: Comparative Analysis Using Financial Ratios and Benchmarking Helps Turn Around a Hospital in the Metropolis Health System Part XII: Mini-Case Studies Chapter 29: Mini-Case Study 1: Proposal to Add a Retail Pharmacy to a Hospital in the Metropolis Health System Chapter 30: Mini-Case Study 2: The Economic Significance of Resource Misallocation: Client Flow Through the Women, Infants, and Children Public Health Program Confronting the Operational Problem The Environment The Peak-Load Problem Method Results Chapter 31: Mini-Case Study 3: Technology in Health Care: Automating Admissions Processes Assess Admissions Process Areas to Automate Fax and Document Management Communication is Important Referral Tracking and Approval Analyzing Referral Activity Hours Saved Appendix A: Checklists Appendix B: Web-Based and Software Learning Tools Glossary Examples and Exercises, Supplemental Materials, and Solutions Index