Thoroughly revised, this third edition of Financial Management of Health Care Organizations of-fers an introduction to the most-used tools and techniques of health care financial management. Comprehensive in scope, the book covers a broad range of topics that include an overview of the health care system and evolving reimbursement methodologies; health care accounting and finan-cial statements; managing cash, billings, and collections; the time value of money and analyzing and financing major capital investments; determining cost and using cost information in decision-mak-ing; budgeting and performance measurement; and pricing. In addition, this new edition includes information on new laws and regulations that affect health care financial reporting and performance, revenue cycle management expansion of health care services into new arenas, benchmarking, interest rate swaps, bond ratings, auditing, and internal control. This important resource also contains information on the 2007 Healthcare Audit Guide of the American Institute of Certified Public Accountants (AICPA).Written to be accessible, the book avoids complicated formulas. Chapter appendices offer advanced, in-depth information on the subject matter. Each chapter provides a detailed outline, a summary, and key terms, and includes problems in the context of real-world situations and events that clearly illustrate the concepts presented. Problem sets that end each chapter have been updated and expanded to support more in-depth learning of the chapters' concepts.An Instructor's Manual, available online, contains PowerPoint and Excel files.

The Authors

William N. Zelman is a professor in the Department of Health Policy and Administration in the

University of North Carolina at Chapel Hill.

Michael J. McCue is a professor in the Department of Health Administration at Virginia Commonwealth University. He serves as associate editor of Health Services Management Research.

Noah D. Glick is senior health care consultant for FTI Consulting in its corporate finance division.

List of Tables, Figures, and Exhibits
Preface
TheAuthors
Acknowledgments
The Context Of Health Care Financial Management
Introduction
Rising Health Care Costs
The Payment System
Technology 6
The Aging Population
Prescription Drug Costs and Medicare Part D
Chronic Diseases
Compliance and Litigation
The Uninsured
Efforts to Control Costs
Efforts by Payors to Control Health Care Costs
DRGs
Capitation
Global Payments
APCs
Pay-for-Performance
Cutting Delivery Costs
Shift to Outpatient Services
Cost Accounting Systems
Information Services Technology
Mergers and Acquisitions
Reengineering/Redesign
Alternative Forms of Care
Retail Health Care
Medical Tourism
Medical Home
Cost Control Issues with Ethical Overtones
Summary
Key Terms
Questions and Problems
Health Care Financial Statements
Introduction
The Balance Sheet
Assets
Current Assets
Noncurrent Assets
Liabilities
Current Liabilities
Noncurrent Liabilities
Net Assets
Stockholders' Equity
Notes to Financial Statements
The Statement of Operations
Unrestricted Revenues, Gains, and Other Support
Net Patient Service Revenues
Premium Revenues
Other Revenues
Net Assets Released from Restriction
Expenses
Depreciation and Amortization
Interest
Provision for Bad Debts
Other Expenses
Operating Income
Other Income
Excess of Revenues over Expenses
Below the Line Items
Change in Net Unrealized Gains and Losses on Other
than Trading Securities
Increases in Long-Lived Unrestricted Net Assets
Transfers to Parent
Extraordinary Items
Increase in Unrestricted Net Assets
The Statement of Changes in Net Assets
Changes in Unrestricted Net Assets
Changes in Temporarily Restricted Net Assets
Changes in Permanently Restricted Net Assets
The Statement of Cash Flows
Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities
Cash and Cash Equivalents at the End of the Year
Summary
Key Terms
Key Equations
Questions and Problems
Financial Statements for Sample Not-for-Profi t Hospital and For-Profi t Hospital and Notes to Financial Statement
Principles And Practices Of Health Care Accounting
Introduction
The Books
Cash and Accrual Bases of Accounting
Cash Basis of Accounting
Accrual Basis of Accounting
An Example of the Effects of Cash Flows on Profit
Reporting Under Cash and Accrual Accounting
Recording Transactions
Rules for Recording Transactions
The Recording Process
Developing the Financial Statements
The Balance Sheet
Assets
Liabilities
Net Assets
The Statement of Operations
Unrestricted Revenues, Gains, and Other Support
Operating Expenses
Operating Income and Excess of Revenues over Expenses
Increase in Unrestricted Net Assets
Statement of Changes in Net Assets
Statement of Cash Flows
Summary
Key Terms
Questions and Problems
Financial Statement Analysis
Introduction
Horizontal Analysis
Trend Analysis
Vertical (Common-Size) Analysis
Ratio Analysis
Categories of Ratios
Key Points to Consider When Using and Interpreting Ratios
Liquidity Ratios
Current Ratio
Quick Ratio
Acid-Test Ratio
Days in Accounts Receivable
Days Cash on Hand
Average Payment Period
Liquidity Summary
Revenue, Expense, and Profi tability Ratios
Operating Revenue per Adjusted Discharge
Operating Expense per Adjusted Discharge
Salary and Benefi t Expense as a Percentage of Total Operating Expense
Operating Margin
Nonoperating-Revenue Ratio
Return on Total Assets
Return on Net Assets
Revenue, Expense, and Profitability Summary
Activity Ratios
Total Asset Turnover
Fixed Asset Turnover
Age-of-Plant Ratio
Activity Summary
Capital Structure Ratios
Long-Term Debt to Net Assets
Net Assets to Total Assets
Times Interest Earned
Debt Service Coverage
Capital Structure Summary
Summary of Newport Hospital's Ratios
Summary
Key Terms
Key Equations
Questions and Problems
Working Capital Management
Introduction
The Working Capital Cycle
Working Capital Management Strategies
Asset Mix Strategy
Financing Mix Strategy
Cash Management
Sources of Temporary Cash
Bank Loans
Lines of Credit
Commitment Fees
Compensating Balance
Transaction Notes
Trade Credit or Payables
Revenue Cycle Management
Scheduling or Preregistration
Registration
Charge Capture
Coding
Billing
Payment
Collecting Cash Payments
Decentralized Collection Centers and Concentration Banking
Lockboxes
Wire Transfers
Investing Cash on a Short-Term Basis
Treasury Bills (T-bills)
Negotiable Certifi cates of Deposit
Commercial Paper
Money Market Mutual Funds
Forecasting Cash Surpluses and Defi cits-The Cash Budget
Cash Inflows
Cash Outflows
Ending Cash Balance
Accounts Receivable Management
Methods to Monitor Accounts Receivable
Methods to Finance Accounts Receivable
Factoring
Pledging Receivables as Collateral
Methods to Monitor Revenue Cycle Performance
Laws and Regulation for Billing Compliance
Health Insurance Portability and Accountability Act
Summary
Key Terms
Key Equations
Questions and Problems
The Time Value Of Money
Introduction
Future Value of a Dollar Invested Today
Using a Formula to Calculate Future Value
Using Tables to Compute Future Value
Using a Spreadsheet to Calculate Future Value
Present Value of an Amount to Be Received in the Future
Using a Formula to Calculate Present Value
Using Tables to Compute Present Value
Using a Spreadsheet to Calculate Present Value
Annuities
Future Value of an Ordinary Annuity
Using Tables to Calculate the Future Value of an Ordinary Annuity
Using a Spreadsheet to Calculate the Future Value of an Ordinary Annuity
Future Value of an Annuity Due
Present Value of an Ordinary Annuity
Using Tables to Calculate the Present Value of an ordinary Annuity
Using a Spreadsheet to Calculate the Present Value
Present Value of an Annuity Due
Special Situations to Calculate Future or Present Value and Other Excel Functions
What If the Interest Rate Is Not Expressed as an Annual Rate?
How to Compute Periodic Loan Payments Using Excel
How to Calculate the Compounded Growth Rate
How to Calculate the Present Value of Perpetual Annuities
How to Solve for the Interest Rate of a Loan with Fixed
Loan Payments
Summary
Key Terms
Key Formulas
Questions and Problems
Future and Present Value Tables
The Investment Decision
Introduction
Objectives of Capital Investment Analysis
Nonfinancial Benefits
Financial Returns
Ability to Attract Funds in the Future
Analytic Methods
Payback Method
Analysis
Strengths and Weaknesses of the Payback Method
Net Present Value
Using the Small Hospital as an Example of Net Present Value Analysis
Decision Rules Regarding NPV
Using Spreadsheets to Calculate NPV
Strengths and Weaknesses of the NPV Method
Internal Rate of Return
Equal Cash Flows
Unequal Cash Flows
Decision Rules with IRR
Strengths and Weaknesses of IRR Analysis
Using an NPV Analysis for a Replacement Decision
Illustrative Example
Solution
Summary
Key Terms
Key Equations
Questions and Problems
Technical Concerns Regarding Net Present Value
Table of Contents provided by Publisher. All Rights Reserved.

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Financial Management of Health Care Organizations: An Introduction to Fundamental Tools, Concepts and Applications, 3rd Edition

9780470497524

0470497521

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