Fundamentals of Healthcare Financial Management: A Practical Guide to Fiscal Issues and Activities

by Berger, Steven H.

• ISBN13: 9780071346719
• ISBN10: 0071346716
• Format: Hardcover
• Copyright: 1999-07-01
• Publisher: McGraw-Hill

Summary

Highland Park Hospital, IL. Structured around a typical year in the financial life of a fictional healthcare facility. Each chapter covers a differ- ent month and the activities typically performed during that month. Includes vignettes describing events and their impact on the hospital's bottom line. For administrators.

Table of Contents

Preface	vi
January	1	(25)
What Is Healthcare?	3	(2)
What Is Management?	5	(1)
What Is Financial Management?	6	(1)
Why Is Financial Management Important?	7	(1)
Ridgeland Heights Medical Center	8	(4)
The Primary Statistics	8	(1)
Managed Care Inroads	9	(1)
RHMC's Actions to Counter Dwindling Inpatient Census	10	(1)
RHMC Decision Time	11	(1)
Financial Management Implications	11	(1)
Pro Forma Development	12	(4)
Net Present Values and Internal Rates of Return	12	(1)
Volume Assumptions	12	(1)
Revenue and Expense Assumptions	13	(3)
Living with the Finance Committee's and Board of Director's Calendar	16	(5)
Routine Matters	19	(2)
Periodic Review Matters	21	(1)
Year-End Closing	21	(5)
February	26	(27)
Accounting Principle and Practices	27	(1)
Objectives of Financial Reporting	28	(1)
Basic Accounting Concepts	29	(2)
Basic Financial Statements of a Healthcare Organization	31	(1)
Uses of Financial Information	32	(1)
The Financial Statements	33	(12)
Balance Sheet	33	(2)
Statement of Operations	35	(7)
Statement of Changes in Net Assets (or Equity)	42	(1)
Statement of Cash Flows	43	(1)
Notes to the Financial Statements	44	(1)
Preparing for the Auditors	45	(3)
Analysis of Sensitive Accounts	46	(2)
February Finance Committee Special Reports	48	(5)
Bond Debt Status	48	(3)
Health Insurance Annual Review	51	(2)
March	53	(27)
Strategic Financial Planning---5 Year Projections	54	(4)
Strategic Planning	55	(2)
Converting Vision (Strategic Plan) into Financial Reality---Market Share, New Services and the Medical Staff	57	(1)
Medical Staff Issues	57	(1)
RHMC Strategic Financial Planning	58	(7)
Volume Assumptions	58	(2)
Payor Mix	60	(1)
Rates and Reimbursements	60	(4)
Operating Expense Implications	64	(1)
Ratio Analysis	65	(10)
Bonding Related Ratios	67	(1)
Other Ratios	67	(4)
Operational Ratios	71	(4)
The Capital Plan and Its Relationship to the Strategic Plan	75	(5)
Capital Affordability	78	(2)
April	80	(28)
Medicare and Medicaid Net Revenue Concepts	83	(4)
The History of Medicare and Medicaid	83	(1)
Impacts of Medicare and Medicaid on Provider Net Revenues	84	(2)
Implication to Ridgeland Heights Medical Center	86	(1)
Calculation of Medicare and Medicaid Contractual Adjustments	87	(6)
Medicare Net Revenue Concepts	88	(2)
Medicaid Net Revenue Concepts	90	(3)
Implications of the Balanced Budget Act of 1997	93	(2)
Impact of the Balanced Budget Act on Medicaid	94	(1)
Overall Impact of the Balanced Budget Act on Ridgeland Heights Medical Center	95	(1)
Managed Care Net Revenue Concepts	95	(5)
Preparation of the Medicare and Medicaid Cost Report	100	(3)
Ratio of Costs to Charges (RCC)	103	(2)
Implications and Sensitivities of Medicare Cost Reporting	104	(1)
Presentation of Audited Financial Statement to the Finance Committee	105	(3)
Implications of Management Letter Comments Proposed by the Auditors	106	(2)
May	108	(25)
Fundamentals of Accounts Receivable Management	109	(13)
Precertification, Preregistration, and Insurance Verification	110	(2)
Documentation Capture	112	(1)
Coding and Reimbursement	113	(1)
Timeliness of Coding	114	(1)
Fraud and Abuse Issues Related to Billing Issues	115	(4)
Managed Care Arrangements and Negotiations	119	(1)
Monitoring Results	119	(3)
Patient Registration---Which Division Should It Report to?	122	(2)
Calculation of Allowance for Doubtful Accounts and Bad Debt Expenses	124	(4)
Calculation of Allowance for Contractual Adjustments	128	(5)
June	133	(26)
Budget Preparations---The Beginning	134	(4)
Budget Calendar	138	(5)
Which Month Should the Budget Be Presented to the Board of Directors for Approval?	141	(1)
Budget Calendar Time Frames	141	(2)
Budget Calendar Steps	143	(1)
Volume Issues	143	(5)
Historical Perspective	144	(1)
Demographic Changes	144	(1)
New Services	145	(1)
Physician Issues and Inputs	145	(1)
Wishful Thinking	146	(1)
June 1---Volume Kick-Off Meeting	146	(1)
June 26---Approve Projected 1999 and Budgeted 2000 Inpatient and Outpatient Volumes	147	(1)
Capital Budgeting---June	148	(5)
Accounting and Finance Department Responsibilities	153	(3)
June Finance Committee Special Agenda Items	156	(3)
Human Resources Report	156	(1)
Pension Status and Actuary Report Review	157	(2)
July	159	(31)
Budget Preparations---The Middle Months	160	(17)
Which Is a Better Budgeting Technique---Top Down or Bottom Up?	161	(1)
July 1---Issuance of the Budget Calendar	162	(1)
July 11---Computer Gross Revenues and Contractual Adjustments	163	(2)
July 14---Review Salary and Nonsalary Assumptions	165	(4)
July 15---Review Gross Revenues and Contractual Adjustments and Validate Payor Mix	169	(1)
July 18---Review 2000 Budgeted Income Statement, Determine Price Increase Targets, and Revise Salary and Nonsalary Assumptions	170	(5)
July 25---Issue 1999 Projected/2000 Budgeted Worksheets to Department Managers	175	(2)
Capital Budget---July	177	(2)
Regulatory and Legal Environment	179	(3)
Medicare/Medicaid Fraud and Abuse	180	(2)
Other Regulatory and Business Compliance Issues	182	(3)
Corporate Compliance	185	(2)
Accreditation Issues	187	(2)
Patient Satisfaction Issues	189	(1)
August	190	(24)
Capital Budget---August	191	(9)
August 11---Detailed Discussion and Training for All Proposals Over $100,000	192	(3)
August 12---Discussion of All Pool Proposals with the Pool Evaluators	195	(1)
Funding Availability	196	(1)
Noncriteria-Based Capital Funding	197	(1)
August 12--15---Evaluate Proposals Online	198	(1)
August 22--25---Various Pool Consensus Meetings with Pool Evaluators	198	(1)
August 25---Consensus Meeting for All Proposals Over $100,000	198	(2)
August 26--28---Revise Ratings, If Necessary, on the Reviewer's Desktop	200	(1)
Operating Budget	200	(3)
August 15---Department Managers Need to Return Their Operating Budget Worksheets to Their Vice Presidents	200	(2)
August 18--28---Review of the Proposed Operating Budget by the Divisional Vice Presidents and then Return to Finance	202	(1)
Budget Variance Analysis	203	(2)
Budget Variance Parameters	205	(1)
Flexible Budgeting	205	(1)
Cost Accounting and Analysis	205	(7)
There Is no Such Thing as ``True'' Cost!	207	(5)
August Finance Committee Special Agenda Items	212	(2)
Review Next Year's Budget Assumptions	212	(1)
Annual Materials Management/Inventory Level Review	212	(2)
September	214	(30)
Operating Budget	216	(10)
September 9---Validate or Adjust Budget Assumptions and Semifinal Budget Approval by the Administrators	217	(5)
September 17---Final Review and Approval of the Operating Budget and Review of the Human Resources Committee Package	222	(1)
September 18--October 14---Prepare First Draft Through Final Copy of the 2000 Budget for the Finance Committee	222	(1)
Operating Budget System of the Near Future	223	(3)
Capital Budget---September	226	(1)
September 4---Meeting to Discuss Results of Main Strategic Capital Budget Evaluations and Final Administrative Approval of 2000 Capital Budget	226	(1)
Cash Budget	226	(2)
Physician Practice Management	228	(16)
General Concepts	228	(6)
Management Services Organizations	234	(3)
Patient Throughput	237	(2)
Equity-Based Physician Practice Management Companies	239	(1)
Hospital Owned PPMCs	240	(4)
October	244	(27)
Information Systems Implications to Healthcare Financial Management	246	(3)
Y2K Implementation	249	(2)
Information Technology Strategic Plan Initiatives	251	(6)
Selection of a New Healthcare Information System	251	(3)
Financial Implications to RHMC	254	(2)
How Improvements to Clinical Systems Benefit RHMC's Financial Outcomes	256	(1)
Impact of the Internet	257	(1)
Budget Presentation to the Board Finance Committee	258	(11)
October Finance Committee Special Agenda Items	269	(2)
November	271	(29)
Preparation and Delivery of the Budget Results back to the Department Managers	273	(7)
Budgeting and Spreading Contractual Adjustments by Department	274	(6)
Issues Involving RHMC's Cost Structure	280	(3)
How to Improve the Organization's Cost Structure	283	(8)
Enhance Communication with Physicians	284	(1)
Standardize the Organization's Supplies	284	(2)
Reduce Utilization of Services and Supplies	286	(3)
Obtain Best Pricing for Supplies and Products	289	(1)
Establish and Implement Optimum Productivity and Staffing Levels	290	(1)
Materials Management in Healthcare	291	(3)
Benefits of Tax Status to Healthcare Organizations	294	(3)
Preparation and Implications of the Annual IRS 990 Report	297	(3)
December	300	(39)
More Y2K at the Year End	303	(1)
More Y2K Contingency Planning	304	(1)
Getting Ready for Year-End Reporting...Again!	305	(1)
Open Heart Surgery Pro Forma	305	(11)
Development of Volumes and Revenues	306	(9)
Financial Conclusion---Open Heart Surgery Program	315	(1)
December Finance Committee Agenda Routine Items	316	(3)
Review Malpractice Insurance Coverages	316	(1)
Review and Approve Auditors and Their Fees for the Current Year	316	(2)
Finance Committee Annual Achievements	318	(1)
Looking Into the Future of Healthcare Finance	319	(20)
General Macro Healthcare Trends	319	(3)
Industry Payor Trends	322	(8)
Industry Segment Trends	330	(4)
Healthcare Information Technology Trends	334	(2)
Other Healthcare Trends	336	(3)
About The Author	339	(1)
Index	340