Essentials of Health Care Finance

by Cleverley, William O.

• ISBN13: 9780763742362
• ISBN10: 0763742368
• Edition: 6th
• Format: Hardcover
• Copyright: 2006-11-01
• Publisher: JONES & BARTLETT PUBLISHERS

Summary

Essentials of Health Care Finance stands firmly in its place as the leading textbook on healthcare finance. No other text so completely blends the best of current finance theory with the tools needed in day-to-day practice. Useful for all course levels as well as a professional reference, this text offers a comprehensive introduction to the field. The sixth edition has been thoroughly revised to reflect the current economic environment in the healthcare industry. Features: Detailed information on Medicare payment rules for a variety of healthcare settings including hospitals, nursing homes, home health agencies, and private practices A new chapter detailing the interaction between pricing and managed care contract negotiation Critical coverage of CPT and ICD 9 procedure and diagnosis codes illustrating their relationship to billing and payment Many examples and illustrations of key financial concepts using real world data to illustrate the application of concept to real world healthcare firm situations Problems and solutions at the end of each chapter to engage the student in further study Helpful chapter-by-chapter Instructorrs"s Manual, PowerPoints, and Testbank to simplify course instruction

Table of Contents

Preface	xi
Acknowledgments	xiii
About the Authors	xiii
Financial Information and the Decision-Making Process	1	(12)
Information and Decision Making	3	(2)
Uses of Financial Information	5	(1)
Financial Organization	6	(2)
Forms of Business Organization	8	(2)
Summary	10	(3)
Billing and Coding for Health Services	13	(20)
Generating Health Care Claims	14	(1)
Registration	15	(2)
Medical Record/Coding	17	(2)
Charge Entry/Chargemaster	19	(2)
Billing/Claims Preparation	21	(4)
Claims Editing	25	(1)
Summary	26	(7)
Financial Environment of Health Care Organizations	33	(40)
Financial Viability	34	(1)
Sources of Operating Revenue	35	(1)
Health Care Payment Systems	36	(5)
Medicare Benefits	41	(1)
Medicare Payment: Hospital Inpatient	41	(3)
Medicare Payment: Physicians	44	(2)
Medicare Payment: Hospital Outpatient	46	(1)
Medicare Payment: Skilled Nursing Facilities (SNFs)	47	(1)
Medicare Payment: Home Health Agencies (HHAs)	48	(2)
Summary	50	(23)
Legal and Regulatory Environment	73	(28)
Federal Enforcement Actions	79	(3)
Antitrust Policy Statements	82	(13)
Management Responsibility for Compliance	95	(2)
Summary	97	(4)
Revenue Determination	101	(22)
Payment Methods and Their Relationship to Price Setting	102	(1)
Generic Factors of Pricing	103	(2)
Price Setting for Health Care Services	105	(3)
Justifying Health Care Firm Prices	108	(1)
Reasonableness of Charges for Case Hospital---ROI Method	109	(2)
Reasonableness of Charges for Case Hospital---Comparison-of-Charges Method	111	(1)
Managed-Care Contract Negotiation	112	(4)
Managed-Care Payment Schedules	116	(2)
Summary	118	(5)
Managed Care	123	(24)
Health Maintenance Organizations (HMOs) and Managed-Care Development	124	(1)
Underwriting	125	(1)
Marketing	125	(1)
Utilization Review	125	(1)
Claims Administration	126	(1)
Staff Model HMO	126	(1)
Group Model HMO	126	(1)
Individual Practice Association (IPA) Model HMO	126	(1)
Network Model HMO	126	(1)
Alternative Health Insurance Plans	127	(2)
Integrated Delivery Systems	129	(4)
Paying Providers in a Managed-Care Environment	133	(1)
Salary or Budget	134	(1)
Fee for Service	134	(1)
Capitation	134	(1)
Withholds and Risk Pools	134	(1)
Setting Prices in Capitated Contracts	135	(5)
Medicare and Medicaid Risk Contracts	140	(1)
Legal and Regulatory Issues	141	(1)
Summary	142	(5)
General Principles of Accounting	147	(16)
Financial Accounting	148	(1)
Managerial Accounting	149	(1)
Principles of Accounting	149	(1)
Accounting Entity	149	(1)
Duality	150	(1)
Cost Valuation	151	(1)
Required Return on Investment and Valuation Alternatives	152	(1)
Accrual Accounting	153	(4)
Fund Accounting	157	(1)
Conventions of Accounting	158	(1)
Summary	159	(4)
Financial Statements	163	(22)
Organizational Structure	164	(1)
Balance Sheet	165	(10)
Statement of Revenues and Expenses	175	(3)
Statement of Cash Flows	178	(1)
Statement of Changes in Unrestricted Net Assets	178	(1)
Summary	178	(7)
Accounting For Inflation	185	(16)
Reporting Alternatives	186	(2)
Uses of Financial Report Information	188	(2)
Case Example: Williams Convalescent Center	190	(1)
Monetary versus Nonmonetary Accounts	191	(4)
Summary	195	(6)
Analyzing Financial Statements	201	(28)
What Is Required to Develop an Effective Financial Reporting System?	202	(1)
What Is Most Important: Sustainable Growth	203	(2)
What Are the Critical Drivers of Performance?	205	(1)
Measurement of Critical Variables	205	(1)
Relevant Benchmarking Data	206	(1)
Case Example: Alpha Health Care System	207	(8)
Cost Position---A New Approach	215	(1)
Hospital Cost Index (HCI)	216	(1)
Overall Cost Factors	217	(6)
Summary	223	(6)
Financial Analysis of Alternative Health Care Firms	229	(22)
Long-Term Care Facilities and Nursing Homes	230	(6)
Medical Groups	236	(4)
Health Plans	240	(3)
Summary	243	(8)
Strategic Financial Planning	251	(28)
The Strategic Planning Process	252	(1)
Financial Policy Targets	253	(2)
Requirements for Effective Policy-Making	255	(4)
Developing the Financial Plan	259	(10)
Integration of the Financial Plan with Management Control	269	(1)
Summary	270	(9)
Cost Concepts and Decision Making	279	(28)
Concepts of Cost	280	(2)
Traceability	282	(1)
Cost Behavior	282	(3)
Controllability	285	(2)
Future Costs	287	(1)
Cost Measurement	288	(1)
Direct and Indirect Cost	288	(2)
Variable and Fixed Cost	290	(1)
Estimation Methods	291	(2)
Using Excel for Simple Linear Regression	293	(1)
Data Checks	294	(2)
Break-Even Analysis	296	(5)
Summary	301	(6)
Product Costing	307	(22)
Activity-Based Costing	309	(2)
Relationship to Planning, Budgeting, and Control	311	(3)
The Costing Process	314	(2)
Standard Development	316	(3)
Variance Analysis	319	(2)
Relative Value Unit Costing	321	(1)
Summary	322	(7)
The Management Control Process	329	(24)
Essential Elements	330	(2)
Phases of Management Control	332	(3)
The Budgeting Process	335	(1)
Statistics Budget	336	(1)
Expense Budget	337	(3)
Revenue Budget	340	(2)
The Cash Budget and Budgeted Financial Statements	342	(1)
Zero-Base Budgeting	343	(1)
Benchmarking at the Departmental Level	344	(1)
Summary	345	(8)
Cost Variance Analysis	353	(24)
Cost Control	354	(1)
Investigation of Variances	355	(1)
Classical Statistical Theory	355	(1)
Decision Theory	356	(2)
Variance Analysis Calculations	358	(1)
Macroanalysis	358	(2)
Departmental Analysis of Variance	360	(2)
Variance Analysis in Budgetary Settings	362	(4)
Variance Analysis in Managed Care Settings	366	(3)
Summary	369	(8)
Financial Mathematics	377	(16)
Single-Sum Problems	378	(2)
Annuity Problems	380	(3)
Summary	383	(10)
Capital Project Analysis	393	(26)
Participants in the Analytical Process	395	(2)
Classification of Capital Expenditures	397	(2)
The Capital Project Decision-Making Process	399	(3)
Justification of Capital Expenditures	402	(6)
Discounted Cash Flow Methods	408	(4)
Selection of the Discount Rate	412	(1)
Valuation	413	(1)
Summary	413	(6)
Consolidations and Mergers	419	(22)
Defining the Terms	420	(1)
Merger and Acquisition Activity	421	(2)
Overview of Theories of Merger & Acquisition Activity	423	(1)
Factors Affecting M&A Activity	424	(1)
Why Do Mergers Succeed or Fail?	424	(2)
Valuations	426	(4)
Valuation Example	430	(2)
Accounting for Business Combinations	432	(1)
Antitrust Considerations	433	(1)
Summary	433	(8)
Capital Formation	441	(30)
Equity Financing	443	(3)
Long-Term Debt Financing	446	(5)
Alternative Debt Financing Sources	451	(4)
More Recent Developments	455	(4)
Early Retirement of Debt	459	(2)
Summary	461	(10)
Working Capital and Cash Management	471	(16)
Cash and Investment Management Structure	473	(2)
Management of Working Capital	475	(5)
Short-Term Bank Financing	480	(1)
Investment of Cash Surpluses	481	(1)
Summary	482	(5)
Developing the Cash Budget	487	(10)
Determining Required Cash and Investment Reserves	488	(1)
Case Example---Defining Required Cash Balances	489	(1)
Sources and Uses of Cash	490	(1)
Preparing the Cash Budget	491	(3)
Summary	494	(3)
Glossary	497	(18)
Common Health Care Financial Management Acronyms	515	(8)
Index	523