Health Care Finance : Basic Tools for Nonfinancial Managers

by Baker, Judith J.; Baker, R. W.

• ISBN13: 9780834212060
• ISBN10: 0834212064
• Format: Paperback
• Copyright: 1999-10-01
• Publisher: Jones & Bartlett Pub

Summary

The author is the executive director of a private consulting firm in Dallas, TX. A practical financial management text for those who need basic knowledge and a better understanding of health care finance. Uses real examples from hospitals and other health care agencies. Includes some case studies. Softcover. Added to Brandon-Hill Medical List in April 2001.

Author Biography

Judith J. Baker, PhD, CPA, is Executive Director, Resource Group, Ltd., a Dallas based health care consulting firm. She is author of Activity-Based Costing and Activity-Based Management for Health Care Providers, a consulting editor for Aspen publications, and co-editor of Aspen's quarterly Journal of Health Care Finance. R. W. Baker, JD, is Managing Partner, Resource Group, Ltd. He is a health care consultant who focuses on health care management, training, and regulatory issues. He designs, directs, and administers long-term care Minimum Data Set (MDS) data collection and financial analysis. He is also a consulting editor for Aspen publications.

Table of Contents

Preface	xi
Acknowledgments	xiii
PART I---HEALTH CARE FINANCE OVERVIEW
Background	3	(3)
Progress Notes	3	(1)
The History	3	(1)
The Concept	4	(1)
Viewpoints	4	(2)
Introduction to Health Care Finance	6	(5)
Progress Notes	6	(1)
Why Manage?	6	(1)
The Elements of Financial Management	6	(1)
The Organization's Structure	7	(3)
Two Types of Accounting	10	(1)
Information Checkpoint	10	(1)
Key Terms	10	(1)
Discussion Questions	10	(1)
What Does the Health Care Manager Need To Know?	11	(10)
Progress Notes	11	(1)
How the System Works in Health Care	11	(1)
The Information Flow	11	(2)
Basic System Elements	13	(5)
The Annual Management Cycle	18	(2)
Information Checkpoint	20	(1)
Key Terms	20	(1)
Discussion Questions	20	(1)
PART II---MANAGERIAL ACCOUNTING AND FINANCIAL ANALYSIS	21	(80)
Revenues (Inflow)	23	(9)
Progress Notes	23	(1)
Overview	23	(1)
Receiving Revenue for Services	23	(2)
Sources of Health Care Revenue	25	(2)
Grouping Revenue for Planning and Control	27	(3)
Information Checkpoint	30	(1)
Key Terms	30	(1)
Discussion Questions	31	(1)
Expenses (Outflow)	32	(8)
Progress Notes	32	(1)
Overview	32	(1)
Disbursements for Services	33	(1)
Grouping Expenses for Planning and Control	33	(4)
Cost Reports as Influencers of Expense Formats	37	(1)
Information Checkpoint	38	(1)
Key Terms	39	(1)
Discussion Questions	39	(1)
Cost Classifications	40	(8)
Progress Notes	40	(1)
Distinction between Direct and Indirect Costs	40	(1)
Examples of Direct Cost and Indirect Cost	41	(2)
Responsibility Centers	43	(3)
Distinction between Product and Period Costs	46	(1)
Information Checkpoint	47	(1)
Key Terms	47	(1)
Discussion Questions	47	(1)
Cost Behavior and Break-Even Analysis	48	(15)
Progress Notes	48	(1)
Distinction between Fixed, Variable, and Semivariable Costs	48	(2)
Examples of Variable and Fixed Costs	50	(4)
Analyzing Mixed Costs	54	(2)
Contribution Margin, CVP and PV Ratios	56	(5)
Information Checkpoint	61	(1)
Key Terms	61	(1)
Discussion Questions	62	(1)
Staffing: The Manager's Responsibility	63	(10)
Progress Notes	63	(1)
Staffing Requirements	63	(1)
FTEs for Annualizing Positions	63	(3)
Number of Employees Required To Fill a Position: Another Way to Calculate FTEs	66	(3)
Tying Cost to Staffing	69	(2)
Information Checkpoint	71	(1)
Key Terms	71	(1)
Discussion Questions	72	(1)
Comparative Data and Forecasts	73	(7)
Progress Notes	73	(1)
Comparative Data	73	(4)
Forecasts	77	(2)
Information Checkpoint	79	(1)
Key Terms	79	(1)
Discussion Questions	79	(1)
Budgeting and Variance Analysis	80	(9)
Progress Notes	80	(1)
Budgets	80	(3)
Variance Analysis	83	(5)
Information Checkpoint	88	(1)
Key Terms	88	(1)
Discussion Questions	88	(1)
The Time Value of Money	89	(12)
Progress Notes	89	(1)
Purpose	89	(1)
Unadjusted Rate of Return	89	(1)
Present-Value Analysis	89	(1)
Internal Rate of Return	90	(1)
Payback Period	91	(1)
Evaluations	92	(1)
Information Checkpoint	92	(1)
Key Terms	93	(1)
Discussion Questions	93	(1)
Appendix 11--A	94	(4)
Appendix 11--B	98	(3)
PART III---FINANCIAL MANAGEMENT TOOLS	101	(26)
Reporting	103	(8)
Progress Notes	103	(1)
Understanding the Major Reports	103	(1)
Balance Sheet	103	(2)
Statement of Revenue and Expense	105	(1)
Statement of Changes in Fund Balance/Net Worth	105	(1)
Statement of Cash Flows	106	(1)
Subsidiary Reports	107	(1)
Summary	107	(2)
Information Checkpoint	109	(1)
Key Terms	110	(1)
Discussion Questions	110	(1)
Financial and Operating Ratios as Performance Measures	111	(7)
Progress Notes	111	(1)
The Importance of Ratios	111	(1)
Liquidity Ratios	111	(2)
Solvency Ratios	113	(2)
Profitability Ratios	115	(2)
Information Checkpoint	117	(1)
Key Terms	117	(1)
Discussion Questions	117	(1)
Other Types of Performance Measures	118	(9)
Progress Notes	118	(1)
Importance of a Variety of Performance Measures	118	(1)
Adjusted Performance Measures over Time	118	(1)
Benchmarking	118	(4)
Economic Measures	122	(1)
Measurement Tools	122	(2)
Information Checkpoint	124	(1)
Key Terms	124	(1)
Discussion Questions	125	(2)
PART IV---CASE STUDY	127	(24)
Case Study: Metropolis Health System	129	(22)
Background	129	(11)
Meeting the Challenge of Cost Containment: A Case Study Using Variance Analysis	140	(11)
PART V---MINI-CASE STUDIES	151	(40)
Mini-Case Study 1: Using Financial Ratios and Interpreting Credit Analysis in Hospitals and Nursing Homes	153	(18)
Hospital Finance	154	(4)
Credit Analysis of a Skilled Nursing Facility	158	(4)
Credit Analysis of Nonprofit Continuing Care Retirement Communities	162	(9)
Mini-Case Study 2: Changing Economic Realities in the Health Care Setting: A Physician's Office Teaching Case That Includes Specifics on Changing Payment Levels	171	(13)
Improving Patient Care in a Changing Environment: A Teaching Case	172	(7)
RBRVS---1999 Update	179	(5)
Mini-Case Study 3: The Economic Significance of Resource Misallocation: A Finance and Operations Problem in the Women, Infants, and Children Public Health Program	184	(7)
Client Flow through the Women, Infants, and Children Public Health Program	185	(6)
Appendix A: Checklists	191	(3)
Appendix B: Web-Based Learning Tools	194	(1)
Notes	195	(2)
Glossary	197	(6)
Examples and Exercises, Supplemental Material, and Solutions	203	(52)
Index	255	(8)
About the Authors	263