1 1. Describe key methodologies for the practical application of financial management in healthcare organizations. Reading Assignment Chapter 15: Financial Statement Analysis Chapter 16: Financial Condition Analysis Unit Lesson The focus of Unit VIII is on providing a general framework for financial statement analysis to gain insight into the financial status of an organization. The basic framework provided is to: Carefully review the financial statements in detail, including reading the auditor’s opinion letter and considering the information in that letter. Examine the notes that accompany the financial statements. Calculate a series of ratios and compare them with the organization over time, other specific similar organizations, and the industry as a whole. Make a final assessment of the financial situation of the organization, taking all of the available information into account. This unit will address the notes that accompany the financial statements. This includes significant accounting policies that you need to understand and apply. There will be a review of the summary of the notes provided. The unit will also explore ratio analysis and making comparisons within the major classes of ratios. Key Learning This is a good time to look back and reflect on your key learning from this course. Hopefully, you have a better understanding now in terms of how healthcare finance actually works, how it gets reported, and how it gets audited. As we conclude this unit, let’s look back at your key learning from this course. Healthcare spending: Earlier in this course, we talked about healthcare spending; where does the money come from, and where does it go? That is definitely a key concept from the course. You learned that private insurance is the number one source of funding for healthcare in America, representing 32% of total healthcare dollars. Even with so many Americans currently uninsured, health insurance is the number one source of funding. Next comes Medicare at 20% and then Medicaid at 15%. Government programs overall make up 35% of spending. That may shed some light on why government has so much influence in our field. In terms of out-of-pocket expenditures, they truly make up a small portion of healthcare spending in America, just 12% of total healthcare spending (Finkler, Purtell, Calabrese, & Smith, 2013). Where does the money go? Well, hospitals clearly get the largest piece of the healthcare dollar, receiving 31% of total medical spending each year. Doctors and clinics come next at 20%, and prescription medications are next at 10%. Several other areas receive smaller amounts, about 5-7% each. Such areas include dental services, health insurance administration cost, and nursing care (Finkler et al., 2013). 2 UNIT x STUDY GUIDE Title The big problem, as you likely recall, is that in America, we spend two to three times as much on healthcare as any other developed nation aroun ...