1 1. Describe key methodologies for the practical applicat.docxhoney725342
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 ...
This is assignment 1 that assignment 2 have to relate to. PLEASE..docxabhi353063
This is assignment 1 that assignment 2 have to relate to. PLEASE.
Financial Statement Analysis
Student name
University
Professor
October 25, 2016
Financial Statement Analysis
Based on your review of the financial statements, suggest a key insight about the financial health of the company. Speculate on the likely reaction to the financial statements from various stakeholder groups (employee, investors, shareholders). Provide support for your rationale.
Health Management Associates, Inc. (NYSE: HMA) is the operator and owner-general acute care centers in the non-urban communities situated in the US, particularly in the Southwest. The organization was founded in 1977. The hospitals provide services such as oncology, emergency room care, general surgery, internal medicine, radiology, pediatric services, coronary care, and diagnostic care (
www.healthcaremanagement.com
).The company is also providing outpatient services like x-ray, respiratory therapy, one-day surgery, laboratory services, physical therapy as well as cardiology therapy. The mission of the Health Management is to provide America’s best local healthcare. They provide processes, capital finance, expertise, and people that can ensure that the local hospitals can accomplish their mission of delivering compassionate and high-quality healthcare that would substantially improve the lives of patients, the communities they serve, and the physicians providing the care
www.healthcaremanagement.com
)
With regard to the review of the current financial statement, HMA is in a dangerous financial state as a result of the present increasing debts and legal woes. The Office of the Inspector General, Justice Department, and the Department of Health and Human Services served the organization with summons regarding a software program that was used by ED doctors and the records from the emergency department. Some reports suggested that there was pressure from the company’s hospitals management to admit patients from emergency rooms so as to maximize profits. Paul Meyer, former compliance director, claimed that HMA’s fraudulent activities could attract government investigation (Britt, 2012).
The common stock of Health Management Associates was owned by almost 850 shareholders, as per the records of December 31, 2012, with hundreds of institutional investors included. HMA had expanded to include 70 hospitals situated in 15 states, with roughly 10,562 present licensed beds. In 2012, HMA realized about $5.9 billion in net revenue (Britt, 2012).
HMA gets payments for the services it renders from the federal government through the Medicare program, the states in which it functions under each Medicaid program, and commercial insurance, among others; and patients, encompassing deductibles and co-payments. Basically, deductibles and co-payments are part of the bill of patients for the medical services provided, which many government and private payers expect the patient to cater for. ...
1 3. Compare and contrast the external financing options t.docxhoney725342
1
3. Compare and contrast the external financing options that are available for healthcare organizations
today.
Reading Assignment
Chapter 4:
Understanding Costs
Unit Lesson
This unit will introduce you to the concept of costs in healthcare. For public service organizations and
healthcare organizations of all kinds, an understanding of costs is absolutely essential. The better that
healthcare managers understand costs, the more accurate their planning will be, and the better they will be
able to control spending for the organization within their areas of responsibility. A solid understanding of costs
will also improve a manager’s ability to make effective decisions on a day-to-day basis for his or her
department. Thus, for many reasons, you need to get a solid understanding of costs. That is what we will
seek to provide in Unit III.
First let us face reality, costs in healthcare are complicated. They are considerably more complicated than
costs in industries such as manufacturing, construction, or retail. One important emphasis of this unit is on
providing a clear understanding of key definitions for widely used cost terms. Such terms include direct costs,
indirect costs, average costs, fixed costs, variable costs, and marginal costs.
In this unit, you will come to realize that finance has its own language, and in order to be effective as a
healthcare manager, you must be able to speak that language. Otherwise you will find yourself in foreign
territory at management team meetings and board of directors meetings. You will also be at great
disadvantage when budget time rolls around each year. Accordingly, in this course, we will teach you the
language of finance so that you can communicate clearly with the chief financial officer (CFO) and other
members of management.
Another focus for Unit III is on understanding how costs change as service volumes change. The relationship
between costs and volume has a dramatic impact on the profits or losses incurred by an organization, and
this relationship is critical to effective decision making. Healthcare organizations must generate black ink on
the income statement in order to survive. That is true for both for-profit and not-for-profit entities, so you must
understand the impact of service volumes on costs.
The old story about the Long Island Tailor comes to mind here. It was said that the tailor lost money on every
single suit that he produced for clients, but he made it up in volume. Well, clearly that will never work. Losing
money on every healthcare service we provide, and then getting busier losing money, will close down the
hospital or clinic in a very short time. In healthcare, we need to find a way to provide services for our patients
at cost levels which allow some margin of revenues over expenses. This may not be true for every patient that
we treat, but it must be true for our patient population overall. Otherwise we could be in a lot of troubl ...
1 4. Describe the financial approach to strategic healthca.docxhoney725342
1
4. Describe the financial approach to strategic healthcare planning, considering how managers can
participate most effectively in this process.
4.1 Explain the purpose of the activity statement and statement of cash flows.
4.2 Discuss the process of recording financial information and generating a balance sheet.
4.3 Discuss various asset categories, including cash, marketable securities, accounts
receivable, inventory, prepaid expenses, fixed assets, and sinking funds.
Reading Assignment
Chapter 10:
Taking Stock of Where You Are: The Balance Sheet
Chapter 11:
Reporting the Results of Operations: The Activity and Cash Flow Statements
Unit Lesson
In Unit VI, you will discover that financial reports are prepared by organizations monthly, quarterly, and
annually, and that these reports are essential for determining the financial health of a healthcare organization.
In order to function effectively in healthcare management, you need a very thorough understanding of these
reports and what they reflect about your department and your medical facility overall. A good portion of each
healthcare board of directors meeting is focused on reviewing and interpreting these reports.
Financial reports help managers understand the current financial situation of the organization and also the
financial results of its operation. They provide information not only for management of the organization, but
also for outsiders—for people who take interest in the stability of the organization as it strives to fulfill its
mission of patient care. Just a few of these parties include auditors, local government officials, the state
department of health, and various accrediting agencies.
Preparation of the financial reports which will be examined by individuals external to the organization is
referred to as financial accounting. Financial accounting employs a process of recording financial
transactions, summarizing all of the information contained in the transactions, and then reporting the
information in a set of standardized financial statements.
Balance Sheet
The statement of financial position (commonly referred to as the balance sheet) is the first of the financial
statements. You need a solid understanding of the balance sheet. A balance sheet reports the financial
position of the organization at a moment in time—often the end of a month or end of the fiscal year. For any
specific entity, this financial document provides a highly summarized view of its financial position at any one
point in time.
Financial statements are derived from information contained in and changes to the fundamental equation of
accounting. That equation states that the assets of any entity equal the liabilities plus the net worth of the
entity. All of financial accounting is built around that fundamental equation. In addition, many organizations
follow a set of rules or conventions that are referred to a Generally Accepted Accounting Principles (GAA ...
Introduction This chapter describes methods for assessing the.docxAASTHA76
Introduction
This chapter describes methods for assessing the financial health of hospitals and safety net institutions. The examples used are drawn principally from hospitals, but the principles and approaches apply to clinics and other safety net providers. The chapter discusses:
What is meant by financial health of institutions.
Alternative approaches and measures available to assess hospital financial health.
How these approaches and measures can be implemented using alternative data.
Issues and complications in interpreting this data.
The goal of this chapter is to enable the reader to identify potential measures, data sources for implementing these measures, and conceptual and accounting issues in implementing and interpreting these measures. It is not intended to be a primer on accounting or financial management, although accounting and financial management concepts are discussed (Lane, Longstreth, and Nixon, 2001).
Return to Contents
Measuring the Financial Health of Safety Net Hospitals
One definition of the financial health of an institution is its ability to continue to operate as a going concern. There are three dimensions to this ability:
1. Revenues and expenses must be in balance.
2. Adequate resources (that is, capital) must be available to deliver services and finance operations both in the short and long term.
3. The institution must be able to replenish or renew itself.
The first two dimensions are explicitly captured in a variety of measures; the third, ability to renew, is generally inferred from a range of data.
Revenues and Expenses
The first dimension of financial health is that revenues and expenses be in balance. More generally, we should expect that revenues at least match expenses ("break even"), and most financial analysts would expect an institution's revenues to exceed expenses, so as to finance increases in working capital and build funds as a cushion for a financial downturn and for renewal or expansion. The standard measure of profitability is margin:
(Revenues - Expenses) Revenues
Hospitals are multiproduct firms, with multiple sources of revenues. They provide inpatient and outpatient health care services, and they may provide other services to those using the hospital (parking, cafeteria, and so on) or to outside organizations (selling laboratory services, laundry, or catering services, for example, to other hospitals or health care providers). Some hospitals are involved in medical or related education, whereas others conduct research. Some receive philanthropy, government subsidies, or interest and investment income that may not be directly tied to any operational activities. Analyzing the margin requires specifying the level at which revenues are being aggregated and allocating expenses to match the revenues.
There are three common measures of margin. The broadest measure is total margin, which is computed as follows:
(Total revenues from all sources - Total expenses) Total .
1 1. Describe key methodologies for the practical applicat.docxhoney725342
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 ...
This is assignment 1 that assignment 2 have to relate to. PLEASE..docxabhi353063
This is assignment 1 that assignment 2 have to relate to. PLEASE.
Financial Statement Analysis
Student name
University
Professor
October 25, 2016
Financial Statement Analysis
Based on your review of the financial statements, suggest a key insight about the financial health of the company. Speculate on the likely reaction to the financial statements from various stakeholder groups (employee, investors, shareholders). Provide support for your rationale.
Health Management Associates, Inc. (NYSE: HMA) is the operator and owner-general acute care centers in the non-urban communities situated in the US, particularly in the Southwest. The organization was founded in 1977. The hospitals provide services such as oncology, emergency room care, general surgery, internal medicine, radiology, pediatric services, coronary care, and diagnostic care (
www.healthcaremanagement.com
).The company is also providing outpatient services like x-ray, respiratory therapy, one-day surgery, laboratory services, physical therapy as well as cardiology therapy. The mission of the Health Management is to provide America’s best local healthcare. They provide processes, capital finance, expertise, and people that can ensure that the local hospitals can accomplish their mission of delivering compassionate and high-quality healthcare that would substantially improve the lives of patients, the communities they serve, and the physicians providing the care
www.healthcaremanagement.com
)
With regard to the review of the current financial statement, HMA is in a dangerous financial state as a result of the present increasing debts and legal woes. The Office of the Inspector General, Justice Department, and the Department of Health and Human Services served the organization with summons regarding a software program that was used by ED doctors and the records from the emergency department. Some reports suggested that there was pressure from the company’s hospitals management to admit patients from emergency rooms so as to maximize profits. Paul Meyer, former compliance director, claimed that HMA’s fraudulent activities could attract government investigation (Britt, 2012).
The common stock of Health Management Associates was owned by almost 850 shareholders, as per the records of December 31, 2012, with hundreds of institutional investors included. HMA had expanded to include 70 hospitals situated in 15 states, with roughly 10,562 present licensed beds. In 2012, HMA realized about $5.9 billion in net revenue (Britt, 2012).
HMA gets payments for the services it renders from the federal government through the Medicare program, the states in which it functions under each Medicaid program, and commercial insurance, among others; and patients, encompassing deductibles and co-payments. Basically, deductibles and co-payments are part of the bill of patients for the medical services provided, which many government and private payers expect the patient to cater for. ...
1 3. Compare and contrast the external financing options t.docxhoney725342
1
3. Compare and contrast the external financing options that are available for healthcare organizations
today.
Reading Assignment
Chapter 4:
Understanding Costs
Unit Lesson
This unit will introduce you to the concept of costs in healthcare. For public service organizations and
healthcare organizations of all kinds, an understanding of costs is absolutely essential. The better that
healthcare managers understand costs, the more accurate their planning will be, and the better they will be
able to control spending for the organization within their areas of responsibility. A solid understanding of costs
will also improve a manager’s ability to make effective decisions on a day-to-day basis for his or her
department. Thus, for many reasons, you need to get a solid understanding of costs. That is what we will
seek to provide in Unit III.
First let us face reality, costs in healthcare are complicated. They are considerably more complicated than
costs in industries such as manufacturing, construction, or retail. One important emphasis of this unit is on
providing a clear understanding of key definitions for widely used cost terms. Such terms include direct costs,
indirect costs, average costs, fixed costs, variable costs, and marginal costs.
In this unit, you will come to realize that finance has its own language, and in order to be effective as a
healthcare manager, you must be able to speak that language. Otherwise you will find yourself in foreign
territory at management team meetings and board of directors meetings. You will also be at great
disadvantage when budget time rolls around each year. Accordingly, in this course, we will teach you the
language of finance so that you can communicate clearly with the chief financial officer (CFO) and other
members of management.
Another focus for Unit III is on understanding how costs change as service volumes change. The relationship
between costs and volume has a dramatic impact on the profits or losses incurred by an organization, and
this relationship is critical to effective decision making. Healthcare organizations must generate black ink on
the income statement in order to survive. That is true for both for-profit and not-for-profit entities, so you must
understand the impact of service volumes on costs.
The old story about the Long Island Tailor comes to mind here. It was said that the tailor lost money on every
single suit that he produced for clients, but he made it up in volume. Well, clearly that will never work. Losing
money on every healthcare service we provide, and then getting busier losing money, will close down the
hospital or clinic in a very short time. In healthcare, we need to find a way to provide services for our patients
at cost levels which allow some margin of revenues over expenses. This may not be true for every patient that
we treat, but it must be true for our patient population overall. Otherwise we could be in a lot of troubl ...
1 4. Describe the financial approach to strategic healthca.docxhoney725342
1
4. Describe the financial approach to strategic healthcare planning, considering how managers can
participate most effectively in this process.
4.1 Explain the purpose of the activity statement and statement of cash flows.
4.2 Discuss the process of recording financial information and generating a balance sheet.
4.3 Discuss various asset categories, including cash, marketable securities, accounts
receivable, inventory, prepaid expenses, fixed assets, and sinking funds.
Reading Assignment
Chapter 10:
Taking Stock of Where You Are: The Balance Sheet
Chapter 11:
Reporting the Results of Operations: The Activity and Cash Flow Statements
Unit Lesson
In Unit VI, you will discover that financial reports are prepared by organizations monthly, quarterly, and
annually, and that these reports are essential for determining the financial health of a healthcare organization.
In order to function effectively in healthcare management, you need a very thorough understanding of these
reports and what they reflect about your department and your medical facility overall. A good portion of each
healthcare board of directors meeting is focused on reviewing and interpreting these reports.
Financial reports help managers understand the current financial situation of the organization and also the
financial results of its operation. They provide information not only for management of the organization, but
also for outsiders—for people who take interest in the stability of the organization as it strives to fulfill its
mission of patient care. Just a few of these parties include auditors, local government officials, the state
department of health, and various accrediting agencies.
Preparation of the financial reports which will be examined by individuals external to the organization is
referred to as financial accounting. Financial accounting employs a process of recording financial
transactions, summarizing all of the information contained in the transactions, and then reporting the
information in a set of standardized financial statements.
Balance Sheet
The statement of financial position (commonly referred to as the balance sheet) is the first of the financial
statements. You need a solid understanding of the balance sheet. A balance sheet reports the financial
position of the organization at a moment in time—often the end of a month or end of the fiscal year. For any
specific entity, this financial document provides a highly summarized view of its financial position at any one
point in time.
Financial statements are derived from information contained in and changes to the fundamental equation of
accounting. That equation states that the assets of any entity equal the liabilities plus the net worth of the
entity. All of financial accounting is built around that fundamental equation. In addition, many organizations
follow a set of rules or conventions that are referred to a Generally Accepted Accounting Principles (GAA ...
Introduction This chapter describes methods for assessing the.docxAASTHA76
Introduction
This chapter describes methods for assessing the financial health of hospitals and safety net institutions. The examples used are drawn principally from hospitals, but the principles and approaches apply to clinics and other safety net providers. The chapter discusses:
What is meant by financial health of institutions.
Alternative approaches and measures available to assess hospital financial health.
How these approaches and measures can be implemented using alternative data.
Issues and complications in interpreting this data.
The goal of this chapter is to enable the reader to identify potential measures, data sources for implementing these measures, and conceptual and accounting issues in implementing and interpreting these measures. It is not intended to be a primer on accounting or financial management, although accounting and financial management concepts are discussed (Lane, Longstreth, and Nixon, 2001).
Return to Contents
Measuring the Financial Health of Safety Net Hospitals
One definition of the financial health of an institution is its ability to continue to operate as a going concern. There are three dimensions to this ability:
1. Revenues and expenses must be in balance.
2. Adequate resources (that is, capital) must be available to deliver services and finance operations both in the short and long term.
3. The institution must be able to replenish or renew itself.
The first two dimensions are explicitly captured in a variety of measures; the third, ability to renew, is generally inferred from a range of data.
Revenues and Expenses
The first dimension of financial health is that revenues and expenses be in balance. More generally, we should expect that revenues at least match expenses ("break even"), and most financial analysts would expect an institution's revenues to exceed expenses, so as to finance increases in working capital and build funds as a cushion for a financial downturn and for renewal or expansion. The standard measure of profitability is margin:
(Revenues - Expenses) Revenues
Hospitals are multiproduct firms, with multiple sources of revenues. They provide inpatient and outpatient health care services, and they may provide other services to those using the hospital (parking, cafeteria, and so on) or to outside organizations (selling laboratory services, laundry, or catering services, for example, to other hospitals or health care providers). Some hospitals are involved in medical or related education, whereas others conduct research. Some receive philanthropy, government subsidies, or interest and investment income that may not be directly tied to any operational activities. Analyzing the margin requires specifying the level at which revenues are being aggregated and allocating expenses to match the revenues.
There are three common measures of margin. The broadest measure is total margin, which is computed as follows:
(Total revenues from all sources - Total expenses) Total .
Healthcare Financial Transformation: Five Leading StrategiesHealth Catalyst
Healthcare financial transformation—improving care delivery while lowering costs—has been an ongoing challenge for health systems in the era of value-based care and an even more prominent concern amid COVID-19. While better care and reduced expense to organizations and consumers might seem like opposing goals, by understanding the true cost of services and other drivers of expense, organizations can successfully manage costs while maintaining, and even improving, care delivery. To that end, health systems can use data- and analytics-driven tools and strategies to addresses financial challenges, including uncompensated care, prolonged accounts receivable days, discharged not final billed cases, inefficient resource use, and more.
Krona Community HospitalMemoToKrona Community HospitalFrom.docxDIPESH30
Krona Community HospitalMemoTo:
Krona Community HospitalFrom:
Cc:
Date:January 12, 2015Re:
Cutting Medicaid at Krona Community Hospital
Cutting Medicaid will definitely have an effect on Krona Community Hospital. Medicaid is a vital foundation of revenue for the hospital and the effect that this will have on the hospital will not be over-the-top. The effect will be on families with low income, providers, and possibly a lot of the economy. Cutting Medicaid obstructs the proficiency of the hospital to deliver operative healthcare to the patients and restrict a huge number of patients. The lack of ability of the hospital to deliver applicable health establishments can be impractical for the hospital to get bigger.
The modifications made to Medicaid in the past couple of years has caused it to be impractical for the healthcare hospital to stay alive in the world. The decrease to Medicaid has directed to reduce repayments of the healthcare providers that may not want to help patients. Medicaid is a main supplier of revenue for several healthcare establishments, suggesting that security of the amount and the excellence of services delivered may mutually be deliberated.
If the hospital chooses to welcome patients that have Medicaid, there could be a possibility of the refunds being rejected for the services that they have tended to. This could have a huge destructive effect on the financial stance of the hospital and the delivery of healthcare to the patients. There may be a chance that grant funding will not be boosted in funding for patients that do not have insurance. Therefore, the hospital will not obtain any refunds from Medicaid for patients who are admitted.
When Medicaid cuts have taken place, the hospital will have to use methods on foreseen contact. With these methods, net revenue or functioning boundary should be the right method that will be suitable to their capability to deliver estimates of financial pressure because the use of any other method will effect Medicaid. The Medicaid cuts are liable to amplify financial predicting from 1 year to 4 or 5 years. The Medicaid cut generates a traditional notion through the prediction.
Capitation is a way of paying for healthcare services that are rendered. This way is an amount that has a due date for the healthcare providers for a set time frame despite if the payer has rendered services or not. The percentage of the payment is mainly defined the age of the patient and the sex for the demographics. This type of payment was presented to raise convenience and fairness in delivery of healthcare hospitals.
There are many advantages of utilizing capitation. One, this system creates a solid bond among the physician and the patient. This happens because the patient is permitted to have several doctors pending the plan elapses, decreasing consequences relates with treatment going too far. The big task related with capitation is that incurable illnesses, or complex medical problems are problematic ...
Chapter 2Four Things the Healthcare Manager Needs to KnEstelaJeffery653
Chapter 2:
Four Things the Healthcare Manager Needs to Know About Financial Management Systems
Four Segments That Make a Financial Management System WorkOriginal Records—Provide evidence that some event has occurred.The Information System—Gathers this evidence.The Accounting System—Records the evidence.The Reporting System—Produces reports of the effects.
Four Segments That Make a
Financial System WorkThe healthcare manager needs to know that these separate elements exist and that they work together for an end result.
Structure of the Information SystemIdentify the inputsIdentify the outputs
(Examine the diagram in Figure 2-1 in the chapter.)
Function of Flow SheetsFlow sheets illustrate the flow of activities that capture information.
Flow Sheets Are Useful Because...They picture who is responsible for what piece of information as it enters the system.
(Examine the two examples of patient information flows in the chapter.)
Figure 2-2 Physician’s Office Flowsheet for Address Confirmation.
Figure 2-3 Health System Flowsheet for Verification of Patient Information.
The Chart of AccountsOutlines the elements of your company in an organized manner.Maps out account titles with a method of numeric coding.Is designed to compile financial data in a uniform manner that can be decoded by the user.
The Chart of AccountsEvery organization has differences in its Chart of Accounts that express the unique differences in its own organizational structure.
(Examine the three examples of different Chart of Accounts formats in Exhibits 2-1, 2-2, and 2-3.)
Basic System Elements:
Books and RecordsCapture transactions
(Figures 2-4 and 2-5 illustrate this concept.)
Books and Records:
The Sequence Is...Initial transaction to subsidiary journal to general ledger;Review, adjust, balance through the trial balance;Create reports (financial statements).
The Annual Management Cycle (1 of 2)Affects the type and status of information the manager uses
The Annual Management Cycle (2 of 2)The type and status of information used by the manager includes:
Daily and Weekly Reports—Generally contain raw data
Quarterly Reports and Statistics—Generally have been verified, adjusted, and balanced. Called “interim” reports; often used as milestones by managers.
Annual Year End Reports—Generally represents the closing out of a specific reporting period. Primarily intended for external (outside) use.
Communicating Financial Information to Others
It is important to:Create a report.Use accepted terminology, standard formats, and executive summary.Organize in a logical flow.Place detail in an appendix.
Chapter 5: Revenues (Inflow)
The Revenue StreamPayment After Service Is DeliveredFee-for-ServiceDiscounted Fee for Service
Payment Before Service Is DeliveredPre-Determined Per-Person PaymentRate-Setting Differences
Deductions from RevenueContractual AllowancesThe difference between the full established rate an ...
Week Two Health Care Financial Terms WorksheetHCS405 Version .docxalanfhall8953
Week Two Health Care Financial Terms Worksheet
HCS/405 Version 6
1Week Two Health Care Financial Terms Worksheet
Understanding health care financial terms is a prerequisite for both academic and professional success. This assignment is intended to ensure you understand some of the basic terms used in this course.
Complete the worksheet below according to the following guidelines:
· In the space provided, write each term’s definition as used in health care management. You must define the term in your own words.
· In the space provided after each term’s definition, summarize a health care management scenario that illustrates the importance of the skill, concept, procedure, or tool to which the term refers. In the scenario, you may wish to consider the following:
Why the skill, concept, procedure, or tool is necessary for accurate record keeping, operational efficiency, excellent patient services, employee management, regulatory compliance, reducing costs, forecasting, and so forth
Successes enabled by an adequate understanding or appropriate application of the skill, concept, procedure, or tool
Risks or failures associated with an inadequate understanding or inappropriate application of the skill, concept, procedure, or tool
· Note that all written assignments in this course must meet the university's published requirements for attribution (citations and references). Additional information on these requirements can be located in the Student Code of Academic Integrity. Although sources may be implied by the assignment criteria your final assignment must still contain appropriate citations and references.
Save the completed worksheet as a Microsoft® Word document with your name in the file name.
Submit the file to your instructor.
Worksheet
Submitted By:
[Type your name here.]
Term
Definition
Scenario
Balance sheet
Statement of revenue and expense
Revenue cycle
Payer mix
Revenue
Student discussion must be 200 original words and supported by academic, peer-reviewed references (at least 1). Whenever possible, please try to relate the course content to real-world applications from your work experience. I expect your message to reflect critical thought and an integration of the key themes and concepts from the readings.
Baker, J. J., & Baker, R. W. (2014). Health care finance: Basic tools for nonfinancial managers (4th ed.). Sudbury, MA: Jones & Bartlett Publishers.
1. Introduction
Financial statements are accounting reports prepared by the health care organization that represent a historical record of finances over a specified time period. These reports are used by investors as the basis for investment. The statements are prepared internally and checked by the company's auditors, the outside accountants used by the organization.
What is a balance sheet? Pretend that you go to the bank asking to borrow money; the loan officer insists that you provide a list of your current finances. You write down everything of value, such as your c.
this is assignment 1
Financial Statement Analysis
Student name
University
Professor
October 25, 2016
Financial Statement Analysis
Based on your review of the financial statements, suggest a key insight about the financial health of the company. Speculate on the likely reaction to the financial statements from various stakeholder groups (employee, investors, shareholders). Provide support for your rationale.
Health Management Associates, Inc. (NYSE: HMA) is the operator and owner-general acute care centers in the non-urban communities situated in the US, particularly in the Southwest. The organization was founded in 1977. The hospitals provide services such as oncology, emergency room care, general surgery, internal medicine, radiology, pediatric services, coronary care, and diagnostic care (
www.healthcaremanagement.com
).The company is also providing outpatient services like x-ray, respiratory therapy, one-day surgery, laboratory services, physical therapy as well as cardiology therapy. The mission of the Health Management is to provide America’s best local healthcare. They provide processes, capital finance, expertise, and people that can ensure that the local hospitals can accomplish their mission of delivering compassionate and high-quality healthcare that would substantially improve the lives of patients, the communities they serve, and the physicians providing the care
www.healthcaremanagement.com
)
With regard to the review of the current financial statement, HMA is in a dangerous financial state as a result of the present increasing debts and legal woes. The Office of the Inspector General, Justice Department, and the Department of Health and Human Services served the organization with summons regarding a software program that was used by ED doctors and the records from the emergency department. Some reports suggested that there was pressure from the company’s hospitals management to admit patients from emergency rooms so as to maximize profits. Paul Meyer, former compliance director, claimed that HMA’s fraudulent activities could attract government investigation (Britt, 2012).
The common stock of Health Management Associates was owned by almost 850 shareholders, as per the records of December 31, 2012, with hundreds of institutional investors included. HMA had expanded to include 70 hospitals situated in 15 states, with roughly 10,562 present licensed beds. In 2012, HMA realized about $5.9 billion in net revenue (Britt, 2012).
HMA gets payments for the services it renders from the federal government through the Medicare program, the states in which it functions under each Medicaid program, and commercial insurance, among others; and patients, encompassing deductibles and co-payments. Basically, deductibles and co-payments are part of the bill of patients for the medical services provided, which many government and private payers expect the patient to cater for. The amount of deductibles and co-payments v.
How to improve operating margins
● What does operating margin tell you about the organization, and how would
you calculate this ratio?
● Select a local medical service organization and describe how it has
specifically improved its operating margins.
HFMA
Financial Reporting Function
Financial Reporting Function
Financial Accounting Standards Board
(FASB)
FASB standards rest on certain
assumptions:
Ø Monetary unit
Ø Economic entity
Ø Time period
Ø Going concern
Financial Reporting Function
FASB
Two key principles
Ø Cost principle
Ø Full disclosure principle
Financial Reporting Function
Generally Accepted Accounting Principles
(GAAP)
Ø Consistency
Ø Relevance
Ø Reliability
Ø Comparability
Financial Reporting Function
Financial Statements
For Profit Not-for-Profit
Balance Sheet Statement of Financial
Position
Income Statement Statement of Operations
Statement of Cash Flows Statement of Cash Flows
Financial Reporting Function
Accepted Accounting Methods
Ø Accrual
Ø Cash
Ø Fund
Financial Reporting Function
Financial Statement Presentation
Ø Two years are displayed
- Prior year to the right of the current year
Ø Statement of Operations or Income Statement are for a period of
time—typically a month
Ø Statement of Cash Flows reflects a period of time consistent with the
Statement of Operations or Income Statement—typically a month
Ø Statement of Financial Position or Balance Sheet reflect the status
of Assets, Liabilities, and Net Assets/Shareholders’ Equity as of a
day.
Financial Reporting Function
Ratio Analysis
Ø Liquidity Ratios
Ø Profitability Ratios
Ø Asset Efficiency Ratios
Ø Capital Structure Ratios
Ø Operating Indicators
Financial Reporting Function
Ratio Analysis
Ø Liquidity
- Current ratio
- Quick ratio
Current ratio = Current Assets/Current Liabilities
Quick ratio = (Cash + Marketable Securities + Net
Accounts Receivable)/Current Liabilities
Financial Reporting Function
Ratio Analysis
Ø Profitability
- Operating margin
- Return on assets
Operating Margin = [(Operating Revenue-Operating
Expenses)/Total Operating Revenues] x 100
Return on Assets = Excess of revenues over expenses/
Total Assets
Financial Reporting Function
Ratio Analysis
Ø Asset efficiency
- Total asset turnover
- Inventory turnover
Total Asset Turnover = Total Operating Revenue/ Total
Assets
Inventory Turnover = Total Operating Revenue/ Inventory
Financial Reporting Function
Ratio Analysis
Ø Capital structure
- Debt to Capitalization
- Debt service coverage
Debt to Capitalization = [Long-term Debt/ (Long-term Debt
+ Unrestricted Net Assets)] x 100
Debt Service Coverage = (Excess of revenues over
expenses + Depre.
Chapter 12 Financial Analysis of Alternative Healthcare Firms LEAR.docxketurahhazelhurst
Chapter 12 Financial Analysis of Alternative Healthcare Firms LEARNING OBJECTIVES After studying this chapter, you should be able to do the following: 1. List some of the major nonhospital and nonphysician sectors of the healthcare industry. 2. Discuss the sources of revenue for the nursing home industry. 3. Discuss the major sources of revenue and expenses of medical groups. 4. List and describe the major organizational types of physician groups. 5. Describe alternative health maintenance organization arrangements. REAL-WORLD SCENARIO Laura Rose has been recently appointed to the Board of ElderCare, a large, for-profit operator of skilled nursing facilities (SNFs) around the country. Laura’s first committee assignment is to the Treasury Committee because of her prior business experience. Although Laura had extensive experience as a hospital administrator, she had relatively little familiarity with the SNF industry. Upon reviewing ElderCare’s recent financial statements, she was concerned about the dramatically declining financial position. She noticed that revenues were declining on per facility and per patient bases. Meanwhile, the company’s debt had been downgraded, and its borrowing costs had risen substantially. She is aware that Medicare implemented a SNF prospective payment system as part of the Balanced Budget Act of 1997. Payment increases by Medicare and Medicaid have not kept pace with increases in costs in recent years. She wonders whether this might be a factor in the company’s financing issues. In general, profitability in the long-term care industry has declined significantly in recent years, and several industry leaders had filed for bankruptcy protection. Although some believe that SNF prospective payment systems were largely to blame, other factors, such as ill-advised acquisitions, excessive long-term debt, and poor balance sheets, probably contributed as well. In essence, she is unsure whether ElderCare’s financing difficulties are unique to management issues at ElderCare or whether they reflect more general market conditions and economic and reimbursement trends. To understand the issue better, Laura needs to estimate the direct financial impact of SNF reimbursement. She asked the ElderCare treasury and controller’s office staff to prepare an analysis of the financial performance of selected long-term care facilities over the period 2006 to 2010. In particular, she wants to know how SNF-bond ratings have been affected by prospective payment systems and what other factors might have contributed to the industry’s deteriorating financial performance. In Chapter 11 we discussed the measures and concepts of financial analysis in some detail, but most of the examples and industry standards were from the hospital sector. The hospital industry is by far the largest sector in the healthcare industry, but it is not the only sector; its rate of growth in recent years has been slower than in other areas. This chapter provides some ad ...
Student discussion must be 200 original words and supported by aca.docxemelyvalg9
Student discussion must be 200 original words and supported by academic, peer-reviewed references (at least 1). Whenever possible, please try to relate the course content to real-world applications from your work experience. I expect your message to reflect critical thought and an integration of the key themes and concepts from the readings.
Baker, J. J., & Baker, R. W. (2014). Health care finance: Basic tools for nonfinancial managers (4th ed.). Sudbury, MA: Jones & Bartlett Publishers.
1. Introduction
Financial statements are accounting reports prepared by the health care organization that represent a historical record of finances over a specified time period. These reports are used by investors as the basis for investment. The statements are prepared internally and checked by the company's auditors, the outside accountants used by the organization.
What is a balance sheet? Pretend that you go to the bank asking to borrow money; the loan officer insists that you provide a list of your current finances. You write down everything of value, such as your checking and savings accounts, investments, house, and cars. You also write down your current debt, such as mortgage, car payments, and student loans. Next, subtract everything you owe from what you own. Now you have a figure called net worth. At the end of this process, you have created a balance sheet. Health care entities do the same thing to evaluate their credit worthiness. Companies typically create a balance sheet for a specific time period at the end of a year. The balance sheet shows the value of the items the company owns, the amount of debt, how much inventory is on hand, and how much money the company has to work with on a short-term basis. The income statement is a financial summary that shows the operating results of a company over a specified period of time, usually one year. The statement shows a company’s revenues, costs and expenses, and profits, which are obtained by subtracting all costs, expenses, and taxes from revenues. The statement of cash flow details the exchange of cash between an organization and the outside world. The cash flow statement has to reconcile the net effect of these flows with the difference in its cash holdings at the beginning and end dates of the reporting period.
In health care, most revenue is earned from services rendered to patients. The organization receives payment after services are delivered. The payments come from various sources, including governmental sources such as Medicare and Medicaid or managed care sources. In managing a health care organization’s finances, the financial manager also must manage the organization’s expenses. Many expenses derive from salaries, payroll taxes, utilities, and so forth. The statement of revenue and expenses is the financial report that summarizes the revenue and expense transactions. The government programs are one source of revenue in health care organizations. These use a prospective payment system, i.
FAMILY MEDICINE CLINIC BUSINESS PLANStude.docxmglenn3
FAMILY MEDICINE CLINIC BUSINESS PLAN
Student’s name
Introduction
As part of its ongoing efforts to improve access to health care, General Medical Center is subsidizing the start-up and first year of operations of a new family medicine practice, Park Square Family Medicine.
As a advanced practice nurses (APN), I have invested a lot of time and money into education I have gone through dealing with the state laws and nurse practice acts, also gone through the principle of autonomy / collaborative approach of practice with physician
This is important because it fulfils the requirement of the APN professional business plan requirement and also to have an insight to what it takes to set up a clinic after licensure as an APN with practice privileges.
Mission/vision statement
Our vision is to bring quality and affordable healthcare. The clinic aspires to bring special healthcare services, health educational programs (primary preventive measures) as well as personal health and wellness programs.
Location of Business
The targeted location will be in Colorado because:
There is a wide range of people
Large Population
Easily accessible
The targeted location for the hospital set up will be in Colorado. This location is best since there is a wide range of people and the population as well is fair which implies that the hospital will have patients in regular basis which further ensure that the hospital will have a continuous flow of income. Before choosing the location, a thorough research was conducted, and further feasibility studies were conducted so as to be able to penetrate the available market and most importantly become the preferred choice.
4
SWOT Analysis
Strengths-
a well-qualified team of professionals in various positions of the hospital.
Clinic has a strong ethos of openness, sharing and commitment
weaknesses
Staff not clear of their role in the patient relationship
it is just starting out and therefore may not have sufficient required finance which will sustain the kind of the publicity
The strength of the hospital lies from the fact that they have a well-qualified team of professionals in various positions of the hospital. Therefore, they have the best arms in the whole of Colorado. Moreover, the hospital will be operating for twenty-four hours a day unlike other hospitals. Also, the clinic has a strong ethos of openness, sharing and commitment to increasing patient confidence Patients wanting to get involved Local charities willing to participate. The weaknesses limited is that it is just starting out and therefore may not have sufficient required finance which will sustain the kind of the publicity which is intended so that the business can be well known and also, Staff is not clear of their role in the patient relationship
5
Opportunities
Constant inflow of patients
Active volunteer committee willing to plan and organize events
Threat
Economic turndown
Patients confidentiality risk
.
Internal.docRunning head Accounting information 1Acco.docxmariuse18nolet
Internal.doc
Running head: Accounting information
1
Accounting information
2
Accounting information
Student Name
University Name
Picket, n.d. defines internal controls as mechanisms to ensure objectives are achieved. Good controls encourage efficiency, compliance with laws and regulations, sound information, and seek to eliminate fraud and abuse. Internal control is also a process designed to provide assurance regarding the achievement of objectives in the effectiveness and efficiency of operations, reliability and internal and external reporting, and compliance with applicable laws and regulations and internal policies.
Everyone in the organization has some role to play in the organization’s internal control system. The board of directors is responsible for the company’s system of internal control and it sets appropriate policies on internal control and seek regular assurance to ensure that the system of internal control is effective in managing risks in the manner which it has approved. It is also the role of the management to implement board policies on risk and control and all the employees of an organization have some responsibility for internal control as part of their accountability for achieving objectives. Management also needs to review the effectiveness of internal control by forming its own view on effectiveness after due and careful enquiry based on the information and assurances provided to it.
A few examples of internal control activities are as follows: (1) Tracking of major agency achievements and comparing these to the plans, goals and established objectives by the management. (2) Establishing physical control to secure and safeguard vulnerable assets. (3) Use a variety of control activities in information processing. (4) There should be a proper execution of transactions by making sure they are authorized and executed only by persons
acting within the scope of their authority. (5) Segregate the key duties and responsibilities to reduce the risk of error or fraud. (6) Appropriate documentation of transactions and other
significant events and they should be readily available for examination. (7) Establish finance committee to spearhead planning and monitoring of financial activities and reporting. (8) Design an effective organizational structure that takes into account the culture of the organization which is critical for effective financial management. (9) Effective management controls which includes methods of financial planning and budgeting and reporting of actual results and follow-up of variances between budgeted and actual amounts.
There are two groups of users of accounting information: internal users and external users. The internal users are the company managers who use the accounting information to decide how to plan and control operations on a daily and long-term basis while the external users are the existing or the potential investors, creditors, analysts, financial advise.
In Module One, our first step is to direct our focus on what healtrafbolet0
In Module One, our first step is to direct our focus on what healthcare reimbursement means and how that meaning will be applied throughout the course. In Module One, you will be provided with explanations of the terminology and methodologies surrounding the cost of healthcare services and, subsequently, how providers of those services are compensated.
Reimbursement in a healthcare context refers to the payment that providers and facilities receive for the services that they provide their patients. Providers and facilities include physicians, hospitals, clinics, outpatient rehabilitation centers, home healthcare centers, and other healthcare facilities. Many providers are not-for-profit as opposed to investor-owned.
Questions that will be answered in this module include:
· What are reimbursement methodologies and how do they impact healthcare organizations?
· What are the current trends in healthcare reimbursement?
· How might healthcare administrators differentiate between reimbursement methods?
· How are financial management principles applied to reimbursement methods?
· Who are the key stakeholders surrounding healthcare reimbursement?
The answers to these questions will provide you with a better understanding of the background, context, and trends surrounding healthcare reimbursement systems. Further, you will find it helpful to assume the role of a healthcare administrator as you practice what it would be like to assume a management position. Although you will have your own personal opinions based on experiences from a patient perspective, for this course, you will view the assignments through the lens of the healthcare administrator. The administrator is challenged with providing the best care and services to the communities that they serve, while charging a price that is affordable to both the patient and the organization. The administrator must also take into account the various compliance standards and government regulations.
Why Study Reimbursement?
Healthcare administrators and other health personnel can better meet the needs of their patients, clients, and organization by offering clear guidelines and cost structures concerning healthcare reimbursement. The key stakeholders of healthcare reimbursement systems are patients, healthcare providers, and third-party processors. As such, there are many perspectives to consider when administrators develop strategic plans designed around revenue generation. Many healthcare administrators are involved in contract management decisions and also represent their organizations by negotiating with managed care organizations and third-party payers.
The Affordable Care Act is one of the largest pieces of healthcare legislation in our era. The law itself is over 1,000 pages covering funding, Health Insurance Portability and Accountability Act (HIPAA) requirements, insurance coverage, health information systems, and reimbursement. Not surprisingly, this has contributed to the increase in employm ...
This paper will discuss the most effective and ineffective financial management practices in the healthcare setting. Healthcare is the most difficult industry to prepare financial operating budgets. There are many factors and variables that must be taken into consideration. These factors and variables can change yearly making the preparation of the budget even more difficult.
Write a response to each discussion question.2.1 AshleyTop.docxdunningblair
Write a response to each discussion question.
2.1 Ashley
Top of Form
The
National Library of Medicine
, defines managed care as programs or organizations “intended to reduce unnecessary healthcare costs through a variety of mechanisms, including: economic incentives for physicians and patients to select less costly forms of care; programs for reviewing the medical necessity of specific services; increased beneficiary cost sharing; controls on inpatient admissions and lengths of stay; the establishment of cost-sharing incentives for outpatient surgery; selective contracting with health care providers; and the intensive management of high-cost health care cases" (Nguyen, 2009). In other words, trying to reduce the cost of health care and improving the quality of care at the same time.
One of the proposed ideas to assist in resolving the national deficit has been through the system that is referred to as Managed Care (MC) via Accountable Care Organizations (ACO), which was initiated in the 1990s (Arroyo, Daniel, Graves, Neal & Coustasse, 2016). The simple idea of an ACO is to formulate a unit consisting of a local health care organization and or a related set of clinicians that can take responsibility for both the cost and quality of care rendered to a defined population (Arroyo, Daniel, Graves, Neal & Coustasse, 2016). It is not secret that quality of care and cost of care in the United States has been terrible. Utilizing ACOs could benefit providers, insurance companies and also United States deficit.
2.1 Heard
Top of Form
One way managed care organizations try to introduce market mechanisms into healthcare is the preferred provider organization (PPO), which offers more flexibility in choosing practitioners than HMOs but which still offers incentives for seeing selected practitioners. PPOs are networks of practitioners that are most often organized by insurers, managed care organizations, or groups of practitioners. The networks contract with groups of practitioners who agree to provide services for a negotiated fee schedule (HIAA, 1996). Individuals who want to see a practitioner who is outside of the network can do so, but there will be a financial penalty.
2.1 Kelly
Top of Form
Managed care organizations can introduce market mechanisms into health care organizations by the benefits they offer to their employees. Many companies offer health savings accounts along with high deductible health insurance plans. If the employee participates in a wellness scan, they are subject to an employer paid funds into their health savings accounts. Some organizations also offer more money depending on the score the employee gains on their wellness exams.
2.2 Taylor
Top of Form
The basis for all accounting theory is: Assets = Liabilities + Owners’ Equity. How the equation works is the value of the assets will always equal the value of the claims (whether liabilities to others or the owners) on those assets. A balance sheet has 2 sides: On the L.
HealthWaysBudgetTable 1. HealthWays Clinic, Monthly Expense Budget Report, June 2018.ItemJune 2018May 20182018 YTDBudgetActualVarianceActualBudgetActualPhysician FTE1.01.01.01.01.0Nurse PractitionerFTE3.03.03.03.03.0Encounters:Established patients27529128616501671New patients251827150164Total encountersExpenses:Physician Salaries & Benefits$10,500$10,502$10,509$63,000$63,149NP Salaries & Benefits$20,000$20,992$20,191$120,000$122,001Clerical (2 FTE) Salaries & Benefits$6,667$6,771$6,683$40,000$41,978Total personnel expenseMedical supplies$7,500$8,136$7,994$45,000$47,883Office supplies$583$623$508$3,498$3,407Rent$2,917$2,917$2,917$17,502$17,502Depreciation$333$346$346$1,998$2,050Capital Expenses$3,333$3,480$3,480$19,998$20,439Overhead$167$167$167$1,002$1,002Total non-personnel expenseTotal health center expenseInterpretation:Providers:The FTEs have not changed, at least for the first 6 months of 2018.Encounters:The number of encounters, both new and established, is increasing over the year.Personnel expense:Although the FTEs are not changing, the personnel budget is somewhat more than budgeted, particularly the NP and clerical budgets. The management should investigate why this is the case, and better control the personnel budget.Non-personnel expense:Medical supplies are over budget. Office supplies are under budget. Depreciation and capital expenses (new equipment) increased over the budget year. Rent and overhead remain stable, but might be expected to increase next year.Total expenses:The clinic must carefully control expenses as its profitability is very low. Possible strategies might include improving staff productivity, reducing the cost of medical supplies, and postponing further capital purchases.
HealthWaysFinancialsNurse-Run Clinic ScenarioPatient EncountersFY 2018FY 2017Established patients3,3483,204New patients331287Total Encounters3,6793,491 Cash$5,675$12,098Financial Ratios:Expense per Encounter = Total Operating Expenses / Total EncountersTotal Operating Revenue per Encounter = Total Operating Revenue / Total EncountersOperating Margin = Net Income/Total Operating RevenueDays Cash On Hand = (Cash + Cash Equivalents) / (Operating Expenses / Days in Time Period)Table 2. HealthWays Clinic, Income Statement, FY 2018.Table 3. HealthWays Clinic, Balance Sheet, December 31, 2018.FY 2018FY 2017Current AssetsDecember 31, 2018December 31, 2017Current LiabilitiesDecember 31, 2018December 31, 2017Gross Revenue (charges)$558,520$497,221 Cash5,0329,877 Notes Payable27,44950,000Less write-offs & adjustments117,254104,332Short-term Investments40,38934,181 Accounts Payable 78,70269,412Net Patient Revenue (collected)$441,266$392,889 Accounts Receivable63,39259,359 Accrued Expenses:+Other Revenue209,671234,953 Supply Inventories, at Cost16,02914,918 Salaries & Benefits38,26528,274 Prepaid Expenses & Other2,1041,876 Taxes1,4191,398Total Operating Revenue$ 650,937$ 627,842Total Current Assets$ 126,946$ 120 ...
PYA’s Angie Caldwell, a healthcare consulting and financial audit services principal, along with Emily Smithson, a tax services manager, discussed “Finance for the Non-Finance Manager.” Their presentation covered the basics of financial reporting and financial statements and budgeting.
PRIMARY CARE Scenario
Type of care provided
Scenario
Question 1
Question 2
Care in this type of setting is delivered by physicians, physician assistants, nurse practitioners, and ad-
vanced practice professionals. This area of health care is the most widely used, and it is a major focus
of the Affordable Care Act of 2010, focusing on primary care providers and decreasing the focus on the
utilization of specialty providers.
As an administrator, you need to assess this situation: How would you determine if there was a true need
for another receptionist? Do you need to reinstate the position or can you retrain the current number of
employees? Why?
As an administrator, describe the effects that labor shortages of key personnel and rising costs of labor
have on profitability. How would you determine how to allocate your money? Be sure to think critically
about the impact that quality outcomes and patient outcomes have on financial resources.
A primary care clinic can be an individual-physician practice or a multiple-physician practice organized
as a nonprofit or a for-profit facility. Multiple-physician practices generally specialize in cardiac, women’s
health, pediatrics, or related services. You are the administrator of a local for-profit, multiple-physician
community clinic owned by five local physicians, specializing in internal medicine, women’s health, pe-
diatrics, orthopedics, and oncology. The clinic sees an average of 50 patients per day. Scheduling is
centralized with two receptionists, and each specialty has four staff members to assist the physicians.
All the physicians have visiting privileges at the area hospitals and frequently speak at local and national
conferences on numerous preventative health care topics. The clinic is noted for its use of technology
and has agreements in place with the local hospitals for web-based exchanges of health information on
shared patients.
Action Required:
Your office just underwent an organizational change and one office receptionist was eliminated, saving
the office $25, 000 per year in labor costs. However, there have been a number of complaints that all
patients cannot be processed due to the increased flow of patients. Two weeks later you begin to hear
that wait times for appointments have increased, and one specific patient was not able to be seen. That
patient now has developed an infection and requires surgery.
Question 3
Based on what you have learned so far in this course, what would be your plan of action for the next 30
days? What types of reports would you use to help support your decisions?
Budget Considerations
Operational Budget – This budget focuses on a broader view of the total operations of the organization in which
all departments are reviewed for both their income potential and the costs associated with the work activities used
to generate projected revenues. Each department will have its own budget for the managers to follow and on
wh.
One of the most common used risk management tools is the Incident Re.docxAKHIL969626
One of the most common used risk management tools is the Incident Reporting.
More recently, incident Reporting system incorporated computer technology that will provide information like:
1. Major incident category.
2. Early identification of patterns and trends in the "how" and "why" of untoward events.
3. Code vulnerability inductors.
Discuss the potential benefits to use this technology. There is any Limitation for the system? Explain.
.
One of the first anthropologists to examine religion in Africa was E.docxAKHIL969626
One of the first anthropologists to examine religion in Africa was Edward Evans-Pritchard in the early 1900's. You will explore what he learned about the Azande by watching the first 23 minutes of "
Strange Beliefs: Sir Edward Evans-Pritchard
".
Instructions:
When you are done watching the video answer the following questions by referring to specific information from the video, NOT outside sources:
How do the Azande people featured in the film explain unfortunate events and what do they do about it?
According to your textbook, what is religion and how would Azande religious beliefs be classified?
Do you think Azande beliefs are any more or less rational than other religious beliefs like Judaism, Christianity, Islam, or Buddhism?
.
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Healthcare financial transformation—improving care delivery while lowering costs—has been an ongoing challenge for health systems in the era of value-based care and an even more prominent concern amid COVID-19. While better care and reduced expense to organizations and consumers might seem like opposing goals, by understanding the true cost of services and other drivers of expense, organizations can successfully manage costs while maintaining, and even improving, care delivery. To that end, health systems can use data- and analytics-driven tools and strategies to addresses financial challenges, including uncompensated care, prolonged accounts receivable days, discharged not final billed cases, inefficient resource use, and more.
Krona Community HospitalMemoToKrona Community HospitalFrom.docxDIPESH30
Krona Community HospitalMemoTo:
Krona Community HospitalFrom:
Cc:
Date:January 12, 2015Re:
Cutting Medicaid at Krona Community Hospital
Cutting Medicaid will definitely have an effect on Krona Community Hospital. Medicaid is a vital foundation of revenue for the hospital and the effect that this will have on the hospital will not be over-the-top. The effect will be on families with low income, providers, and possibly a lot of the economy. Cutting Medicaid obstructs the proficiency of the hospital to deliver operative healthcare to the patients and restrict a huge number of patients. The lack of ability of the hospital to deliver applicable health establishments can be impractical for the hospital to get bigger.
The modifications made to Medicaid in the past couple of years has caused it to be impractical for the healthcare hospital to stay alive in the world. The decrease to Medicaid has directed to reduce repayments of the healthcare providers that may not want to help patients. Medicaid is a main supplier of revenue for several healthcare establishments, suggesting that security of the amount and the excellence of services delivered may mutually be deliberated.
If the hospital chooses to welcome patients that have Medicaid, there could be a possibility of the refunds being rejected for the services that they have tended to. This could have a huge destructive effect on the financial stance of the hospital and the delivery of healthcare to the patients. There may be a chance that grant funding will not be boosted in funding for patients that do not have insurance. Therefore, the hospital will not obtain any refunds from Medicaid for patients who are admitted.
When Medicaid cuts have taken place, the hospital will have to use methods on foreseen contact. With these methods, net revenue or functioning boundary should be the right method that will be suitable to their capability to deliver estimates of financial pressure because the use of any other method will effect Medicaid. The Medicaid cuts are liable to amplify financial predicting from 1 year to 4 or 5 years. The Medicaid cut generates a traditional notion through the prediction.
Capitation is a way of paying for healthcare services that are rendered. This way is an amount that has a due date for the healthcare providers for a set time frame despite if the payer has rendered services or not. The percentage of the payment is mainly defined the age of the patient and the sex for the demographics. This type of payment was presented to raise convenience and fairness in delivery of healthcare hospitals.
There are many advantages of utilizing capitation. One, this system creates a solid bond among the physician and the patient. This happens because the patient is permitted to have several doctors pending the plan elapses, decreasing consequences relates with treatment going too far. The big task related with capitation is that incurable illnesses, or complex medical problems are problematic ...
Chapter 2Four Things the Healthcare Manager Needs to KnEstelaJeffery653
Chapter 2:
Four Things the Healthcare Manager Needs to Know About Financial Management Systems
Four Segments That Make a Financial Management System WorkOriginal Records—Provide evidence that some event has occurred.The Information System—Gathers this evidence.The Accounting System—Records the evidence.The Reporting System—Produces reports of the effects.
Four Segments That Make a
Financial System WorkThe healthcare manager needs to know that these separate elements exist and that they work together for an end result.
Structure of the Information SystemIdentify the inputsIdentify the outputs
(Examine the diagram in Figure 2-1 in the chapter.)
Function of Flow SheetsFlow sheets illustrate the flow of activities that capture information.
Flow Sheets Are Useful Because...They picture who is responsible for what piece of information as it enters the system.
(Examine the two examples of patient information flows in the chapter.)
Figure 2-2 Physician’s Office Flowsheet for Address Confirmation.
Figure 2-3 Health System Flowsheet for Verification of Patient Information.
The Chart of AccountsOutlines the elements of your company in an organized manner.Maps out account titles with a method of numeric coding.Is designed to compile financial data in a uniform manner that can be decoded by the user.
The Chart of AccountsEvery organization has differences in its Chart of Accounts that express the unique differences in its own organizational structure.
(Examine the three examples of different Chart of Accounts formats in Exhibits 2-1, 2-2, and 2-3.)
Basic System Elements:
Books and RecordsCapture transactions
(Figures 2-4 and 2-5 illustrate this concept.)
Books and Records:
The Sequence Is...Initial transaction to subsidiary journal to general ledger;Review, adjust, balance through the trial balance;Create reports (financial statements).
The Annual Management Cycle (1 of 2)Affects the type and status of information the manager uses
The Annual Management Cycle (2 of 2)The type and status of information used by the manager includes:
Daily and Weekly Reports—Generally contain raw data
Quarterly Reports and Statistics—Generally have been verified, adjusted, and balanced. Called “interim” reports; often used as milestones by managers.
Annual Year End Reports—Generally represents the closing out of a specific reporting period. Primarily intended for external (outside) use.
Communicating Financial Information to Others
It is important to:Create a report.Use accepted terminology, standard formats, and executive summary.Organize in a logical flow.Place detail in an appendix.
Chapter 5: Revenues (Inflow)
The Revenue StreamPayment After Service Is DeliveredFee-for-ServiceDiscounted Fee for Service
Payment Before Service Is DeliveredPre-Determined Per-Person PaymentRate-Setting Differences
Deductions from RevenueContractual AllowancesThe difference between the full established rate an ...
Week Two Health Care Financial Terms WorksheetHCS405 Version .docxalanfhall8953
Week Two Health Care Financial Terms Worksheet
HCS/405 Version 6
1Week Two Health Care Financial Terms Worksheet
Understanding health care financial terms is a prerequisite for both academic and professional success. This assignment is intended to ensure you understand some of the basic terms used in this course.
Complete the worksheet below according to the following guidelines:
· In the space provided, write each term’s definition as used in health care management. You must define the term in your own words.
· In the space provided after each term’s definition, summarize a health care management scenario that illustrates the importance of the skill, concept, procedure, or tool to which the term refers. In the scenario, you may wish to consider the following:
Why the skill, concept, procedure, or tool is necessary for accurate record keeping, operational efficiency, excellent patient services, employee management, regulatory compliance, reducing costs, forecasting, and so forth
Successes enabled by an adequate understanding or appropriate application of the skill, concept, procedure, or tool
Risks or failures associated with an inadequate understanding or inappropriate application of the skill, concept, procedure, or tool
· Note that all written assignments in this course must meet the university's published requirements for attribution (citations and references). Additional information on these requirements can be located in the Student Code of Academic Integrity. Although sources may be implied by the assignment criteria your final assignment must still contain appropriate citations and references.
Save the completed worksheet as a Microsoft® Word document with your name in the file name.
Submit the file to your instructor.
Worksheet
Submitted By:
[Type your name here.]
Term
Definition
Scenario
Balance sheet
Statement of revenue and expense
Revenue cycle
Payer mix
Revenue
Student discussion must be 200 original words and supported by academic, peer-reviewed references (at least 1). Whenever possible, please try to relate the course content to real-world applications from your work experience. I expect your message to reflect critical thought and an integration of the key themes and concepts from the readings.
Baker, J. J., & Baker, R. W. (2014). Health care finance: Basic tools for nonfinancial managers (4th ed.). Sudbury, MA: Jones & Bartlett Publishers.
1. Introduction
Financial statements are accounting reports prepared by the health care organization that represent a historical record of finances over a specified time period. These reports are used by investors as the basis for investment. The statements are prepared internally and checked by the company's auditors, the outside accountants used by the organization.
What is a balance sheet? Pretend that you go to the bank asking to borrow money; the loan officer insists that you provide a list of your current finances. You write down everything of value, such as your c.
this is assignment 1
Financial Statement Analysis
Student name
University
Professor
October 25, 2016
Financial Statement Analysis
Based on your review of the financial statements, suggest a key insight about the financial health of the company. Speculate on the likely reaction to the financial statements from various stakeholder groups (employee, investors, shareholders). Provide support for your rationale.
Health Management Associates, Inc. (NYSE: HMA) is the operator and owner-general acute care centers in the non-urban communities situated in the US, particularly in the Southwest. The organization was founded in 1977. The hospitals provide services such as oncology, emergency room care, general surgery, internal medicine, radiology, pediatric services, coronary care, and diagnostic care (
www.healthcaremanagement.com
).The company is also providing outpatient services like x-ray, respiratory therapy, one-day surgery, laboratory services, physical therapy as well as cardiology therapy. The mission of the Health Management is to provide America’s best local healthcare. They provide processes, capital finance, expertise, and people that can ensure that the local hospitals can accomplish their mission of delivering compassionate and high-quality healthcare that would substantially improve the lives of patients, the communities they serve, and the physicians providing the care
www.healthcaremanagement.com
)
With regard to the review of the current financial statement, HMA is in a dangerous financial state as a result of the present increasing debts and legal woes. The Office of the Inspector General, Justice Department, and the Department of Health and Human Services served the organization with summons regarding a software program that was used by ED doctors and the records from the emergency department. Some reports suggested that there was pressure from the company’s hospitals management to admit patients from emergency rooms so as to maximize profits. Paul Meyer, former compliance director, claimed that HMA’s fraudulent activities could attract government investigation (Britt, 2012).
The common stock of Health Management Associates was owned by almost 850 shareholders, as per the records of December 31, 2012, with hundreds of institutional investors included. HMA had expanded to include 70 hospitals situated in 15 states, with roughly 10,562 present licensed beds. In 2012, HMA realized about $5.9 billion in net revenue (Britt, 2012).
HMA gets payments for the services it renders from the federal government through the Medicare program, the states in which it functions under each Medicaid program, and commercial insurance, among others; and patients, encompassing deductibles and co-payments. Basically, deductibles and co-payments are part of the bill of patients for the medical services provided, which many government and private payers expect the patient to cater for. The amount of deductibles and co-payments v.
How to improve operating margins
● What does operating margin tell you about the organization, and how would
you calculate this ratio?
● Select a local medical service organization and describe how it has
specifically improved its operating margins.
HFMA
Financial Reporting Function
Financial Reporting Function
Financial Accounting Standards Board
(FASB)
FASB standards rest on certain
assumptions:
Ø Monetary unit
Ø Economic entity
Ø Time period
Ø Going concern
Financial Reporting Function
FASB
Two key principles
Ø Cost principle
Ø Full disclosure principle
Financial Reporting Function
Generally Accepted Accounting Principles
(GAAP)
Ø Consistency
Ø Relevance
Ø Reliability
Ø Comparability
Financial Reporting Function
Financial Statements
For Profit Not-for-Profit
Balance Sheet Statement of Financial
Position
Income Statement Statement of Operations
Statement of Cash Flows Statement of Cash Flows
Financial Reporting Function
Accepted Accounting Methods
Ø Accrual
Ø Cash
Ø Fund
Financial Reporting Function
Financial Statement Presentation
Ø Two years are displayed
- Prior year to the right of the current year
Ø Statement of Operations or Income Statement are for a period of
time—typically a month
Ø Statement of Cash Flows reflects a period of time consistent with the
Statement of Operations or Income Statement—typically a month
Ø Statement of Financial Position or Balance Sheet reflect the status
of Assets, Liabilities, and Net Assets/Shareholders’ Equity as of a
day.
Financial Reporting Function
Ratio Analysis
Ø Liquidity Ratios
Ø Profitability Ratios
Ø Asset Efficiency Ratios
Ø Capital Structure Ratios
Ø Operating Indicators
Financial Reporting Function
Ratio Analysis
Ø Liquidity
- Current ratio
- Quick ratio
Current ratio = Current Assets/Current Liabilities
Quick ratio = (Cash + Marketable Securities + Net
Accounts Receivable)/Current Liabilities
Financial Reporting Function
Ratio Analysis
Ø Profitability
- Operating margin
- Return on assets
Operating Margin = [(Operating Revenue-Operating
Expenses)/Total Operating Revenues] x 100
Return on Assets = Excess of revenues over expenses/
Total Assets
Financial Reporting Function
Ratio Analysis
Ø Asset efficiency
- Total asset turnover
- Inventory turnover
Total Asset Turnover = Total Operating Revenue/ Total
Assets
Inventory Turnover = Total Operating Revenue/ Inventory
Financial Reporting Function
Ratio Analysis
Ø Capital structure
- Debt to Capitalization
- Debt service coverage
Debt to Capitalization = [Long-term Debt/ (Long-term Debt
+ Unrestricted Net Assets)] x 100
Debt Service Coverage = (Excess of revenues over
expenses + Depre.
Chapter 12 Financial Analysis of Alternative Healthcare Firms LEAR.docxketurahhazelhurst
Chapter 12 Financial Analysis of Alternative Healthcare Firms LEARNING OBJECTIVES After studying this chapter, you should be able to do the following: 1. List some of the major nonhospital and nonphysician sectors of the healthcare industry. 2. Discuss the sources of revenue for the nursing home industry. 3. Discuss the major sources of revenue and expenses of medical groups. 4. List and describe the major organizational types of physician groups. 5. Describe alternative health maintenance organization arrangements. REAL-WORLD SCENARIO Laura Rose has been recently appointed to the Board of ElderCare, a large, for-profit operator of skilled nursing facilities (SNFs) around the country. Laura’s first committee assignment is to the Treasury Committee because of her prior business experience. Although Laura had extensive experience as a hospital administrator, she had relatively little familiarity with the SNF industry. Upon reviewing ElderCare’s recent financial statements, she was concerned about the dramatically declining financial position. She noticed that revenues were declining on per facility and per patient bases. Meanwhile, the company’s debt had been downgraded, and its borrowing costs had risen substantially. She is aware that Medicare implemented a SNF prospective payment system as part of the Balanced Budget Act of 1997. Payment increases by Medicare and Medicaid have not kept pace with increases in costs in recent years. She wonders whether this might be a factor in the company’s financing issues. In general, profitability in the long-term care industry has declined significantly in recent years, and several industry leaders had filed for bankruptcy protection. Although some believe that SNF prospective payment systems were largely to blame, other factors, such as ill-advised acquisitions, excessive long-term debt, and poor balance sheets, probably contributed as well. In essence, she is unsure whether ElderCare’s financing difficulties are unique to management issues at ElderCare or whether they reflect more general market conditions and economic and reimbursement trends. To understand the issue better, Laura needs to estimate the direct financial impact of SNF reimbursement. She asked the ElderCare treasury and controller’s office staff to prepare an analysis of the financial performance of selected long-term care facilities over the period 2006 to 2010. In particular, she wants to know how SNF-bond ratings have been affected by prospective payment systems and what other factors might have contributed to the industry’s deteriorating financial performance. In Chapter 11 we discussed the measures and concepts of financial analysis in some detail, but most of the examples and industry standards were from the hospital sector. The hospital industry is by far the largest sector in the healthcare industry, but it is not the only sector; its rate of growth in recent years has been slower than in other areas. This chapter provides some ad ...
Student discussion must be 200 original words and supported by aca.docxemelyvalg9
Student discussion must be 200 original words and supported by academic, peer-reviewed references (at least 1). Whenever possible, please try to relate the course content to real-world applications from your work experience. I expect your message to reflect critical thought and an integration of the key themes and concepts from the readings.
Baker, J. J., & Baker, R. W. (2014). Health care finance: Basic tools for nonfinancial managers (4th ed.). Sudbury, MA: Jones & Bartlett Publishers.
1. Introduction
Financial statements are accounting reports prepared by the health care organization that represent a historical record of finances over a specified time period. These reports are used by investors as the basis for investment. The statements are prepared internally and checked by the company's auditors, the outside accountants used by the organization.
What is a balance sheet? Pretend that you go to the bank asking to borrow money; the loan officer insists that you provide a list of your current finances. You write down everything of value, such as your checking and savings accounts, investments, house, and cars. You also write down your current debt, such as mortgage, car payments, and student loans. Next, subtract everything you owe from what you own. Now you have a figure called net worth. At the end of this process, you have created a balance sheet. Health care entities do the same thing to evaluate their credit worthiness. Companies typically create a balance sheet for a specific time period at the end of a year. The balance sheet shows the value of the items the company owns, the amount of debt, how much inventory is on hand, and how much money the company has to work with on a short-term basis. The income statement is a financial summary that shows the operating results of a company over a specified period of time, usually one year. The statement shows a company’s revenues, costs and expenses, and profits, which are obtained by subtracting all costs, expenses, and taxes from revenues. The statement of cash flow details the exchange of cash between an organization and the outside world. The cash flow statement has to reconcile the net effect of these flows with the difference in its cash holdings at the beginning and end dates of the reporting period.
In health care, most revenue is earned from services rendered to patients. The organization receives payment after services are delivered. The payments come from various sources, including governmental sources such as Medicare and Medicaid or managed care sources. In managing a health care organization’s finances, the financial manager also must manage the organization’s expenses. Many expenses derive from salaries, payroll taxes, utilities, and so forth. The statement of revenue and expenses is the financial report that summarizes the revenue and expense transactions. The government programs are one source of revenue in health care organizations. These use a prospective payment system, i.
FAMILY MEDICINE CLINIC BUSINESS PLANStude.docxmglenn3
FAMILY MEDICINE CLINIC BUSINESS PLAN
Student’s name
Introduction
As part of its ongoing efforts to improve access to health care, General Medical Center is subsidizing the start-up and first year of operations of a new family medicine practice, Park Square Family Medicine.
As a advanced practice nurses (APN), I have invested a lot of time and money into education I have gone through dealing with the state laws and nurse practice acts, also gone through the principle of autonomy / collaborative approach of practice with physician
This is important because it fulfils the requirement of the APN professional business plan requirement and also to have an insight to what it takes to set up a clinic after licensure as an APN with practice privileges.
Mission/vision statement
Our vision is to bring quality and affordable healthcare. The clinic aspires to bring special healthcare services, health educational programs (primary preventive measures) as well as personal health and wellness programs.
Location of Business
The targeted location will be in Colorado because:
There is a wide range of people
Large Population
Easily accessible
The targeted location for the hospital set up will be in Colorado. This location is best since there is a wide range of people and the population as well is fair which implies that the hospital will have patients in regular basis which further ensure that the hospital will have a continuous flow of income. Before choosing the location, a thorough research was conducted, and further feasibility studies were conducted so as to be able to penetrate the available market and most importantly become the preferred choice.
4
SWOT Analysis
Strengths-
a well-qualified team of professionals in various positions of the hospital.
Clinic has a strong ethos of openness, sharing and commitment
weaknesses
Staff not clear of their role in the patient relationship
it is just starting out and therefore may not have sufficient required finance which will sustain the kind of the publicity
The strength of the hospital lies from the fact that they have a well-qualified team of professionals in various positions of the hospital. Therefore, they have the best arms in the whole of Colorado. Moreover, the hospital will be operating for twenty-four hours a day unlike other hospitals. Also, the clinic has a strong ethos of openness, sharing and commitment to increasing patient confidence Patients wanting to get involved Local charities willing to participate. The weaknesses limited is that it is just starting out and therefore may not have sufficient required finance which will sustain the kind of the publicity which is intended so that the business can be well known and also, Staff is not clear of their role in the patient relationship
5
Opportunities
Constant inflow of patients
Active volunteer committee willing to plan and organize events
Threat
Economic turndown
Patients confidentiality risk
.
Internal.docRunning head Accounting information 1Acco.docxmariuse18nolet
Internal.doc
Running head: Accounting information
1
Accounting information
2
Accounting information
Student Name
University Name
Picket, n.d. defines internal controls as mechanisms to ensure objectives are achieved. Good controls encourage efficiency, compliance with laws and regulations, sound information, and seek to eliminate fraud and abuse. Internal control is also a process designed to provide assurance regarding the achievement of objectives in the effectiveness and efficiency of operations, reliability and internal and external reporting, and compliance with applicable laws and regulations and internal policies.
Everyone in the organization has some role to play in the organization’s internal control system. The board of directors is responsible for the company’s system of internal control and it sets appropriate policies on internal control and seek regular assurance to ensure that the system of internal control is effective in managing risks in the manner which it has approved. It is also the role of the management to implement board policies on risk and control and all the employees of an organization have some responsibility for internal control as part of their accountability for achieving objectives. Management also needs to review the effectiveness of internal control by forming its own view on effectiveness after due and careful enquiry based on the information and assurances provided to it.
A few examples of internal control activities are as follows: (1) Tracking of major agency achievements and comparing these to the plans, goals and established objectives by the management. (2) Establishing physical control to secure and safeguard vulnerable assets. (3) Use a variety of control activities in information processing. (4) There should be a proper execution of transactions by making sure they are authorized and executed only by persons
acting within the scope of their authority. (5) Segregate the key duties and responsibilities to reduce the risk of error or fraud. (6) Appropriate documentation of transactions and other
significant events and they should be readily available for examination. (7) Establish finance committee to spearhead planning and monitoring of financial activities and reporting. (8) Design an effective organizational structure that takes into account the culture of the organization which is critical for effective financial management. (9) Effective management controls which includes methods of financial planning and budgeting and reporting of actual results and follow-up of variances between budgeted and actual amounts.
There are two groups of users of accounting information: internal users and external users. The internal users are the company managers who use the accounting information to decide how to plan and control operations on a daily and long-term basis while the external users are the existing or the potential investors, creditors, analysts, financial advise.
In Module One, our first step is to direct our focus on what healtrafbolet0
In Module One, our first step is to direct our focus on what healthcare reimbursement means and how that meaning will be applied throughout the course. In Module One, you will be provided with explanations of the terminology and methodologies surrounding the cost of healthcare services and, subsequently, how providers of those services are compensated.
Reimbursement in a healthcare context refers to the payment that providers and facilities receive for the services that they provide their patients. Providers and facilities include physicians, hospitals, clinics, outpatient rehabilitation centers, home healthcare centers, and other healthcare facilities. Many providers are not-for-profit as opposed to investor-owned.
Questions that will be answered in this module include:
· What are reimbursement methodologies and how do they impact healthcare organizations?
· What are the current trends in healthcare reimbursement?
· How might healthcare administrators differentiate between reimbursement methods?
· How are financial management principles applied to reimbursement methods?
· Who are the key stakeholders surrounding healthcare reimbursement?
The answers to these questions will provide you with a better understanding of the background, context, and trends surrounding healthcare reimbursement systems. Further, you will find it helpful to assume the role of a healthcare administrator as you practice what it would be like to assume a management position. Although you will have your own personal opinions based on experiences from a patient perspective, for this course, you will view the assignments through the lens of the healthcare administrator. The administrator is challenged with providing the best care and services to the communities that they serve, while charging a price that is affordable to both the patient and the organization. The administrator must also take into account the various compliance standards and government regulations.
Why Study Reimbursement?
Healthcare administrators and other health personnel can better meet the needs of their patients, clients, and organization by offering clear guidelines and cost structures concerning healthcare reimbursement. The key stakeholders of healthcare reimbursement systems are patients, healthcare providers, and third-party processors. As such, there are many perspectives to consider when administrators develop strategic plans designed around revenue generation. Many healthcare administrators are involved in contract management decisions and also represent their organizations by negotiating with managed care organizations and third-party payers.
The Affordable Care Act is one of the largest pieces of healthcare legislation in our era. The law itself is over 1,000 pages covering funding, Health Insurance Portability and Accountability Act (HIPAA) requirements, insurance coverage, health information systems, and reimbursement. Not surprisingly, this has contributed to the increase in employm ...
This paper will discuss the most effective and ineffective financial management practices in the healthcare setting. Healthcare is the most difficult industry to prepare financial operating budgets. There are many factors and variables that must be taken into consideration. These factors and variables can change yearly making the preparation of the budget even more difficult.
Write a response to each discussion question.2.1 AshleyTop.docxdunningblair
Write a response to each discussion question.
2.1 Ashley
Top of Form
The
National Library of Medicine
, defines managed care as programs or organizations “intended to reduce unnecessary healthcare costs through a variety of mechanisms, including: economic incentives for physicians and patients to select less costly forms of care; programs for reviewing the medical necessity of specific services; increased beneficiary cost sharing; controls on inpatient admissions and lengths of stay; the establishment of cost-sharing incentives for outpatient surgery; selective contracting with health care providers; and the intensive management of high-cost health care cases" (Nguyen, 2009). In other words, trying to reduce the cost of health care and improving the quality of care at the same time.
One of the proposed ideas to assist in resolving the national deficit has been through the system that is referred to as Managed Care (MC) via Accountable Care Organizations (ACO), which was initiated in the 1990s (Arroyo, Daniel, Graves, Neal & Coustasse, 2016). The simple idea of an ACO is to formulate a unit consisting of a local health care organization and or a related set of clinicians that can take responsibility for both the cost and quality of care rendered to a defined population (Arroyo, Daniel, Graves, Neal & Coustasse, 2016). It is not secret that quality of care and cost of care in the United States has been terrible. Utilizing ACOs could benefit providers, insurance companies and also United States deficit.
2.1 Heard
Top of Form
One way managed care organizations try to introduce market mechanisms into healthcare is the preferred provider organization (PPO), which offers more flexibility in choosing practitioners than HMOs but which still offers incentives for seeing selected practitioners. PPOs are networks of practitioners that are most often organized by insurers, managed care organizations, or groups of practitioners. The networks contract with groups of practitioners who agree to provide services for a negotiated fee schedule (HIAA, 1996). Individuals who want to see a practitioner who is outside of the network can do so, but there will be a financial penalty.
2.1 Kelly
Top of Form
Managed care organizations can introduce market mechanisms into health care organizations by the benefits they offer to their employees. Many companies offer health savings accounts along with high deductible health insurance plans. If the employee participates in a wellness scan, they are subject to an employer paid funds into their health savings accounts. Some organizations also offer more money depending on the score the employee gains on their wellness exams.
2.2 Taylor
Top of Form
The basis for all accounting theory is: Assets = Liabilities + Owners’ Equity. How the equation works is the value of the assets will always equal the value of the claims (whether liabilities to others or the owners) on those assets. A balance sheet has 2 sides: On the L.
HealthWaysBudgetTable 1. HealthWays Clinic, Monthly Expense Budget Report, June 2018.ItemJune 2018May 20182018 YTDBudgetActualVarianceActualBudgetActualPhysician FTE1.01.01.01.01.0Nurse PractitionerFTE3.03.03.03.03.0Encounters:Established patients27529128616501671New patients251827150164Total encountersExpenses:Physician Salaries & Benefits$10,500$10,502$10,509$63,000$63,149NP Salaries & Benefits$20,000$20,992$20,191$120,000$122,001Clerical (2 FTE) Salaries & Benefits$6,667$6,771$6,683$40,000$41,978Total personnel expenseMedical supplies$7,500$8,136$7,994$45,000$47,883Office supplies$583$623$508$3,498$3,407Rent$2,917$2,917$2,917$17,502$17,502Depreciation$333$346$346$1,998$2,050Capital Expenses$3,333$3,480$3,480$19,998$20,439Overhead$167$167$167$1,002$1,002Total non-personnel expenseTotal health center expenseInterpretation:Providers:The FTEs have not changed, at least for the first 6 months of 2018.Encounters:The number of encounters, both new and established, is increasing over the year.Personnel expense:Although the FTEs are not changing, the personnel budget is somewhat more than budgeted, particularly the NP and clerical budgets. The management should investigate why this is the case, and better control the personnel budget.Non-personnel expense:Medical supplies are over budget. Office supplies are under budget. Depreciation and capital expenses (new equipment) increased over the budget year. Rent and overhead remain stable, but might be expected to increase next year.Total expenses:The clinic must carefully control expenses as its profitability is very low. Possible strategies might include improving staff productivity, reducing the cost of medical supplies, and postponing further capital purchases.
HealthWaysFinancialsNurse-Run Clinic ScenarioPatient EncountersFY 2018FY 2017Established patients3,3483,204New patients331287Total Encounters3,6793,491 Cash$5,675$12,098Financial Ratios:Expense per Encounter = Total Operating Expenses / Total EncountersTotal Operating Revenue per Encounter = Total Operating Revenue / Total EncountersOperating Margin = Net Income/Total Operating RevenueDays Cash On Hand = (Cash + Cash Equivalents) / (Operating Expenses / Days in Time Period)Table 2. HealthWays Clinic, Income Statement, FY 2018.Table 3. HealthWays Clinic, Balance Sheet, December 31, 2018.FY 2018FY 2017Current AssetsDecember 31, 2018December 31, 2017Current LiabilitiesDecember 31, 2018December 31, 2017Gross Revenue (charges)$558,520$497,221 Cash5,0329,877 Notes Payable27,44950,000Less write-offs & adjustments117,254104,332Short-term Investments40,38934,181 Accounts Payable 78,70269,412Net Patient Revenue (collected)$441,266$392,889 Accounts Receivable63,39259,359 Accrued Expenses:+Other Revenue209,671234,953 Supply Inventories, at Cost16,02914,918 Salaries & Benefits38,26528,274 Prepaid Expenses & Other2,1041,876 Taxes1,4191,398Total Operating Revenue$ 650,937$ 627,842Total Current Assets$ 126,946$ 120 ...
PYA’s Angie Caldwell, a healthcare consulting and financial audit services principal, along with Emily Smithson, a tax services manager, discussed “Finance for the Non-Finance Manager.” Their presentation covered the basics of financial reporting and financial statements and budgeting.
PRIMARY CARE Scenario
Type of care provided
Scenario
Question 1
Question 2
Care in this type of setting is delivered by physicians, physician assistants, nurse practitioners, and ad-
vanced practice professionals. This area of health care is the most widely used, and it is a major focus
of the Affordable Care Act of 2010, focusing on primary care providers and decreasing the focus on the
utilization of specialty providers.
As an administrator, you need to assess this situation: How would you determine if there was a true need
for another receptionist? Do you need to reinstate the position or can you retrain the current number of
employees? Why?
As an administrator, describe the effects that labor shortages of key personnel and rising costs of labor
have on profitability. How would you determine how to allocate your money? Be sure to think critically
about the impact that quality outcomes and patient outcomes have on financial resources.
A primary care clinic can be an individual-physician practice or a multiple-physician practice organized
as a nonprofit or a for-profit facility. Multiple-physician practices generally specialize in cardiac, women’s
health, pediatrics, or related services. You are the administrator of a local for-profit, multiple-physician
community clinic owned by five local physicians, specializing in internal medicine, women’s health, pe-
diatrics, orthopedics, and oncology. The clinic sees an average of 50 patients per day. Scheduling is
centralized with two receptionists, and each specialty has four staff members to assist the physicians.
All the physicians have visiting privileges at the area hospitals and frequently speak at local and national
conferences on numerous preventative health care topics. The clinic is noted for its use of technology
and has agreements in place with the local hospitals for web-based exchanges of health information on
shared patients.
Action Required:
Your office just underwent an organizational change and one office receptionist was eliminated, saving
the office $25, 000 per year in labor costs. However, there have been a number of complaints that all
patients cannot be processed due to the increased flow of patients. Two weeks later you begin to hear
that wait times for appointments have increased, and one specific patient was not able to be seen. That
patient now has developed an infection and requires surgery.
Question 3
Based on what you have learned so far in this course, what would be your plan of action for the next 30
days? What types of reports would you use to help support your decisions?
Budget Considerations
Operational Budget – This budget focuses on a broader view of the total operations of the organization in which
all departments are reviewed for both their income potential and the costs associated with the work activities used
to generate projected revenues. Each department will have its own budget for the managers to follow and on
wh.
Similar to Finance and Accounting Management and PlanningChapter O.docx (20)
One of the most common used risk management tools is the Incident Re.docxAKHIL969626
One of the most common used risk management tools is the Incident Reporting.
More recently, incident Reporting system incorporated computer technology that will provide information like:
1. Major incident category.
2. Early identification of patterns and trends in the "how" and "why" of untoward events.
3. Code vulnerability inductors.
Discuss the potential benefits to use this technology. There is any Limitation for the system? Explain.
.
One of the first anthropologists to examine religion in Africa was E.docxAKHIL969626
One of the first anthropologists to examine religion in Africa was Edward Evans-Pritchard in the early 1900's. You will explore what he learned about the Azande by watching the first 23 minutes of "
Strange Beliefs: Sir Edward Evans-Pritchard
".
Instructions:
When you are done watching the video answer the following questions by referring to specific information from the video, NOT outside sources:
How do the Azande people featured in the film explain unfortunate events and what do they do about it?
According to your textbook, what is religion and how would Azande religious beliefs be classified?
Do you think Azande beliefs are any more or less rational than other religious beliefs like Judaism, Christianity, Islam, or Buddhism?
.
One of the most important concepts in clinical practice and group wo.docxAKHIL969626
One of the most important concepts in clinical practice and group work is confidentiality. All members of the group sign an informed consent form in order to address the rules and parameters of the group sessions. The rules regarding confidentiality are stated in one section of the form. Although every member must sign this agreement, ensuring that all information shared in the group remains confidential can be difficult. As the group leader, the clinical social worker is responsible for developing strategies so that all members feel safe to share.
For this Discussion, review the “Working With Groups: Latino Patients Living With HIV/AIDS” case study.
By Day 3
Post
strategies you might prefer to use to ensure confidentiality in a treatment group for individuals living with HIV/AIDS. Describe how informed consent addresses confidentiality in a group setting. How does confidentiality in a group differ from confidentiality in individual counseling? Also, discuss how you would address a breach of confidentiality in the group.
Required Readings
Plummer, S.-B., Makris, S., & Brocksen, S. M. (Eds.). (2014).
Social work case studies: Concentration year
. Baltimore, MD: Laureate International Universities Publishing [Vital Source e-reader].
“Working With Groups: Latino Patients Living With HIV/AIDS” (pp. 39–41)
Toseland, R. W., & Rivas, R. F. (2017). An introduction to group work practice (8th ed.). Boston, MA: Pearson.
Chapter 11, “Task Groups: Foundation Methods” (pp. 336-363)
Chapter 12, “Task Groups: Specialized Methods” (pp. 364–395)
Himalhoch, S., Medoff, D. R., & Oyeniyi, G. (2007). Efficacy of group psychotherapy to reduce depressive symptoms among HIV-infected individuals: A systematic review and meta-analysis.
AIDS Patient Care and STDs,
21
(10), 732–739
Lasky, G. B., & Riva, M. T. (2006). Confidentiality and privileged communication in group psychotherapy.
International Journal of Group Psychotherapy
,
56
(4), 455–476.
Toseland, R. W., & Rivas, R. F. (2017).
An introduction to group work practice
(8th ed.). Boston, MA: Pearson.
Chapter 1, “Introduction” (pp. 1–42)
Chapter 2, “Historical and Theoretical Developments” (pp. 45–66)
Working With Groups:
Latino
Patients Living
WithHIV/AIDS
The support group discussed here was created to address the unique needs of a vulnerable population receiving services at an outpatient interdisciplinary comprehensive care center. The center’s mission was to provide medical and psychosocial services to adult patients living with HIV/AIDS (PLWH). Both patients and providers at the center expressed a need for a group to address the needs of the center’s Latino population. At the time the group was created, 36% of the center’s population identified as Latino, and 25% of this cohort identified Spanish as their primary language. The purpose of the group was twofold: 1) to reduce the social isolation felt by Latino patients at the center and 2) to create a culturally sensitive environm.
One function of a leader is to provide the vision for the organizati.docxAKHIL969626
One function of a leader is to provide the vision for the organization that they lead. Being a role model and leading the way forward are important aspects of leadership.
If you were leading an Internet retailer or another organization that involves innovative technology and organizational flexibility, describe the process that you would use to create a vision for the organization.
How would you get the employees involved in the vision?
Describe how the process would differ between an Internet retailer and a brick and mortar retailer.
.
One could argue that old-fashioned attitudes regarding gender and t.docxAKHIL969626
One could argue that old-fashioned attitudes regarding gender and "traditional" gender roles are becoming obsolete. In many parts of the world women head major corporations and hold high positions of power—positions historically seen as being of the male domain. In turn, many men freely choose to be "stay-at-home-dads" or enter professions that were once considered to be "feminine." Naturally, our contemporary views of gender and gender roles illustrate the social progress we have made as one human culture.
Yet, prehistoric and ancient works of art tell a different story—one that reinforces old-fashioned gender roles (and maybe for good reason). Prehistoric and ancient representations of gender illustrate the social norms of their periods. Naturally, these works of art were produced by people whose lives and values were quite different from ours. Yet, the views of gender presented by these works of art are, despite our contemporary sensibilities, are still very recognizable.
Write an essay that analyzes the representation of gender and gender roles as seen in
Woman of Willendorf
(prehistoric: c. 25,000–20,000 B.C.E.) and
Kouros
/
Statue of Standing Youth
(ancient Greece: c. 580 B.C.E.).
.
One of the hallmarks of qualitative research is writing detailed obs.docxAKHIL969626
One of the hallmarks of qualitative research is writing detailed observations when collecting data. For this assignment, take a notebook with you to a public setting where social interaction takes place (restaurant, public library, public park, shopping mall, airport, etc.). Observe for an hour, then write up your notes into a descriptive vignette, looking for patterns in events and actions.
Observe as though you are a stranger in a new country, trying to make sense of the action around you. Describe how things look, smell, sound, feel, etc. Be as descriptive as possible. Write up your observations into a vignette with the intention of having readers feel as though they are in the environment you choose to observe. Do not be shy to talk to people and ask what they are doing for more information.
REMEMBER to concentrate on observing the
context
only (NO PERSONAL OPINIONS)! This paper should be no longer than 3 pages double-spaced. There is going to be follow-up with this assignment in Module 8.
Assignment Specifics:
· Student will write a 3 double-spaced reflective paper.
· Citations from any of the required reading/presentations from the assigned module
· APA format
.
One of the three main tenants of information security is availabilit.docxAKHIL969626
One of the three main tenants of information security is availability. It is also one of the least thought about. Explain the importance of availability? Do you believe it should be more important than the other two tenants (confidentiality/integrity)? Why is it important to know the value of your data when it comes to availability?
Requirements:
Initial posting by Wednesday
Reply to at least 2 other classmates by Sunday (Post a response on different days throughout the week)
Provide a minimum of 3 references on the initial post and on any response posts.
Proper APA Format (References & Citations)/No plagiarism
.
One of the challenges in group problem solving is identifying the ac.docxAKHIL969626
One of the challenges in group problem solving is identifying the actual problem. Often as a group, we try to fix the symptoms of the problem instead of the actual problem. Review the attached scenario. Identify the problem, write a problem statement, and explain why you believe the problem you identified is not a symptom but the actual root cause.
*Post must be 200 to 250 words
*Answer must be clear, concise and straight forward
* PE is attached
.
One is the personal plot that unfolds around the relationships betwe.docxAKHIL969626
One is the personal plot that unfolds around the relationships between the characters—O thello, Iago, Desdemona, Cassio, Rodrigo, and Emelia. The other plot is the more public one in which Venice is at war with the Turks. How do these plots intersect, and do they overlap in terms of some of the main themes of the play? For instance, don’t overlook the line in Act I, iii, regarding where the Turks are headed in their ships—“or this cannot be, by no assay of reason: 'tis a pageant,to keep us in false gaze.”
.
One and half pagesimple, noplagarism Title page, abstr.docxAKHIL969626
One and half page
simple, noplagarism
Title page, abstract, table of contents, list of figures, list of tables are all
not required
in the discussion forums. All other aspects of
APA (citations, list of references, correct spacing & formatting, etc.)
are
required to receive full credit
You must
engage
(not just agree, disagree, or repost you own posting) at least two of your classmates in the discussions each week to receive full credit
Each question should be researched and supported with some peer reviewed sources other than or in addition to your textbook
Discussion posts are assessed on a rubric with equal weight given to 5 assessable items: Comprehension, Timeliness, Engagement, Critical Thinking, and APA/Mechanics
Digital Forensics
There are three primary goals with digital forensics:
Collect electronically stored information in a sound, defensible manner,
Analyze the results of the collections, and
Present the findings either in formal legal proceedings or less formally to inform a client.
Electronic evidence can be short-lived and fragile. It needs to be collected in a defensible, methodological manner to preserve it accurately, and to withstand scrutiny in legal proceedings. (chain of custody)
Electronic evidence can be highly probative, both as it appears to users, and behind the scenes. There is a lot of information that a computer user never sees (e.g. metadata, logs, registry entries). This behind-the-scenes evidence may provide a wealth of information about who did what when and where. Forensic analysts are trained to preserve, collect and interpret this kind of evidence.
Some digital files can be recovered, even if a user has tried to delete them.
Locate a famous case where digital forensics played a role, and share it with the class. Discuss how digital forensics was critical in cracking the case. Examples are listed below, but
you can’t use them – find your own.
Famous cases cracked with digital forensics
Be it a text message, Google searches or GPS information, a person’s digital footprint can provide plenty of ammunition in the courtroom. Here are a few cases where digital forensics played a critical role in bringing about justice
.
1. The BTK Killer, Dennis Rader
Perhaps the most famous case to be solved through digital forensics is that of
the BTK Killer Dennis Rader
, with “BTK” referring to his MO of “bind, torture and kill.” Rader enjoyed taunting police during his killing sprees in Wichita, KS. But this also proved to be his fatal flaw. A floppy disk Rader sent to police revealed his true identity. He was soon arrested, pled guilty and was put behind bars for life, much to the relief of his long-terrorized community.
2. Dr. Conrad Murray’s lethal prescriptions
Another recent case solved with digital forensics was that of
Dr. Conrad Murray, personal physician of Michael Jackson
. Digital forensics played a crucial role in the trial. After Jackson passed away unexpectedly in 20.
One 750 - word essay exploring an art historical issue presented in .docxAKHIL969626
One 750 - word essay exploring an art historical issue presented in the class.(following file)
The file is 6 pages long. write a reaction and add some of the own thinking.
The file preview
The Combahee River Collective Statement
Combahee River Collective
We are a collective of Black feminists who have been meeting ...........
.
One of the most interesting items in the communication realm of orga.docxAKHIL969626
One of the most interesting items in the communication realm of organization management is the informal grapevine. The informal grapevine has the capacity to undermine the official communication function of a criminal justice organization.
Discuss what a grapevine is and the best methods to counteract it.
.
One of the most important filmmakers of the twentieth centur.docxAKHIL969626
One of the most important filmmakers of the twentieth century to release such popular films such as Ferris Bueller’s Day Off, and The Breakfast Club was someone by the name of John Hughes. Born February 18 in 1950, he sadly died 11 years ago due to a heart attack. Brought up in Michigan, John Hughes started off by creating jokes for already famous comedians. He then began to capture the interest of adolescents in the 1980’s with his work. Movies such as The Breakfast Club;Sixteen Candles;Ferris Bueller's Day Off;Plane, Trains, and Automobiles; and Home Alone gained a huge amount of popularity over time. These movies usually ended in a good way but not without a struggle along the way.
One of John Hughes most popular film’s, titled The Breakfast club takes place in a school library setting as the main 5 students are tasked with learning and understanding each other. Understanding their dislikes for teachers, parents, as well as going through the peer pressure of their respective social groups. This film highly resembles Hughes' work as it reaches toward the best of society with all different types of popular culture which explains why the movie takes place in a library, with the students surrounded by art, books, and statues.
Hughes was very well known as being the king of highschool movies. All of his work dealt with teenagers and the issues they dealt with. Ferris Bueller
Ferris Buellers was one of Hughes' first comedies, and it is the most original movie about high school that has ever been made. There wasn't a movie like it before it was made, and since many attempts have been made to recapture what Ferris Buellers brought to the table. Unfortunately, that is impossible. A big part of Ferris Bueller's magic was the originality of Hughes' vision. He looked at teenagers and high school life from a completely new perspective. Hughes created a world where everything worked out for the hero, and everyone can identify with that.
.
One of the ways businesses provide secure access to their networ.docxAKHIL969626
One of the ways businesses provide secure access to their network (or a subset of their network) to remote (or mobile) users is to use virtual private networks (VPNs). VPNs allow users to connect securely (over an encrypted link) to a network. For this discussion:
Define the term virtual private network
Discuss the goal(s) of a VPN
Describe different types of VPNs (hardware or software based)
Discuss how the use of a VPN may support BYOD (bring your own device)
List several commonly available (open source) VPNs
Describe best practices for using a VPN
300 Words NO Plagiarism
.
On Stretching Time (250 Words)The given paradigms by which we.docxAKHIL969626
On Stretching Time (250 Words)
“The given paradigms by which we are to understand and use academic freedom isolate utterances and individuals to insist that the contexts that matter are professional and institutional. But if we stretch time, the potent context of modern nationalism/settler colonialism becomes strongly palpable.”
Kandice Chuh argues that it is imperative for us to “stretch time”: to be able to place utterances and individuals in the academic context in the broader context of modern nationalism and settler colonialism. What is something someone can only understand about you by bringing in a larger context? Write that, and also the larger context needed to understand.
.
On the evening news, social media and even in conversation, do you f.docxAKHIL969626
On the evening news, social media and even in conversation, do you feel that noting where data and other vital information being shared came from could alleviate confusion, frustration and "gossip"? If so, where should we draw the line? Do you trust what others discuss with you? Or do you "fact check"?
.
On p. 98-99 of Music and Capitalism, Tim Taylor writes, The.docxAKHIL969626
On p. 98-99 of
Music and Capitalism,
Tim Taylor writes, “These and other Western star musicians employ other common discourses about the musicians with whom they worked and the musics they appropriated or collaborated with. The dominant ideology and discourse are that non-Western musics are a kind of natural resource that is available for the taking, though these acts of appropriation are frequently tempered by the Western star’s appearance alongside the non-Western musicians in publicity photographs, on recordings, and in liner notes.”
Review your notes from class about important words, or look these up as necessary: discourse, appropriation, collaboration, ideology
Then, write a response that does the following:
Explain: what does this quotation mean in your own words?
How does the
Graceland
example fit in with what Tim Taylor is talking about here
?
Think of another time that musicians with different power positions are part of a musical performance or recording (you can use one in the chapter, like
Buena Vista Social Club, Deep Forest,
“The Lion Sleeps Tonight,” “Return to Innocence,” “El Condor Pasa,” or
Talking Timbuktu
, or one not in the reading that interests you). Describe the relationship between the musicians, and argue whether you think the album/performance is appropriation, collaboration, sampling, or something else. If the artists have different positionalities in terms of race, gender, and/or country of origin, comment on the effect this has. Give your opinion on ethical questions raised in this particular situation.
Your response should be about 3-5 paragraphs (minimum 12 sentences) in length. For part c, you will need to reference and cite an additional source (i.e. web site, album, academic source, news article, etc.)
.
On 1 January 2016, the 17 Sustainable Development Goals (SDGs) o.docxAKHIL969626
On 1 January 2016, the 17 Sustainable Development Goals (SDGs) of the 2030 Agenda for Sustainable Development — adopted by world leaders in September 2015 at an historic UN Summit — officially came into force. These goals address every topic of concern we have discussed this semester. Over the coming decade, it's the hope of UN member nations (which includes the U.S.) that the SDGs will universally be applied to all, countries will mobilize efforts to end all forms of poverty, fight inequalities and tackle climate change, while ensuring that no one is left behind.
With the SDGs as your reference, answer these questions:
Are any of the 17goals from the UN website particularly unrealistic—describe, in detail, why you think so (or not).
Which of the 17 goals do you believe is the highest priority for the world and why? Cite specific examples from class content, discussions and assessments.
.
On September 11, 2001 the U.S. changed forever. While the U.S. had s.docxAKHIL969626
On September 11, 2001 the U.S. changed forever. While the U.S. had suffered attacks before, nothing to this scale and magnitude. The attacks were aimed at highly populated areas (NYC) and homes for the government and armed forces (Washington, D.C. and the Pentagon). The World Trade Centers were an ideal target for their height and location. For your own post, consider vulnerable populations. What constitutes vulnerability in populations living in disaster prone areas? Consider NYC, these attacks were neither the first nor the last attacks NYC has suffered. Why is NYC such a hub for terrorist attacks? Try considering other areas, other than NYC, and provide an example from a recent disaster. Unfortunately, there are many. You can discuss man-made disasters or natural disasters.
250 Words
.
On January 28, 1986, the Space Shuttle Challenger was destroyed upo.docxAKHIL969626
On January 28, 1986, the Space Shuttle Challenger was destroyed upon launch from Cape Canaveral, Florida killing all seven astronauts on board. Conduct a literature and an Internet search on the topics of the Challenger disaster and groupthink. Then, discuss how groupthink might have created decision-making problems for NASA and its booster contractor. Cite at least two sources in your answer.
250 words and list references
.
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
For more information, visit-www.vavaclasses.com
Ethnobotany and Ethnopharmacology:
Ethnobotany in herbal drug evaluation,
Impact of Ethnobotany in traditional medicine,
New development in herbals,
Bio-prospecting tools for drug discovery,
Role of Ethnopharmacology in drug evaluation,
Reverse Pharmacology.
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
How to Create Map Views in the Odoo 17 ERPCeline George
The map views are useful for providing a geographical representation of data. They allow users to visualize and analyze the data in a more intuitive manner.
This is a presentation by Dada Robert in a Your Skill Boost masterclass organised by the Excellence Foundation for South Sudan (EFSS) on Saturday, the 25th and Sunday, the 26th of May 2024.
He discussed the concept of quality improvement, emphasizing its applicability to various aspects of life, including personal, project, and program improvements. He defined quality as doing the right thing at the right time in the right way to achieve the best possible results and discussed the concept of the "gap" between what we know and what we do, and how this gap represents the areas we need to improve. He explained the scientific approach to quality improvement, which involves systematic performance analysis, testing and learning, and implementing change ideas. He also highlighted the importance of client focus and a team approach to quality improvement.
2024.06.01 Introducing a competency framework for languag learning materials ...Sandy Millin
http://sandymillin.wordpress.com/iateflwebinar2024
Published classroom materials form the basis of syllabuses, drive teacher professional development, and have a potentially huge influence on learners, teachers and education systems. All teachers also create their own materials, whether a few sentences on a blackboard, a highly-structured fully-realised online course, or anything in between. Despite this, the knowledge and skills needed to create effective language learning materials are rarely part of teacher training, and are mostly learnt by trial and error.
Knowledge and skills frameworks, generally called competency frameworks, for ELT teachers, trainers and managers have existed for a few years now. However, until I created one for my MA dissertation, there wasn’t one drawing together what we need to know and do to be able to effectively produce language learning materials.
This webinar will introduce you to my framework, highlighting the key competencies I identified from my research. It will also show how anybody involved in language teaching (any language, not just English!), teacher training, managing schools or developing language learning materials can benefit from using the framework.
Palestine last event orientationfvgnh .pptxRaedMohamed3
An EFL lesson about the current events in Palestine. It is intended to be for intermediate students who wish to increase their listening skills through a short lesson in power point.
Model Attribute Check Company Auto PropertyCeline George
In Odoo, the multi-company feature allows you to manage multiple companies within a single Odoo database instance. Each company can have its own configurations while still sharing common resources such as products, customers, and suppliers.
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
Instructions for Submissions thorugh G- Classroom.pptxJheel Barad
This presentation provides a briefing on how to upload submissions and documents in Google Classroom. It was prepared as part of an orientation for new Sainik School in-service teacher trainees. As a training officer, my goal is to ensure that you are comfortable and proficient with this essential tool for managing assignments and fostering student engagement.
2. from insurance companies, patients, and the government; paying
for medical equipment and
supplies; and covering the costs of operation, including wages
for support staff, the price of a
physical office space through a lease or a purchase, and other
expenses. Meanwhile, healthcare
managers must also contend with requests for purchases of new
equipment, increased space, and
a variety of additional items that may or may not be suited to a
healthcare organization’s goals.
Healthcare managers also oversee payroll, billing statements,
accounts payable and receivable,
third-party reimbursements, discounting systems, tax statements
and bills, and numerous finan-
cial and accounting activities. All of these tasks relate to the
process of cash flow management,
or working capital policy.
Working capital policy poses challenges for managers in every
type of industry. However, health-
care providers face additional obstacles that most private-sector
companies do not. For example,
any physician or pharmacy accepting Medicare and Medicaid
patients often encounters diffi-
culties in receiving reimbursements in a
timely fashion. The dilemma follows a com-
mon cycle: A patient receives care or fills
a prescription; reimbursement documents
are filed with the appropriate government
agency; then the wait begins, many times
for months. Meanwhile, supply bills, sala-
ries, utilities, and other expenses come due
and must be paid. Thus, any pharmacy or
medical practice that accepts Medicare or
Medicaid but that does not have a substan-
4. Financial Governance and Working Capital Policy Chapter 6
establish practices lacking cash reserves, and with other
organizations at the brink of default due
to such payment delays, many have called on Congress to
become involved and help resolve these
problems.
This chapter examines the natures of finance and accounting as
they apply to the field of health-
care. The first section outlines the forms, methods, and analyses
used in managing an orga-
nization’s financial system and presents working capital policy,
which directs the oversight of
day-to-day operations. Next, the chapter discusses pricing
issues and the types of financial
instruments that organizations may use to accomplish an
organization’s longer-term goals. The
final section describes the role of accounting in a healthcare
organization’s operations.
6.1 Financial Governance and Working Capital Policy
Financial governance in the field of healthcare involves two
primary responsibilities: (1) over-
sight of day-to-day operations that require financing and (2)
planning for and implementing
financial instruments that provide for the organization’s long-
term financial needs (Gapenski,
2003). Tending to a healthcare provider’s financial well-being
constitutes a primary concern
for managers in the healthcare system. The increasing
complexity of the economic and politi-
cal environments in the area of finance makes this task highly
demanding. Rigorous track-
ing of an organization’s financial activities constitutes one
crucial component in managing this
5. complexity.
Financial Documents and Statements
Finance and accounting departments prepare several documents
and statements that assist
healthcare managers in overseeing the organization’s monetary
well-being. Three forms that
assist the finance and accounting departments, as well as other
organizational leaders, include a
balance sheet, an income summary, and a ratio analysis.
Balance Sheet
A balance sheet summarizes an organization’s current status
with regard to assets, liabilities,
and equity. Figure 6.1 presents the items located in each portion
of a balance sheet. Note that
an organization’s total assets may be divided into what it owes
(total liabilities) and what it owns
(total equity) as follows:
Total assets = Total liabilities + Total equity
Balance sheets are typically prepared on an annual basis.
The balance sheet provides a financial manager with a snapshot
of the organization’s current
position in terms of debt and equity. When managers examine a
series of balance sheets that
have been prepared over several years, they can study trends
regarding growth of assets, changes
in levels of liability, and differences in levels of equity in order
to determine the organization’s
financial well-being over time (Weygandt, 2013).
6. Financial Governance and Working Capital Policy Chapter 6
Income Summary
An income summary is an accounting or financial statement that
provides a somewhat different
purpose for a profit-seeking organization than it does for a
nonprofit. Managers in nonprofit, or
not-for-profit, providers use an income summary to make sure
that revenues exceed expenses. In
a nonprofit, the manager works to make sure that organizational
funds (the amount by which rev-
enues exceed expenses) are being used wisely and efficiently,
with sufficient monies to subsidize
other goals, such as support of the less fortunate in the
community and the expansion of medical
services over time. A manager in a for-profit hospital, however,
wishes to understand whether
annual operations do indeed result in profits to be retained in
order to build share value growth
or to be distributed as dividends to shareholders. Figure 6.2
displays the elements of a standard
income summary.
Figure 6.1 Elements in a balance sheet
f06.01_HCA340.ai
Assets Liabilities Equity
Short-term assets
Cash
Marketable securites
7. Accounts receivable
Inventory
Short-term liabilities
Accounts payable
Payments due
trade credit
commercial paper
Common stock
Paid-in surplus
Preferred stock
Retained earnings
Long-term assets
Building
Equipment
Financial instruments
Long-term liabilities
Loans
Bonds
11. Total assets $38,000,000 Total liabilities $19,750,000 Total
equity $18,250,000
Financial Governance and Working Capital Policy Chapter 6
Healthcare organizations receive revenues from multiple
sources, including patients, insur-
ance providers, and government payments for services. As
Figure 6.2 shows, these revenues are
totaled. For a healthcare organization, the cost of goods sold
portion of an income summary
includes the total expenses for medical supplies and other items
directly related to the delivery
of health services. Depreciation is tallied for all buildings and
equipment, and a healthcare man-
ager may use several different methods to depreciate an asset
over time. Unusual expenses may
include a settlement of a lawsuit or other nonroutine payments,
while unusual income includes
any gifts or bequeaths that the organization receives. Note that
taxes are paid only by profit-seek-
ing health organizations. Thus, net income after taxes (NIAT) is
the bottom-line profit earned by
these organizations (Finney, 2012). However, the government
does not charge nonprofit organiza-
tions, such as many skilled nursing facilities, taxes. So instead
of NIAT, the bottom-line amount
reported is the total by which revenues exceed expenses.
Ratio Analysis
A ratio analysis combines information made available by the
finance and accounting depart-
12. ments to help managers evaluate various operations in the
organization. Healthcare managers
are usually interested in four categories of ratios:
• Liquidity ratio: Measures the organization’s ability to pay
its short-term obligations on time
• Activity ratio: Measures efficiencies in organizational
operations
• Leverage ratio: Measures organizational debt and risk
• Profitability ratio: Measures organizational profits
Although other ratios may be calculated, these four categories
offer healthcare managers a quick
look at an organization’s financial well-being. Managers should
avoid the tendency to overem-
phasize any single ratio; instead, they should look at the group
of ratios together. Managers can
compare ratios from the current year with those from previous
years or with averages in the
industry to gain further understanding of the organization’s
financial standing (Reilly, Minnick,
& Baack, 2011).
Figure 6.2 Elements of an income summary
f06.02_HCA340.ai
Sales (Revenues)
–Cost of goods sold
Gross profit
–Operating expenses
Gross operating income
13. –Depreciation
Net operating income
–Other unusual expenses
+Other unusual income
Net income before taxes
–Taxes
Net Income After Taxes (NIAT)
Patient payments
Insurance payments
Governmental reimbursements
$12,000,000
15,000,000
25,000,000
42,000,000
<12,000,000>
30,000,000
<18,000,000>
12,000,000
14. <5,000,000>
7,000,000
<1,000,000>
+3,000,000
9,000,000
<1,800,000>
$7,200,000
Financial Governance and Working Capital Policy Chapter 6
Working Capital Policy
Financial managers in both nonprofit and profit-seeking entities
have the duty of overseeing an
organization’s cash flow. This includes making sure the
organization maintains sufficient funds to
operate on a day-to-day basis through oversight of current
assets and current liabilities. Working
capital is a comparison of the amount of current assets an
organization has on hand in relation
to its current liabilities. Using the information from a balance
sheet, a financial manager can
compute the organization’s amount of working capital as
follows:
Working capital = Current assets – Current liabilities
15. Working capital can be generated in many ways, including
through selling new or additional
shares of stock, selling long-term bonds, or securing other types
of loans in order to generate the
funds needed to ensure that the organization remains liquid.
In many healthcare organizations, management of working
capital creates some difficulties,
which often emerge as a result of timing. For example, someone
who receives medical care may
be charged the copayment amount during the actual hospital
visit; however, that copay is only
a small part of the balance due for anything more complicated
than a routine examine. Often, a
considerable amount of time passes before the organization
receives any government or insur-
ance company payment. Only then is the patient billed for the
remaining balance so that payment
can be rendered. As noted earlier, Medicare and Medicaid can
be notoriously slow at rendering
payments. While waiting for this payment, the organization
must pay bills for medical supplies,
payroll expenses, and other costs, all of which are due nearly
immediately. Thus, working capital
requires extra attention by financial managers (McLean, 1997).
Effective management of working capital creates a series of
benefits. First, an effective working
capital policy means the healthcare provider will remain liquid,
which in turn means that the
organization will always have funds available to meet
obligations such as payroll and tax pay-
ments. Second, organizations that routinely pay bills on time
generate goodwill with suppliers,
manufacturers, and other vendors. The net outcome of this
goodwill can be that the hospital
16. will receive the most attentive care from those vendors. Third,
an effective working capital policy
establishes a line of credit over time, so that the organization
can borrow money in case of finan-
cial emergencies.
Bundled Reimbursements: A Potential New Working Capital
Challenge
In the past, when a person with an acute medical problem
arrived at the hospital, the individual
received the necessary care and was then made ready for
discharge. If the patient required additional
services, such as rehabilitation, a home health facility, or a
skilled nursing facility, each treating unit
(that is, the hospital and every other organization the patient
visits) billed the person and the gov-
ernment (such as Medicare) separately for each service, or
“silo” of care. Under a system proposed in
the U.S. legislature as an addendum to the Affordable Care Act,
the government (Medicare) would
pay one provider—typically the hospital—for the entire patient
episode, from entry into the system
to a return to health. The entity or hospital would then divide
the reimbursement among all orga-
nizations that served the patient. (This addendum has not yet
been passed or enacted.)
The reasoning behind the bundled payment system is to increase
efficiencies in care. Under
this plan, patients would no longer receive multiple billings,
and the government would only
make a single payment—all with the goal of reducing
redundancy in postoperative-care facilities
(Jackson, Greis, & Rawlings, 2009).
17. Long-Term Financial Governance Chapter 6
However, hospital administrators have raised major concerns
about how such a system would be
administered. Under the plan, each hospital would be placed in
a decision-making role regarding
the amount each connected unit should receive for a patient’s
care. Many healthcare administra-
tors have expressed concerns about conflicts with other
organizations, lowered levels of reim-
bursement, and the confusion created by the paperwork of such
a system.
This new proposal has elicited two suggested responses. The
first is a vertical integration system,
in which the hospital would purchase or establish the linking
levels of care under its ownership,
thereby keeping all payments within one billing entity. An
example of a vertical integration sys-
tem is a hospital that purchases a rehabilitation facility and an
extended-care organization. A
patient who becomes incapacitated would first stay in the
hospital, would then use the services
of the rehab center, and might finally be placed in an extended-
care setting. When the person is
finally discharged, the hospital would bill that patient for all
activities at once. The hospital would
then distribute monies received to each aspect of its operations.
The second response involves the development of network
embeddedness systems, in which
informal networks of organizations would divide
reimbursements on a routine basis (Dacin,
Ventresca, & Beal; 1999). An example of an embedded network
is an informal combination of
18. healthcare organizations under separate ownership in which
each receives reimbursements and
then the payments are distributed among the members.
In the bundled payment approach, the organization that receives
the payment often faces a chal-
lenge in deciding on the amount to be allocated to the other
units involved in the patient’s care.
One way to solve this problem is to devise a transactions cost
approach, in which each activity
is assigned a cost to be reimbursed as a percentage of the total
payment to the primary provider.
The percentage should take into account the costs and the
allowable reimbursements for each
unit that treated or cared for the patient.
Another continuing challenge with the bundled payment
approach involves working capital
issues. Each unit incurs expenses associated with the patient’s
care that are entitled to reim-
bursement. Unfortunately, a substantial amount of time might
pass before any payment is sent
by the primary organization (that is, the organization that
received the full bundled payment)
to the individual unit. Furthermore, disputes among managers
from individual units may arise
regarding exactly how much each unit should be granted as a
percentage of the patient’s total care
package. Estimating and keeping on hand the amount required
to maintain cash flow and make
payments under such a system adds an additional complication
to a system that already experi-
ences significant problems (Shay, 2013).
6.2 Long-Term Financial Governance
In addition to working capital policy, another major
19. responsibility held by financial managers in
both nonprofit and profit-seeking ventures involves ensuring
that the organization tries to achieve
consistent outcomes across all time horizons. This process
requires the manager to mesh short-
term operational duties with long term strategy making. In the
areas of finance and accounting,
managers work to integrate activities by obtaining funds for and
managing the organization’s
monetary well-being so that the organization’s top management
team can create effective strate-
gies that lead to future success. In the long term, two major
concerns of financial managers are
dealing with pricing issues and creating long-term financial
instruments.
Long-Term Financial Governance Chapter 6
Pricing
Pricing includes institutional marketing and financial
considerations. In some instances, govern-
ment programs determine the prices charged for medical
systems. For example, the Medicare
prospective payment system (PPS) method of reimbursement
establishes prices and payments
based on predetermined, fixed amounts. Payments for individual
services are based on the PPS
classification system for each service. The Centers for Medicare
and Medicaid provides separate
prospective payment systems for individual diagnostic related
groups (DRGs), such as acute inpa-
tient hospitals, home health agencies, hospice, hospital
outpatient, inpatient psychiatric facilities,
20. inpatient rehabilitation facilities, long-term care hospitals, and
skilled nursing facilities (Centers
for Medicare and Medicaid Services, 2013c).
In marketing, methods for setting prices may be based on costs,
profit goals, supply and demand,
or competition. Each approach assists the finance team in
pricing healthcare products and
services.
Costs
When calculating price based on cost, the first determination
involves the difference between
fixed costs and variable costs (Higgins, 2011). Fixed costs are
expenses incurred that are not
affected by the volume of sales; the provision of healthcare
services; or revenues from the patient,
the insurance company, and the government. Examples of fixed
costs include building payments
(fixed loan or lease payments), annual salaries, and utility bills.
An important component of fixed
costs involves deciding how much to allocate to each service.
For example, if a physician’s prac-
tice spent $200,000 per year on fixed costs, and the physician
had 8,000 appointments per year,
then the fixed cost per appointment would be $25 per
appointment ($200,000 ÷ 8,000). If the
physician were able to increase the number of appointments to
10,000 per year, the fixed cost
per appointment would drop to $20 per year ($200,000 ÷
10,000). Fixed-cost allocation applies to
hospitals, physician clinics, and any provider of medical
supplies or equipment.
Variable costs are directly related to volume or revenues. In
healthcare, variable costs include
21. billings for physician services; diagnostic procedures, such as
reading an X-ray or conducting a
blood test; medical supplies, including materials for bandages
and stitches; and other per-patient
or per-visit expenses. A greater number of patients incurs a
higher total variable cost, although
regardless of the number of patients, the variable cost per
patient remains relatively stable. Only
when a hospital pays extra expenses—such as overtime wages to
nurses and support staff mem-
bers in the case of a major emergency like an accident that
injures a great number of people—
would variable costs per patient rise.
Total costs are calculated by adding total fixed costs to total
variable costs. Total cost per patient
results from adding fixed costs per patient to variable costs per
patient. These figures may then
be used to set prices based on costs. Two forms of cost-based
pricing are markup pricing and
cost-plus pricing.
A markup pricing approach assigns a percentage to be added to
the total cost per item. Assume,
for example, that the total cost per patient visit is $40 ($25
fixed costs + $15 variable costs). The
practice believes that a 50% markup represents a reasonable
amount. Therefore, the patient would
be charged $60 for the office visit ($40 × 0.5 = $20; $40 + $20
= $60).
Another option is to assign markup to total costs rather than to
costs per visit. Suppose a walk-in
clinic’s total fixed costs amount to $500,000 per year, and its
total variable costs are $100,000 per
year. Its total costs would be $600,000 per year. If the
22. organization used the same 50% markup,
Long-Term Financial Governance Chapter 6
then it would add $300,000 ($600,000 × 0.5) to total charges,
resulting in a total amount of
$900,000. The $900,000 would then be divided by total patient
visits. If 100,000 patients visited
the clinic during the year, each would be charged $90 per visit
($900,000 ÷ 100,000). Such an
approach is unlikely, however, due to the wide variance in
variable costs per visit and per patient.
For example, an infection would incur one set of variable costs,
whereas setting a leg fracture,
complete with X-rays and other services, would lead to much
higher variable costs.
The main advantage of markup pricing is precision in pricing
for each action. The disadvantage is
the extra time involved in making calculations for each
individual item or service.
Cost-plus pricing adds a fixed amount to the total cost per
patient. Suppose the total cost per
patient visit is $40. The unit decides to charge each patient an
additional $25 per visit. Thus, the
charge for the visit would be $65 ($40 + $25).
Cost-plus pricing based on total costs adds a fixed
amount to total costs. If total costs equal $600,000
for the year, and the organization charges a total of
$400,000, then total charges would be $1,000,000. For
100,000 patients, the visit charge would become $100
($1,000,000 ÷ 100,000).
23. The primary advantage of cost-plus pricing is the ease
of calculation. The disadvantage is that some patients
might feel overcharged, while others are undercharged.
For example, one patient visit may take a physician 30
minutes or more to resolve, while another only takes
5 minutes, yet the two patients are charged the same
amount. To some, this might seem unfair, even though
the real charge is for a doctor’s expertise more than for
his or her time.
Costs and Healthcare Pricing
Each type of healthcare provider can use costs to
develop charges (or the “price” of a service). The form of
pricing is adapted to the type of healthcare being pro-
vided. For example, dentists, physicians, psychiatrists,
and others might use markup or cost-plus pricing to establish
rates for office visits. Then, they
might examine individual services to set charges using one of
the two methods. The charge could
be based on the level of expertise and precision required,
combined with a charge for less-direct
costs, or an activity-based costing system (Canby, 1995). For
example, a dental procedure, such
as a root canal, would carry a higher price than a typical dental
visit due to the expertise required
to perform the procedure. In addition, the procedure requires
specialized equipment, the cost of
which would be partially allocated to the procedure. In this
case, variable costs include a charge
for the assistance of a dental technician, as well as the costs of
a numbing injection, gauze or cot-
ton, and other items.
When determining activity-based costs, financial officers bear
in mind that an established price
25. tional, meaning they have not had a complete recovery or are
still not healthy (Nof, Rone-Adams,
& Hart, 2007).
With regard to fairness concerns, the American Medical
Association (AMA) advocates accurate
valuations of all physician services. The AMA designed the
resource-based relative value scale
(RBRVS) to ensure that every physician service and specialty is
represented with regard to pay-
ment policies and systems. The RBRVS figures are based on
evaluations and recommendations
of the AMA and its Specialty Society Relative Value Scale
Update Committee and include any
new or revised services. The committee undertakes broad
reviews of the RBRVS every five years
(AMA, n.d.-c).
In addition, the Centers for Medicare and Medicaid (2013a)
provide the Healthcare Common
Procedure Coding System (HCPCS), a numeric coding system
maintained by the AMA. The
uniform coding system “consists of descriptive terms and
identifying codes that are used pri-
marily to identify medical services and procedures furnished by
physicians and other healthcare
professionals. These healthcare professionals use the system to
identify services and procedures
for which they bill public or private health insurance
programs.” The objectives of the system are
uniformity and fairness.
A payer mix refers to the amounts provided as payments by
various providers, including govern-
ment sources and insurance. The mix determines total revenues
that the healthcare organiza-
26. tion receives. Cost shifting, which is the practice of charging
private payers, such as insurance
companies, more in response to shortfalls in public payments,
has long been part of the debate
over healthcare policy. Although some evidence suggests that
the amounts of such shifts are not
dramatic, the subject remains controversial (Frakt, 2011).
An organization such as a pharmaceutical company might use a
form of pricing that is entirely
different from the activity-based approach. The development of
individual drugs often takes years
of research and testing, followed by government approval (by
the Food and Drug Administration).
Only then can the drug be released to the general public. In
addition to these costs, advertis-
ing and personal selling costs also accrue. The pharmaceutical
company’s management team
remains acutely aware that a window of 12 years is in place for
the organization to charge as much
as is needed to recover startup costs (12 years is the length of a
medical patent). After that win-
dow, other companies can manufacture generic versions of the
drug and offer them at much lower
prices. Thus, managers try to set prices that capture all startup
costs, plus a reasonable return
on investment in that 12-year period. This explains why new
drugs to the market are often quite
expensive for patients and hospitals.
Long-Term Financial Governance Chapter 6
In summary, the management team, working in conjunction with
the finance and accounting
27. departments, can set charges or prices using fixed and variable
costs as the starting point. Each
situation remains unique, however, and the pricing approach is
adjusted according to the type of
provider and the types of services being rendered.
Pricing Based on Profit Goals
Healthcare providers that seek to make profits, including
pharmaceutical companies, medical
equipment manufacturers, medical supply providers, some
hospitals, and private practitioners,
can incorporate cost information with desired profit targets, or
the amount of revenue they intend
to generate from a given product or service. Some hospital
managers may not use the term profits;
instead they refer to the degree to which revenues exceed
expenses. In either case, a common
method for analyzing profitability is a break-even analysis,
which identifies the point at which the
total costs incurred are equal to the revenue received. Figure 6.3
provides a visual portrayal of the
relationships among fixed costs, variable costs, volume, and
profits.
A break-even analysis can be calculated for individual services
and is valuable when making deci-
sions about how much to charge for the use of a major piece of
medical equipment, such as a mag-
netic resonance imaging machine. Break-even points can also be
calculated based on the volume
of revenues, which best fits a provider that offers a variety of
services. A break-even analysis also
has use for nonprofit settings, as managers can use the
information to set charges high enough to
create funds for altruistic purposes or for the expansion of
28. medical services offered rather than
profit goals (Van Horne, 1974).
Figure 6.3 Break-even analysis
f06.03_HCA340
D
Volume
B
C
A
Cost
Loss Profit
Key
Revenues
Break-even point
Total cost
Variable costs
Fixed costs
Long-Term Financial Governance Chapter 6
Competition-Based Pricing
29. In some instances, pricing based on the competition is most
appropriate for healthcare orga-
nizations. For example, many over-the-counter medicines
compete with generic drugs.
Insurance companies establish premium rates based, in part, on
what other competitors charge.
Psychologists, psychiatrists, dentists, and other providers are
often aware of the fee schedules of
others in a geographic region. However, as has been stated
earlier, the complicating factor for
most healthcare service providers is that the actual price may be
extremely difficult to identify.
Individuals with health insurance policies who seek care pay an
amount that is vastly different
from the fee or price of a service that appears on the indi-
vidual’s bill or statement. As a result, setting prices based on
competition becomes problematic.
Three competition-based pricing strategies include above the
competition, meet the competition, and below the competi-
tion. Highly exclusive plastic surgeons may routinely price
services above those charged by others, whereas eyeglass and
hearing aid providers often use competition-based pricing.
Some organizations advertise their prices to make it well-
known to the public that the products are being sold at the
lowest price in the area. In most other situations, however,
a healthcare provider does not want to be known as pricing
services on the cheap, because price does imply quality.
Supply and Demand Pricing
Although pricing based on supply and demand is common in
many private-sector industries, it only applies to a rare num-
ber of circumstances in healthcare. Most of the time, revenues
31. W E B F I E L D T R I P
Healthcare Blue Book provides a service that is intended to help
consumers determine fair prices
for healthcare services and to make comparisons between prices
in their area versus prices in other
areas. Visit http://www.healthcarebluebook.com, enter your zip
code, and search for the prices of
a few procedures and services. Then search the same procedures
and services in the area code of a
city or town that is very different from your own, whether in
size or geography.
• Is there a difference in price for the procedures and
services in your area versus those in other cit-
ies? What do you think might account for any differences?
Providing Financial Resources
Another primary function provided by the chief financial officer
involves the selection and imple-
mentation of the long-term financial instruments used to
provide for major capital expenses.
Such expenses include the purchase of a new building,
expansion of a current facility, the pur-
chase of expensive major medical equipment, and the
acquisition of any other large asset that
will be used over a period of years. The four primary long-term
financial instruments, or legal
documents representing monetary value, are bonds, loans,
stocks, and leases.
Bonds
Bonds are fixed-payment instruments that are issued and sold in
order to raise capital. A bond
instrument’s terms include the amount of the bond (money paid
32. to purchase it), a specified
interest rate, and the terms of repayment. Some bonds are
bought and sold by various financial
organizations. Buyers may find them more or less lucrative
depending on changes in prevailing
interest rates and the buyer’s trust in the bond issuer.
The first distinction in bond instruments depends on the nature
of the organization issuing them.
A for-profit bond’s interest payments provide taxable income to
bondholders. In contrast, a bond
issued by a nonprofit healthcare organization may offer tax-free
revenue or interest income to
those who purchase the bonds.
Bonds normally require funds to be set aside so that they are
repaid at a specified time. The bond’s
sinking fund represents these monies on the company’s balance
sheet. Coupon bonds require
regular interest payments (monthly, quarterly, annually) to
bondholders. Other bonds allow for
repayment of both the principal and the interest when the bond
is redeemed.
The primary benefit of a bond to a for-profit hospital or skilled
nursing facility is that the interest
paid on the instrument can be listed as an expense on an income
summary, which reduces the
real interest rate for the funds. For example, a bond that pays
5% would cost the organization 1
minus the tax rate times the interest level. Thus, if the
corporation paid a 20% tax rate on income,
then the effective rate for the bond would drop to 4% ([1 – 0.2]
× 0.05 = 0.04).
The primary disadvantage of a bond, to both for-profit and
33. nonprofit organizations, is that pay-
ments to sinking funds must be set aside and cannot be used for
other purposes. This limits the
organization’s financial flexibility to some extent. Furthermore,
failure to make interest payments
or to redeem bonds places the organization in default, which
means bonds imply at least some
http://www.healthcarebluebook.com
Long-Term Financial Governance Chapter 6
level of risk. Bond-rating organizations specify the degree of
that risk. The lower the rating, the
greater the level of risk. Investors expect a risk premium, or a
higher level of interest, for bonds
with lower ratings (Marlowe & Matkin, 2013).
Loans
Financial institutions (e.g., banks, savings and loans) and other
lenders make loans to individual
organizations. Loans are less structured than bonds, with more
flexible terms. Hospitals acquire
loans to cover shortfalls in working capital and other financing
needs. Many features of loans are
the same as those for bonds, with the amount, duration, and
interest rate spelled out in a loan
contract between the healthcare and financial organizations.
Healthcare organizations offer collateral to ensure loan
repayments. A hospital with a debt-free
building could use that facility as collateral to secure a loan for
some other purpose, such as
the acquisition of a cutting-edge piece of medical equipment.
This feature of loans provides the
34. healthcare financial officer with additional flexibility.
Loan interest is tax deductible for profit-seeking organizations.
Each loan carries with it a level of
risk, however, due to the possibility of default.
Stock
A relative minority of healthcare organizations issues stock.
The issuance of stock allows the
organization to collect funds for long-term projects. In
exchange, shareholders expect to receive
dividends, or earnings distributions, which are not tax
deductible for the organization that issues
the stock. Dividends are paid out of an organization’s after-tax
profits. In addition, shareholders
expect a risk premium, which further increases the cost to the
healthcare facility. The primary
benefit of stock is that it is issued in perpetuity, which means
no sinking fund or repayment is
required. Not-for-profit healthcare organizations cannot issue
stock.
Leases
Any number of healthcare organizations can benefit from
leasing
arrangements. A leasing arrangement can help an organization
obtain
not only major medical equipment but also office equipment,
such as
copiers and computers. In some instances, leases may apply to
build-
ings that house medical services. Lease terms specify an amount
to
be paid, the length of the lease, and any special arrangements,
such as
maintenance and repair.
36. provide funding for parts of a hospital (e.g., a wing or a medical
practice) and other larger pur-
chases, often in exchange for naming rights or for having the
donor’s name prominently displayed
in some way. Fund-raising programs can be used to finance
shortfalls in year-to-year operations,
as well as larger projects and tangible organizational features.
The benefits of donations include increased visibility in the
community for both the donor and the
healthcare provider. Some funds can be set aside in savings and
investment programs. The pro-
ceeds can then accumulate until a major purchase can be made
or the proceeds can be invested
into the organization’s general fund. The costs associated with
donations are those incurred in
fund-raising programs, often including the salary of the person
in charge. It is important to note
the dramatic impact donations have on the healthcare
community, including many local and
charitable hospitals.
C A S E
The Skin Rejuvenation Center
Dr. Richard Jorgenson opened his dermatology practice nearly a
decade ago. Early in the process,
he advertised extensively in the local newspaper, on the radio,
and in a regional magazine. Over
time, physician and former patient referrals helped his practice
grow to the point at which he was
able to retain two skilled nurses and an office staff consisting of
three additional individuals.
In the past year, a new opportunity arose: Dr. June Lee, a
37. recently graduated dermatologist, opened
a practice on the other side of the city. Focusing on female
patients and children with skin prob-
lems, her practice was growing steadily.
Dr. Lee approached Dr. Jorgenson with a proposal: The two
could combine to open The Skin
Rejuvenation Center in the middle of town. The center would
provide beautification services related
to dermatology, such as dermal abrasion, chemical peels, Botox
injections, and laser resurfacing.
These treatments would help those with aging-based problems,
such as wrinkles, age spots, sun
damage, and skin problems resulting from smoking.
To supplement these programs, the center would also provide
other services, such as facials, body
scrubs, body masks, and body wraps. The organization would
also sell skin products, including
moisturizers, acne medicines, and various oils and waxes. The
Skin Rejuvenation Center would also
sell safer tanning products that do not require sun exposure.
A third element of the operation would involve minor surgeries,
including permanent makeup; hair
removal; and treatments for warts, moles, and beauty marks.
This would make the center a nearly
full-service beautification operation.
Dr. Lee noted that some of the services would qualify for
insurance benefits, while others would
not. She also pointed out that some of the services would
receive payments as they were rendered.
Dr. Jorgenson wondered whether the company would primarily
benefit Dr. Lee’s patients, or if oth-
ers would be inclined to visit the center.
38. After consideration by both sides, The Skin Rejuvenation
Center opened. The two physicians
located a building in which they could create a lease-purchase
contract. They needed to renovate
(continued)
Accounting in Healthcare Chapter 6
6.3 Accounting in Healthcare
Healthcare administrators consider both short-term and long-
term financial decisions care-
fully. Part of this process includes planning annual budgets,
overseeing cash flows, and working
to ensure that costs remain at acceptable levels. Both nonprofit
and profit-seeking organiza-
tions maintain accounting records and conduct other activities
that support the organization’s
operational, tactical, and strategic intent. This section examines
accounting practices related to
budgeting, accounts receivable management, accounts payable
management, cost controls, and
auditing of operations.
Budgeting
Budgeting represents the area in which financial and accounting
activities overlap the most. In
addition, managers from other departments, including human
resources and those who oversee
clinical, administrative, and support staffs, are often involved in
the process. Each manager seeks
sufficient funding to effectively operate his or her individual
39. department. As a group, these indi-
viduals identify the needs of the organization, as well as the
costs of those items, both for annual
operations and the long term. In larger healthcare organizations,
two types of budgets require
attention: the capital budget and the operating budget.
Capital Budget
A capital budget assists in planning for major expenditures and
acquiring the funds needed to
finalize such purchases and lease arrangements. Capital
budgeting programs incorporate mana-
gerial plans with accounting and financing arrangements
(Gapenski, 2009). Healthcare manag-
ers, working in conjunction with other leaders, identify the
major (fixed) assets to acquire, such as
a building, a renovation, a fleet of ambulances, or other medical
equipment. The capital budgeting
process involves the following steps:
1. Identify the required asset(s) and the funding needed to
purchase them.
2. Estimate the useful life of the asset(s).
3. Determine the method of depreciation that applies to the
asset.
4. Specify the nature of payments to be made.
The required resources are based on the price of the asset(s) to
be obtained. Managers make deci-
sions about how to procure the assets, whether through bonds,
loans, stock issues, or leases. The
the interior to meet the medical and aesthetic requirements for
this type of business. The two der-
matologists knew they had entered a new and exciting period in
their careers.
40. In answering the following questions, it may be helpful to
review Sections 6.1, 6.2, and 6.3.
1. How would the combination of business services and
products assist in the area of working
capital?
2. What method of pricing should apply to each of the three
types of services The Skin
Rejuvenation Center plans to offer?
3. Beyond the lease for the building, what type of financing
should the two physicians use to
acquire the necessary equipment and furnishings? What
advantage would there be to the lease?
To the other forms of financing?
4. Identify the fixed and variable, direct and indirect costs
associated with this new company.
Accounting in Healthcare Chapter 6
goal is to maintain a reasonable cost of capital that balances
costs with risks, fixed obligations,
and other considerations, such as donations.
The asset’s useful life should be estimated and established
between the healthcare organization
and the vendor selling the asset. The length of the life
determines in part how the item will be
depreciated and the method of payment to be made.
The method of depreciation varies according to the following:
41. asset’s years of useful life, whether
an asset retains or quickly loses value after its purchase, the
organization’s tax situation, and
managerial preference. Accelerated depreciation methods are
employed for assets that quickly
lose value or by organizations seeking to reduce immediate tax
liabilities by front-loading the
expensing of items. Organizations employ straight-line
depreciation when the useful life delivers
a consistent value over its life span. Accelerated depreciation
applies to circumstances in which
an asset quickly loses value or when doing so improves an
organization’s tax situation for the
early years of the asset’s life (Oliver & Horngren, 2010).
The nature of payments results from the type of financial
instrument. A bond requires a sinking
fund. A loan and a lease will feature monthly, quarterly,
semiannual, or annual fixed obligations.
Stocks include a dividend policy stating how and when
dividends will be paid to shareholders.
All of these payments are built into the operating budget
prepared by the accounting office for
each year.
An additional major capital expenditure that has become
increasingly common in the healthcare
system occurs when a major facility, such as a hospital,
purchases the practice of an independent
physician, thereby bringing that practice under its operating
umbrella. Capital must be raised to
make such purchases.
Operating Budget and Revenues
An operating budget maps expected revenues and then allocates
the funds to individual depart-
42. ments and activities for their expenses, normally over a one-
year period. The annual document
specifies the nature of all revenues to be received. Revenues
accrue from third-party reimburse-
ments and patient payments. Third-party reimbursements take
various forms, including those
itemized in Table 6.1.
Table 6.1 Forms of third-party reimbursement
Form Explanation Example
Fee for services Full charge for a service Annual exam
Per diem Dollar amount per day for care Hospital room charge
Nursing facility daily charge
Per diagnosis Amount charged for a diagnostic
service
Read an X-ray
Bundles Fixed amount shared by providers Set of doctors, one
patient
Capitation Fixed amount per enrollee per
month for specified services
Managed-care organization charge
per patient
Government Reimbursement
Medicare
43. Medicaid
Accounting in Healthcare Chapter 6
Accounts receivable includes amounts due for all services that
have been rendered or items
that have been sold for which payment has not yet been made.
Accounts receivable management
constitutes a critical activity in the accounting department of
most healthcare organizations
(Sachdeva & Gitman, 1981). Receivables are collected from
third-party reimbursement organi-
zations, from government organizations, and then from patients.
A fully developed accounts
receivable program incorporates the activities detailed in Table
6.2.
Table 6.2 Elements of accounts receivable management
Element Explanation
Precertification Prior to admission; verifies the patient has
insurance
Medical records Coding of all evaluations, treatments,
medicines, and other medical
services
Billing Itemized statements sent to patients, insurance
providers, and government
agencies
Collection Receipt and deposit of funds sent; financial
counseling to patients
44. (including setting up payment programs)
Accounting entries Recording of all payments and nonpayments
for accounting purposes
Legal Oversight of contracts, litigation policies, federal
regulations, and patient
rights
Compliance Detection and reporting of fraud and abuse
Operating Budgets and Expenses
After the accounting office establishes the total amount of
expected revenues for the upcom-
ing year, operating budgets for individual departments and
activities can be established. Three
potential forms of allocation can be made for these units:
across-the-board, relative-amount, and
variable or flexible budgets.
An across-the-board operating budget estimates the growth,
stability, or decline of revenues
expected in the coming year. Each department then receives a
budget allocation that mirrors
the change in revenues. For example, if a hospital board expects
a 3% increase in revenues, then
each department would receive a 3% increase in its annual
operating budget. The same type of
adjustment would be made for budget decreases or for a flat
budget. Across-the-board budgets are
common in government organizations, including Medicare and
Medicaid.
A relative-amount operating budget allocates funds to various
departments based on need. To
determine need, financial management often conducts a cost–
45. benefit analysis, which involves
adding the benefits of a business-related program or action and
then subtracting the costs asso-
ciated with that program or action. If, for example, a cost–
benefit analysis determined that a
laboratory had been underfunded, and services to patients and
physicians had suffered as a result,
then additional resources would be allocated to that unit, and
other units would receive lower
allocations.
A variable or flexible operating budget adjusts departmental
allocations during the course of
the year. If higher-than-expected revenues occur, then budgets
are adjusted upward. If revenues
decline, the budgets reflect that change as well. Both across-
the-board and relative-amount bud-
gets can be adjusted using the variable approach.
Accounting in Healthcare Chapter 6
Healthcare managers in various departments become quickly
familiar with how budget alloca-
tions for expenses are made. Each year they make budget
requests that often include requests for
extraordinary expenditures. It becomes the role of top
management to make judgments about
which applications are most viable.
Cost Allocations and Cost Control
Healthcare accountants hold two major responsibilities in the
area of costs. First, they are charged
with allocating costs in as precise a manner as possible for each
form of healthcare. Second, they
46. assist in trying to reduce or manage the costs of various
materials and activities.
The previous section described concepts regarding fixed and
variable costs and pricing meth-
ods based on those costs. In addition to those costs, accountants
provide information regarding
direct and indirect costs. Direct costs in healthcare are those
that can be attributed to a specific
treatment format for a patient or activity. Direct costs include
physician fees, medical supplies,
medical equipment, nursing care, and any other item directly
associated with helping a patient.
Indirect costs in healthcare constitute those that cannot be
attributed to a specific patient or
form of service, such as most support staff
activities, including patient safety, food ser-
vice, and janitorial services. Calculations of
direct and indirect costs compile impor-
tant information for billing practices and
third-party payment requests that are sent
to insurers and governmental agencies.
To help control costs, accounting manag-
ers compute important numbers regard-
ing inventories, payroll figures, and other
expenses, such as supplies for bathrooms
for visitors. Inventory control constitutes
a key activity provided by the accounting
department. The management of medical
supplies balances two key factors: main-
taining sufficient inventory and not carry-
ing excess inventory. Sufficient inventory
is needed so that the organization does not
experience a stock out, or the failure to have a crucial medicine
or medical supply on hand. A
48. who cannot afford it to be a primary altruistic mission of the
organization. In profit-seeking set-
tings, however, decisions regarding who receives care are, in
part, dictated by the government.
For example, emergency rooms are mandated to treat anyone
needing emergency care, regardless
their ability to pay (Hadley & Holahan, 2004).
Auditing
Healthcare organizations engage in two forms of auditing:
internal and external. An internal
audit seeks to ensure that accounting and financial operations
and statements are accurate and
that the systems in place protect against intentional or
unintentional malfeasance. Internal audits
may be conducted either by an accountant specifically retained
by the organization to provide
such services or by an outside provider that has been retained
by the organization. For example,
the Catholic Healthcare Audit Network provides internal audits
for numerous Catholic health-
care organizations and facilities.
External audits are imposed by an outside force, such as for a
government requirement. Any
healthcare organization that participates in Medicare becomes
subject to an annual external
audit. Many financial organizations require external audits
before an organization can receive a
loan or assistance in the sale of bonds or common stock. For
both internal and external audits,
typical inspections are made in the following areas:
• Accuracy of financial records
• Accuracy of human resource records, including time
cards, sick leave pay, and accruals
49. of benefits
• Management of physical assets, including maintenance
• Management of purchasing procedures
• Analysis of uncompensated care
• Protection against financial conflicts of interest by
various parties
• Protection against fraud perpetrated against outside
organizations (e.g., against the govern-
ment or insurance companies)
• Protection against fraud perpetrated against the healthcare
organization
• Protection against inurement, or gaining a financial
advantage through insider status
Audit reports tend to be sweeping documents covering these
areas. Auditors point out problems
and make recommendations regarding potential solutions. It is
then up to the organization’s
financial, accounting, and corporate executives to make sure
that problems and deficiencies are
corrected. Cases of illegal activities must be reported to the
appropriate government agency.
Chapter Summary Chapter 6
Chapter Summary
Financial governance in the field of healthcare involves
oversight of day-to-day operations that
require financing and planning for and implementation of
instruments that provide for the orga-
nization’s long-term financial needs. Healthcare managers
employ balance sheets to understand
50. the organization’s basic standing with regard to assets and
liabilities. They use the income sum-
mary to determine whether revenues exceed expenses. And they
use ratios to evaluate other
monetary circumstances of the organization.
Working capital policy oversees the organization’s cash flow,
ensuring that sufficient funds are
available to pay bills as they come due. Healthcare managers
understand that cash inflows often
lag outflows; as such, they take the necessary steps to make
sure the organization remains solvent.
C A S E
Accounting for Altruism
John Mulvaney faced a unique challenge. As the chief financial
officer (CFO) for Merciful Hospital,
he had been given the directive to make certain the organization
stayed true to its name. The board
of directors had established a policy that 10% of the hospital’s
excess of revenues over expenses (in
essence, the “profits” for this nonprofit organization) would be
directed to granting care to those
without insurance, those with low incomes, and others in
difficult financial circumstances.
On the surface, the mandate seemed fairly straightforward;
however, several issues quickly
emerged. First, if the policy were widely publicized in the
community, would some patients believe
they were being charged extra so that others could receive free
medical care? This might lead some
to seek treatment elsewhere. How might that decision affect
revenues?
51. Second, the hospital had to accept many payments as dictated
by government forces. Medicare,
Medicaid, and other payers have established set amounts for
various treatments, and these orga-
nizations are often categorized as low payers. How would it be
possible to create circumstances in
which costs would be sufficiently low so that revenues would
exceed expenses for those services?
Third, the most lucrative procedures (in terms of revenues
versus costs) are those that are not nor-
mally covered by insurance, such as elective surgeries for
cosmetic appearance. How should these
be priced relative to other treatments?
John also considered other sources of revenues not directly
related to patient care. He believed
it would be wise to establish a foundation with the sole purpose
of funding altruistic care. His
dilemma was how to account for monies received with regard to
an income summary. John hoped
that donations would be placed into an ongoing fund, with only
the interest received being used to
support the altruistic program.
In the end, John was pleased by his organization’s desire to take
care of the most vulnerable. His
task was to figure out how to account for and finance the
intention.
1. How should free or reduced-price services be calculated on
accounting forms? Which portion
would be revenue? Which portion would be cost?
2. How might these altruistic programs affect the organization’s
52. working capital?
3. How would the organization account for direct and indirect
costs for services provided free of
charge?
4. What sources of financing, beyond donations, might be useful
for the altruistic care program?
Key Terms Chapter 6
Healthcare pricing is typically based on costs, profits, or the
competition. Managers evaluate
fixed and variable costs and assign them to individual services,
thereby establishing a base price,
or charge. In some settings, prices are set to match, exceed, or
undercut the competition. Rarely
do supply-and-demand forces affect charges in healthcare
settings.
When acquiring large assets, healthcare financial officers
consider the use of bonds, loans, com-
mon stocks, and leasing. Each option creates differing costs,
risks, and cash flow issues.
Accounting practices in healthcare include budgeting, accounts
receivable management, accounts
payable management, cost controls, and auditing of operations.
Capital budget and operating
budgets represent the two main forms of accounting practices.
The capital budget assists in plan-
ning for major expenditures and acquiring the funds needed to
finalize such purchases and lease
arrangements. An operating budget maps expected revenues and
then allocates the funds to
53. individual departments and activities for their expenses.
Healthcare accountants are charged with allocating costs in as
precise a manner as possible for
each form of healthcare. They also assist in trying to reduce or
manage the costs of various mate-
rials and activities. This task includes inventory control and
uncompensated healthcare.
An internal healthcare audit seeks to ensure that accounting and
financial operations and state-
ments are accurate and that the systems in place protect against
intentional or unintentional
malfeasance. External audits are imposed by an outside force,
such as a government require-
ment. Both forms examine a variety of organizational operations
and make recommendations for
improvements and necessary changes.
Key Terms
accounts receivable amounts due for all services that have been
rendered or items that have
been sold for which payment has not yet been made
activity-based costing setting prices for healthcare services
based, in part, on the level of
expertise and precision required
capital budget a finance and accounting instrument that assists
in planning for major expen-
ditures and in acquiring the funds needed to finalize such
purchases and lease arrangements
cost-plus pricing a pricing approach that adds a fixed amount to
the total cost of a product or
service
54. direct cost healthcare cost that can be attributed to a specific
treatment format for a patient or
activity
financial governance management of two primary
responsibilities: (1) oversight of day-to-day
operations that require financing and (2) planning for and
implementing long-term financial
needs
fixed cost incurred expense that is not affected by the volume of
sales or revenues
indirect cost healthcare cost that cannot be attributed to a
specific patient or form of service
markup pricing a pricing approach that assigns a percentage to
add to the total cost per item
Critical Thinking Chapter 6
operating budget finance and accounting instrument that maps
expected revenues and allo-
cates funds to individual departments and activities for their
expenses, normally over a one-
year period
uncompensated healthcare a situation in which uninsured
individuals receive medical treat-
ment but cannot pay for it or in which others fail to pay their
portion of the expense, such as
coinsurance
55. variable cost cost directly related to volume or revenue
working capital a comparison of an organization’s current assets
to its current liabilities
Additional Resources
American Accounting Association http://www.aaahq.org
Federation of Schools of Accountancy http://www.thefsa.org
Financial Management Association International
http://www.fma.org
Institute of Management Accountants http://www.imanet.org
International Federation of Accountants http://www.ifac.org
Management and Accounting Web (database of articles
pertaining to management and
accounting) http://www.maaw.info
National Association of State Boards of Accountancy
http://www.nasba.org
Critical Thinking
Review Questions
1. What two activities are involved in financial governance?
2. What three financial instruments do financial officers use to
examine an organization’s
monetary well-being?
3. Define working capital.
4. How do managers calculate the amount of working capital an
organization holds?
5. Define fixed costs, variable costs, and total costs.
56. 6. Define markup pricing and cost-plus pricing.
7. What is a break-even point?
8. What are the advantages and disadvantages of bonds as
financial instruments?
9. What are the advantages and disadvantages of loans as
financial instruments?
10. What are the advantages and disadvantages of common
stock as a financial instrument?
11. What are the advantages and disadvantages of leasing as a
financial instrument?
12. What are the differences between a capital budget and an
operating budget?
13. What elements are included in accounts receivable
management?
14. What are direct and indirect costs in healthcare operations?
15. What is uncompensated healthcare?
http://www.aaahq.org
http://www.thefsa.org
http://www.fma.org
http://www.imanet.org
http://www.ifac.org
http://www.maaw.info
http://www.nasba.org
Critical Thinking Chapter 6
Analytical Exercises
1. A healthcare organization has $250,000 in the bank, $500,000
in accounts receivable, and
$100,000 in on-hand medical supplies. The value of its building
is $1,400,000, and the medi-
cal equipment on hand is worth $700,000. The organization
57. owes $150,000 in accounts
payable. The mortgage for the building has a $900,000 balance.
The organization also owes
$400,000 for its medical equipment on a bank note. Based on
these figures, calculate this
organization’s amount of equity.
2. An independent physician’s practice earned $975,000 in the
past year. The physician paid
$50,000 for all supplies. Rent for the physician’s office space
was $60,000 for the year. Office
salaries totaled $300,000. The physician received a one-time
payment of $100,000 for an
office building that she had previously owned. Her income tax
rate is 40%. Calculate the
NIAT for this medical practice.
3. A skilled nursing facility has $450,000 of current assets on
hand. The organization has
$150,000 in current liabilities on the books. Calculate the
organization’s level of working
capital.
4. Which pricing method do you believe is most appropriate for
the following types of
organizations?
• Dental surgeon providing intricate procedures
• Skilled nursing facility for those with moderate medical
needs
• Drug store selling over-the-counter medicines and
pharmacy drugs
• Pharmaceutical company creating new drugs
5. How would a break-even analysis be valuable to the
accounting department of a nonprofit
hospital operated by a religious group?
58. 6. A local for-profit mental health center’s management team is
considering the purchase of
a building that could be used as a lockdown facility for patients
requiring careful, 24-hour
scrutiny, such as those at risk of suicide. The building has a life
expectancy of 20 years. What
form of financing should be used to acquire the building? What
method of depreciation
should be used? Would your answer change if the managers
knew that several major costs
would occur in about seven years, including providing a new
roof and upgrading the plumb-
ing system? Why or why not?
7. How would management views of uncompensated care differ
in a for-profit healthcare pro-
vider as opposed to a nonprofit healthcare provider?
Marketing and Competitive
Strategies and Tactics
Chapter Objectives
After reading this chapter, you should be able to
1. Describe the nature of marketing.
2. Apply strategic marketing concepts to the healthcare
industry.
3. Create tactical activities that support the strategic health
marketing program using mar-
60. money we cannot support our mission. (cited in Doyle, 2012)
Many critics believe that these advertising practices have little
value. According to Dr. Sidney
Wolfe, director of the health research group at Public Citizen:
“Hospitals seem to be spending
money left and right trying to get more patients. Absent
significant cost controls, there’s nothing to
stop them. . . . It’s siphoning money
away from healthcare. Advertising
shouldn’t be confused with taking
care of patients or improving patient
care” (cited in Doyle, 2012).
Samuel Steinberg, a Florida-based
hospital finance consultant, also
remained skeptical about the bene-
fits of advertising: “It’s very difficult
to be able to demonstrate that these
things are worth the investment. . . .
Hospitals and health systems that
put a lot of money into advertising
say it is beneficial. But when you ask
them to prove it, there’s a real short-
age of good research that verifies that it’s worth it.” But the
Missouri Hospital Association created
the following response: “Marketing and advertising is core to
our mission to educate the pub-
lic, [including] promoting better public health by reminding
patients of the need for preventive
screenings such as mammograms” (cited in Doyle, 2012).
In this era of the proliferation of medical advertising for such
things as Viagra and Cialis, jokes
62. suggests that the goal of marketing
should be to develop relationships with an organization’s
customers and other publics. This con-
cept could also be applied to the nature of healthcare. In the
past, however, a more traditional
definition (Armstrong & Kotler, 2012) for marketing has been:
1. Discovering consumer needs and wants
2. Creating the goods and services that meet those needs and
wants
3. Pricing, promoting, and delivering the goods and services
According to this definition, marketing begins with an
understanding of consumer needs and
wants. Thus, the foundation of any marketing management
program consists of identifying
groups of consumers that share a common desire for a good or
service. Only then can the goods
or services be created and sold.
Primary Marketing Activities and Components
The traditional definition of marketing implies six major topics,
as shown in Figure 5.1.
Figure 5.1 Healthcare marketing
Markets
(patients as
consumers)
f05.01_HCA340
Distribution
Products
63. (goods and
services)
Pricing
Promotion
People
The Nature of Marketing Chapter 5
Markets consist of people (or businesses) with wants and needs,
financial resources, and the will-
ingness to spend those resources to satisfy their wants and
needs. The most common method for
discovering individual markets is to divide them into various
consumer and business-to-business
segments. In healthcare, however, methods used to identify
markets differ from standard for-profit
operations. Although most hospitals feature a community or
regional focus, many hospitals and
smaller healthcare operations also specialize in the treatment of
certain illnesses (cancer, heart
disease, mental health) or try to reach certain categories of
patients (athletes, pregnant women,
children, elderly). These groups have wants and needs that can
be specified and documented.
Products are the physical goods sold to consumers and other
organizations, as well as the services
that are offered to individual consumers, other businesses, and
the government. Physical goods
include both durable goods that last more than one year and
nondurable goods with shorter
64. uses. In healthcare, an example of a durable good is the medical
equipment a person purchases
for long-term care, such as a wheelchair. Nondurable goods
include convenience items, shopping
goods, and specialty products. Convenience items include
frequently purchased products that
feature low prices. In healthcare, convenience items would
include over-the-counter medicines
and other low-cost health aids, such as heating pads. Shopping
goods require consumers to make
some level of effort in their choices and purchases. For
example, going to a pharmacy to purchase
prescriptions, or deciding to purchase a hot tub or exercise
equipment to improve one’s health.
Orthodontist care would also qualify as a shopping good, due to
the increasing availability of
options. Specialty products are sold at unique outlets and
require a more concerted effort by the
individual consumer to find them and purchase them. Few
specialty items are associated with
healthcare.
Services, the intangible items that are sold to others, constitute
the primary form of product that
is marketed in healthcare. Examples of health services include
ambulance delivery of patients,
insurance, and most forms of medical care, including regular
physician practices, specialists,
nursing home care, dentistry, psychiatric care, and
rehabilitation services.
Prices of goods and services are normally based on costs,
demand and supply, competition, and
profit goals. As mentioned earlier, patients, or consumers,
rarely know the actual price of a health-
care service. Pricing complications arise from methods of
65. billing, the type of insurance cover-
age, government payments, and provider write-offs. In addition,
the healthcare provider, such as
a hospital, may offer the exact same service at a price that is
vastly different from that charged
by other similar organizations (James, 2013). When a healthcare
facility provides a new good or
service, the organization’s leaders can decide whether they want
to use a skimming method, in
which the price charged is as high as possible, or penetration
pricing, in which the price is set as
low as the firm can afford. In the unique setting of healthcare,
however, neither strategy seems
particularly applicable. Instead, costs are allocated across the
number of patients served over
time by the item or service.
Place, or distribution, involves deciding where, how, and when
products will be made available
to potential customers. In a standard marketing program,
distribution includes a decision about
the type of distribution approach that will be used: intensive,
selective, or exclusive. Intensive
distribution means selling the product in every available
location and is often associated with
convenience goods. Selective distribution involves placing
products in outlets that are believed to
be profitable or that project a certain image, and not using other
outlets. Exclusive distribution
restricts the availability of the product to a highly select group
of outlets—normally only one per
geographic region.
The Nature of Marketing Chapter 5
66. Some healthcare products that feature intensive distribution are
daily or regular-use products,
such as aspirin, dental rinse, or a toothbrush. Selective
distribution in healthcare occurs when a
small number of physicians provides a specific service, such as
physical rehabilitation, in a given
area. Hospitals tend to operate single locations or a central
facility with additional satellite sites.
Many types of healthcare services are distributed exclusively, in
that only one provider operates
in a geographic area.
The second activity associated with distribution is the physical
distribution program, which
involves choosing methods of transportation, types of
warehouses, forms of inventory control,
and methods of billing and payment. These processes apply to
medical suppliers that provide
products to larger health facilities.
Promotion, another major component of marketing, includes
creating and supporting advertis-
ing programs, consumer and trade promotions programs,
personal selling tactics, and public
relations efforts. The most recent trend in promotion involves
carefully combining all of these
elements into an integrated marketing communications plan
(Clow & Baack, 2014). Promotional
activities have been strongly influenced by the availability of
new alternative media outlets.
Traditional advertising and promotional programs have been
adapted in response to new tech-
nologies and new methods of making contact with customers.
The final, and perhaps most critical, component of effective
67. marketing is people. In a service
industry, such as healthcare, the people performing the services
play crucial roles. To a manufac-
turer of major medical equipment, the people who operate the
machines, deliver the products,
and design the marketing program are the key. In a nonprofit
operation, the people providing the
services to the public, along with the volunteers who help, are
the ones who make the organiza-
tion successful. Without people, an organization cannot
continue to survive.
In recent years, customer satisfaction and customer retention
have received a great deal of atten-
tion. Numerous articles and books focus on what a company or
organization should do to achieve
customer satisfaction and customer retention. Most of this
information can be summarized by
these words: product quality and customer service. Without
product or service quality, there is
no customer satisfaction and no customer retention. Without
customer service, the importance
of product quality quickly diminishes. Thus, these factors are
key components in the healthcare
industry (Clow & Baack, 2010).
Strategic Marketing and Healthcare
In the area of planning, marketing strategies outline the services
to be offered and the tar-
get markets for those services. Marketing strategies provide
broad sweeping plans based on an
organization’s mission and vision statements, as described in
Chapter 4. The mission statement
expresses the primary reasons for the formation and operation
of an organization. The vision
68. statement outlines the organization’s intended future and offers
direction about where the orga-
nization seeks to go and what executives hope the organization
will become and achieve. These
two statements outline the most general direction for the
marketing department and program.
Together, an organization’s mission statement, vision statement,
and marketing strategies outline
its key values.
Marketing tactics include all of the midrange or medium-term
(one- to three-year) efforts
designed to support marketing strategies. Many product design
issues are tactical issues. In
Strategic Marketing Activities Chapter 5
standard marketing programs, tactics include changing the
product’s packaging or label, revising
or creating new advertising taglines, and improving the methods
used to support promotional
efforts. Marketing tactics vary across healthcare organizations,
as many organizations seek to
strengthen a specific brand and engender high levels of
confidence regarding the quality of care
they provide. Often, healthcare marketing tactics involve public
relations efforts, including vari-
ous programs that raise awareness of health concerns and teach
preventive care. Although most
midlevel marketing managers are not involved in developing
marketing strategies, they can be
heavily involved in creating and implementing marketing
tactics.
69. Operational plans, or short-term plans, are created to carry out
marketing strategies and tactics.
Typical short-term plans include departmental budgets, projects,
and programs, such as plans for
the marketing department’s day-by-day activities. A marketing
budget establishes a financial map
outlining the amount of money available for the program and
how funds will be spent, such as for
advertisements, promotional programs, website development
and maintenance, and other more
routine activities. Projects, or single-use plans, are short-term
plans created for one-time activi-
ties. An example of a project is a plan for a one-time health
seminar on a specific topic. Once the
seminar has been held, the project plan is complete. Another
project could be the renovation and
upgrading of a specific medical service area, such as an
operating room. A program consists of a
set of projects that leads to a permanent new course of action.
An example of a marketing pro-
gram is the entire process surrounding the development of a new
medical service. The projects
associated with that marketing program include developing the
service, potentially choosing a
name or a brand for that service, creating an advertising
program to inform the community of its
existence, and other activities (Ferrell, 2013).
5.2 Strategic Marketing Activities
Strategic marketing and strategic management overlap in many
areas. Effective healthcare
administration requires that the two efforts mesh in order to
achieve the organization’s strategic
and marketing communication objectives. In Chapter 4,
strategic management was described in
terms of:
70. • Analysis and diagnosis—strengths, weaknesses,
opportunities, threats (SWOT) analysis
• Generating strategic alternatives
• Strategy evaluation and choice
• Strategy implementation
To complement these activities, marketers begin by conducting
a supporting program known as
a strategic marketing analysis.
Strategic Marketing Analysis
A strategic marketing analysis program consists of an
environmental analysis; a competitive and
industry analysis; a segmentation, targeting, and positioning
analysis; and a customer analysis
(Clow & Baack, 2010). The program also combines elements of
a SWOT analysis in that it assesses
the external environment and various internal company
operations. However, a strategic mar-
keting analysis focuses less on strengths, weaknesses,
opportunities, and threats, and more on
the discovery of how the organization interacts with its
environment, its markets, and specific
customers. Executives seek to gauge how organizational leaders
can create new relationships with
Strategic Marketing Activities Chapter 5
patients and customers while also building on current
relationships. Such an analysis can be
extremely helpful to marketing managers in a healthcare system.
71. Environmental Analysis
An environmental analysis begins with careful monitoring of all
external variables that have an
impact on the healthcare industry. Assessments of all political,
social, economic, technological,
and semicontrollable forces should be made, much in the same
format as a SWOT analysis. The
information gathered should reflect specific issues that affect
healthcare marketing programs,
rather than overall strategic implications.
For example, when examining political forces, marketers look to
laws that directly apply to vari-
ous activities, such as advertising. They must become familiar
with what can, and what cannot,
be said in a commercial for a hospital. The term puffery, for
instance, means that an organization
can make untestable claims, such as that a hospital is the
“friendliest” or that it offers “the most
compassionate care,” as no method can be used to verify or
disprove such statements.
Healthcare marketers also consider shifting demographics,
cultural trends and changes, and ris-
ing educational levels to assess the impact of the marketing on
their intended programs. Economic
forces include economic conditions and how these might affect
consumer choices, such as the
decision to have an elective surgery to improve one’s
appearance. Healthcare marketers are con-
sistently asked to get the word out regarding new services,
service improvements, improvements
in the delivery of those services, and technological
advancements in medical care.
Competitive and Industry Analysis
73. Strategic Marketing Activities Chapter 5
might require such services. Segmentation involves identifying
all potential customer groups that
are viable for the purposes of marketing products and services.
Most healthcare organizations
cannot create enough services to reach every available type of
patient. Thus, a market segment
analysis categorizes customers into groups and identifies the
characteristics of members of the
groups (Myron & Truax, 1996).
In traditional marketing programs, a segmentation analysis
includes demographic characteris-
tics, psychographic variables, behavioral actions, and
geographic location. In healthcare, other
categories, such as illness type and patient characteristics (some
of which are demographic, such
as seniors, children, and women), are more useful. The
segments can be examined for potential to
increase revenues based on the match of the service to the local
community, the size of the seg-
ment, growth potential, reachability, consumer responsiveness,
retention potential, and levels of
competition. For example, a local hospital could decide to
provide a mobile magnetic resonance
imaging (MRI) unit to travel around a county or specified
geographic region. A market segment
analysis would reveal whether sufficient need exists to justify
such a purchase and the employ-
ment of specialists to operate the equipment.
After segmentation, the targeting component of the STP
74. approach can proceed. Targeting
includes selecting the market segments (e.g., diseases or groups
of patients) that the organization
intends to target or reach. For example, a mobile MRI unit
would target various injuries, includ-
ing those related to sports, accidents, and the aging process.
Positioning involves creating perceptions in the minds of
consumers about the nature of the orga-
nization, its brand, and its products and services. Positioning
must match the characteristics of the
selected target markets. Continuing the example, a mobile MRI
operation would be positioned as
a high-quality method of diagnosing injuries that would ensure
the best possible care. Marketing
programs would note that MRI imaging is superior to X-rays
and computed tomography (CT)
scans, thus granting the physician greater precision in
diagnosing and treating an injury.
A positioning analysis discovers the place of an organization
and its services in the minds of
consumers and relative to the competition. Four components to
be considered during this part of
the STP analysis include the target audience, the organization
itself or the service being offered,
the frame of reference or category, and points of differentiation
or uniqueness. Once completed,
positioning strategies may be put in place.
A perceptual map may assist in identifying the position of a
healthcare organization in com-
parison to the competition. A perceptual map typically employs
two axes representing the key
variables that affect perceptions of a service. In traditional
marketing, price and quality serve
75. as the two axes. Figure 5.2 provides a perceptual map
containing various providers of the same
service—psychiatric care—using two common healthcare
factors: affordability and accessibility.
Affordability measures the degree to which a patient believes he
or she can reasonably pay for
healthcare services. Accessibility measures perceptions that a
patient could obtain the needed
service from a specific healthcare provider. These two concepts
can be combined as surrogates
for price and then be compared with perceptions of quality to
provide a useful analysis.
As shown, an individual psychiatrist is perceived as being the
least affordable and accessible (the
highest price), even though the psychiatrist might be perceived
as providing the highest level of
care. An individual psychologist costs less and would be more
accessible; however, the quality of
care might also be viewed as being somewhat lower.
(Remember, however, that a patient would
be able to examine insurance coverage to see if this changes the
costs of each.) A support group
Strategic Marketing Activities Chapter 5
in a hospital probably would be reasonably affordable and
accessible (moderately priced) and
would only hold an advantage over an unlicensed counselor if
perceptions were that the quality
of care was better. The unlicensed counselor would be perceived
as being the most affordable and
accessible (lowest price) but may be perceived as providing the
least effective quality of care. More
76. precise perceptual maps would incorporate the names of specific
psychiatrists and psychologists.
A quality STP analysis allows an organization to avoid brand
parity, or the perception that ser-
vices provided by other institutions or physicians are basically
the same. Healthcare organiza-
tions are best served when marketers are able to build brand
equity, or the perception that a
given provider is different and better (Schultz, 2009). Any
dentist or physician holding such an
advantage probably has a highly successful practice, as would
any practice group or hospital.
Customer Analysis
A quality customer analysis provides marketers with an in-depth
understanding of an organiza-
tion’s customers, or patients in the healthcare system. The
“W’s” and “H’s” of a customer analysis
include understanding the who, what, when, and where of
patients seeking medical services, as
well as how those services are obtained. In other words,
marketers should ask, “Who are our
patients? What services do they seek? When do they seek them
(e.g., emergency vs. routine visit)?
Where are they located? How are the services obtained?” The
answers to these questions help a
marketing manager in healthcare establish a target audience to
reach.
An effective marketing program necessitates careful study of
the consumer buying decision-
making process for purchasing a service (Clow & Baack, 2014,
pp. 53–81). Each step offers the
potential to reach and attract customers. Figure 5.3 details the
steps of a purchasing process, as
77. modified to fit healthcare circumstances.
Figure 5.2 A perceptual map for psychiatric care
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Affordability and Accessibility (Price)
High
Quality
Low
Low High
Unlicensed counselor
Individual psychiatrist
Individual psychologist
Hospital-guided support group
Strategic Marketing Activities Chapter 5
Consider a person who experiences blurred vision. The
individual recognizes that her eyesight
has deteriorated. She considers the services of an individual
optometrist, an individual ophthal-
mologist, or a company such as Pearle Vision Center, which
offers both an eye exam and subse-
quent fulfillment of an eyeglass prescription. Next, she reviews
her healthcare coverage to find
out whether eye exams and glasses are included, which would
78. affect her subsequent choice. If she
is poor or unemployed or if her policy does not cover eye care,
she may consider a public health
facility that offers eye exams for free.
When the patient evaluates alternatives, she considers the cost
of each option, along with the level
of care. If she worries that a new problem has emerged, such as
glaucoma, she may wish to see a
more advanced medical professional, depending on the type of
insurance she has. If she believes
it is simply a matter of obtaining a new prescription, other
options become viable. A person with
no or low income will also think about the amount of time she
would wait in a public health facil-
ity and whether she might have to take time off from work to
take advantage of the free service.
After she makes her choice and resolves the problem, she will
review her experience. If she spent
a long time in a waiting room and encountered a terse, distant
eye care professional, she may tell
others not to go to such a place. If her vision does not improve
or is not corrected, postpurchase
dissatisfaction will be high. She might decide to post her story
on social media and websites that
evaluate various eye care providers to tell friends and family
about the episode.
Figure 5.3 The consumer purchasing decision process:
Applications to healthcare
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Step 1: Problem recognition
Recognize a health Issue
79. Step 2: Information search
Examine potential healthcare providers
and options that could resolve the health issue
Step 3: Evaluation of alternatives
Consider the advantages and disadvantages
of each type of healthcare provider
Step 4: Purchase decision
Seek medical care
Step 5: Postpurchase evaluation
Consider recovery, degree of wellness, satisfaction with
provider
Strategic Marketing Activities Chapter 5
In recent times, many healthcare organizations
take into consideration the steps of the buying
process in some form, with particular atten-
tion paid to postpurchase evaluation. A variety
of techniques may be used to ascertain levels of
patient satisfaction with the services and service
providers.
Additional Factors
When considering customers and patients,
healthcare administrators can benefit from meth-
ods that help them understand market potential
and market demand. Market potential consists of
the total number of patients that might require a