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Financial Management of Health Care Organizations: An Introduction to Fundamental Tools, Concepts and Applications, 3rd Edition

Book Description

Thoroughly revised, this third edition of Financial Management of Health Care Organizations offers an introduction to the most-used tools and techniques of health care financial management. Comprehensive in scope, the book covers a broad range of topics that include an overview of the health care system and evolving reimbursement methodologies; health care accounting and financial statements; managing cash, billings, and collections; the time value of money and analyzing and financing major capital investments; determining cost and using cost information in decisionmaking; budgeting and performance measurement; and pricing. In addition, this new edition includes information on new laws and regulations that affect health care financial reporting and performance, revenue cycle management expansion of health care services into new arenas, benchmarking, interest rate swaps, bond ratings, auditing, and internal control. This important resource also contains information on the 2007 Healthcare Audit Guide of the American Institute of Certified Public Accountants (AICPA).

Written to be accessible, the book avoids complicated formulas. Chapter appendices offer advanced, in-depth information on the subject matter. Each chapter provides a detailed outline, a summary, and key terms, and includes problems in the context of real-world situations and events that clearly illustrate the concepts presented. Problem sets that end each chapter have been updated and expanded to support more in-depth learning of the chapters' concepts.

An Instructor's Manual, available online, contains PowerPoint and Excel files.

Table of Contents

  1. Title Page
  2. Copyright Page
  3. Dedication
  4. PREFACE
    1. Chapter One: The Context of Health Care Financial Management
    2. Chapter Two: Health Care Financial Statements
    3. Chapter Three: Principles and Practices of Health Care Accounting
    4. Chapter Four: Financial Statement Analysis
    5. Chapter Five: Working Capital Management
    6. Chapter Six: The Time Value of Money
    7. Chapter Seven: The Investment Decision
    8. Chapter Eight: Capital Financing for Health Care Providers
    9. Chapter Nine: Using Cost Information to Make Special Decisions
    10. Chapter Ten: Budgeting
    11. Chapter Eleven: Responsibility Accounting
    12. Chapter Twelve: Provider Cost-Finding Methods
    13. Chapter Thirteen: Provider Payment Systems
  5. THE AUTHORS
  6. Acknowledgments
  7. Chapter 1 - THE CONTEXT OF HEALTH CARE FINANCIAL MANAGEMENT
    1. LEARNING OBJECTIVES
    2. RISING HEALTH CARE COSTS
    3. EFFORTS TO CONTROL COSTS
    4. COST CONTROL ISSUES WITH ETHICAL OVERTONES
    5. SUMMARY
    6. KEY TERMS
    7. QUESTIONS
    8. NOTES
  8. Chapter 2 - HEALTH CARE FINANCIAL STATEMENTS
    1. LEARNING OBJECTIVES
    2. THE BALANCE SHEET
    3. THE STATEMENT OF OPERATIONS
    4. THE STATEMENT OF CHANGES IN NET ASSETS
    5. THE STATEMENT OF CASH FLOWS
    6. SUMMARY
    7. KEY TERMS
    8. KEY EQUATIONS
    9. QUESTIONS AND PROBLEMS
    10. APPENDIX A - FINANCIAL STATEMENTS FOR SAMPLE NOT-FOR-PROFIT AND FOR-PROFIT HOSPITAL, AND NOTES TO FINANCIAL STATEMENTS
  9. Chapter 3 - PRINCIPLES AND PRACTICES OF HEALTH CARE ACCOUNTING
    1. LEARNING OBJECTIVES
    2. THE BOOKS
    3. AN EXAMPLE OF THE EFFECTS OF CASH FLOWS ON PROFIT REPORTING UNDER CASH AND ACCRUAL ACCOUNTING
    4. RECORDING TRANSACTIONS
    5. DEVELOPING THE FINANCIAL STATEMENTS
    6. SUMMARY
    7. KEY TERMS
    8. QUESTIONS AND PROBLEMS
  10. Chapter 4 - FINANCIAL STATEMENT ANALYSIS
    1. LEARNING OBJECTIVES
    2. HORIZONTAL ANALYSIS
    3. TREND ANALYSIS
    4. VERTICAL (COMMON-SIZE) ANALYSIS
    5. RATIO ANALYSIS
    6. LIQUIDITY RATIOS
    7. REVENUE, EXPENSE, AND PROFITABILITY RATIOS
    8. ACTIVITY RATIOS
    9. CAPITAL STRUCTURE RATIOS
    10. SUMMARY
    11. KEY TERMS
    12. KEY EQUATIONS
    13. QUESTIONS AND PROBLEMS
    14. NOTE
  11. Chapter 5 - WORKING CAPITAL MANAGEMENT
    1. LEARNING OBJECTIVES
    2. WORKING CAPITAL CYCLE
    3. WORKING CAPITAL MANAGEMENT STRATEGIES
    4. CASH MANAGEMENT
    5. SOURCES OF TEMPORARY CASH
    6. REVENUE CYCLE MANAGEMENT
    7. COLLECTING CASH PAYMENTS
    8. INVESTING CASH ON A SHORT-TERM BASIS
    9. FORECASTING CASH SURPLUSES AND DEFICITS: THE CASH BUDGET
    10. ACCOUNTS RECEIVABLE MANAGEMENT
    11. METHODS TO MONITOR REVENUE CYCLE PERFORMANCE
    12. LAWS AND REGULATION FOR BILLING COMPLIANCE
    13. SUMMARY
    14. KEY TERMS
    15. KEY EQUATIONS
    16. QUESTIONS AND PROBLEMS
  12. Chapter 6 - THE TIME VALUE OF MONEY
    1. LEARNING OBJECTIVES
    2. FUTURE VALUE OF A DOLLAR INVESTED TODAY
    3. PRESENT VALUE OF AN AMOUNT TO BE RECEIVED IN THE FUTURE
    4. ANNUITIES
    5. SPECIAL SITUATIONS TO CALCULATE FUTURE OR PRESENT VALUE AND OTHER EXCEL FUNCTIONS
    6. SUMMARY
    7. KEY TERMS
    8. KEY EQUATIONS
    9. QUESTIONS AND PROBLEMS
    10. NOTES
    11. APPENDIX B - FUTURE AND PRESENT VALUE TABLES
  13. Chapter 7 - THE INVESTMENT DECISION
    1. LEARNING OBJECTIVES
    2. OBJECTIVES OF CAPITAL INVESTMENT ANALYSIS
    3. ANALYTIC METHODS
    4. USING AN NPV ANALYSIS FOR A REPLACEMENT DECISION
    5. SUMMARY
    6. KEY TERMS
    7. KEY EQUATION
    8. APPENDIX C - TECHNICAL CONCERNS REGARDING NET PRESENT VALUE
    9. APPENDIX D - ADJUSTMENTS FOR NET WORKING CAPITAL
    10. APPENDIX E - TAX IMPLICATIONS FOR FOR-PROFIT ENTITIES IN A CAPITAL BUDGETING DECISION AND THE ADJUSTMENT FOR INTEREST EXPENSE
    11. APPENDIX F - COMPREHENSIVE CAPITAL BUDGETING REPLACEMENT COST EXAMPLE
  14. Chapter 8 - CAPITAL FINANCING FOR HEALTH CARE PROVIDERS
    1. LEARNING OBJECTIVES
    2. EQUITY FINANCING
    3. DEBT FINANCING
    4. BOND ISSUANCE PROCESS
    5. LEASE FINANCING
    6. SUMMARY
    7. KEY TERMS
    8. KEY EQUATIONS
    9. QUESTIONS AND PROBLEMS
    10. APPENDIX G - BOND VALUATION, LOAN AMORTIZATION, AND DEBT BORROWING CAPACITY
  15. Chapter 9 - USING COST INFORMATION TO MAKE SPECIAL DECISIONS
    1. LEARNING OBJECTIVES
  16. Chapter 10 - BUDGETING
    1. LEARNING OBJECTIVES
  17. Chapter 11 - RESPONSIBILITY ACCOUNTING
    1. LEARNING OBJECTIVES
    2. DECENTRALIZATION
  18. Chapter 12 - PROVIDER COST-FINDING METHODS
    1. LEARNING OBJECTIVES
  19. Chapter 13 - PROVIDER PAYMENT SYSTEMS
    1. THE EARLY YEARS OF PAYMENT SYSTEM, 1929 TO 1964
    2. THE MIDDLE YEARS OF PAYMENT SYSTEM, 1965 TO 1983
    3. THE LATER YEARS OF PAYMENT SYSTEM, 1984 TO PRESENT
    4. MANAGED CARE AND RISK SHARING
    5. EVOLVING ISSUES
    6. MEDICAL ERRORS
    7. CONSUMER CHOICE IN HEALTH CARE
    8. INFORMATION TECHNOLOGY
    9. SUMMARY
    10. KEY TERMS
    11. QUESTIONS AND PROBLEMS
    12. QUESTIONS FROM APPENDIX H
    13. APPENDIX H - COST-BASED PAYMENT SYSTEMS
  20. GLOSSARY
  21. USEFUL WEB SITES
  22. INDEX