Learn the essentials of finance theory and practice with the tools needed in day-to-day practice In this thoroughly revised and updated fourth edition of Fundamentals of Health Care Financial Management, consultant and educator Steven Berger offers a practical step-by-step approach to understanding the fundamental theories and relationships guiding financial decisions in health care organization. Using cases set in a fictional mid-sized hospital, the book takes the reader into the inner workings of the finance executive's office. As in the previous editions, this book introduces students to key practical concepts in fundamental areas of financial management. This innovative introduction to the most-used tools and techniques includes health care accounting and financial statements; managing cash, billings and collections; making major capital investments; determining cost and using cost information in decision-making; budgeting and performance measurement; and pricing.
Also covered in depth are the financial implications of Patient Protection and Affordable Care Act, which will increase patient volume, reduce bad debt, factor quality and patient satisfaction into the financial picture, and significantly affect how hospitals and physicians are paid for services. Students focusing on the business side of health care will find Fundamentals of Health Care Financial Management: A Practical Guide to Fiscal Issues and Activities, 4th Edition a valuable text for understanding the workings of the health care financial system.
STEVEN BERGER, CPA, is founder and president of Healthcare Insights, LLC, which specializes in health care and financial management training and consulting. Healthcare Insights has also created INSIGHTS, the health care industry s best practice decision support software. He has nearly 30 years experience in the field and recently served a three-year term of membership on the Healthcare Financial Management Association (HFMA s) National Board of Examiners.
Figures, Tables, and Exhibits vii Preface xv Acknowledgments xix The Author xxi Chapter 1: January 1 What Is Health Care? 3 What Is Management? 5 What Is Financial Management? 6 Why Is Financial Management Important? 8 Ridgeland Heights Medical Center: The Primary Statistics 9 Pro Forma Development 13 Living with the Finance Committee and Board of Directors Calendar 19 Year-End Closing 24 Chapter 2: February 31 Accounting Principles and Practices 32 Objectives of Financial Reporting 34 Basic Accounting Concepts 35 Basic Financial Statements of a Health Care Organization 36 Uses of Financial Information 37 The Financial Statements 39 Preparing for the Auditors 52 Analysis of Sensitive Accounts 54 February Finance Committee Special Reports 56 Chapter 3: March 61 Strategic Financial Planning: Five-Year Projections 63 RHMC Strategic Financial Planning 67 Ratio Analysis 74 The Capital Plan and Its Relationship to the Strategic Plan 84 Chapter 4: April 91 Medicare and Medicaid Net Revenue Concepts 94 Calculation of Medicare and Medicaid Contractual Adjustments 100 Implications of the Balanced Budget Act of 1997 109 Implications of the Medicare Modernization Act of 2003 115 Implications of the Patient Protection and Affordable Care Act of 2010 (PPACA or ACA) 117 Managed Care Net Revenue Concepts 131 Preparation of the Medicare and Medicaid Cost Report 137 Presentation of the Audited Financial Statements to the Finance Committee 140 Chapter 5: May 145 Fundamentals of Revenue Cycle Management (RCM) 146 Calculation of the Allowance for Doubtful Accounts and Bad-Debt Expense 165 Calculation of the Allowance for Contractual Adjustments 170 Chapter 6: June 175 Budget Preparation: The Beginning 177 Budget Calendar 177 Volume Issues 185 Capital Budgeting: June 190 Accounting and Finance Department Responsibilities 195 June Finance Committee Special Agenda Items 198 Chapter 7: July 203 Budget Preparation: Th e Middle Months 204 Capital Budgeting: July 221 Regulatory and Legal Environment 223 Other Regulatory and Business Compliance Issues 227 Corporate Compliance 228 Accreditation Issues 229 Patient Satisfaction Issues 232 Chapter 8: August 235 Capital Budget: August 236 Operating Budget 246 Budget Variance Analysis 249 Budget Variance Parameters 252 Flexible Budgeting 252 August Finance Committee Special Agenda Items 260 Chapter 9: September 263 Operating Budget 265 Capital Budget: September 275 Cash Budget 277 Physician Practice Management Issues 280 Current Physician Practice Issues 2013 292 Additional Physician-Hospital Integration Issues 294 Monthly Physician Reporting 295 Chapter 10: October 299 Information Systems Implications for Health Care Financial Management 301 Information Technology Strategic Plan Initiatives 304 HIPAA Implementation Issues 306 Selection of a New Health Care Information System 310 Budget Presentation to the Board Finance Committee 316 October Finance Committee Special Agenda Items 328 Chapter 11: November 331 Preparation of the Budget Results and Delivery to the Department Managers 333 Budgeting and Spreading Contractual Adjustments by Department 337 Issues Involving RHMC s Cost Structure 340 How to Improve the Organization s Cost Structure 344 Supply Chain Management in Health Care 352 Benefi ts of Tax Status for Health Care Organizations 356 Preparation and Implications of the Annual IRS 990 Report 360 Chapter 12: December 367 Getting Ready for Year-End Reporting Again 371 Open-Heart Surgery Pro Forma 371 December Finance Committee Special Agenda Items 380 Looking into the Future of Health Care Finance 383 Future Conclusions 397 References 401 Index 407