Free Essay

Health Care Accounting

In: Other Topics

Submitted By DesKelly
Words 821
Pages 4
Health Care Accounting
Desiree Kelly
March 21, 2016
U of P

The hospital Elijah heart center is a 140-bed cardiac care hospital in New York this 120,000 square foot hospital has cardiac laboratories, radiology services, nephology, and pulmonology services to help those that suffered heart attacks, open heart surgery or any other heart-related illnesses. EHC is facing some financial problems such as capital shortfall, outdated equipment and the need for capital expansion.
I was hired to analyze these issues and determine how to help and submit a report of my decisions. Here is the report of my decisions for EHC.
Capital Shortage:
The cost-cutting options that I choose were to reduced agency staff. Using a third party source to hire staff to help during peak times was helpful but at this time needs to be cut out to save on costs. I also decided to change the skill mix, to have unlicensed assistants help do things such answer phones, file, and input information will help raise the revenue. The loan that I thought was best for EHC is the $1,500.000 with the 9.45% for a 12-month term. I decided on this investment because it allows for early payoff. If the loan was to be paid off in 6 months the interest that would be saved will be $21,297 and there would be saving of more if the option to pay off even earlier than the six months. These changes fixed that capital shortage with EHC, which is causing patient needing services.
Funding Options for the Equipment:
I decided that getting the all the equipment with the refurbished loan would be best due to that the loan payment total and the monthly payment was lower than getting the new equipment. The outcome was not the most optimal option for the EHC. If I would have chosen to lease the x-ray and ultrasound machine it would increase the value of the equipment and cut on the repair cost for the equipment.
Funding option for the capital expansion:
I decided to use the HUD 242 loan insurance program. This loan was the best choice for EHC. The HUD 242 has a loan term of no maximum loan amount, no cash needed at closing for companies that have sufficient equity and the FHA insures 99% of the loan amounts. This loan also offers taxable and exempt bonds. (“Office of the Hospital Facilities,”n.d) This loan enabled EHC to plan a $75 million expansion and improvement this is the largest in the history of this hospital. This expansion will include a new hospital with 100 new private rooms, women’s section, and development of the surgical suites, radiology, and the endoscopy services. This also includes new construction, reconstruction, and expansion of the existing buildings. The two rooms that are not in use any longer that will be destroyed to make new room for the expansion. When this development is finished, it will have five open heart surgery rooms, seven cardiac lab, and 20 critical cars rooms with the digital system that will be able to access the latest cardiac technology.
The things that I have learned in this simulation are that the financial part of any company is critical. If a company is paying out more than they are receiving this is going to cause the profits drop very quickly, and it is very hard for a company to operate this way. There are times that a business might need to get loans for improvements such as in the simulation, and the result is profitable if you make a right choice about loan options.
If I were to do this simulation again I would do the equipment loans differently, the choice to use refurbished for all the equipment was not the best option, this equipment didn't have very high value and high repair costs; if you are to pay the extra expense for new equipment you would have saved on the repair costs. The capital shortage and the funding I would not change due to the decisions I made we the best for the company.
At my current job, I can not apply what I learned to my job due to I am not in a management position currently. In the future, I hope to be in some leadership position where I will take what I have learned from this and apply it if needed to help outcome shortfall in the company.
In conclusion, every company not matter how big or small needs to watch the financial statement from year to year, and if needed cut back on unneeded spending. There are times that spending the extra money to do improvement ends up being profitable for companies also.

References
Additional Resources/U.S. Department of Housing and Urban Development (HUD). (n.d.). Retrieved March 19, 2016, from http://portal.hud.gov/hudportal/HUD?src=/federal_housing_administration/healthcare_facilities/section_242/additional_resources

Similar Documents

Premium Essay

Health Care Financial Accounting

...Ethics Paper Health Care Financial Accounting HCS405 Ethics Paper Financial Management is an important part of today's health care finance plans. Several financial decisions are done on a daily basis for all accounting records and even the business transactions that occur. Some of these decisions are made according with the organiation's fiscal objectives (even if some are done following generally accepted accounting principles). The question I really like to ask then is "How good are the health care organizations' financial management and do they have accurate financial report records"? GAAP Generally accepted accounting principles (GAAP) usually are regarded as the set of guidelines for financial accounting and the jurisdiction of every accounting standards. Following these accounting guidelines the GAAP includes several things like conventions, standards and the different rules the organization's accountant must follow during a copy summarization of all the transactions and in doing the work in general like preparing all the financial statements. The third parties involved with these reports must rely on the stated information to be exempted from all inconsistency or bias without any debate. These could also ensure that all GAAP standards are being followed. All business currently states that, "the generally accepted accounting principles serves as guidelines precisely, a group of......

Words: 1006 - Pages: 5

Premium Essay

Health Care Financial Accounting

...Health Care Financial Accounting Simulation Kanisha Wilson HCS/405 October 20, 2013 Adrian Parker Health Care Financial Accounting Simulation Health care organizations are cutting back on expenses in order to continue to provide quality health care to the community. Cutting back can cause layoffs, the number of patients that who are treated in the health care facility, and how funds are used to keep the organization running. The Elijah Heart Center, located in New York is to have financial difficulties maintaining its hospital’s 140- bed cardiac care unit. I have been selected by the Consulting Firm of Huber and Guizot as the senior consultant to help develop and implement a turnaround strategy. Decisions made during the simulation will be discussed to help Elijah Heart Center on their financial situation. In the simulation reducing agency staff and changing the skill mix were chosen as cost –cutting options. “Whether you as a manager must either review or prepare required data, your responsibility is to recall and apply the elements of consistency, because such data will typically be used for decision making” (Baker & Baker, 2011 p. 152). Reducing agency staff was chosen because by reducing the number of agency staff would help reduce cost by saving money on premiums and contract fees paid to the staff. Changing the skill mix was chosen because it allows the health care organization to hire unlicensed assistants to help the nursing to focus on more......

Words: 1015 - Pages: 5

Premium Essay

Hcs/405 Health Care Financial Accounting

...| Week 4 Individual Assignment | Simulation Review Paper | | By: Kayte Zbikowski | 7/21/2011 | HCS/405 Health Care Financial Accounting Teacher: Mike Shin | My strategy will consist of three phases. These phases include: capital shortage, funding options for equipment acquisition and funding options for capital expansion. During these three phases I will observe the necessary financial statements and documents. From this information I will analyze the information and decide the best strategy for improvements. I will not only focus on the goals for the clinic, but long term budget goals as well. Phase I: Capital Shortage There were two options that I chose to cut costs. The two options that I chose was to reduce agency staff and changing the skill mix. I chose to reduce agency staff because “Reducing proportion of contract labor used to fill vacancies among patient care workers would reduce costs, staffing nursing units and other patient care areas. The salaries of agency contracted people are twice that of the other hospital staff. Reducing these personnel will tremendously cut down costs. Bridging a working capital shortage is one of the strategies that can help increase the hospital’s revenue if a true concrete plan can be formulated. (University of Phoenix, 2011). I chose changing the skill mix because “Changing the skill mix by hiring unlicensed assistive personnel will offer an effective means of addressing economic realities. This......

Words: 1112 - Pages: 5

Premium Essay

Hcs/405 Health Care Financial Accounting

...following paper will address the Patton-Fuller Community Hospitals financial statements including the differences between the audited and unaudited financial statements, the effect that revenue sources had on the financial reporting for the hospital and how the hospitals revenue and expenses were grouped for planning and control. When organizations report unaudited financials it is important to realize there may be changes in the audited financial reporting that may occur after an independent review by an outside accounting firm. Additionally it is also important to realize the effect revenue sources can have on financial reporting and the importance of grouping revenue and expenses when implementing internal financial planning and controls. All of the financial information discussed in this paper is important from a financial accounting perspective for external decision makers can evaluate how well the organization has achieved their goals, as well as, a management accounting perspective to provide internal decision makers with financial information to make operational decisions to help them achieve their goals. How Did the Audited and Unaudited Financial Statements Differ? - Stormie There are two types of financial statements, unaudited financial statements are financial statements that are generated based the financial information that has been provided to certified public accountants based on the accuracy of the financial information that has been presented. Audited......

Words: 782 - Pages: 4

Premium Essay

The Relationship Between Finance and Accounting

...Although finance and accounting are both involved with the financial aspect of a business or organization, the managers and employees in these departments deal with finances in completely different ways. Accounting deals mainly with preparing and examining financial records and ensuring their accuracy, making sure taxes are paid on time and properly, and assessing financial operations to help ensure that organizations run efficiently. On the other hand, finance deals primarily with making important financial decisions for an organization and helping “develop strategies and plans for the long-term financial goals of an organization” (Financial Managers 2012). It is also important to note that financial managers use the financial information prepared by the accounting department in order to make the best decision possible for their organization. Nevertheless, both accountants and financial managers together must operate effectively and efficiently to ensure the continued short-term and long-term financial viability of any health care organization. In this short essay I will explain the relationship between finance and accounting and how they both help ensure the financial viability of a health care organization. First, despite the fact that finance and accounting both oversee the financial aspect of a health care organization, the way in which they handle finances are very different from one another. “Accounting is concerned with financial record keeping, the production of......

Words: 943 - Pages: 4

Premium Essay

Grief

...Determining Financial Viability The relationship between finance and accounting are very similar but they definitely have their differences. “Accounting and finance are the methodical or precise recording, reporting, and assessment of financial deals and transactions of a business. Accounting is an essential part of finance. Accounting produces information about the operations of a business. The end-product of accounting is composed of financial declarations such as balance sheets, income declarations which include the profit and loss accounts, and the declaration of changes in financial position which includes sources and uses of funds declaration” (Difference Between Accounting and Finance). Accounting and finance both need each other. A company needs both. To determine financial viability within a heath care organization, they need a functioning finance and accounting departments. In a health care organization, there needs to be a high functioning finance department. There needs to be an innovative way to run a health care facility. “The current economic situation, together with the uncertainty of healthcare reform, has fueled the demand for efficient and effective facilities” (Elting, D. 2009). Financial departments have to run an efficient department to assure that they are not faced with high debts that could cause a healthcare to shut down. With all of the changes occurring in healthcare there needs to be a financial team that can try and run......

Words: 587 - Pages: 3

Free Essay

Generally Accepted Accounting Principles

...Generally Accepted Accounting Principles Tonya Krell Phoenix Generally Accepted Accounting Principles Accounting standards that record and report financial information in a consistent manner is known as Generally Accepted Accounting Principles (GAAP). There are four primary financial statements in which GAAP is used to guide the rules and requirements. The financial statements include a balance sheet, statement of operations, statement of cash flow, and statement of changes in net assets (Cleverley, Song, & Cleverley, 2011). Professionals, to prepare financial documents based on a common standard, implement the principle. GAAP is beneficial to companies as it alleviates the difficulties of comparing a company’s financial statements, establishes creditworthiness of a company, and provides financial strength ("How does GAAP aid in health care," n.d.) GAAP is reinforced by eight accounting concepts. The concepts are as follows: (a) Entity concept, (b) Going-concern concept, (c) Matching principle, (d) Cost principle, (e) objective evidence, (f) Materiality, (g) Consistency, and (h) Full disclosure (Finkler, Jones, & Kovner, 2012). This paper provides a description of each concept and how the concept relates to health care. In accounting there must be an entity that is used to prepare financial statements such as balance sheets for the health care organization. This can include the organization as a whole but typically is broken down into units or departments.......

Words: 909 - Pages: 4

Free Essay

Generally Accepted Accounting Principles

...Generally Accepted Accounting Principles Introduction In the past, the financial statements of health care organizations’ were fairly easy to compare. Historically, members of the healthcare community had applied similar sets of accounting rules without regard to their business structure. This meant that whether an organization was a for-profit, nonprofit, or a government owned, every healthcare entity was considered to be in the same industry and the accounting procedures they were forced to follow were similar, thus increasing the level of comparability between organizations. However, today’s standard setting environment requires these similar organizations to apply different sets of accounting standards based of their business model. Resulting in similar transactions being accounted for differently and reducing the level of comparability between financial statements. This has led to the need and implementations of Generally Accepted Accounting Principles. Generally Accepted Accounting Principles, or GAAP, are a framework of accounting standards, rules and procedures defined by the professional accounting industry, which have been adopted by nearly all publicly traded companies in the United States, and allow for the recording and reporting of financial information in a uniform manner (Investing Answers, 2015). The benefit to companies using GAAP is that it makes it easier to compare the financial statements of different companies. GAAP aids in health care to......

Words: 998 - Pages: 4

Premium Essay

Reporting Practices and Ethics Paper

...Reporting Practices and Ethics Paper HCS405 Within today’s health care finance plans financial management is one of the most important aspects. There are numerous financial decisions that are handled from day to day in reference to accounting records and the business transactions that occur within the organization. The organizations fiscal objectives tackle these decisions. A concern that may arise is the integrity of the health care organization’s financial management department and the accuracy of their records. GAAP Generally accepted accounting principles or GAAP are the set of regulations for financial accounting and the jurisdiction of all accounting standards. Along with these guidelines the GAAP includes other important aspects such as conventions, standards, and different rules the accountants within the organization must adhere to during a copy summarization of all the transactions and in doing the usual tasks such as preparing all the financial statements. Any third party involved with these reports need to rely information within the report to be without inconsistencies or flaws. These can help ensure that the GAAP standards are being maintained and adhered to. All business currently states that, "the generally accepted accounting principles serves as guidelines precisely, a group of objectives and verified conventions that were permanently set up over time to standardize how financial statements must be prepared or presented” (FASAB,......

Words: 753 - Pages: 4

Premium Essay

Reporting Practices and Ethics

...things. Health care makes up one sixth of the U.S. GDP it is the largest source of the nation's public expenditures. With large amounts of revenue going in and out of hospitals and facilities and health care reform accounting can be challenging. To help ensure fair and accurate financial reporting, there are practices and ethical standards that must be followed when accounting for finances in health care. This paper will provide the four elements of financial management and standard accounting principles and ethics. Financial Reporting Practices The Financial Accounting Standards Board was established in 1073. It is the designated organization in the private sector that establishes standards of financial accounting for nongovernmental entities. The standards established are officially recognized as authoritative by the SEC and the American Institute of Certified Public Accountants. The FASB also has accounting standards for health care entities. "The AICPA Health Care Expert Panel developed technical guidance on the application in consolidated financial statements of a recent accounting standards update for health care entities" (Financial Reporting, 2012, para 2). In May 2012, the FASB decided to revisit the question of whether management should assess whether there is doubt about an entity's ability to continue. According to Financial Reporting (2012), "The decision can as a result of FASB's recent decision not to pursue going-concern-type disclosures." Accounting......

Words: 1309 - Pages: 6

Premium Essay

Reporting Practices and Ethics Paper

...Reporting Practices and Ethics Paper Jessy Dominique-Clark HCS/405 Health Care Financial Accounting September 24, 2013 Debra Brindley Reporting Practices and Ethics Paper The National Health Care Anti-Fraud Association assess that the economic damages cause by health care fraud is more than ten of billon dollars every year. Financial controlling is difficult, but by using the four fundamentals of monetary management correctly and following the generally accepted accounting principles, revealing the financial position of an organization is not difficult ("The Challenge of Health Care Fraud", 2012). The four fundamentals of monetary management are controlling, decision-making, organizing, and planning. Controlling entails ensuring that every area of the organization is adhering to the plans that have been established. The decision-making process entails making an educated choice. Organizing entails using the organizations resources to successfully carry out the plans that have been established. The process of planning is to compile goals of the organization and then to identify the steps necessary for achieving these goals. The financial management team is accountable for ensuring the reports are up-to-date, and they are accountable for reporting the funds with the principles set forth by the code of ethics and mission statement of the organization. Every organization has the obligation and wants the veracity to release the correct financial position to its......

Words: 865 - Pages: 4

Premium Essay

Health Care

...In recent years financial accounting and reporting in the United States health care organization has revolved. Currently health care organizations that includes public and private, for profits and non for profits adhere to generally accepted accounting principles. The generally accepted accounting principles are a mixture of respected criteria that govern the field of accounting, which consist of rules that accountants must comply by. In this paper first it is going to explain the principles of accounting. Next, give an aspect to the value and important of corporate compliance when using generally accepted accounting principles. In addition, address the importance of cooperate compliance and its relationship with ethics, fraud, and abuse The general accepted accounting principles (GAAP) is a set of accounting principles, standards, and procedures that health care organizations uses to compile financial statements. The general accepted accounting principles also steers health care organizations in recording business transaction. However, general accepted accounting principles are not rules, but are six sets of principles for a health care organization to follow for recording. .The first principle is economic entity, which allows accountants to keep the sole proprietors business transaction separate from the owner’s personal transactions. The second principle is accrual basis, which is a method of book keeping that accountant uses to record financial events on the bases of......

Words: 1070 - Pages: 5

Premium Essay

Reporting Practices and Ethics in Financial Healthcare

...Financial Reporting Practices and Ethics in Healthcare Jeanette Jordan 03/07/16 HCS-405 Prof. Adrian Parker Abstract Financial management is a vital part of organizational effectiveness, it is a discipline with a long and respected history. Health care service delivery is a business, and the concept of financial management assists in balancing the inflows and outflows that are a part of the business. The managers within a health care organization will generally have one of three views the financial view, the process view and, the clinical view. Health care managers must of necessity interact with one another. Thus, managers holding different views will be required to work together. So, health care managers who understand health care finance will be able to interpret and negotiate successfully such interactions between and among viewpoints. (Mohamed Refaat, 2016) There are four elements of financial management planning, controlling, organizing and, decision making. In planning the financial manager identifies the steps that must be taken to accomplish the organization's objectives. Thus, the purpose is to identify objectives and then to identify the steps for accomplishing these objectives. In controlling the financial manager makes sure that each area of the organization is following the plans that have been established. In organizing the financial manager decides how to use the resources of the organization to most effectively carry out the plans that have been......

Words: 1131 - Pages: 5

Premium Essay

Reporting Practices

...Reporting and Ethical Practices Financial and accounting professionals must follow the ethical standards that regulate the type of business they conduct, who they conduct business with, and how they use their skills to conduct their business. These ethical standards are defined by professional finance organizations and the Financial Accounting Standards Board. This article will discuss reporting and ethical practices for any financial and accounting organization. It will include a summary of generally acceptable accounting principles and general financial ethical standards, as well as, summarize the four elements of financial management. This article will conclude by discussing researched articles on financial reporting practices, ethical standards, and financial management within the health care organization. Generally Accepted Accounting Principles (GAAP) and Financial Ethical Standards According to "Business News Daily" (2014), “Generally Accepted Accounting Principles (GAAP) is a combination of guidelines, comprehensive rules, and generally accepted standard practices utilized throughout the accounting industry to prepare and standardize financial statements, such as balance sheets, income statements, and cash flow statements” (Generally Accepted Accounting Principles (GAAP): Standards & Rules for Accountants). In 1999, the American Institute of Certified Public Accountants (AICPA) designated the Federal Accounting Standards Advisory Board (FASAB) as the......

Words: 984 - Pages: 4

Premium Essay

Financial Practices

...Reporting Practices and Ethics Paper HCS405 July 29, 2012 Professor C. Brew Reporting Practices and Ethics Paper Financial accounting and financial management are the basis for health care accounting. The GAAP is a cornerstone of all accounting practices. Financial management aides and guides health care accounting practices in today’s health care settings. These two elements are the building blocks for a solid health care organization. Without the two, there is risk of fraud and unethical practices within health care. In financial accounting there are four elements of financial management. The first element is planning. In the planning element of financial management, the objective is determined and then the steps needed to reach that objective are identified so that the goal of accomplishing the objective can be met. The second element of financial management is controlling. In controlling the goals set in the planning element are monitored to ensure that the goal is on track. In the controlling stage of planning, managers use reports to track the goals, compare information and to gain feedback on the status of the goals. Organizing and directing is the third financial management element. In this element the manager works daily to track the progress of the goals, reviews daily the results of the organizing and is active daily in the progress of the goals. The final element of financial management is decision making. In the decision making element the......

Words: 1271 - Pages: 6