...Chapter One 1. A. What are some of the industries in the healthcare sector? The major industries in the healthcare sector includes health services, health insurance, medical equipment and supplies, pharmaceuticals and biotechnology, and other (includes a diverse collection of organization ranging from consulting firms to educational institutions to government and private research agencies. B. What is meant by the term healthcare finance as used in the book? Finance, as the term is used within the health services industry and as it is used in the book, consists of both the accounting and financial management functions. C. What are the two broad areas of Healthcare Finance? Accounting as its name implies, concerns the recording, in financial terms, of economic events that reflect the operations, resources, and financing of an organization. Financial management or corporate finance, provides the theory, concepts, and tools necessary to help managers make better financial decisions. Certain aspects of accounting involve decision making, and much of the application of financial management theory and concepts requires accounting data. D. Why is it necessary to have a book on healthcare finance as opposed a generic finance book? The reason is that while all industries have certain individual characteristics, the health services industry it truly unique. 2. What is the difference between a business and a pure charity? A business such as a hospital or medical...
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...Finance in the healthcare industry can be a very tricky subject. The primary role of finance in the health services is to plan for, obtain, and make use of resources to increase the productivity and value of the business (Nowicki 2007). Finance is a very important part of the health care industry. It keeps everything on track and in order so that things operate successfully. Without the right person(s) helping to operate the place of business the company can be in a great deal of trouble. When I think of finance I think of cash. In today’s economy cash flow is at its all time low. More people are trying to cut cost and much as they can. This means less doctor visits and sometime not going to the doctor at all. Which means that if your health care business is use to seeing a certain amount of patients and that number suddenly stops that can put some jobs at jeopardy. The role of finance has increased in the healthcare industry. Like I stated previously cash flow is at an all time low. With the high demands of hospitals, long term care, nursing homes, special practices and assisted living, the need for healthcare and funding is growing daily. There is a different age group that is being more catered to due to the aging population around. Funding is necessary for all levels of healthcare organizations, and there are some governmental hospitals/facilities, non-profit, and privately funded that need to be aware of the fast paced changes that are being made financially in the world...
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...Homework One 1.3 The role of finance in a healthcare industry is to use the most rational decisions and theories to manage and fund the business. The role of finance always increases because business's are always looking for the better business practices . 1.4 A. Home health services are medical services rendered in the patients home by medical providers. Outpatient hospital services are medical services provided in a medical facility and the patients is released to go home after rendering services. Inpatient hospital services are medical services provided in a medical facility and the patient has an extended stay . Long -term care health services are medical services provided for residents of a medical facility such as a nursing home. Ambulatory services are medical render from physicians and medical specialists of a group of independent practice . B. The benefit of integrated healthcare services is patient's having access to a variety of medical services under one entity . 2.1 Sole Proprietorships One person owning and operating a business (Advantages: ease of start/ending business, own boss, less regulation / Disadvantages: unlimited liability, limited financial resources) Partnerships Legal business with two or more parties (Advantages: financial resources, shared risks, no special taxes / Disadvantages: unlimited liability, profits shared, disagreements)Corporations Legal entity with authority to act/have liability...
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...Healthcare Finance I Questions 1.1, 1.4, 1.6 (pp. 23-24) 1.1 a. What are some of the industries in the healthcare sector? Health services, health insurance, medical equipment and supplies, pharmaceuticals and biotechnology and other such as consulting firms and educational institutions. b. What is meant by the term healthcare finances as used in this book? It means “the accounting and financial management principles and practices used within health services organizations to ensure the financial well-being of the enterprise.”(p.22) Accounting functions are needed for the financial management of the company. Educated business decision can’t be made without knowing the detailed accounting part at all times. c. What are the two broad areas of healthcare finance? Financial Accounting and Managerial Accounting. d. Why is it necessary to have a book on healthcare finance as opposed to a generic finance book? This is due to the fact that the healthcare industry has unique, as stated in the text, individual characteristics which require emphasis in these specific areas. 1.4 a. Briefly describe the following health services settings: * Hospital: Provides general, acute care, diagnostics, surgery, usually for patients who need several hours of care. * Ambulatory care: Outpatient care for patients who need less than several hours of care and is usually cheaper than hospitals. 1.6 What is the structure of the finance function...
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...Health Services Finance Recruiting and Retaining Nurses Health Services Finance HS543ON June 16, 2011 ISSUE/BACKGROUND With quickly changing demographics, new technologies, limits on resources and public expectations the health care arena is constantly changing at a quick pace (Nowicki, p. 338). The Bureau of Labor statistics reported in April 2011 that despite the recent economic downturn and high unemployment health care is continuing to grow. It was estimated that approximately thirty seven thousand jobs were added in March 2011 alone (AACN). The staffing of registered nurses has been a long time concern due to the fact the shortage greatly affects patient safety as well as quality of care (nysna.org). Studies have shown that adverse patient outcomes have been related to the ineffective nurse staffing as patients have had longer hospital stays, increased infections, and higher mortality rates (Needleman, et al, 2002). To relieve the pressures put on an organization with the shortage many have begun to substitute people who are not as prepared to care for patients. This has been done by hiring temporary nursing services or recruiting foreign nurses who are not familiar with the facility, policies and procedures or the patients ( nysna.org). The ineffective nurse staffing also leads to retaining issues as nurses experience decreased morale, increased stress and anxiety, increased physical ailments, and burnout. DEFINE THE PROBLEM The problem...
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...Financial Condition Analysis, Chapter 9 Problems: P 9.1-9.4, 9.8 & 9.11 HM 707 Health Management Foundations II Problem 9.1 Find the following values for a lump sum assuming annual compounding: a) The future value of $500 invested at 8 percent for one year: FVN = FV1= PV × (1 +I)N = $500 x (1 + 0.08) = $500 x 1.08 = $540 b) The future value of $500 invested at 8 percent for five years: FVN = FV5= PV × (1 +I)N = $500 x (1 + 0.08)5 = $500 x (1.08)5 = $734.66 c) The present value of $500 to be received in one year when the opportunity cost rate is 8 percent (discounting): PV = FVN = $5001 = $500 = $462.96 (1 + I)N (1 + 0.08)1 (1.08)1 d) The present value of $500 to be received in five years when the opportunity cost rate is 8 percent: PV = FVN = $5005 = $500 5 = $340.29 (1 + I)N (1 + 0.08)5 (1.08)5 Problem 9.2 Repeat problem 9.1 above, but assume the following compounding conditions: Semiannual compounding, N= 2 x 4 = 8 % and I = 8 / 2 = 4% per semiannual period. Therefore here are the solutions: a) The future value of $500 invested at 8 percent for one year: FVN = FV1= PV × (1 +I)N = $500 x (1 + 0.04)2 = $500 x (1.04)2 = $540.80 b) The future value of $500 invested at 8 percent for five years: FVN = FV5= PV × (1 +I)N = $500 x (1 + 0.04)10 = $500 x (1.04)10 = $740.12 c) The present value of $500 to be received in one year when the opportunity cost rate is 8 percent...
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...Effective Communication Paper HCS/325 March 12, 2013 Effective Communication Paper Organizational structure administers the guidance for the system of reporting that pushes an organization separating the organization into different departments or areas that are in charge for certain angles of the organizations purposes. It demonstrates the relationships between areas and individuals needed to accomplish more efficient operations while reaching the goals of the organization. The best organizational structure that best describes the organization that I am familiar with is a formal structure. This organization is divided on the basis of the functions that they accomplish, into departments such as Marketing, Sales, Production, Human Resources, Accounts, Managers, Supervisors, etc. In each of those departments, the employees perform a set of tasks. Without some kind of organization businesses would be turmoil because no one would know who is in charge or who to report to for inquires. According to Schermerhorn and Lombardi, “the organizational structure is the system of task, workflow, reporting relationships, and communication channels that link the diverse plans of an organization (Lombardi & Schermerhorn, 2007).” This type of structure provides a range of comfort and security, which make the employees feel safe and secure because we know exactly what the chain of commands is should any problems arise for which we may need further assistance. This kind of...
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...Revenue Determination Chapter 6 1- List and discuss the three payment determination bases. Cost based: underlying method for payment will be the provider’s cost. Fee Schedule – predetermined, unrelated to either provider's cost or price Price related – provider will be paid for services based upon some relationship to its total charge or price for the services rendered. 2- What are the two usual units upon which payment is based in the three payment determination bases? What are the basic differences between these two types? Specific services are based upon services provided Bundled services are a fee schedule and there is no additional payment for ancillary services 3- How can a health care firm benefit from perceived higher levels of quality care when fixed payment payers comprise eighty percent (80%) of the firms revenue? Increase volume on payers that leads to gain profit Homework Assignment Chapter 4 1- How could a hospital avoid being covered by the Emergency Medical Treatment and Active Labor Act? Identify and describe the key elements of the plan. * Review and understand the EMTALA requirements * Ensure that all patients who leave the hospital without receiving treatment are offered a medical examination * Reasonable steps are taken to obtain patient’s informed consent to refuse the examination or treatment. * Emergency department staff have reviewed and understand all requirements regarding transfer of patients...
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...2.7 Capitation and fee-for-service (FFS) are different modes of payment for healthcare providers. In capitation, doctors are paid a set amount for each patient they see, while FFS pays doctors according to what procedures are used to treat a patient. Both systems are in widespread use in the U.S. healthcare system, but FFS has been in decline over the past decade. 2.8 A. Cost-based reimbursement A reimbursement methodology based on the costs incurred in providing services. B. Charge-based reimbursement A reimbursement methodology based on charges (chargemaster prices). C. Per procedure. Under per procedure reimbursement, a separate payment is made for each procedure performed on a patient. Because of the high administrative costs associated with this method when applied to complex diagnoses,per procedure reimbursement is more commonly used in outpatient than in inpatient settings. D. diagnosis. In the per diagnosisreimbursement method, the provider is paid a rate that depends on the patient’s diagnosis. Diagnoses that require higher resource utilization, and hence are more costly to treat, have higher reimbursement rates. Medicare pioneered this basis of payment in its diagnosis related group (DRG) system, which it first used for hospital inpatient reimbursement in 1983. E. Per diem A reimbursement methodology that pays a set amount for each inpatient day. F. Bundled (global) pricing. The payment of a single amount for the complete...
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...Week 4 Janet McGonagle 8.1 Consider the following 2001 data for Newark general hospital (in millions of dollar) | Static Budge | Flexible Budget | Actual Results | | | | | Revenue | $4.7 | $4.8 | $4.5 | Costs | 4.1 | 4.1 | 4.2 | Profits | 0.6 | 0.7 | 0.3 | A: Calculate and interpret the profit variance Profit variance = Actual Profit – Static Profit = $3000, 000.00 - $600,000.00 = $-300,000.00 The hospital is in the red of $300,000.00 less for profit than expected. (Unfavorable) B: Calculate and interpret the revenue variance Revenue variance = Actual Revenue – Static Revenue $4,500,000.00 - $4,700,000.00 = $-200,000.00 The hospital is in the red of $200,000.00 selling less than expected. (Unfavorable) C: Calculate and interpret the cos variance Cost variance = Static cost – Actual Costs $4,100,000.00 - $4,200.000.00 = $100,000.00 This number shows that the hospital the cost were $100,000.00 greater than projected. D: Calculate and interpret the volume and price variance on the revenue side. Volume variance = Flexible Revenue – Static Revenue $4,800,000.00 - $4,700,000.00 = $100,000.00 Hospital is $100,000 higher than expected volume The company spent more than planned for. (Unfavorable) Price Variance = Actual Revenue - Flexible Revenue $4,500,000.00 - $4,800,000.00 = $-300,000.00 Looks like price variance is lower as they sold their products lower than projected. (Unfavorable) E: Calculate and interpret the volume and management...
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...Cinema 101 Monday May 27, 2014 Growing Apart: Distance and Loss in Citizen Kane Citizen Kane (Orson Welles, 1941) is an American drama film that narrates the story of a newspaper magnate who gained worldly success in his life, but he lost connection with people around him during this process. With the help of a series of flashbacks, the film illustrates Kane’s personal life. The film starts with the scene where Kane is on his deathbed and says the word ‘Rosebud’ before dying. A newspaper reporter, Thompson gets intrigued by this word, which becomes the motivation for him to learn about the life of Charles Foster Kane and the significance of the word ‘ Rosebud’. The director, Orson Welles depicts the personal life of Kane beautifully in his work through various sequences of the film. Each scene in the film plays an important role in demonstrating the distance Kane is developing with people around him. The gradual withdrawal of Kane from public life is illustrated through two unsuccessful relationships between his two wives. The puzzle sequence in the film in which Susan and Kane have a brief argument over the boring life Susan is having at Kane’s palatial estate, Xanadu displays dramatically the growing distance between Kane and his second wife, Susan. The puzzle sequence in the movie starts by showing Xanadu’s isolated location on the top of the mountain. This sequence gives the palace a gloomy look by having a dark background and not so happy music. In the next scene, Susan...
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...Option #1: Budgeting for Radiology Facility The radiology department at Best Medical Care is developing a budget for DRG 250: Fracture, Sprain, Strain, and Dislocation of Forearm, Hand, and Foot. This year the department saw 2,200 admissions for DRG 250 analyzed in the following way: 40% for a hand X-ray (which takes five minutes); 30% for a foot X-ray (which takes 15 minutes); and 30% for a forearm X-ray (which takes 15 minutes). The budget committee is projecting a 12.1% change in DRG 250 for next year analyzed in the same proportions as this year. The controller states that the charge for a hand Xray will be $100, for a foot X-ray will be $300, and for a forearm X-ray will be $500. The controller also projects the payer analysis for DRG 250 to be 40% Medicare (DRG rate is 75% of charges), 30% Medicaid (DRG rate is 65% of charges), 20% managed care (discount is 25% of charges), and 10% self-pay (self-pay patients pay full charges—20% of self-pay results in charity care). DRG 250 accounts for 30% of the radiology department’s labor, supply, and overhead expenses. The department’s labor expenses are $500,000—labor expenses are expected to increase 4% next year due to raises. The department’s non-labor expenses are $200,000—non-labor expenses are expected to increase 6% next year due to inflation. The department’s overhead to increase next year as well. Using the budgeting steps, calculate the volumes, collected revenues, expense, and adjustments for DRG 250 in the radiology...
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...Chapter-7 questions/problems 2-12-15 7.1a A price taker - a business that has no power to influence the prices set by the marketplace. Within a hospital setting must take the prices set in the marketplace and have little influence over reimbursement rates. Because of competition and insurance company dominance most healthcare providers are price takers. Price takers typically will take the price as a given and focus on management to ensure profitability of healthcare services. If a provider dominates the market with differentiated services such as outcomes, convenience then the provider can set market prices on services or are price setters. In the healthcare arena, the status between price setter and taker can change quickly or can be a price setter in one area e.g. cardiac surgery, but a price taker in others depending upon the marketplace. 7.2 a (no b?) a. Full cost pricing for price setters sets prices that recover all costs of a particular service direct fixed and variable costs, overhead plus a profit component. Marginal costs prices cover incremental costs which typically refers to recovering only direct variable costs. 7.4 a. Cross subsidization or cost shifting refers to overcharging some insurers as compared for full costs while others are undercharged. Today cost shifting often covers governmental payers like Medicaid, Medicare. Payers faced with increased cost are demanding prices cover only true costs. 7.5 a. Target costing is a management strategy...
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...This is a sample of the instructor resources for Louis C. Gapenski, PhD, Fundamentals of Healthcare Finance, Second Edition. The complete instructor resources include Test Bank PowerPoint slides Sample course syllabus Solutions to the end-of chapter questions and problems Solutions to the online cases This sample includes the following resources for Chapter 2: Answers to end-of-chapter discussion questions PowerPoint slides If you adopt this text, you will be given access to the complete materials. To obtain access, email your request to hapbooks@ache.org and include the following information in your message: Book title Your name and institution name Title of the course for which the book was adopted and season course is taught Course level (graduate, undergraduate, or continuing education) and expected enrollment The use of the text (primary, supplemental, or recommended reading) A contact name and phone number/e-mail address we can use to verify your employment as an instructor You will receive an e-mail containing access information after we have verified your instructor status. Thank you for your interest in this text and the accompanying instructor resources. Copyright and distribution of this PDF is prohibited without written permission. For permission, please contact Copyright Clearance Center at www.copyright.com Healthcare Business Basics Chapter 2 8/1/12 ANSWERS TO END-OF-CHAPTER QUESTIONS 2.1 a. A business is an entity that obtains financing from the...
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...Chp 1 Questions: (pg 23-4) 1. a. What are some of the industries in the healthcare sector? Healthcare services (ex. hospitals), Health insurance (makes most of the payments to the health service providers), Medical equipment and supplies (maker of medical/diagnostic equipment), Pharmaceuticals and biotechnology (develop/market drugs/therapeutics), and "other" (which includes consulting, educational, government, and research agencies) b. What is meant by the term healthcare finance as used in this book? Healthcare Finance consists of both the accounting (which creates and provides useful operations and financial status information to interested internal and external parties for assessing financial and operation performance) and financial management (provides the theory, concepts, and tools necessary to help managers make better financial decisions) for the healthcare sector of the economy. c. What are the two broad areas of healthcare finance? Accounting and financial management (aka Corporate Finance) d. Why is it necessary to have a book on healthcare finance as opposed to a generic finance book? Healthcare services are dominated by both private and governmental not-for-profit corporations, which differ from investor-owned businesses (learned in a generic finance book) due to the majority of payments being made are from third-party payers (e.g., employers, commercial insurance companies, government programs). 2. What is the difference between...
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