module 10

Financial accounting

data are oriented towards financial statement are provided retrospectively to external user (government, suppliers, stockholders)

increase revenues and reduce expenses enhance good will towards organization undertake changes that add value to the organization

Purposes of Working Capital Management

Retrospective

determined after service delivery

Prospective

determined before service delivery

ABC Inventory Method

each supply item is assigned to one of three expense groups and is thus monitored according to cost.

Self-pay patients are billed for full charges and uncompensated care

Reimbursements by The Uninsured

managing working capital

Short-term assets used in day-to-day operations. Calculation: current assets - current liabilities = working capital.

cost allocation

involves the determination of the total cost of producing a health care service

managing budgets

The process of turning the objectives of the organization into a plan for earning revenues and controlling expenditures. Involves all managers.

managing accounts receievable

money owed to a company, current assets on the balance sheet. Considered revenue earned but cash yet to be collected

Bad debt

no payment received for billed services; written off by the organization; can result in damage to patient's credit score.

Charity care

organization provides care, knowing the patient will be unable to pay

capital budget

plan for expenditures for long-term assets whose useful life is more than 1 year

reduce collection period of staying in A/R

primary goal of managing A/R

to assist organizational decision makers with accurate and timely accounting information to support strategic decision making to advance an organization's, business interests.

primary purpose of financial management?

Just-in-time

products are literally delivered to the provider "just in time" for use; decreases holding costs and obsolescence

operating budget or cash budget

annual budget that is a forecast of cash inflows, outflows, and net lending or borrowing needs.

Not-for-profit

uServe public interests and are tax-exempt uGoal is to provide community benefit and optimal patient care (including the indigent). uTypes: business-oriented (private), private not-for-profit, and government-owned Must also turn a profit for sustainability

uDelivery of appropriate patient care uProvision of cost control: a non-productive asset, inventory loses value over time. uImprovement of the organization's bottom line, through best pricing and reducing over-utilization

Importance of supply chain management:

uGenerate a reasonable net income. uEnsure proper cost allocation. uSet prices for services. uFacilitate relationships and manage contracts with third party payers. uRecord and analyze cost information.

Major Objectives of Financial Management

reimbursements to hospitals, physicians and other providers

Methods used by Medicare and Medicaid

Managerial accounting

financial data are oriented towards operational reports and provided to internal uses

master budget

income statement, balance sheet, and statement of cash flows

For-profit, investor-owned

uServe private interests and pay taxes. uGoal is to maximize profits for the owner(s). uProvides services which the community is willing to pay for

uBorrowing and investing funds uAnalyzing accounting information to evaluate past decisions and make sound decisions that will affect the future of the organization

what does finance include?

It is the process of: Providing oversight of the health care organization's financial operations Planning the organization's long-term financial direction (both internal and external) Increasing the organization's revenues and decreasing expenses to improve income

what is financial management?