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?