Chapter 1: Introduction to Healthcare Finance – Flashcards

the system that a society uses to pay for healthcare services

those that provide patient care services. Examples include hospitals, medical practices, clinics, and nursing homes. Also called providers.

the measurement and recording of events that reflect the operations, assets, and financing of an organization

the use of theory, principles, and concepts developed to help managers make better financial decisions

The senior manager (or top finance dog) in a large organization's finance department. Also called vice president-finance.

the finance department manager who handles accounting, budgeting, and reporting activities

the finance department manager who handles capital acquisition, investment management, and risk management activities.

the manager responsible for the finance function in a small healthcare organization, such as a medical practice with one or a few clinicians

a single business entity that owns a group of similar providers, such as hospitals

a single business entity that owns a group of related, but not identical, providers, such as hospitals, medical practices, and nursing homes

the accreditation body for hospitals and other health services organizations

a hospital that treats all conditions that require a relatively short hospitalization (e.g., less than 30 days)

a hospital that treats patients with a common characteristic or condition, such as a children's or cancer hospital

a hospital that is owned by a gov't entity. Federal hospitals are owned by the federal government, while public hospitals are owned (or funded) by state or local governments

a hospital that is not governmental but is operated for the exclusive benefit of the community

a hospital that is owned by investors who benefit financially from its operation. Also called a for-profit hospital.

care that is provided to patients who are not institutionalized. Typical settings include physicians' offices, outpatient surgery centers, and walk-in clinics

care that is provided in either an institutional or outpatient setting that covers an extended period of time

the concept that once a patient enters the system at one point (e.g., a doctor's office), all services needed by that patient will be provided within the system

the process of granting "permission" for h/c (and other) professionals to practice. Most professional licenses are granted by states with the goal of protecting the public from incompetent practioners

state programs that require providers (primarily hospitals) to submit budgets each year for approval

the responsibility of org. and individuals who provide professional services, such as hospitals and physicians, for losses that result from malpractice

- involves how society pays for the healthcare it consumes

- accounting and financial management functions

concerns the recording, in financial terms, of economic events that reflect the operations, assets, and financing of an org.

to create and provide to interested parties, both internal (managers) and external (investors), useful information about an org. financial status and operations

is also known as Corp management, it provides the theories, concepts, and tools necessary to help managers make better financial decisions

the healthcare system has changed and requires different strategies than a regular corporation. This includes different line items & rules/regulations, it's not as predictable, uncertainty with illnesses and revenue stream

- plan for, acquire, and use resources to maximize the efficiency (and value) of the enterprise - it is implemented through specific activities such as planning and budgeting. Accounting is carried out under the direction of the chief financial officer and falls under the overall category of finance - providers have redesigned their finance functions to recognize the changes that have occurred in the health services industry

It has increased

provide diagnostic and therapeutic services to individuals who require more than several hours of care, although most hospitals are actively engaged in ambulatory services as well - open 24 hours - of beds is a concern - Must be licensed by the state and comply with regulations - Aaccredited by The Joint Commission - Provides eligibility for participation in the Medicare and Medicaid programs - Environmental and operational changes create challenges for hospital managers - Hospitals are considered as general acute care facilities or specialty facilities - The number of specialty hospitals has increased - They require lower costs because they don't require the overhead associated with providing many services - Hospitals vary in size, general acute care hospitals tend to be larger - Optimal size is 400-500 beds - Labor intensive b/c they provide continuous nursing supervision to patients -Physicians play a role in determining a hospital's costs and revenues and hence its financial condition

Don't benefit from economies of scale 2. Located in rural areas 3. Experience fin. Difficulties because of less flexibility to lower costs to tightening reimbursement rates

Too big to manage efficiently (diseconomies of scale) 2. Academic health centers/teaching hospitals 3. Offer a wide range of services

Make up 25% of all hospitals 2. Broken down into federal and public (nonfederal) entitities a. Federal hospitals serve special purposes (such as US Dept. of Verterans Affairs) b. Public hospitals

- funded wholly or in part by a city, county, tax district or state - Have converted to private not-for-profit b/c local gov'ts have found it difficulat to fund h/c services & at the same time provide other necessary public services

Nongovernmental entities organized for the purpose of providing impatient h/c services 2. 80% of all private (60% of all hospitals) 3. Receive exemption from federal/state income taxes, property/sales taxes, receives tax-deductible charitable contringutions, favorable postal rates, favorable tax-exempt financing and tax-favored annuities for ees 4. Place greater emphasis on the fin. Implications of operating decisions

Most are owned by large corp. such as HCA (Hospital Corp. of America) 2. Pay taxes and forgo the other benefits of not-for-profit status

i. Provided to patients who are not institutionalized. Includes: physician's offices, outpatient surgery centers, and walk-in clinics ii. Most recently, retail clinic, which is placed in a retail store iii. Offer convenience and lower prices iv. Technology has contriubuted to expansion v. Easier to start business than a hospital

i. Provided in either an institutional or outpatient seting that covers an extended period of time ii. Clients are too mentall or physically incapacitated to perform daily living tasks and when family members are unable to provide the help needed; ie nursing homes

1. Skilled nursing - Care closest to hospital care - Provided under the supervision of a physician 2. Nursing - Indiv. Who don't require hospital or SNF care but mental/physical conditions require daily continuity of one or more medical services 3. Residential care - Sheltered environments that do not provide professional h/c services

- The benefits of providing hospital care - hospitals and physiciants are linked together - Has the ability to assume full clinical responsibility for the h/c needs of a defined population - Patient capture

- nurses come to home - hospital care is no longer needed - i.e. diabetes - separate arm from hospital or independently linked

all in one system, info. is lock-down

It helps to control h/c costs. Licensure focuses more on physical features and safety than on patient care and outcomes. - licensure helps to protect consumer - certificate of need: ensures that theres a need in the area - rate setting- manages the cost of h/c to make it affordable based on consumer income

i. CFO- reports to CEO and is responsible for all finance activities within the org. ii. Directs two senior managers who help manage the finance activities: the comptroller and treasurer iii. Under the comptroller and treasurer, there is other managers such as patient accounts manager (reports to comptroller) and cash manager (reports to treasurer). iv. In small bisneses, finance responsibilities are compbined and assight to one individual often call the business (practice) manager

professional liability

consists of both accounting and financial management functions

planning and budgeting financing decisions capital investment decisions financial reporting financial and operational analysis

contract management financial risk management

costs cash capital control

- CON legislation required providers to obtain state approval on the basis of community need for construction and renovation projects that either relate to specific services or exceed a defined threshold

rate review system

1. detailed budget reviews with approval or setting of rates 2. formula methods, which use inflation formulas to set target rates 3. negotiated rates, which involve joint decision making between the provider and the rate setter

Doesn't address the issue of demand for h/c services