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More About This Title Financial Management of Health Care Organizations: An Introduction to Fundamental Tools, Concepts and Applications, Fourth Edition
English
This new Fourth Edition of Financial Management of Health Care Organizations, offers an introduction to the most-used tools and techniques of health care financial management, including health care accounting and financial statements; managing cash, billings and collections; making major capital investments; determining cost and using cost information in decision-making; budgeting and performance measurement; and pricing.
New to this edition: The Perspectives sections and the glossary have been updated. The book features a cutting-edge view of the health care landscape in 2013 and beyond after passage and pending implementation of the Affordable Care Act. Areas of expanded content include revised examples of financial statements for both private non-profit hospitals and investor-owned hospital management companies, changes in bad debt and charity care, the role of financial statements, the discount rate or cost of capital, lease financing section, use of cost information, budgeting, cost centers, and current forms of reimbursement Content new to this edition includes valuation of accounts receivable and the "waterfall" effect of cash collections, differences between Posting-Date and Service-Date reporting methodologies, calculation of effective annual interest rate, application of time value of money in perspectives, and Activity-Based Costing from the perspective of labor, supplies, and equipment.
English
William N. Zelman is a professor in the Department of Health Policy and Administration in the University of North Carolina at Chapel Hill.
Michael J. McCue is a professor in the Department of Health Administration at Virginia Commonwealth University.
Noah D. Glick is a senior healthcare consultant for FTI in its Health Solutions division.
Marci S. Thomas is a clinical associate professor in the Department of Health Policy and Administration in the School of Public Health at the University of North Carolina, Chapel Hill.
English
Preface xiii
Acknowledgments xix
The Authors xxi
Chapter 1 The Context of Health Care Financial Management 1
Changing Methods of Health Care Financing and Delivery 3
Addressing the High Cost of Care 9
Establishing Value-Based Purchasing 21
Summary 23
Key Terms 24
Review Questions 24
Chapter 2 Health Care Financial Statements 27
The Balance Sheet 28
The Statement of Operations 51
The Statement of Changes in Net Assets 65
The Statement of Cash Flows 68
Summary 73
Key Terms 75
Key Equations 75
Review Questions and Problems 76
Appendix A: Financial Statements for Sample Not-for-Profit and For-Profit Hospitals, and Notes to Financial Statements 86
Chapter 3 Principles and Practices of Health Care Accounting 103
The Books 103
An Example of the Effects of Cash Flows on Profit Reporting under Cash and Accrual Accounting 106
Recording Transactions 110
Developing the Financial Statements 120
Summary 126
Key Terms 127
Review Questions and Problems 127
Chapter 4 Financial Statement Analysis 137
Horizontal Analysis 138
Trend Analysis 143
Vertical (Common-Size) Analysis 144
Ratio Analysis 146
Liquidity Ratios 151
Revenue, Expense, and Profitability Ratios 161
Activity Ratios 172
Capital Structure Ratios 175
Summary 183
Key Equations 186
Key Terms 187
Review Questions and Problems 187
Chapter 5 Working Capital Management 209
Working Capital Cycle 209
Working Capital Management Strategies 211
Cash Management 215
Sources of Temporary Cash 216
Revenue Cycle Management 222
Collecting Cash Payments 225
Investing Cash on a Short-Term Basis 228
Forecasting Cash Surpluses and Defi cits: The Cash Budget 230
Accounts Receivable Management 233
Methods to Monitor Revenue Cycle Performance 237
Fraud and Abuse 239
Summary 243
Key Terms 246
Key Equations 246
Review Questions and Problems 246
Chapter 6 The Time Value of Money 259
Future Value of a Dollar Invested Today 259
Present Value of an Amount to Be Received in the Future 266
Future and Present Values of Annuities 270
Future and Present Value Calculations and Excel Functions for Special Situations 275
Summary 283
Key Terms 284
Key Equations 284
Review Questions and Problems 286
Appendix B: Future and Present Value Tables 291
Chapter 7 The Investment Decision 301
Objectives of Capital Investment Analysis 302
Analytical Methods 306
Using an NPV Analysis for a Replacement Decision 320
Summary 325
Key Terms 327
Key Equation 327
Review Questions and Problems 327
Appendix C: Technical Concerns in Calculating Net Present Value 335
Appendix D: Adjustments for Net Working Capital 342
Appendix E: Tax Implications for For-Profit Entities in a Capital Budgeting Decision and the Adjustment for Interest Expense 344
Appendix F: Comprehensive Capital Budgeting Replacement Cost Example 348
Chapter 8 Capital Financing for Health Care Providers 359
Equity Financing 362
Debt Financing 364
Bond Issuance Process 375
Lease Financing 387
Summary 392
Key Terms 393
Key Equations 394
Review Questions and Problems 394
Appendix G: Bond Valuation, Loan Amortization, and Debt (Borrowing) Capacity 399
Chapter 9 Using Cost Information to Make Special Decisions 409
Break-Even Analysis 410
Product Margin 433
Applying the Product Margin Paradigm to Making Special Decisions 438
Summary 445
Key Terms 446
Key Equations 447
Review Questions and Problems 447
Appendix H: Break-even Analysis for Practice Acquisition 458
Chapter 10 Budgeting 465
The Planning-and-Control Cycle 465
Organizational Approaches to Budgeting 470
Types of Budgets 481
Monitoring Variances to Budget 489
Group Purchasing Organizations 491
Summary 493
Key Terms 495
Key Equation 496
Review Questions and Problems 496
Appendix I: An Extended Example of How to Develop a Budget 498
Chapter 11 Responsibility Accounting 521
Decentralization 521
Types of Responsibility Centers 524
Measuring the Performance of Responsibility Centers 529
Budget Variances 532
Summary 544
Key Terms 546
Key Equations546
Review Questions and Problems 547
Chapter 12 Provider Cost-Finding Methods 551
Cost-to-Charge Ratio 551
Step-Down Method 552
Activity-Based Costing 559
Summary 571
Key Terms 572
Review Questions and Problems 572
Chapter 13 Provider Payment Systems 579
Evolution of the Payment System 583
Risk Sharing and the Principles of Insurance 608
Evolving Issues 614
Technology 614
Summary 616
Key Terms 617
Review Questions and Problems 618
Appendix J: Cost-Based Payment Systems 619
Glossary 627
Useful Websites and Apps 653
Index 659
