Accounting Fundamentals for Health Care Management

Cover......Page 1
Title Page......Page 2
Copyright Page......Page 4
Dedication......Page 8
Contents......Page 9
Preface......Page 16
About the Authors......Page 19
New to This Edition......Page 22
Chapter 1 Introduction to Health Care Accounting and Financial Management......Page 24
Do I Really Need to Understand Accounting to Be an Effective Health Care Manager?......Page 26
What Is Financial Management?......Page 28
What Are the Goals of Financial Management Within Health Care Organizations?......Page 30
How Does Accounting Fit into Financial Management?......Page 40
Key Concepts......Page 41
Test Your Knowledge......Page 42
Chapter 2 Introduction to Electronic Spreadsheets......Page 43
What Are Spreadsheets?......Page 45
Electronic Spreadsheets......Page 48
The Basics......Page 49
Different Ways to Accomplish the Same Task......Page 53
Formatting an Electronic Spreadsheet......Page 58
Updating the Spreadsheet......Page 65
More Time Savings......Page 70
Key Concepts......Page 74
Additional Resources......Page 75
Test Your Knowledge......Page 76
Chapter 3 Financial Environment of Health Care Organizations......Page 77
How Do Health Care Organizations Get Paid?......Page 79
Why Do Different Patients Pay Different Amounts?......Page 81
Health Care Reform......Page 83
How Does All This Impact Financial Accounting?......Page 88
Key Concepts......Page 90
Test Your Knowledge......Page 91
Chapter 4 Accounting Concepts......Page 92
Basics......Page 94
Assets......Page 96
Liabilities......Page 98
Owners’ Equity/Net Assets......Page 99
The Accounting Equation......Page 101
Fund Accounting......Page 102
Generally Accepted Accounting Principles......Page 104
International Financial Reporting......Page 114
Key Concepts......Page 117
Test Your Knowledge......Page 119
Chapter 5 Introduction to the Key Financial Statements......Page 120
The Balance Sheet—How Much Do We Have and What Do We Owe?......Page 122
The Operating or Income Statement—How Much Did We Make?......Page 127
Statement of Cash Flows—Where Did All Our Cash Go?......Page 130
Why Have Both an Operating and Cash Flow Statement?......Page 132
Notes to the Financial Statements—What Do the Financial Statements Really Mean?......Page 137
Key Concepts......Page 138
Test Your Knowledge......Page 140
Chapter 6 Valuation of Assets and Equities......Page 141
Asset Valuation—How Does That Old Building Show Up on the Balance Sheet?......Page 143
Valuation of Liabilities—What Do We Really Owe?......Page 154
Valuation of Net Assets and Owner’s Equity—Is It Really Just What Is Leftover?......Page 157
Key Concepts......Page 159
Test Your Knowledge......Page 161
Chapter 7 Recording Financial Information......Page 162
Double Entry and the Accounting Equation—The Golden Rule of Accounting......Page 164
Debits and Credits—The Accountant’s Secret......Page 167
Recording Financial Events......Page 173
Healthy Hospital 2019 Financial Events......Page 177
T-Accounts......Page 185
Chart of Accounts......Page 188
Key Concepts......Page 190
Test Your Knowledge......Page 191
Chapter 8 Reporting Financial Information—A Closer Look at the Financial Statements......Page 192
Ledgers......Page 194
Healthy Hospital’s Financial Statements......Page 196
Key Concepts......Page 212
Test Your Knowledge......Page 213
Chapter 9 The Role of the Outside Auditor......Page 214
The Audit......Page 217
Audit Failures......Page 226
Next Steps......Page 230
Key Concepts......Page 231
Test Your Knowledge......Page 232
Chapter 10 Depreciation—Having Your Cake and Eating It Too!......Page 233
Amortization......Page 236
Asset Valuation for Depreciation......Page 238
Straight Line vs. Accelerated Depreciation......Page 245
Comparison of the Depreciation Methods......Page 247
Modified Accelerated Cost Recovery System......Page 252
Depreciation and Deferred Taxes—Accounting Magic......Page 254
Key Concepts......Page 256
Test Your Knowledge......Page 257
Chapter 11 Inventory Costing—The Accountant’s World of Make-Believe......Page 258
The Inventory Equation......Page 260
Periodic vs. Perpetual Inventory Methods......Page 261
The Problem of Inflation......Page 265
Cost-Flow Assumptions......Page 267
Key Concepts......Page 276
Test Your Knowledge......Page 277
Chapter 12 An Even Closer Look at Financial Statements......Page 278
The Balance Sheet......Page 281
Statement of Operations......Page 294
Statement of Cash Flows......Page 300
Notes to the Financial Statements......Page 307
Key Concepts......Page 308
Test Your Knowledge......Page 309
Chapter 13 Notes to the Financial Statements—The Inside Story......Page 310
Significant Accounting Policies......Page 312
Other Notes......Page 316
Summary......Page 322
Key Concepts......Page 324
Test Your Knowledge......Page 325
Chapter 14 Ratio Analysis—How Do We Compare to Other Health Care Organizations?......Page 326
Benchmarks for Comparison......Page 331
Common Size Ratios......Page 346
Liquidity Ratios......Page 354
Efficiency Ratios......Page 358
Solvency Ratios......Page 364
Profitability Ratios......Page 368
Return on Investment Ratios......Page 370
Key Concepts......Page 376
Test Your Knowledge......Page 377
Chapter 15 Investment Analysis—What Should We Do Next?......Page 378
Investment Opportunities......Page 381
Data Generation......Page 382
The Payback Method......Page 384
Time Value of Money......Page 387
The Net Present Value Method......Page 405
Internal Rate of Return Method......Page 412
Project Ranking......Page 414
Summary......Page 416
Key Concepts......Page 417
Test Your Knowledge......Page 419
Chapter 16 Working Capital Management and Banking Relationships......Page 421
Working Capital Management......Page 423
Short-Term Resources......Page 425
Managing the Revenue Cycle......Page 442
Short-Term Obligations......Page 445
Banking Relationships......Page 454
Key Concepts......Page 459
Test Your Knowledge......Page 461
Chapter 17 Capital Structure—Long-Term Debt and Equity Financing......Page 462
Charitable Giving......Page 464
Common Stock......Page 465
Debt......Page 467
Preferred Stock......Page 469
Cost of Capital......Page 470
Other Elements of Capital Structure......Page 474
Dividends......Page 477
Obtaining Capital......Page 480
Key Concepts......Page 485
Test Your Knowledge......Page 486
Chapter 18 Case Study—Happy Hospital......Page 487
Recovering from New Year’s Eve—Is It Really the Start of Another Year?......Page 489
What Should We Do with All That Money?......Page 492
What a Busy Year—Tracking Financial Events......Page 499
Putting Together the End-of-Year Financial Statements......Page 505
How Did We Do? Using Ratio Analysis......Page 511
Test Your Knowledge......Page 514
Index......Page 516