Fundamentals of Health Care Financial Management:

Fundamentals of Health Care Financial Management: A Practical Guide to Fiscal Issues and Activities
	Contents
	Figures, Tables, and Exhibits
	Preface
	Acknowledgments
	The Author
	Chapter 1: January
		What Is Health Care?
		What Is Management?
		What Is Financial Management?
		Why Is Financial Management Important?
		Ridgeland Heights Medical Center: The Primary Statistics
			Managed Care Inroads
			RHMC’s Actions to Counter Dwindling Inpatient Census
			RHMC Decision Time
			Financial Management Implications
		Pro Forma Development
			Net Present Value and Internal Rate of Return
			Volume Assumptions
			Revenue and Expense Assumptions
		Living with the Finance Committee and Board of Directors’ Calendar
			Routine Matters
			Periodic Review Matters
		Year-End Closing
	Chapter 2: February
		Accounting Principles and Practices
		Objectives of Financial Reporting
		Basic Accounting Concepts
		Basic Financial Statements of a Health Care Organization
		Uses of Financial Information
		The Financial Statements
			Balance Sheet
			Statement of Operations
			Statement of Changes in Unrestricted Net Assets (or Equity)
			Statement of Cash Flows
			Notes to the Financial Statements
		Preparing for the Auditors
		Analysis of Sensitive Accounts
			Contractual Adjustments
			Accounts Receivable
			Allowance for Doubtful Accounts
			Provision for Bad Debts
			Allowance for Contractual Adjustment
			Third-Party Settlements
		February Finance Committee Special Reports
			Bond Debt Status
			Health Insurance Annual Review
	Chapter 3: March
		Strategic Financial Planning: Five-Year Projections
			Strategic Planning
			Converting Vision (the Strategic Plan) into Financial Reality
		RHMC Strategic Financial Planning
			Volume Assumptions
			Payer Mix
			Rates and Reimbursements
			Implications for Operating Expenses
		Ratio Analysis
			Bonding-Related Ratios
			Other Ratios
			Operating Ratios
		The Capital Plan and Its Relationship to the Strategic Plan
			Routine Capital Items
			Information Technology
			Facility Improvements and Upgrades
			Property Acquisition
			Physician Recruitment
			Physician Medical Offi ce Space
			Capital Affordability
	Chapter 4: April
		Medicare and Medicaid Net Revenue Concepts
			The History of Medicare and Medicaid
			Impact of Medicare and Medicaid on Provider Net Revenues
			Implications for Ridgeland Heights Medical Center
		Calculation of Medicare and Medicaid Contractual Adjustments
			Medicare Hospital Net Revenue Concepts
			Medicaid Net Revenue Concepts
		Implications of the Balanced Budget Act of 1997
			Balanced Budget Refi nement Act of 1999
			Benefits Improvement and Protection Act of 2000
			Impact of the Balanced Budget Act on Medicaid
		Implications of the Medicare Modernization Act of 2003
		Implications of the Patient Protection and Aff ordable Care Act of 2010 (PPACA or ACA)
			Reduction in the Annual Medicare Market Basket Payment Updates (APUs)
			Penalties for High Readmission Rates
			Establishment of ACO Contracts with Medicare
			Bundled Payment Pilots
			Value-Based Purchasing Program
			Calculating Performance
			CMS-TJC Core Measure Set
			Reduced Payments for High Levels of Hospital-Acquired Infections
			Individual and Business Mandates
			Establishment of Health Insurance Exchanges and Affordability Credits
			Medicaid Expansion
			Medicare and Medicaid DSH cuts
		Managed Care Net Revenue Concepts
		Preparation of the Medicare and Medicaid Cost Report
			Ratio of Costs to Charges
			Implications and Sensitivity of Medicare Cost Reporting
		Presentation of the Audited Financial Statements to the Finance Committee
			Implications of Management Letter Comments Proposed by the Auditors
	Chapter 5: May
		Fundamentals of Revenue Cycle Management (RCM)
			Preregistration, Precertifi cation, and Insurance Verification
			Charge Capture and Price Setting
			Coding and Reimbursement: Documentation Capture and Review
			Coding and Reimbursement: Coding 2013
			Coding and Reimbursement: Coding 2014
			Coding and Reimbursement: Timeliness
			Denials Management
			Denials Management: Fraud and Abuse Issues Related to Billing
			Denials Management: Recovery Audit Contractors (RAC)
			Follow-Up: Managed Care Arrangements and Negotiations
			Performance Monitoring
		Calculation of the Allowance for Doubtful Accounts and Bad-Debt Expense
		Calculation of the Allowance for Contractual Adjustments
	Chapter 6: June
		Budget Preparation: The Beginning
		Budget Calendar
			Presentation of the Budget for Approval
			Budget Calendar Time Frame
			Detailed Budget Calendar Steps
		Volume Issues
			Historical Perspective
			Demographic Changes
			New Services
			Impact from the New ACA Law
			Physician Issues and Input
			Wishful Thinking
			June 1: Volume Kickoff Meeting
			June 26: Approval of Projected 2013 and Budgeted 2014 Inpatient and Outpatient Volumes
		Capital Budgeting: June
		Accounting and Finance Department Responsibilities
		June Finance Committee Special Agenda Items
			Human Resources Report
			Pension Status and Actuary Report Review
	Chapter 7: July
		Budget Preparation: The Middle Months
			Which Is Better: Top-Down or Bottom-Up Budgeting?
			July 1: Issuing the Budget Calendar
			July 11: Computation of Gross Revenues and Contractual Adjustments
			July 14: Review of Salary and Nonsalary Assumptions
			July 15: Review of Gross Revenues and Contractual Adjustments and Validation of Payer Mix
			July 18: Review of the 2014 Budgeted Income Statement, Determination of Price Increase Targets, and Revision of Salary and Nonsalary Assumptions
			July 25: Releasing 2013 Projected and 2014 Budgeted Worksheets to Department Managers
		Capital Budgeting: July
		Regulatory and Legal Environment
			Medicare and Medicaid Fraud and Abuse
		Other Regulatory and Business Compliance Issues
		Corporate Compliance
		Accreditation Issues
		Patient Satisfaction Issues
	Chapter 8: August
		Capital Budget: August
			August 12: Detailed Discussion for All Proposals over $100,000 and Training of All Proposal Evaluators
			August 13: Discussion of All Pool Proposals with the Pool Evaluators
			Funding Availability
			Automatically Approved Capital Funding Items
			August 13–16: Online Evaluation of Proposals
			August 19–22: Consensus Meetings with Pool Evaluators
			August 29: Consensus Meeting for All Proposals over $100,000
			August 29–31: Online Revision of Ratings, If Necessary
		Operating Budget
			August 15: Return of Department Managers’ Operating Budget Work to Their Vice Presidents
			August 19–28: Review of the Proposed Operating Budget by the Divisional Vice Presidents and Its Return to Finance
		Budget Variance Analysis
		Budget Variance Parameters
		Flexible Budgeting
			Cost Accounting and Analysis
			The Impossibility of Determining “True” Cost
		August Finance Committee Special Agenda Items
			Review of Next Year’s Budget Assumptions
			Review of Annual Materials Management and Inventory Level
	Chapter 9: September
		Operating Budget
			September 9: Last Look at Budget Assumptions and Semifi nal Budget Approval
			September 17: Final Review and Approval of the Operating Budget and Review of the Human Resources Committee Package
			September 18–October 14: Preparation of the 2014 Budget for the Finance Committee
			Electronic Budgeting System for the Following Year
		Capital Budget: September
		Cash Budget
		Physician Practice Management Issues
			Physician Office Management
			From PPMC to MSO
			The Management Services Organization
			Patient Throughput
			The Hospital-Owned PPMC
		Current Physician Practice Issues—2013
		Additional Physician-Hospital Integration Issues
		Monthly Physician Reporting
	Chapter 10: October
		Information Systems Implications for Health Care Financial Management
		Information Technology Strategic Plan Initiatives
			Systems to Support Enhanced Clinical Process Management and Data Access
			Integrating Data and Reporting to Support Enhanced Decision Making
			Maximizing the IT Infrastructure and Delivery Capabilities
		HIPAA Implementation Issues
		Selection of a New Health Care Information System
			Features and Functions of the Selected IT System
			Financial Implications for RHMC
			How Improvements to Clinical Systems Benefi t RHMC’s Financial Outcomes
		Budget Presentation to the Board Finance Committee
		October Finance Committee Special Agenda Items
	Chapter 11: November
		Preparation of the Budget Results and Delivery to the Department Managers
		Budgeting and Spreading Contractual Adjustments by Department
		Issues Involving RHMC’s Cost Structure
		How to Improve the Organization’s Cost Structure
			Enhancing Communication with Physicians
			Standardizing the Organization’s Supplies
			Reducing Utilization of Services and Supplies
			Obtaining the Best Pricing for Supplies and Products
			Attaining Optimum Productivity and Staffi ng Levels
		Supply Chain Management in Health Care
			Obtaining the Best Pricing
			Developing Close Relations with Distributors
			Applying Just-in-Time Inventory Management
			Establishing In-Service Training
			Adopting a Consignment Policy
			Implementing E-Commerce
		Benefits of Tax Status for Health Care Organizations
		Preparation and Implications of the Annual IRS 990 Report
	Chapter 12: December
		Getting Ready for Year-End Reporting—Again
		Open-Heart Surgery Pro Forma
			Development of Volume and Revenue
			Financial Conclusion: Open-Heart Surgery Program
		December Finance Committee Special Agenda Items
			Review of Malpractice Insurance Coverage
			Review and Approval of Auditors and Their Fees for the Current Year
			Finance Committee Annual Achievements
		Looking into the Future of Health Care Finance
			General Macro Health Care Trends
			Industry Payer Trends
			Hospital Segment Trends
			Health Care IT Trends
		Future Conclusions
	References
	Index
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