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Chapter 19

Chapter 19. Financial Management of the Medical Practice. Objectives. Review the learning and performance objectives for this chapter By the end of this chapter, demonstrate the procedures in the textbook and the job skills in the workbook. Heart of the Health Care Professional. Service

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Chapter 19

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  1. Chapter 19 Financial Management of the Medical Practice

  2. Objectives • Review the learning and performance objectives for this chapter • By the end of this chapter, demonstrate the procedures in the textbook and the job skills in the workbook

  3. Heart of the Health Care Professional • Service • It takes a well-rounded medical practice to be successful, one that patients will talk about with high regard

  4. Computerized Financial Management • Medical Office Budget • Income and expenses • Analyze previous year • Project for upcoming year • Profit and Loss Statement • Summarizes income and expenses

  5. Computerized Financial Management • Financial Status Reports • Accounts Receivable • List of account balances owed • Aging Summary Analysis • Age of accounts receivable

  6. Computerized Financial Management • Financial Status Reports • Insurance Aging Report • Overdue accounts • Amounts with length of time (age) overdue • 30, 60, 90, 120 days • Financial Summary • Monthly report • Diagnoses and cases treated • Income generated

  7. Computerized Financial Management • Financial Status Reports • Periodic Transaction Summary • AKA Practice Management Report, Balance Sheet • Annual report • Tax form completion • Presents financial position of practice

  8. Computerized Financial Management • Financial Status Reports • Periodic Transaction Summary • Management planning • Analysis of insurance needs • Loan applications • Management planning

  9. Analyzing Practice Productivity • Overhead Expenses (fixed overhead) • Cost of building (mortgage/lease) • Utilities • Long term equipment purchases • Leased equipment • Janitorial services

  10. Analyzing Practice Productivity • Overhead Expenses (fixed overhead) • Permanent staff payroll • Total expenses - physician benefits ÷ receivables = % overhead expenses • Monitor regularly

  11. Analyzing Practice Productivity • Cost of Procedures and Services • Formula: total expenses for specific procedure in one month divided by number of procedures in one month = cost of procedure

  12. Analyzing Practice Productivity • Managed Care Analysis • Capitation: “Dollar amount per patient whether seen or not” • Encounters per member per year • Average number of members per month • Revenues per member per month

  13. Analyzing Practice Productivity • Managed Care Analysis • Revenues per visit • Total managed care revenue • Capitation to fee-for-service ratio • Capitation stop loss • Withhold • Risk pools • Capitation versus fee-for-service plan

  14. Accounts Payable • Check Controls • Safety control of office checking account • Verify checks against purchase orders • Monitor utility bills • Create Headings and Post Entries in an Accounts Payable System; Write Checks • Procedure 19-1

  15. Accounts Payable • Overpayments and Refunds–Government • Money paid provider is not entitled to • Report reason for overpayment • Return money within 60 days • False Claims Act

  16. Accounts Payable • Overpayments and Refunds – Private • Keep on books as credit • Refund to patient

  17. Payroll • Wages and Hours of Work • Fair Labor Standards Act (FLSA) • Nonexempt employees • Exempt employees • Federal minimum wage • Overtime • Over 40 hours worked in a week

  18. Payroll • Wages and Hours of Work • Posting requirements • Civil Rights Act of 1964 • Disability Insurance • Discrimination Acts • Disabilities, Title VII • Employee Polygraph Protection Act

  19. Payroll • Wages and Hours of Work • Posting requirements • Family and Medical Leave Act • Federal minimum wage • Medical emergency contact • No smoking policy • Notification of Employee Rights • Occupational Safety and Health Act

  20. Payroll • Wages and Hours of Work • Posting requirements • Rehabilitation Act • Vietnam Era Veterans Readjustment Act • Workers’ Compensation Coverage • Unemployment Benefits • Uniformed Services Employment and Reemployment Rights Act

  21. Payroll • Payroll Procedures • Department of Labor’s Regulations • Time card: each pay period • Record hours worked • Calculate and record wages • Separate record for each employee • Paycheck and itemized statement • Paycard

  22. Payroll • Employer Identification Number (EIN) • 9-digit number for tax accounting • Provided by Internal Revenue Service • Social Security Number • Required by age two • Immigration and Nationality Act • Employment Eligibility Verification • Form I-9

  23. Payroll • Employee Withholding Allowance Certificate • Form W-4 • Number of claimed exemptions • One exemption for self • One exemption for each dependent • Fewer exemptions = higher tax

  24. Payroll • Payroll Deductions • Federal Insurance Contributions Act (FICA) • Three programs financed: • Retirement (OASDI), Medicare (HI), Disability (DI) • Income Tax Deductions • Federal withholding tax (FWT)

  25. Payroll • Payroll Deductions • State Disability Insurance (SDI) • Unemployment compensation disability (UCD) • Required in five states • Optional Payroll Deductions or Benefits • Partial/full payment for: • Life and health insurances • Pension plans • Profit sharing

  26. Payroll • Unemployment Taxes • Federal Unemployment Tax Act (FUTA) • Paid by employer • State Unemployment Tax Act (SUTA) • Employer payments vary by state • Compensation to unemployed workers • Annual Tax Return • Employers report payments annually • Form 940

  27. Payroll • Tax Reports • Employer’s Tax Guide (Circular E) • Guidelines and requirements • Federal Tax Deposits and Receipts • Employers act as collection agents • FICA tax and income tax • Employer’s Quarterly Federal Tax Return • Payment of taxes withheld from paychecks • Form 941

  28. Payroll • Tax Reports • Wage and Tax Statement • W-2 given to employee at end of year • All wages must be filed electronically • Paper filing requires special approval • Employee’s Earning Record • Separate financial record for each employee • Gross income, deductions, net income

  29. Payroll • Payroll Register • Summary of time cards • Create Category Headings, Determine Deductions, Calculate Payroll, and Make Entries to a Payroll Register • Procedure 19-2 • Payroll via electronic banking • Direct deposit to bank

  30. Payroll • Payroll Register • Write-it-once check writing and payroll journal systems • Pegboard system • Layered forms

  31. Stop and ThinkCase Scenarios • Review the scenario “Prepare an Analysis to Determine the Effectiveness of Capitated Plans” • What information do you need? • What type of formula will you use? • What additional information would have an impact on this analysis?

  32. Stop and ThinkCase Scenarios • Review the scenario “Determine Payroll Category and Frequency for Deduction” • Determine the payroll dates for each type of employee for next month; circle on calendar • Select where will you find the deductions on the withholding tables • Write your answers by each staff member

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