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Financial Management

Financial Management. 2. Financial Management. Learning ObjectivesUnderstand the purpose of healthcare organizations.Relate the purpose of healthcare financial management to the purpose of the organization.Understand the objectives of healthcare financial management.Apply quality assessment

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Financial Management

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    1. Financial Management 1 Financial Management

    2. Financial Management 2 Financial Management Learning Objectives Understand the purpose of healthcare organizations. Relate the purpose of healthcare financial management to the purpose of the organization. Understand the objectives of healthcare financial management. Apply quality assessment to healthcare financial management. Apply organizational ethics to healthcare financial management. Examine the value of healthcare financial management to the management functions and the changing face of healthcare. Review background accounting, economics, and statistics information.

    3. Financial Management 3 Organizational Purpose Economic survival Nonprofit--provide services to the community For-profit--provide profit for the owner To be successful, both must identify and meet the needs of their customers.

    4. Financial Management 4 Purpose of Healthcare Management to provide the community with the services it needs, at a clinically acceptable level of quality, at a publicly responsive level of amenity, at the least possible cost (Berman, Kukla, and Weeks 1994, 5)

    5. Financial Management 5 Purpose of Healthcare Management By planning, organizing, staffing, directing, and controlling while communicating, coordinating, and making decisions By obtaining organizational accreditation Joint Commission

    6. Financial Management 6 Purpose of Healthcare Management By obtaining basic educational requirements BHA from an Association of University Programs in Health Administration (AUPHA)--approved baccalaureate program MHA/MBA from a Commission on Accreditation of Healthcare Management Education (CAHME)--accredited graduate program

    7. Financial Management 7 Purpose of Healthcare Management By obtaining certification and continuing education Certified as Fellows (FACHE) (over 5,000) from the American College of Healthcare Executives (ACHE) with over 30,000 members

    8. Financial Management 8 Purpose of Healthcare Financial Management To provide both accounting and finance information that assists healthcare managers in accomplishing the purposes of the organization By delegating authority for financial matters from the governing body and CEO to the CFO.

    9. Financial Management 9 Purpose of Healthcare Financial Management By obtaining certification and continuing education BBA/MBA CPA Certified Healthcare Financial Professional (CHFP) (663) and Fellow (FHFMA) (1,672) from the Healthcare Financial Management Association (HFMA) with over 34,000 members

    10. Financial Management 10 Accounting and Healthcare Financial Management Financial accounting provides accounting information, generally historical in nature, to external users. 1996 American Institute of Certified Public Accountants (AICPA) Audit Guide establishes the following four financial reports for external users: balance sheet, statement of operations, statement of changes in net assets, and statement of cash flows.

    11. Financial Management 11 Accounting and Healthcare Financial Management Financial accounting AICPA has not published a new Audit Guide since 1996--An expected 2007 new edition should include Criteria to recognize charity care at cost. Disclosures regarding settlements to third parties. Accounting for physician loan/guarantees. Contributions and pledges. Auditor association with cost reports.

    12. Financial Management 12 Accounting and Healthcare Financial Management Managerial accounting--provides accounting information, generally current or prospective in nature, to internal users.

    13. Financial Management 13 Accounting and Healthcare Financial Management Cost accounting--provides cost accounting information, historical, current, or prospective in nature, to both external and internal users, and combines elements of both financial and managerial accounting.

    14. Financial Management 14 Finance Borrows and invests the money necessary for the organization to accomplish its purpose.

    15. Financial Management 15 Financial Management Analyzes the information provided by financial accounting, cost accounting, managerial accounting, finance, as well as other disciplines in order to evaluate past decisions and make better decisions in the future.

    16. Financial Management 16 Objectives of Healthcare Financial Management To generate a reasonable net income (difference between collected revenues and expenses) by investing in assets and putting the assets to work. To respond to the myriad regulations in a timely and cost-effective manner.

    17. Financial Management 17 Objectives of Healthcare Financial Management To facilitate the organizations relationship with third-party payers, who account for about 81 percent of a healthcare organizations revenues. To influence the method and amount of payment third-party payers choose.

    18. Financial Management 18 Objectives of Healthcare Financial Management To monitor physicians and their potential financial liability to the organization in terms of their ordering patterns and possible negligence. Utilization review Credentialing and risk management To protect the organizations tax status.

    19. Financial Management 19 Quality Assessment and Healthcare Financial Management Direct measures of quality Goal-based measures Responsive measures Decision-making measures Connoisseurship measures

    20. Financial Management 20 Quality Assessment and Healthcare Financial Management Indirect measures of quality Resource measures Outcome measures Reputational measures Value-added measures

    21. Financial Management 21 Quality Assessment and Healthcare Financial Management Joint Commission--the [healthcare organization] has a planned, systematic, [organization]-wide approach to process design and performance measurement, assessment, and improvement (Joint Commission 1996, 134).

    22. Financial Management 22 Quality Assessment and Healthcare Financial Management

    23. Financial Management 23 Quality Assessment and Healthcare Financial Management Joint Commission Sentinel indicators measure a process so important that every time they occur, the manager initiates an individual case review. Rate-based indicators measure a process and allow for an error rate

    24. Financial Management 24 Quality Assessment and Healthcare Financial Management Joint Commission In response to a 1999 Institute of Medicine report that as many as 98,000 Americans die each year in hospitals as a direct result of hospital errors, the Joint Commission adopted new patient safety standards that went into effect on July 1, 2001.

    25. Financial Management 25 Quality Assessment and Healthcare Financial Management Joint Commission Patient Safety Standards--2001 Make doctors tell patients when they receive substandard care. Implement an organization-wide patient safety program.

    26. Financial Management 26 Quality Assessment and Healthcare Financial Management Joint Commission Patient Safety Standards--2002 Improve accuracy of patient identification. Improve effectiveness of communication. Improve safety of high-alert medications. Eliminate wrong-site, wrong-patient, wrong-procedure surgery. Improve safety of infusion pumps. Improve effectiveness of clinical alarms.

    27. Financial Management 27 Quality Assessment and Healthcare Financial Management Joint Commission Patient Safety Standards--2004 Reduce the risk of healthcare-acquired infections.

    28. Financial Management 28 Quality Assessment and Healthcare Financial Management Joint Commission Patient Safety Standards--2005 Reconcile medications, accurately and completely, across the continuum of care. Reduce the risk of patient harm from falls.

    29. Financial Management 29 Quality Assessment and Healthcare Financial Management Joint Commission Patient Safety Standards--2006 No new patient safety goals added.

    30. Financial Management 30 Quality Assessment and Healthcare Financial Management Joint Commission Patient Safety Standards2007 Encourage patients active involvement in their own care as a patient safety strategy. Identify risks inherent in the organizations patient population.

    31. Financial Management 31 Quality Assessment and Healthcare Financial Management Joint Commission Patient Safety Standards2008 Improved recognition and response to changes in patient condition.

    32. Financial Management 32 Organizational Ethics and Healthcare Financial Management Utilitarianism--greatest good for the greatest number Deontology--decisions are governed by duties to one another that take precedence over ends-based thinking of utilitarians.

    33. Financial Management 33 Organizational Ethics and Healthcare Financial Management Conflicts of interest--owing duties to two or more parties and fulfilling a duty to one somehow harms the other.

    34. Financial Management 34 Organizational Ethics and Healthcare Financial Management Conflicts of Interest--2006 Governance Institute study. Because conflicts of interest can undermine public confidence, all should be disclosed.

    35. Financial Management 35 Value of Healthcare Financial Management Supports the management functions and connective processes. Predicts which organizations will survive the competition of the 1990s. Falling prices Restrictions on credit Reduced production Bankruptcies,

    36. Financial Management 36 Review Appendices 1.1 on Financial Accounting 1.2 on Economics 1.3 on Statistics, which includes the American Hospital Association (AHA) definitions of statistical terms

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