Financial and Accounting Management Skills for Healthcare organizations
Course Code: FA 37
Course Objective
- Define the term healthcare finance as it is used in this course.
- Describe the key characteristics of a business.
- Discuss the structure of finance department, the role of finance in health services organizations, and how this role has changed over time.
- Describe the major players in the health services industry.
- Discuss some of the regulatory and legal issues pertinent to the health services industry.
- List the key operational issues currently facing healthcare managers.
- Describe the organization of the course and the learning aids.
Target Audience
- This course is for individuals, managers or supervisors who are willing to increase their professional area of healthcare finance as it introduces delegates to the basic concepts of healthcare finance, including accounting and financial management.
Course Outline
Day 1
- The Healthcare Environment
- Introduction to Healthcare Finance
- Defining healthcare finance
- Purpose of the course
- Concept of business
- The role of finance in health services and organizations
- The structure of the finance department
- Health services settings
- Regulatory and legal issues
- Current challenges
- Organization of the course
Day 2
- Financial Accounting
- The Income Statement and Statement of Changes in Equity
- Historical foundations of financial accounting
- The users of financial accounting information
- Regulation and standards in financial accounting
- Conceptual framework of financial reporting
- Accounting methods: cash versus accrual
- Recording and compiling financial accounting data
- Income statement basics
- Revenues
- Expenses
- Operating income
- Non-operating income
- Net income
- Net income versus cash flow
- Income statements of investor-owned businesses
- Statement of changes in equity
- A look ahead: using income statement data in financial statement analysis
- The Balance Sheet and Statement of Cash Flows
- Balance sheet basics
- Assets
- Liabilities
- Net assets (Equity)
- Fund accounting
- The statement of cash flows
- Transactions
- Another look ahead: Using balance sheet data in financial statement analysis
Day 3
- Managerial Accounting
- Cost Behavior and Profit Analysis
- The basics of managerial accounting
- Cost classifications: fixed and variable
- Cost behavior
- Cost classifications: semi-fixed
- Profit (CVP) analysis
- Breakeven analysis
- Operating leverage
- Profit analysis in discounted fee-for-service environment
- Profit analysis in a capitated environment
- The impact of cost structure on financial risk
- Cost Allocation
- Direct versus indirect (Overhead) costs
- Introduction to cost allocation
- Cost allocation basics
- Cost allocation methods
- Direct method illustration
- Changing to more effective cost driver
- Step-down method illustration
- Activity-based costing
- Final thoughts on cost allocation
- Pricing and service decisions
Day 4
- Healthcare providers and the power to set prices
- Price setting strategies
- Target costing
- Setting prices on individual services
- Setting prices under capitation
- Setting merged care plan premium rates
- Using relative value units to set prices
- Making service decisions (Contract Analysis)
- Planning and Budgeting
- The planning process
- Operational planning
- Introduction to budgeting
- Budget timing and other issues
- Budget types
- Constructing a simple operating budget
- Variance analysis
Day 5
- Basic Financial Management Concepts
- Time Value Analysis
- Time lines
- Future value of a Lump Sum (Compounding)
- Present value of a Lump Sum (Discounting)
- Opportunity cost
- Solving for interest rate and time
- Annuities
- Perpetuities
- Uneven cash flow streams
- Using time value analysis to measure return on investment (ROI)
- Semiannual and other compounding periods
- Amortized loans
- Financial Risk and Required Return
Day 6
- The many faces of financial risk
- Introduction to financial risk
- Risk aversion
- Probability distributions
- Expected and realized rate of return
- Stand-alone risk
- Portfolio risk and return
- Measuring the risk of investments held in portfolios
- The relationship between component and portfolio betas
- Relevance of the risk measures
- Interpretation of the risk measures
- The relationship between risk and required return
- The revenue cycle and receivables management
- Supply chain management
- Short-term financing
- Financial Condition Analysis
- Financial statement analysis
- Financial ration analysis
Day 7
- Long-Term Financing
- Long-Term Debt Financing
- The cost of money
- Common long-term debt instruments
- Debt contracts
- Credit ratings
- Credit enhancement
- Interest rate components
- The term structure of interest rates
- Economic factors that influence interest rate levels
- Debt valuation
- Equity Financing and Securities Markets
Day 8
- Equity in for-profit businesses
- Types of common stock
- Procedures for selling new common stock
- The market for common stock
- Regulation of securities markets
- The investment banking process
- Equity in not-for-profit corporations
- Common stock valuation
- Security market equilibrium
- Information efficiency
- The risk/return trade-off
- Capital Structure and the Cost of Capital
- Capital structure basics
- Impact of debt financing on accounting risk and return
- Capital structure theory
- Identifying the optimal capital structure in practice
- Not-for-profit businesses
- Using the target capital structure
- Cost of capital basics
- Cost of debt capital
- Cost of equity capital
- Cost of capital estimation for small businesses
- An economic interpretation of the corporate cost of capital
Day 9
- Capital Investment Decisions
- The basics of Capital Budgeting
- Project classifications
- The role of financial analysis in healthcare capital budgeting
- Overview of capital budgeting financial analysis
- Cash flow estimation
- Cash flow estimation example
- Breakeven analysis
- Return on investment (Profitability) analysis
- Some final thoughts on breakeven and profitability analyses
- Capital budgeting in not-for-profit businesses
- The post-audit
- Using capital budgeting techniques in other contexts
- Project Risk Analysis
Day 10
- Types of project risk
- Relationships among stand-alone, corporate, and market risk
- Risk analysis illustration
- Sensitivity analysis
- Scenario analysis
- Monte carlo simulation
- Qualitative risk assessment
- Incorporating risk into the decision process
- Making the final decision
- Adjusting cash outflows for risk
- Divisional costs of capital
- An overview of the capital budgeting decision process
- Capital rationing
- Current Asset Management and Financing
- An overview of short-term financial management
- Cash management
- The cash budget
- Marketable securities management
- Long-term securities management
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