Financial and Accounting Management Skills for Healthcare organizations
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