HSCC 450 Financial Management in Health Care
Perquisites: HSCC 320, HSCC 340, or permission of instructor
I. Instructor Information
A. Instructor: Jeffery L. Beinke, REMT-P, MBA/HCM
B. Phone: Home (336) 992 – 3205
Office (336) 734 – 7924
Mobile (336) 480 – 5802
C. e-mail address: beinkej@forsythtech.edu
D. Office Hours: N/A
E. Class Time: Student Choice (minimum recommendation of 5 hours per week)
II. Course Competencies
A. At the conclusion of the course the student will be able to:
1. Explain the relationship between the financial management function and other functions in management.
2. Explain the placement and structure of financial management in the organizational chart of a typical health care organization.
i. Present to the class financial management structure of their organization.
3. Explain basic accounting rules under the accrual principle, including how accrual results differ from results under cash accounting.
4. Interpret the individual items in financial statement.
5. Define major accounting terms.
6. Understand simple bookkeeping entries.
7. Use an organization’s financial statements to evaluate past liquidity.
8. Use an organization’s financial statements to evaluate past asset utilization.
9. Define cost.
10. Distinguish between variable and fixed cost for a given service or process.
11. Distinguish direct from indirect cost for a responsibility of service center.
12. Perform simple statistical cost analysis.
13. Perform simple cost/volume/profit analysis.
14. Explain the purpose of the budgeting process and the role of the organization’s budget.
15. Make important choices about the nature of the budgeting process (fixed or flexible, top down or bottom up, incremental or zero base).
16. Prepare a statistics budget for a small health care organization or EMS service.
17. Explain the relationships among the components of an organization’s budget.
18. Perform a variance analysis from data on a monthly budget report.
19. Explain how external financial markets constrain health care organizations.
20. Explain the basic functions of financial markets.
21. Explain the origin (in risk aversion) and nature of the trade-off between risk and expected return.
22. Explain the role of diversification in portfolio management.
23. Graphically show and explain the capital asset model (CAPM).
24. Calculate cash flow after taxes for proposed capital investments.
25. Explain the major decision rules for analyzing proposed investments and apply them in appropriate circumstances.
26. Calculate net present value, internal rate of return, and profitability index given assumed cash flows and discount rates.
27. Explain the differences between the applications of the net present value and the internal rate of return rules in making mutually exclusive choice decisions.
28. Use linear programming to solve a complex capital-rationing problem.
29. Define and measure total and systematic project risk.
30. Adjust the discount rate in a net present value (NPV) calculation to account for differential project risk.
31. Make a “lease or buy” decision.
32. Explain the nature of an endowment and its role in subsidizing the organization.
33. Identify an endowment’s asset and claims on the balance sheet.
34. Articulate an endowment’s investment goals and constraints.
35. Prepare a written investment policy statement for an endowment.
36. List the choices for external financing faced by health care organizations.
37. Explain the requirements placed on the by each external financing option.
38. Discuss the issues involved in optimal capital structure decisions.
39. Interact effectively with investment bankers and other financing professionals.
40. Explain the basic procedures and regulations involved in long-term financing.
41. List and explain the roles of the professionals involved in arranging long-term financing.
42. Explain the contents of a financing prospectus to a skeptical board of directors.
43. Explain the role of external financing in organizational growth and survival.
44. Explain the role of reimbursement policies in health care organizations’ access to capital.
45. Explain the factors that influence not-for-profit provider’s costs of capital.
46. Explain the relationship between the cost of capital for a not-for-profit health care provider and that of an otherwise equivalent taxable corporation.
47. Explain how the Federal Reserve System can create money and credit.
48. Explain and measure the cash conversion cycle.
49. Explain the trade-off between the costs of liquidity and the costs of illiquidity.
50. Explain the basic principles of working capital management, as rooted in controlling opportunity costs.
51. Explain the role of the cash budget in working capital management.
52. Make decisions as to the adoption of new cash and accounts management policies.
53. Recognize inventory control as a key element of supply chain management.
54. Determine optimal order quantities and reorder points for inventory and supply items.
55. Determine upon which inventory and supply items to concentrate one’s attention to and which to ignore.
56. Develop plans for working with suppliers to develop just-in-time inventory and supply delivery schemes.
57. Explain the role of the matching principle in controlling overall financial risk.
58. Explain the role of the yield curve in determining the relative costs of short-term and long-term financing.
59. List possible sources of short-tem financing and explain the characteristics of each.
60. Make decisions as to whether or not to accept discounts for early payment.
61. Explain the financial approach to strategic planning and to participate effectively in that process.
62. Advise senior management of financial restructuring possibilities, including mergers, acquisitions, joint ventures, and joint operating agreements.
63. Evaluate and advise senior management on the acceptance of capitated contract proposals.
III. Required Textbook, Lab Manuals, Supplies
A. McLean, R. (2002). Financial Management in Health Care Organizations 2nd
Edition. Thomson, Delmar Learning. Clifton Park, NY.
B. Internet Access
C. Microsoft© Office (MS Word, MS EXCEL, MS Power Point).
IV. Attendance and Participation Policy
A. Attendance
1. Attendance is a university requirement that requires you post at least one message to one of the course discussion groups within WebCT on three separate days during the online week.
B. Participation
1. Participation is different from attendance. To obtain full participation credit, you need to participate visibly in discussion in the <Main> discussion group three (3) days in each week of the semester. In addition to completing the assignments, you should read, analyze, and respond to the questions and comments from me and the other classmates - in short, you are required to participate actively in our classroom discussions. Please note: Comments made in the learning team discussion groups will not be considered for class participation.
2. Please, remember that participation is part of your overall grade in the class. While submitting your assignments will be taken into consideration when determining your level of participation, what I am really looking for is evidence that you are an active participant in the learning experience three out of seven days each week. In other words, you must do more than send in your assignments, you must send in messages demonstrating your regular reading of others' notes.
3. I suggest you try to relate "real world" experiences as much as possible to our activities and discussions. I will look for comments that explore the content of the course. Your comments should add significantly to the discussion by building on others' comments, suggesting alternative solutions, pointing out problems, and even at times, constructively disagreeing. Make sure you substantiate any comments you make with "good reasons." As you know, just saying, "I agree" is not enough to add to a discussion.
4. Our discussion goal is to be collaborative, not combative. Experience shows that even an innocent remark in the online environment can be easily misconstrued. I suggest that you always reread your responses carefully before you post them to make certain that in the message you have worded it in a way that will not be seen as a personal attack! Be positive in your approach to others and diplomatic with your words. I will do my best to do the same.
5. Respect is the foundation of successful online learning.
V. Grading
A = 356 – 331
B = 330 – 303
C = 302 – 274
D = 273 – 266
F = < 265
A Clearly stands out as excellent performer. Has unusually sharp insight into material and initiates thoughtful questions. Superb articulation in presentations and writes logically, clearly and consistently. Student is adept at integrating ideas/concepts previously learned from this and other disciplines. Assignments are competed in a timely manner. Note: “A” written work should be of such a nature that it could be readily submitted for publication and/or put on reserve for all students to emulate.
B Grasps subject matter at a level considered”good to very good" at level; demonstrates satisfactory comprehension of subject matter at graduate level. Writes and speaks well with room for improvement. Accomplishes more than minimal requirements and produces high quality work. Participates actively every week, promotes collegiality. A “B” is considered a high grade.
C Demonstrates satisfactory comprehension of subject matter at level. Accomplishes the minimal requirements outlined in syllabus. The student has mechanical or grammatical errors in written work and presentations, but remains at an acceptable level for a college student. Student participation at every week, and Learning Team Meetings minimal.
D Quality and quantity of written work is below average. Student may be deficient in communication/presentation skills. Does not demonstrate an accurate and satisfactory comprehension of course material. Frequent absences/tardiness to class will contribute to a lower grade.
F Quality and quantity of work is unacceptable.
VI. Final Grade Computation
|
Class Schedule |
Due Date |
Points |
|
Week 1 Part 1: Introduction to Health Care & Finance (Chapters 1 & 2) |
|
|
|
Submit Personal Biography |
6/1/2007 |
-- |
|
Post Discussion Question Answers |
6/2/2007 |
3 |
|
6/4/2007 |
5 |
|
|
6/5/2007 |
5 |
|
|
Weekly Summary |
6/6/2007 |
1 |
|
Online Quizzes |
6/6/2007 |
12 |
|
Participation |
Weekly |
3 |
|
Total Possible Points |
|
29 |
|
Week 2 Part 2: Tools (Chapters 3 – 4) |
|
|
|
Post Discussion Question Answers |
6/9/2007 |
3 |
|
6/11/2007 |
10 |
|
|
6/12/2007 |
10 |
|
|
Weekly Summary |
6/13/2007 |
1 |
|
Online Quizzes |
6/13/2007 |
20 |
|
Participation |
Weekly |
3 |
|
Total Possible Points |
|
47 |
|
Week 3 Part 2: Tools (Chapters 5 – 8) |
|
|
|
Post Discussion Question Answers |
6/16/2007 |
3 |
|
Individual: Odd Problems Ch. 5, Case Question Ch. 8 LSHHS only |
6/18/2007 |
10 |
|
6/20/2007 |
10 |
|
|
Weekly Summary |
6/20/2007 |
1 |
|
Online Quizzes |
6/20/2007 |
39 |
|
Participation |
Weekly |
3 |
|
Total Possible Points |
|
66 |
|
Week 4 Part 3: The Financial Market Environment (Chapter 9) |
|
|
|
Post Discussion Question Answers |
6/23/2007 |
3 |
|
6/25/2007 |
10 |
|
|
6/27/2007 |
10 |
|
|
Weekly Summary |
6/27/2007 |
1 |
|
Online Quizzes |
6/27/2007 |
12 |
|
Participation |
Weekly |
3 |
|
Total Possible Points |
|
39 |
|
Week 5 Part 4: Selecting Long-Term Assets and Programs (Chapter 10 & 11) |
|
|
|
Post Discussion Question Answers |
6/30/2007 |
3 |
|
7/2/2007 |
10 |
|
|
7/3/2007 |
10 |
|
|
Weekly Summary |
7/3/2007 |
1 |
|
Online Quizzes |
7/3/2007 |
27 |
|
Participation |
Weekly |
3 |
|
Total Possible Points |
|
54 |
|
Week 6 Part 6: Long-Term Financing (Chapters 12 – 15) |
|
|
|
Post Discussion Question Answers |
7/7/2007 |
3 |
|
7/9/2007 |
10 |
|
|
7/11/2007 |
10 |
|
|
Weekly Summary |
7/11/2007 |
1 |
|
Online Quizzes |
7/11/2007 |
29 |
|
Participation |
Weekly |
3 |
|
Total Possible Points |
|
56 |
|
Week 7 Part 7: Managing Short-Term Assets & Liabilities (Chapters 16 – 19) |
|
|
|
Post Discussion Question Answers |
7/14/2007 |
3 |
|
7/16/2007 |
10 |
|
|
7/18/2007 |
10 |
|
|
Weekly Summary |
7/18/2007 |
1 |
|
Online Quizzes |
7/18/2007 |
23 |
|
Participation |
Weekly |
3 |
|
Total Possible Points |
|
50 |
|
Week 8: EMS & Reimbursement |
|
|
|
Post Discussion Question Answers |
7/21/2007 |
3 |
|
7/23/2007 |
10 |
|
|
7/25/2007 |
10 |
|
|
Weekly Summary |
7/25/2007 |
1 |
|
Online Quizzes |
7/25/2007 |
10 |
|
Participation |
Weekly |
3 |
|
Total Possible Points |
|
37 |
|
Week 9 Part 8: Frontiers of Health Care Financial Management (Chapter 20) |
|
|
|
Post Discussion Question Answers |
7/30/2007 |
3 |
|
Weekly Summary |
8/1/2007 |
1 |
|
Online Quizzes |
8/1/2007 |
8 |
|
Participation |
Weekly |
3 |
|
Total Possible Points |
|
15 |
|
Course Total |
|
356 |
ASSIGNMENTS
Week 1 Individual Assignments
Ø Operations and Financial Summary
o Use the Internet to access the website of a health care organization such as an HMO, a hospital management company, or an ambulance service and find press releases summarizing the operations and financial results for the end-of-year or end-of-quarter. In a 1 – 2 page brief, summarize the important issues facing this organization. How will this organization resolve these issues? If the issues have been resolved, describe the success or failure of the process. Appropriate citation is expected.
o The potential for the increasing number of medical malpractice lawsuits has led to skyrocketing medical malpractice insurance rates and an increased number of physicians leaving the practice of medicine. Utilize one of the various Internet search engines complete a search on “medical malpractice” or similar term. Prepare a 900 – 1500 word paper in APA style to provide current information on trends in insurance rates and changes in physician behavior regarding prevailing medical practice.
Week 2 Individual Assignment
Ø Accounting VS. Financial Management
o Using the “compare and contrast” method prepare a 900 – 1500 word paper in APA style relating to accounting and financial management.
Week 2 Team Assignment
o Form a response to the case questions found at the conclusion of Chapter 4. These questions relate to the financial analysis of an organization. Your response does not need to be in APA style; however, the response is to be consistent with the degree level you are seeking.
Week 3 Individual Assignments
Ø Odd Problems Ch. 5
Ø Case Question Ch. 8 LSHHS only
Week 3 Team Assignment
Ø The questions for the case study at the conclusion of Chapter 6 are on page 123.
Week 4 Individual Assignment
Ø Complete Discussion Question 4 & 5 for Chapter 9, questions can be found on page 181
Week 4 Team Assignment
Ø Case Study Questions 1 – 4 Chapter 9, questions can be found on Page 182 – 183
Week 5 Individual Assignment
Ø Conduct NPV and IRR analysis for problems submitted to the Main Discussion Board.
Week 5 Team Assignment
Ø Complete the case problem at the conclusion of Chapter 11 found on page 228.
Week 6 Individual Assignment
Ø Respond to the Case Study Question (1 & 2) found on page 275
Week 6 Team Assignment
o What is bond rating and what does that mean?
o Are they (bonds) insured, if not, why not?
o What is the amount of and use of the proceeds?
o What is the interest rate to be paid?
o What is the maturity date, and can the bonds be paid off early?
o What risk factors are identified in the prospectus?
Week 7 Individual Assignments
Ø Obtain three different annual reports (10K) for a hospital management company or other providers (include EMS services). Comment on the proportion of supplies relative to other current assets and to revenue. Form 10K can be obtained from the SEC’s Edgar website found at www.sec.gov/edgar
Week 7 Team Assignment
Ø Examine the balance sheet of one firm each in the hospital management industry, the drugstore industry, and the medical services industry. On the current asset side, compare the relative levels of cash, receivables, and inventory. On the current liabilities side, compare the levels of current interest bearing debt due and the levels of non-interest debt such as accounts payable and wages payable.
Week 8 Individual Assignment
Ø Based on the information presented thus far, in your organization indicate and discuss the factors affecting cost. Additionally, if you were the CFO, identify strategies that may result in decreasing associated costs.
Week 8 Team Assignment
Ø Discuss the factors affecting EMS reimbursement in relationship the various EMS services. Include in your discussion private for – profit, hospital – based, fire – based, and government (county based) services.