Financial Management for Nurse Managers: Merging the Heart with the Dollar

332 Pages·2018·11.615 MB·English

by  John Michael Leger (editor), Janne Dunham-Taylor (editor)

fourth edition
Financial Management
Nurse Managers
for
Merging the Heart with the Dollar
Edited by
J. Michael Leger, PhD, MBA, RN
Director, Department of System Quality,
Healthcare Safety, and Accreditation
Adjunct Professor, School of Nursing
University of Texas Medical Branch
Janne Dunham-Taylor, PhD, RN
Professor Emerita
East Tennessee State University
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Library of Congress Cataloging-in-Publication Data
Names: Leger, J. Michael (John Michael), editor.
Title: Financial management for nurse managers : merging the heart with the
dollar / [edited by] J. Michael Leger.
Other titles: Financial management for nurse managers (Dunham-Taylor)
Description: Fourth edition. | Burlington, Massachusetts : Jones & Bartlett
Learning, [2018] | Includes bibliographical references and index.
Identifiers: LCCN 2017025739 | ISBN 9781284127256 (pbk. : alk. paper)
Subjects: | MESH: Economics, Nursing | Nursing Services--economics | Nursing
Services--organization & administration | Financial Management--methods
Classification: LCC RT86.7 | NLM WY 77 | DDC 362.1068/1--dc23 LC record available at https://lccn.loc.gov/2017025739
6048
Printed in the United States of America
21 20 19 18 17 10 9 8 7 6 5 4 3 2 1
© Spectral-Design/Shutterstock
Brief Contents
Contributors x
Preface xi
Acknowledgments xii
Introduction xiii
PART I Health Care, the Economy and Value-Based
Purchasing 1
Chapter 1 How We Got to Where We Are! . . . . . . . . . . . . . . . . . . . . . . 3
Chapter 2 Healthcare Stakeholders: Consumers, Providers,
Payers, Suppliers, and Regulators . . . . . . . . . . . . . . . . . . 27
Chapter 3 Microeconomics in the Hospital Firm: Competition,
Regulation, the Profit Motive, and Patient Care . . . . . . . 45
Chapter 4 Providing Patient Value While Achieving Quality,
Safety, and Cost-Effectiveness . . . . . . . . . . . . . . . . . . . . . 67
PART II Budget Principles 107
Chapter 5 Budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Chapter 6 Budget Development and Evaluation . . . . . . . . . . . . . 131
Chapter 7 Budget Variances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Chapter 8 Comparing Reimbursements with Cost of
Services Provided . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
iii
iv Brief Contents
PART III Financial Strategies and Accounting Issues 195
Chapter 9 Strategic Management: Facing the Future
with Confidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
Chapter 10 Financial Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229
Chapter 11 Accounting for Healthcare Entities . . . . . . . . . . . . . . . . 253
Chapter 12 Financial Analysis: Improving Your
Decision Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279
Index 305
© Spectral-Design/Shutterstock
Contents
Contributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x Health Maintenance Organizations . . . . . . . . . . . 11
The Health Insurance Portability and
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
Accountability Act of 1996 . . . . . . . . . . . . . . . 11
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . xii
The Balanced Budget Act of 1997 . . . . . . . . . . . 11
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii Policies Addressing Quality . . . . . . . . . . . . . . . . . . . . . . 12
Governmental Agencies Concerned
with Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
PART I Health Care, the Economy The Affordable Care and Patient
Protection Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
and Value-Based
A Look to the Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Purchasing 1
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Discussion Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Chapter 1 How We Got to Where
Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
We Are! . . . . . . . . . . . . . . . . . . . . . 3
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
J. Michael Leger, PhD, MBA, RN, Janne Dunham-Taylor,
Chapter 2 Healthcare Stakeholders:
PhD, RN, and Joellen Edwards, PhD, RN, FAAN
Consumers, Providers, Payers,
How Did We Get into This Mess? . . . . . . . . . . . . . . . . . . 4
Suppliers, and Regulators . . . . 27
Foundations of Health Care: The Early Days
of Our Country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 J. Michael Leger, PhD, MBA, RN, and
Policies Addressing Access to Care . . . . . . . . . . . . . . . . 5 Janne Dunham-Taylor, PhD, RN
Access to Direct Services: Hospitals Healthcare Dilemmas: Access, Cost, and Quality . . . 28
and Beyond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Five Stakeholders: Consumers, Providers,
The Social Security Act . . . . . . . . . . . . . . . . . . . . . . .6 Payers, Suppliers, and Regulators . . . . . . . . . . . . . . 28
Healthcare Access Changes Post–World Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
War II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Providers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Medicare and Medicaid: New Forms
Payers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
of Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Safety Net Providers . . . . . . . . . . . . . . . . . . . . . . . . . 8
Regulators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Policies Addressing Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Blue Cross/Blue Shield: Setting Trends
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
in Paying for Care . . . . . . . . . . . . . . . . . . . . . . . . . 9
Discussion Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
The Federal Role in Cost Containment . . . . . . 10
Hospital Prospective Payment: A New Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
World for Hospitals and Providers . . . . . . . . 10 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
v
vi Contents
Chapter 3 Microeconomics in the We Have a L-O-N-G Way to Go to Fix Our
Hospital Firm: Competition, Healthcare System . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Patient Safety Issues . . . . . . . . . . . . . . . . . . . . . . . . 71
Regulation, the Profit Motive,
Workforce Management Issues . . . . . . . . . . . . . 75
and Patient Care . . . . . . . . . . . . 45
Complexity Issues . . . . . . . . . . . . . . . . . . . . . . . . . . 77
J. Michael Leger, PhD, MBA, RN, and Mary Anne Cultural Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Schultz, PhD, MBA, MSN, RN Disparities Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Microeconomics, Cost Accounting, and Nursing . . . . 46 Regulatory Response: Restricting or
Eliminating Reimbursement . . . . . . . . . . . . . . 79
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Our Reality Is Changing—Ready or Not! . . . . . . . . . . 81
Regulation and Managed Care . . . . . . . . . . . . . . . . . . . 49
PART 2: WHAT DOES THE PATIENT WANT? . . . . . . . . . 82
Profit Motive and Patient Care . . . . . . . . . . . . . . . . . . . 51
Our First Priority: Discovering What the Patient
Getting the Word Profit Back . . . . . . . . . . . . . . . . 52
Wants and Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Quality of Care: At What Level?
At What Cost? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 The Healing Relationship . . . . . . . . . . . . . . . . . . . 84
Patient and Family Advisory
Quality Patient Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Councils . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Information on Quality and the
Replace Patient Compliance with What
Risk-Adjustment Process . . . . . . . . . . . . . . . . . 53
the Patient Wants and Values . . . . . . . . . . . . . 85
Healthcare Policy: The Staffing Ratios Debate . . . . 54
PART 3: THE IMPACT OF QUALITY . . . . . . . . . . . . . . . . . 86
Hospital Operations and Closure . . . . . . . . . . . . 55
The Quality Dimension . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Feasibility and the Sporadic Nursing
Shortage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Performance Improvement . . . . . . . . . . . . . . . . . 87
Political Opportunity Costs for Nursing . . . . . . 57 Evidence-Based Practice . . . . . . . . . . . . . . . . . . . . 91
Costs to Society . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Changing Administrative Practices . . . . . . . . . . 91
Provider Accountability in the
The Business Case: Electronic Health Record
Cost–Quality Dilemma . . . . . . . . . . . . . . . . . . . 92
Systems in Hospitals . . . . . . . . . . . . . . . . . . . . . . . . . . 60
What Does It Mean to Be in the
Costs for the Hospital . . . . . . . . . . . . . . . . . . . . . . . 60
Information Age? . . . . . . . . . . . . . . . . . . . . . . . . 94
Benefits for the Hospital and Patients . . . . . . . 61
Recognition of Value and Quality . . . . . . . . . . . . . . . . 95
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
The Leapfrog Group . . . . . . . . . . . . . . . . . . . . . . . . 95
Discussion Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Magnet Recognition Program . . . . . . . . . . . . . . 95
Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
The National Database of Nursing
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Quality Indicators . . . . . . . . . . . . . . . . . . . . . . . . 95
Performance Measurement . . . . . . . . . . . . . . . . . . . . . . 95
Chapter 4 Providing Patient Value While
Benchmarking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Achieving Quality, Safety,
Patient Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . 96
and Cost-Effectiveness . . . . . . . 67
Performance Measurement and Patient
Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
J. Michael Leger, PhD, MBA, RN, Sandy K. Diffenderfer,
Balanced Scorecard: Best Approach
PhD, MSN, RN, CPHQ, Janne Dunham-Taylor, PhD,
to Performance Measurement . . . . . . . . . . . . 98
RN, Karen W. Snyder, MSN, RN, and Dru Malcolm,
DNP, MSN, RN, NEA-BC, CPHRM Utilization Review . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Employee Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
OSHA Standards for Employee Safety . . . . . . . 99
PART 1: PROBLEMS WE MUST ADDRESS . . . . . . . . . . 69
Contents vii
Promoting a Healthy Workplace . . . . . . . . . . . . 99 Productive Hours Overview . . . . . . . . . . . . . . . 124
Disaster Planning and Preparedness . . . . . . . . 99 Replacement FTEs . . . . . . . . . . . . . . . . . . . . . . . . 126
Chaos Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Calculating Nursing Hours Per
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Patient Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Discussion Questions . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 Discussion Questions . . . . . . . . . . . . . . . . . . . . . . . . . . 129
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Chapter 6 Budget Development and
PART II Budget Principles 107 Evaluation . . . . . . . . . . . . . . . . 131
Paul Brown, MSN, RN, and Gary Eubank MSN, RN,
Chapter 5 Budgeting . . . . . . . . . . . . . . . . 109
and J. Michael Leger, PhD, MBA, RN
Paul Brown, MSN, RN, Gary Eubank MSN, RN, Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
and J. Michael Leger, PhD, MBA, RN Case Study #1—Inpatient Setting . . . . . . . . . . . . . . 132
An Introduction to Budgeting . . . . . . . . . . . . . . . . . 110 Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Budgeting Principles and Terminology . . . . . . . . . 110 Schedule 1—Staffing Matrix . . . . . . . . . . . . . . . . . . . 134
Capital Budgeting Versus Operational Calculating FTEs from Total Hours . . . . . . . . . . . . . . 136
Budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Schedule 2—Determining
Cost Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 Replacement FTEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Fixed Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Education and Meeting Hours . . . . . . . . . . . . . . . . . 138
Variable Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Schedule 3—Financial Impact . . . . . . . . . . . . . . . . . 139
Revenue Concepts . . . . . . . . . . . . . . . . . . . . . . . 112
Supplemental Resources . . . . . . . . . . . . . . . . . 140
Break-Even Analysis . . . . . . . . . . . . . . . . . . . . . . . 113
Schedule 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Budgeting Implications for Nurse Leaders . . . . . . 115
Case Study #2—Outpatient . . . . . . . . . . . . . . . . . . . . 143
An Introduction to Nursing-Specific
Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Budgeting Principles . . . . . . . . . . . . . . . . . . . . . . . . 115
Units of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 Schedule 1—Staffing Pattern . . . . . . . . . . . . . . . . . . 145
Nursing Workload . . . . . . . . . . . . . . . . . . . . . . . . 116 Calculating Total Hours per
Developing a Nursing Department Job Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Budget and Staffing Plan . . . . . . . . . . . . . . . 117 Calculating FTEs from Total Hours . . . . . . . . . . . . . . 146
Establish Volume . . . . . . . . . . . . . . . . . . . . . . . . . 117 Schedule 2—Replacement FTEs . . . . . . . . . . . . . . . 147
Determine Nurse–Patient Ratio . . . . . . . . . . . 117 Education and Meeting Hours . . . . . . . . . . . . 148
Establish Skill Mix Necessary to Meet Schedule 3—Financial Impact . . . . . . . . . . . . . . . . . 149
Patient Needs . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Overtime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Non-Productive Time . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Replacement FTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
Personal Time Off . . . . . . . . . . . . . . . . . . . . . . . . . 117
Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Overtime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Orientation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Education and Orientation . . . . . . . . . . . . . . . . 118
Facility Overview . . . . . . . . . . . . . . . . . . . . . . . . . 118 Schedule 4—The Big Picture . . . . . . . . . . . . . . . . . . . 156
Building a Staffing Model . . . . . . . . . . . . . . . . . . . . . . 119 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
PTO, Education, and Orientation . . . . . . . . . . 123 Discussion Questions . . . . . . . . . . . . . . . . . . . . . . . . . . 157
viii Contents
Chapter 7 Budget Variances . . . . . . . . . . 159 PART III F inancial Strategies
and Accounting Issues 195
J. Michael Leger, PhD, MBA, RN, and Paul Brown,
MSN, RN, Norma Tomlinson, MSN, RN,
NE-BC, FACHE
Chapter 9 Strategic Management:
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Facing the Future with
Budget Variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Confidence . . . . . . . . . . . . . . . . 197
Analyzing History to Predict the Future . . . . . . . . 160
J. Michael Leger, PhD, MBA, RN, and Sandy K.
Clarity through Details . . . . . . . . . . . . . . . . . . . . . . . . . 161
Diffenderfer, PhD, MSN, RN, CPHQ
Causative Factors of Variance . . . . . . . . . . . . . . . . . . 161
Strategic Planning in Health Care . . . . . . . . . . . . . . 202
Supply Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
Contemporary Strategic Management . . . . . . . . . 202
Staffing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
Traditional Strategic Management . . . . . . . . . . . . . 204
Man-Hours Budget . . . . . . . . . . . . . . . . . . . . . . . 162
Salary Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . 205
Strategy Formation . . . . . . . . . . . . . . . . . . . . . . . 209
Dissecting the Variance Report . . . . . . . . . . . . . . . . . 168
Strategy Deployment . . . . . . . . . . . . . . . . . . . . . 216
Identifying Variance Early . . . . . . . . . . . . . . . . . . . . . . 169
Strategic Management . . . . . . . . . . . . . . . . . . . 219
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
Cost-Benefit Analysis . . . . . . . . . . . . . . . . . . . . . 220
Discussion Questions . . . . . . . . . . . . . . . . . . . . . . . . . . 171
Break-Even Analysis . . . . . . . . . . . . . . . . . . . . . . . 221
Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
Regression Analysis . . . . . . . . . . . . . . . . . . . . . . . 222
Role of the Nurse Leader . . . . . . . . . . . . . . . . . . . . . . . 222
Chapter 8 Comparing Reimbursements with
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
Cost of Services Provided . . . . . . 173
Discussion Questions . . . . . . . . . . . . . . . . . . . . . . . . . . 224
J. Michael Leger, PhD, MBA, RN, and Patricia M.
Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
Vanhook, PhD, MSN, RN, FNP-BC
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
Note to the Reader . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 Chapter 10 Financial Strategies . . . . . . . 229
Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
J. Michael Leger, PhD, MBA, RN, and Janne
Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
Dunham-Taylor, PhD, RN
Clarifying the Cost Issue . . . . . . . . . . . . . . . . . . . . . . . 175
Complexity Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
Defining Costs, Charges, and Payments . . . 175
Providing What the Patient Values . . . . . . . . . . . . . . 232
Cost of Service Versus Reimbursement . . . . 176
Ensuring Quality and Safety . . . . . . . . . . . . . . . . . . . . 233
Nurse Leader’s Role in Cost Control . . . . . . . 178
Improving Efficiency Through Productivity and
Departmental Operations Report . . . . . . . . . . . . . . 180
Financial Management . . . . . . . . . . . . . . . . . . . . . . 235
DRG Costing Examples . . . . . . . . . . . . . . . . . . . 181
What Not to Do . . . . . . . . . . . . . . . . . . . . . . . . . . 237
Revenue Budget . . . . . . . . . . . . . . . . . . . . . . . . . . 187
The Budget Process: Is It Flawed or Effective? . . . 238
Predicting Financial Success . . . . . . . . . . . . . . 191
Creating a Cost-Conscious Environment . . 239
Nursing Management Decisions Affect
Developing Integrated Information Systems . . . 241
Financial Outcomes . . . . . . . . . . . . . . . . . . . . 191
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192 Educating and Engaging Employees
and Physicians to Create Leaders . . . . . . . . . . . . 242
Discussion Questions . . . . . . . . . . . . . . . . . . . . . . . . . . 192
Partnering with Payers . . . . . . . . . . . . . . . . . . . . . . . . . 243
Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
Scenario-Based Strategic, Financial,
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
and Operational Planning . . . . . . . . . . . . . . . . . . . 244
Contents ix
Achieving Population Health Improvement Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268
Through Pursuit of the Triple Aim . . . . . . . . . . . . 244 Discussion Questions . . . . . . . . . . . . . . . . . . . . . . . . . . 269
Writing a Business Plan . . . . . . . . . . . . . . . . . . . . . . . . 244 Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245 Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
Chapter 12 Financial Analysis: Improving
Discussion Questions . . . . . . . . . . . . . . . . . . . . . . . . . . 246
Your Decision Making . . . . . . 279
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247 J. Michael Leger, PhD, MBA, RN, and Paul Bayes,
DBA Accounting, MS Economics, BS Accounting
Chapter 11 Accounting for Healthcare
Common Size Balance Sheets . . . . . . . . . . . . . . . . . . 280
Entities . . . . . . . . . . . . . . . . . . 253
Common Size Income Statements . . . . . . . . . . . . . 284
J. Michael Leger, PhD, MBA, RN, and Paul Bayes, Financial Ratio Analysis . . . . . . . . . . . . . . . . . . . . . . . . 287
DBA Accounting, MS Economics, BS Accounting Liquidity Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . 287
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254 Activity Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288
Accounting Framework . . . . . . . . . . . . . . . . . . . . . . . . 254 Leverage Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . 289
Statement of Financial Position (Balance Sheet) . . 254 Profitability Ratios . . . . . . . . . . . . . . . . . . . . . . . . 290
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254 Not-for-Profit Comparisons . . . . . . . . . . . . . . . . . . . . 292
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257 Current Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300
Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . 258 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302
Income Statement . . . . . . . . . . . . . . . . . . . . . . . . 259 Discussion Questions . . . . . . . . . . . . . . . . . . . . . . . . . . 303
Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261 Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303
Schedule of Changes in Equity . . . . . . . . . . . . 263
Internal Accounting Information . . . . . . . . . . . . . . . 265
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305
Cost/Managerial Accounting . . . . . . . . . . . . . 265
Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265