OVERVIEWIn healthcare organizations, financial management is a critical component of success. The
primary roles of healthcare financial management include planning for, acquiring, and correctly
utilizing funds and resources to maximize both the efficiency and the value of a healthcare
organization. There are many factors involved in financial planning, and many of the decisions
will depend on the current and predicted financial strength of the organization. For example: how
much cash is available to invest? What will be the cost of capital to expand your services? What
long-term investments should the organization consider and use? How will the financial plan
affect the “bottom line” of the organization? What economic market factors must be considered?
Quality financial planning begins with an assessment of the organization’s overall
financial health, and then specific and measurable financial goals can be set for the various parts
of the organization. All of the financial goals must align with the organization’s strategic goals
and plans. The ability to meet these goals depends on financial performance over the duration of
the strategic financial plan. After studying past data and current status, healthcare managers do
their best to accurately project future costs and future revenues. These projections must take into
account the organization’s recent financial performance, local competition, economic market
forces, demographic trends – and should include realistically anticipated increases in all-around
costs (such as rising labor costs and equipment purchasing costs.
For a financial plan to be successfully executed, two commitments must be made on the
part of healthcare management. First, financial performance in all parts of the organization must
be carefully monitored over time. Projections may need to be revised at certain intervals – and it
is best to foresee negative returns/overspending more quickly vs. annually or bi-annually, in case
intervention is possible. Second, managers need to invest the resources necessary to correctly
view, interpret, and then use the information provided through the various organization financial
statements. It is within the role of a healthcare manager to ensure that each area of the
organization is indeed following the plans that have been established, and to ensure that all are
working towards the accomplishment of the stated common goals. In order to do this, current
reports are produced and studied and are then compared back to reports from earlier periods.
These comparisons often show where the organization needs real-time attention to stay on track
to meet the stated goals and necessary financial benchmarks.
This course will provide you with a strong background in the objectives of healthcare
financial management, the integrated structure of financial operations, basic financial analysis,
organizational tax status, types of third-party payments, Medicare/Medicaid financial
implications, basic cost accounting, economic market factors, reimbursements, working capital,
revenue cycles, materials management, budgeting, inventory, as well as the latest trends in
healthcare financial reform that all managers should be aware of.
INSTRUCTION
This Module is intended to allow you to apply what you have learned in the background readings
regarding performing an analysis of a healthcare organization’s basic financial statement of
operations. After completing each part of the background readings, search online for a healthcare
organization’s statement of operations (at least two years of data; the organization can be
inpatient or outpatient, either real or fictitious). Examine each of the columns and the totals in the
statement of operations, using each of the topics introduced in Chapter 3 of the required
background reading by Dr. Nowicki (2018), then answer the following:
1. How is your chosen organization doing in terms of its overall financial health?
2. What is your assessment of the organization’s revenues, expenses, operating income,
nonoperating income, etc.? How have each of these lines changed from one year to the
next?
3. What might the changes signify, and what might be the logical cause of the changes?
What would your recommendations be for the following year’s revenue cycle?
4. How do changes in the economic market often affect the healthcare financial
environment? Do you believe the healthcare revenue cycle models the rises and falls of
the larger economy?
EXPECTATIONS
1. Conduct additional research to gather sufficient information to support your
analysis.
2. Provide a response of 3 pages, not including title page and references. Include
a copy of the organization’s statement of operations as an Appendix at the end
of your assignment.
3. As we have multiple required items to be addressed herein, please use
subheadings to show where you are responding to each required item and to
ensure that none are omitted.
REQUIRED READINGS
Please review the following materials in this order and access via ProQuest where no link is
provided:
Nowicki, M. (2018). Introduction to the Financial Management of Healthcare Organizations
(Vol. Seventh edition). Chicago, Illinois: Health Administration Press. Part 1; pages 3-88.
Available in the Trident Online Library.
View: Healthcare Finance 101 with Steve Febus, Pullman Regional Hospital Chief Financial
Officer: Understanding the Costs of Full Service Healthcare. (2017). https://youtu.be/NSumPdb2PI
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