Syllabus
MHSA 7325
Health Care Financial Management II
Fall 2013
Instructor and Office Hours:
Instructor:
Office:
Telephone:
Email:
Meeting Times:
Rod McAdams, Ph.D.
Dept. of Health Sciences, Solms Hall, Room 201 D
912-344-3179
rod.mcadams@armstrong.edu
Thursday, 5:30 PM, Hawes 206
Office Hours:
Monday
Tuesday
Wednesday
Other Times
1:30 – 5:30 PM
3:30 – 5:30 PM
1:30 – 5:00 PM
By appointment
Course Description:
This course addresses selected financial management concepts and practices in
health care organizations. It is a broad introduction to important financial
theories, issues, tools and terminology that administrators need to know to
manage health care organizations.
The health care environment today places increased emphasis on the financial
implications of both managerial and clinical decisions. This emphasis, in turn,
has created a need for financial skills among many clinicians and managers that
in the past have not been required.
All business decisions have financial implications. As a result, all health care
managers must be financially literate, so that they can work with specialists in
financial management and can use financial information in their areas of
responsibility. Managers with responsibility for marketing, operations, facilities,
or personnel need to understand the principles of financial management. This
course is designed to meet that need. The course will cover the following topics:
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Preparation and types of financial statements
Financial statement analysis
Cost classifications
Profit (CVP) analysis
Breakeven analysis
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Cost allocation methods
Activity-based costing
Pricing strategies and service decisions
Time value analysis
Measuring ROI
Amortization
Long-term debt instruments and debt financing
Capital investment decisions
Current asset management and financing
Course Objectives: By the end of this course, students should have:
Objectives
1. An understanding of financial
statements and how they are used for
management and investment decisions
in for-profit and not-for-profit health
care organizations.
2. An understanding of the various
environmental factors (internal and
external) that drive the development of
contemporary financial management
practices in the health care industry.
3. An understanding of cost behavior
and the ability to conduct profit analysis
in health care settings.
4. An understanding of cost allocation
methods and how to apply these
methods in a variety of situations in
health care organizations.
5. Understand and apply accounting
and actuarial information to pricing and
service decisions in health care
organizations.
6. Understand the principles and uses
of an operating budget and how the
operating budget is constructed.
7. Understand the importance of time
value analysis and how to employ it to
measure financial return on
investments.
8. An understanding of the different
sources and markets for financial
capital available to various health care
organizations, including debt, equity
HLA Competency
HLA 5.17. Knowledge of financial
statements.
HLA 5.15 Knowledge of financial
analysis.
HLA 4.9. Knowledge of funding and
payment mechanisms of the health
care system.
HLA 5.14. Knowledge of cost
accounting.
HLA 5.14. Knowledge of cost
accounting
HLA 5.14. Knowledge of cost
accounting.
HLA 5.16. Knowledge of financial
planning methodologies.
HLA 5.15. Knowledge of financial
analysis.
HLA 5.18. Knowledge of outcome
measures.
HLA 5.15 Knowledge of financial
analysis.
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and lease financing.
9. An understanding of a business’s
capital structure and how it affects the
cost of capital.
10. Understand the role of financial
analysis in health services capital
budgeting decisions and how to
conduct basic capital budgeting
analyses.
11. Understand and apply current asset
investment and financing principles.
12. Understand and apply the key
elements of receivables and supply
chain management.
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HLA 5.15 Knowledge of financial
analysis.
HLA 5.18 Knowledge of outcome
measures.
HLA 5.21. Knowledge of capital
budgeting principles.
HLA 5.21 Knowledge of capital
budgeting principles.
HLA 5.10. Knowledge of asset
management.
HLA 5.10 Knowledge of asset
management.
Course Materials:
1. (Textbook) Healthcare Finance: An Introduction to Accounting and Financial
Management, Louis Gapenski, Chicago: Health Administration, You may use
either the 4th or 5th edition of this textbook..
2. During the semester students are required to analyze five case studies.
Each case will roughly coincide with the material being covered in the
textbook. Cases will be distributed by the instructor.
3. Chapter notes will be made available to students.
4. Optional – Texas Instruments BA II Plus calculator.
Evaluation:
1. (Exams) There will be 2 exams given during the semester. The exams are inclass exams and are open book, open note exams.
2. (Chapter Problems) Problems are assigned for each chapter. Problems
should be completed on a spreadsheet where appropriate. Chapter problems
will be collected with each exam.
3. (Case Studies) Students will be given five case studies to analyze. Case
studies will be distributed after we have reviewed concepts and information
related to the cases. Students will be given one or two weeks to complete
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each case. Formats for analyzing the cases will vary. A couple of cases will
include both a qualitative and quantitative analysis. All calculations and
quantitative solutions must be completed and submitted onspreadsheets.
Your completed case studies must be emailed to the instructor by noon
on the day they are due.
Evaluation of student performance on the case assignments will primarily be
based on the validity of the student’s responses to the questions presented in
each case. The instructor reserves the right to deduct points on case
assignments for incomplete, sloppy, or otherwise unprofessional work.
Be prepared to discuss the case in class on the date each case is due.
4. (Presentation and Short Paper) Students (2-person group) are required to
make a presentation and prepare a short paper (5-7 pages) on one of the
following topics:
Payment Systems:
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Skilled nursing facility (SNF) payment system
Hospital acute inpatient services payment system
Outpatient hospital services payment system
Physician and other health professionals payment system
Medicare Advantage program payment system
Hospice services payment system
Ambulatory surgical center payment system
Home health care services payment system
Psychiatric hospital services payment system
Clinical laboratory services payment system
For payment systems, your presentation should describe the process,
adjustments and exceptions, and any micro and macro level problems.
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Other Topics
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ACOs: design features, one- and two-sided models, current and future
payment methods, quality standards, successful models or
demonstration programs.
Shared savings demonstration projects: how they are designed, who
they serve, payment methods; methods for calculating and distributing
savings.
Episodic or bundled payments: how they might be configured, payment
models, risk adjustment, successful demonstrations.
Patient-centered medical homes: certification standard and defining a
home, payment incentives, risk adjustment, demonstration projects
and their impact on access, quality and cost (savings).
Medicare payment policies for 30-day readmissions and hospitalacquired (HAC) infections: penalties, scope of the problem, metrics,
conditions associated with readmission, strategies for reducing
readmissions and HACs,
Important Dates:
Method of Evaluation
Description
Percent of
Total Grade
Exam I – October 10,
2013
Chapters 3, 4, 5, 6, 7 & 17and lecture
materials
24%
Exam II – December
5, 2013
Chapters 8, 9, 10, 11, &14 and lecture
materials
24%
Case Studies
See schedule
35%
Problems/homework
Problems have been assigned for each
chapter. Problems must be completed and
submitted to the instructor. Problems will be
picked-up following each exam and will be
reviewed. Also, a one or two paragraph
summary of any assigned readings.
Presentations –
October 24, 2013
Student Presentations
8 – 10 minutes in length
5%
12%
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Student Performance / Conduct Expectations
Academic dishonesty, as defined in the AASU Student Handbook, is strictly
prohibited in this course as in all others at AASU. Students are reminded that, as
AASU students, they have a responsibility to adhere to and have knowledge of
the principles of ethical conduct for AASU students as it applies to academic
dishonesty. Violations of any of these principles will result in the student
receiving an 'F' in the course as well as the potential for further prosecution for
said violations by AASU and its respective governing bodies.
Plagiarism is stealing someone else’s words and/or thoughts and is a
serious matter on college and university campuses. Some students plagiarize
materials with full knowledge of their act, and some students plagiarize materials
in complete innocence. In any case, plagiarism can have grave repercussions
from the guilty party failing an assignment to failing a course to being dismissed
from the program or university (see AASU Student’s Illustrated).
A few simple rules may help you to avoid plagiarism. See the Publication
Manual of the American Psychological Association for more detailed information
on citing references.
1) If you quote anything directly from printed materials, then you must place that
quote in quotation marks (or an indented stand alone paragraph in the case of
long quotes over 40 words) and cite your source. The citation should consist of
an author, the year of publication and the page number. Make it clear that the
words are not your own.
2) If you paraphrase anything from printed materials, then you must cite your
source. The author and the year of publication should be cited. Make it clear
that the ideas were not your own; you borrowed them from another person.
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Schedule and Assignments
Meeting
Date
August 15,
2013
August 22,
2013
August 29,
2013
September
5, 2013
Topics
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Introduction to finance
Review syllabus
Discuss assignments and course objectives
Review of financial accounting basics
Income statement
Using income statement data
Balance sheet
Interrelationship between the balance sheet and
income statement.
Statement of cash flows
Analyzing financial performance
Ratio analysis
Operating analysis
Review assigned problems
Distribute Case #1
Lab – Instructor will be available to assist with
case or problems.
Cost behavior and profit analysis
Fixed and variable costs
Breakeven analysis
Review assigned problems
Review Case #1
Distribute Case #2
Reading Assignments and
Problems
Assignments Due
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None
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None
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Chapters 3, 4 & 17 in
Gapenski
Problems 3.1, 3.4, 3.5 & 3.6
Problems 4.3, 4.4 & 4.5
Problem 17.3
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None
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Case #1
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Julie Creswell and Reed Abelson.
A Giant Hospital Chain is Blazing a
Profit Trail, New York Times,
August 14, 2012.
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In-class problems
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Chapters 5 in Gapenski
Problems 5.3, 5.4, 5.5 and 5.7
(do not construct the graphs)
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Arnold Milstein and Stephen
Shortell, Innovations to Slow
Spending Growth, JAMA, October
10, 2012.
In-class problems
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Meeting
Date
September
12, 2013
September
19, 2013
September
26, 2013
October 3,
2013
Topics
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October 10,
2013
October 17,
2013
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Lab – Instructor will be available to assist with
case or problems.
Cost allocation
Choosing a cost driver
Primary methods of allocating overhead costs
Applying cost allocation methods
Review assigned problems
Review Case #2
Distribute Case #3
Lab – Instructor will be available to assist with
case or problems.
Pricing and service decisions
Pricing strategies
Setting prices and determining service
offerings
Review assigned problems
Review Case #3
Exam Review
Exam I – Covers chapters 3, 4, 17, 5, 6 & 7 and
lecture materials.
Review exam
Time value analysis
Annuities
Uneven cash flows
Measuring financial returns
Amortization
Distribute Case #4
Reading Assignments and
Problems
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Chapter 6 in Gapenski
Problems 6.3, 6.4, 6.5 & 6.7.
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Jon Tilburt et al. Views of US
Physicians About Controlling
Health Care Costs, JAMA, July
2013.
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In-class problems
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Chapter 7 in Gapenski
Problems 7.2, 7.3, 7.4, 7.5 &
7.6.
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Assignments Due
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Case #2
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Case #3
Bob Kocher and Ezekiel Emanuel,
Overcoming the Pricing Power of
Hospitals, JAMA, September 26,
2012.
Anna Sommer, Chapin White, Paul
Ginsburg. Addressing Hospital
Pricing Leverage Through
Regulation: Rate Setting, National
Institute for Healthcare Reform,
May 2012.
In-class problems
Chapter assignments must
be turned in with exam.
Chapter 9 in Gapenski
Problems 9.1 – 9.9, 9.11 &
9.12.
Uwe Reinhardt. Making Surgical
Complications Pay. JAMA, April
2013.
In-class problems
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Meeting
Date
October 24,
2013
October 31,
2013
November
7, 2013
November
14 2013
Topics
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Presentations
Time value analysis (cont.)
Financial risk
Probability distributions
Expected and realized rates of return
Portfolio risk and return
Interpreting risk measures
The cost of money
Long-term debt instruments
Interest rate components
Debt valuation
Review assigned problems
Review Case #4
Basics of capital budgeting
Cash flow estimation
Breakeven analysis
Profitability analysis
Review assigned problems
Distribute Case #5,
Lab – Instructor will be available to assist with
case or problems.
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Reading Assignments and
Problems
Chapter 9 (cont.)
Chapter 10 in Gapenski
Problems and 10.5 a & b
Chapter 11 in Gapenski
Problems 11.2, 11.3, 11.5,
11.6, and 11.7
Assignments Due
Presentation and
papers due
 Case #4
In-class problems
Chapter 14 in Gapenski
Problems 14.1, 14.2, 14.5,
14.6, and 14.7
It is not necessary to calculate
the MIRR for any of the
problems.
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Kristen Reiter and Paula Song,
Hospital Capital Budgeting in
an Era of Transformation. Journal
of Health Care Finance, Spring
2013.
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In-class problems
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Meeting
Date
November
21, 2013
December
5, 2013
Topics
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Types of budgets
Static and flex budgets
Variance analysis
Review Case #5
Exam review
Exam II – Covers Chapters: 8, 9, 10, 11, 14 and
lecture materials
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Reading Assignments and
Problems
Chapter 8 in Gapenski
Problems 8.2 & 8.3
In-class problems
Assignments Due
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Case #5
Chapter assignments must
be turned in with exam.
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