Graduate School of Public Health
San Diego State University
Division of Health Management and Policy
PH 742A: Health Services Financial Management
Fall 2012
Class day/time: Monday, 7pm
Class location: HH 146
Schedule number: 22270
Instructor: Jong-Deuk (JD) Baek
Office location: HT 158
Office hours: Monday 3-4, pm &
by appointment.
Instructor contact information:
Office phone: 619-594-3540
Email: jbaek@mail.sdsu.edu
COURSE DESCRIPTION: Fundamentals of healthcare finance including basics of financial
and cost accounting, financial analysis, and decision making. Financial reporting statements
including balance sheet, income statement, cash flow, estimating costs will be discussed. Related
financial analysis such as financial ratio analysis, profit analysis, variance analysis, budget
analysis, and decision makings with financial information. (Graduate Bulletin)
COURSE COMPETENCIES & LEARNING OBJECTIVES:
The learning objectives of this course are listed below and mapped with HMP Competency. For
details on HMP Competency, visit GSPH website (http://publichealth.sdsu.edu/miscfiles/hmp-cahmecompetencies.pdf).
COURSE COMPETENCIES & LEARNING OBJECTIVES:
This course has the following learning objectives. Each learning objectives is linked to HMP
competency. HMP competency is found on GSPH website (http://publichealth.sdsu.edu/miscfiles/hmpcahme-competencies.pdf)
BRIEF COURSE LEARNING OBJECTIVES
1. Establish knowledge on healthcare finance, accounting, financial analysis
techniques, and health care financial environments.
2. Describe and contrast various types of costs and cost accounting approaches.
3. Understand and articulate financial accounting process and components of
financial statements. Analyze financial statements for strategic financial
planning, including capital budgeting.
4. Create relevant information and apply it for various financial or managerial
planning, control, and decision making.
5. Develop proficiency in financial analysis tools and techniques and apply
them in case analysis.
A1, A2, A6,
B8, C8
B7
B4, B7
B4, B7, D5
B4, D5
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FULL COURSE LEARNING OBJECTIVES LINKED TO HMP COMPETENCIES;
HMP Competency: A1
Discuss health care organizations and their relationship to access, quality, cost, accountability,
and the health of patients and the community.
 Identify/discuss implications of major types of payment systems such as FFS, Medicare PPS
system and Capitation in MCOs on healthcare financial management.
HMP Competency: A2
Describe trends in health care expenditures, and their causes and consequences on health and
health care organizations.
 Identify/discuss implications of major types of payment systems such as FFS, Medicare PPS
system and Capitation in MCOs on healthcare financial environment including health
expenditure, and discuss challenges in health care financial management.
HMP Competency: A6
Identify revenue sources and reimbursement methods in the U.S. health care system, including
historical origins and current policy, and their impact on health service delivery.
 Identify/discuss implications of major types of payment systems such as FFS, Medicare PPS
system and Capitation in MCOs on healthcare financial environment including health
expenditure, and discuss challenges in health care financial management.
 Discuss revenue cycle/management and cost determination in PPS and managed care
environments.
HMP Competency: B4
Apply quantitative methods, such as survey research, health care market analysis, operations
research, and statistical analysis, to health care managerial decision making.
 Analyze financial statements including cash flow and use them to evaluate financial condition
of healthcare organizations
o Interpret financial and operational ratios to evaluate business performance of healthcare
organizations.
 Conduct managerial and capital decision making;
o Discuss concepts of time value of money (present and future values) and apply them for
health care financial planning/decisions.
o Discuss the relationships of price, cost, and quantity relative to breakeven analysis.
o Describe budget planning, and discuss and analyze different types of budgets in
strategic planning and managerial control purposes. Analyze variances in budgets for
performance improvement.
o Utilize computer applications like Excel spreadsheet for financial analysis.
HMP Competency: B7
Apply managerial and cost accounting information to evaluate financial performance and
decision making in health care organizations.
 Describe financial accounting process and evaluate its relations with financial statements.
 Describe and contrast components in financial statements in healthcare organizations.
 Describe and contrast capital financing methods, capital cost, and capital planning in either
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
investor-owned or not-for-profit (including managing community funding) healthcare
organizations.
Conduct financial condition analysis.
HMP Competency: B8
Understand and calculate different reimbursement formulas and strategies for cost containment
and revenue enhancement used by the government and health services organizations.
 Identify implications of major types of payment systems such as FFS, Medicare PPS system
and Capitation in MCOs on healthcare financial management.
 Discuss revenue cycle/management and cost determination in PPS and managed care
environments.
HMP Competency: C8
Understand the importance of compliance for health organizations related to data privacy,
confidentiality, data security, coding, billing, and government regulations.
 Discuss revenue cycle/management and cost determination in PPS and managed care
environments.
HMP Competency: D5
Form and lead teams to improve organizational, project, and task performance.
 Describe budget planning, and discuss and analyze different types of budgets in strategic
planning and managerial control purposes. Analyze variances in budgets for performance
improvement.
 Apply financial management concepts through case study assignment.
COURSE MATERIALS:
Textbooks:
Required: Fundamentals of Healthcare Finance, AUPHA, Louis C. Gapenski.
Further readings (selected chapters or parts): Financial Management in Healthcare, AUPHA, Louis C.
Gapenski.
CLASS FORMATS:
This course is consisted of lectures, class discussions/demonstrations/exercises, and assignments. The
instructor will hand out lecture material and other resources for discussions and exercises.
Lecture and discussion: See the class schedule for details.
Preparation/Review Questions: Some questions (T/F, multiple choices) will be used to review
concepts and techniques learned in the previous week.
Practice: A case/calculation questions are to be used to practice application of theories. Excel
spreadsheet may be used for the selected topics such as present value analysis. Resources for
practices will be posted on the BlackBoard.
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COURSE REQUIREMENTS:
Class Participation
(10%)
- Assignment
(30%)
o Case analysis (15%)
o Homework
(15%)
- 1st Exam
(30%)
nd
- 2 Exam
(30%)
GRADING SCALE:
A
A
AB+
B
B-
97-100
96-93
92-90
89-87
86-83
82-80
C+
C
CCD
F
79-77
76-73
72-70
69-67
66-63
62 or less
ASSIGNMENTS:
- Written Case Analysis: One case analysis will be assigned. Each student is required to a
written report that analyzes and provides possible answers to questions (less than five
pages, 12 font size, double spaced; excluding cover page, references, and appendix if
any). Each case will be introduced in class in detail by the instruction with a simple
guide of report. No presentation required.
- Homework: Each homework assignment requires write-ups and calculations. Expect two
homework assignments.
BLACKBOARD, EMAIL, AND COMPUTER RESOURCES:
All of material used in class including announcements, course documents, weekly reading and lecture
handouts will be posted on Blackboard. Students must check the Blackboard regularly, several times a
week. Lecture handout (in a pdf format) will usually be posted a couple days before the class of week
but can be as late as the day of lecture.
COURSE POLICIES:
Missing class: If you miss a class, it is your responsibility to contact the instructor to discuss
alternatives to any quiz or exercise you miss, and to obtain lecture notes, handouts, other
materials or instructions from the course Blackboard site or a classmate.
Religious holidays: The University Policy File includes the following statement on absence for
Religious Observances: By the end of the second week of classes, students should notify the
instructors of affected courses of planned absences for religious observances.
Extenuating circumstances: If severe difficulties (e.g., illness, injury, death of a family member)
prevent you from completing an assignment on time, please contact the instructor to discuss
alternative arrangements as soon as possible.
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Academic misconduct: Misconduct by a student shall include, but not be limited to: disrupting
classes; giving or receiving unauthorized aid on examinations, reports or other assignments;
knowingly misrepresenting the source of any academic work; falsifying research results;
plagiarizing another’s work; violating regulations or ethical codes for the treatment of human
subjects; or otherwise acting dishonestly. If an instance of academic misconduct is suspected, the
student will be informed of the infraction and the penalty to be imposed. If appropriate, the
matter will be referred to the Department Chair and Dean of the College for mediation. Potential
sanctions include a warning, an admonition, censure, reduction of grade (including a grade of F
for the course), disciplinary probation, suspension, or expulsion.
Safety: Students are encouraged to consult with SDSU public safety regarding parking and other
safety issues. San Diego State University is dedicated to a safe, supportive and
nondiscriminatory environment. It is the responsibility of all students to familiarize themselves
with University policies regarding nondiscrimination, misconduct and academic honesty.
Statement on Nondiscrimination Policy
San Diego State University complies with the requirements of Title VI and Title VII of the Civil
Rights Act of 1964, as well as other applicable federal and state laws prohibiting discrimination.
No person shall, on the basis of race, color, or national origin be excluded from participation in,
be denied the benefits of, or be otherwise subjected to discrimination in any program of the
California State University
SDSU does not discriminate on the basis of disability in admission or access to, or treatment or
employment in, its programs and activities. Students should direct inquiries concerning San
Diego State University’s compliance with all relevant disability laws to the Director of Student
Disability Services (SDS), Calpulli Center, Room 3101, San Diego State University, San Diego,
CA 92128 or call 619-594-6473 (TDD: 619-594-2929).
SDSU does not discriminate on the basis of sex, gender, or sexual orientation in the educational
programs or activities it conducts. More detail on SDSU’s Nondiscrimination Policy can be
found in the SDSU General Catalog, University Policies.
Student Conduct and Grievances
SDSU is committed to maintaining a safe and healthy living and learning environment for
students, faculty and staff. Sections 41301, Standards for Student Conduct, and Sections 4130241304 of the University Policies regarding student conduct should be reviewed.
If a student believes that a professor’s treatment is grossly unfair or that a professor’s behavior is
clearly unprofessional, the student may bring the complaint to the proper university authorities
and official reviewing bodies. See University policies on Student Grievances.
Statement on Plagiarism and Academic Dishonesty
Academic dishonesty includes cheating, plagiarism or other forms of academic dishonesty that
are intended to gain unfair academic advantage. See section 41301 of the University policies.
Plagiarism is an important element of this policy. Plagiarism is defined as ‘formal work publicly
misrepresented as original; it is any activity wherein one person knowingly, directly and for
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lucre, status, recognition, or any public gain resorts to the published or unpublished work of
another in order to represent it as one’s own’. Any work, in whole or in part, taken from the
Internet or other computer-based source without referencing the source is considered plagiarism.
http://its.sdsu.edu/classic/resources/turnitin/pdf/Plagiarism_AcadSen.pdf.
COURSE SCHEDULE
Week
Topics
Date
Topics: Introduction
- Introduction: syllabus
1
Foundation Concepts
Aug 27
- Healthcare finance
- Healthcare business basic
Readings: chs 1 and 2
2
Labor Day: No Class
Sep 3
Topics: Revenue sources and reimbursement
- Paying for health services
3
- Reimbursement: FFS and Capitation
Sep 10
- Provider incentive and financial risk
Readings: chs 3 and supplemental readings
Topics: Costs
- Types of costs
4
- Cost allocation
Sep 17
- ABC
Readings: ch 4
Topics: Pricing Decisions
5~6
- Price setting strategy
Sep 24
- Profit analysis, breakeven analysis
Oct 1
- Marginal analysis
Readings: ch 5
Topics: Budgeting and Budget evaluation
6~7
- Strategic planning
Oct 1
- Budgeting types
Oct 8
- Variance analysis
Readings: chs 6 and 7
8
1st Exam
Oct 15
Debrief
Topics: Financial Operations
9
- Revenue cycle
Oct 22
- Cash management
- Receivables management
Readings: ch 7
10
APHA, No Class
Oct 29
Practice/
HMP
Assignments Competency
Practice
A1
A2
Practice
Practice
Case 1
introduction
Practice
A1
A2
A6
B8
C8
B7
B8
B4 (case
analysis
report)
A2
A6
B4
B8
Practice
HW1
B4
Practice
A6
B4
6
Week
Date
11
Nov 5
12
Nov 12
13
Nov 19
14
Nov 26
15
Dec 3
Topics
Topics: Reporting profits
- Accounting process
- Financial statements
Readings: chs 11 and 12
Practice/
HMP
Assignments Competency
Case 1 Due A6
B7
B8
Veteran’s Day, No Class
Topics: Reporting Assets, financing, and Cash Flow
- Financial statements
Readings: chs 12 and 13
Topics: Analyzing Financial Statements
- Financial statement analysis
- Du Pont analysis
Readings: chs 13
Topics: Business Financing and Cost of Capital
- Financing decisions
- Cost of capital
Readings: ch 8
A6
B7
B8
Practice
HW2
B4
B7
Practice
B4
B7
Topics: Capital investment Decisions (if time allowed)
- Time line analysis
- Breakeven analysis
- Discount cash flow analysis
- Cash flow estimation
- Risk analysis
Readings: chs 9 and 10
16
2nd Exam
Dec 10
This course schedule is subject to change.
Supplementary Readings and Resources (will be updated)
Hsiao, Braun, Kelly, and Becker, "Results, Potential Effects, and Implementation Issues of the ResourceBased Relative Value Scale, JAMA, October 28, 1988.
Cleverly and Nutt, “The Decision Process Used for Hospital Bond Rating-and its Implications,” Health
Services Research, December 1984.
Wheeler and Smith, ‘The Discount Rate for Capital Expenditure Analysis in Health Care,” Healthcare
Management Review, 13(2), 1988, 43-51.
Kennedy and Plath, “A Return-Based Alternative to IRR Evaluations,” Healthcare Financial
Management, March 1994, 38-49.
7
Bolster, “Planning during Turmoil: Credit Challenges and Healthcare Finance,” Healthcare Financial
Management, 62;11, 2008, 55-62.
Gapenski, “Capital Investment Analysis: Three Methods,” Healthcare Financial Management, Aug.
1993, 60-66.
Cleverly, “Financial Ratios, Summary Indicators for Management Decision-Making,” Hospital and
Health Services Administration / Special I, 1981, 26-47.
Baker and Boyd, “Activity-Based Costing in the Operating Room at Valley View Hospital,” Journal of
Health Care Finance, 24;1, 1997, 1-9.
Kaplan, “The Demise of Cost and Profit Center.” White Paper, 2006, 1-7.
Kis and Bodenger, “Cost Management Information Improves Financial Performances,” Healthcare
Financial Management, 43;5, 1989, 36-48.
Cleverly, W. and Harvey, R. 1992. “Does Hospital Financial Performance Measure Up?” Health Care
Financial Management 46(5), 21-26
Epstein, A. M., and Cumella, E. J. 1988. “Capitation Payment: Using Predictions of Medical Utilization
to Adjust Rates.” Health Care Financing Review 10(1), 51-69.
Giacomino, D. 1993. “Cash Flows: Another Approach to Ratio Analysis.” Journal of Accountancy,
March 1993, 55-?
Muller, A. 1993. “Medicare Prospective Payment Reforms and Hospital Utilization: Temporary or
Lasting Effects.” Medical Care 31(4), 296-308.
Rogers, M., and Rothe, K. 1993. “Integrating Capital Budgeting techniques.” Health Care Strategic
Management 10(2), 7-10.
Sherman, B. 1990. ‘How Investors Evaluate Hospitals’ Creditworthiness.” Healthcare Financial
Management 44(3), 24-30.
Sunders, R., and et. al. 1993. “Strategic Capital Planning Scenarios for the Future.” Healthcare Financial
Management 48(4), 50-53.
Whitcombe, M. E., and Cleverly, W. O. 1993. “Financial Performance of Academic Medical Center
Hospitals.” Academic Medicine 68(10), 729-31.
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