Graduate School of Public Health
San Diego State University
Division of Health Management and Policy
PH 742A: Health Services Financial Management
Fall 2010
Class day/time: Thursday, 7pm
Class location: HH 134
Schedule number: 22322
Instructor contact information:
Instructor: Jong-Deuk (JD) Baek
Office location: HT 158
Office hours: Thursdays 5-6pm, by appointment.
Office phone: 619-594-3540
Email: jbaek@mail.sdsu.edu
Course Description: Fundamentals of healthcare finance; basics of health care finance,
accounting, financial analysis and decision making. Financial and cost accounting including
financial reporting statements including balance sheet, income statement, cash flow, estimating
costs. Related financial analysis including financial ratio analysis, profit analysis, variation
analysis, budget analysis, and decision makings with financial information. (Revised based on
the description in the Graduate Bulletin)
Course Learning Objectives and Outcomes:
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/).
1. Establish knowledge in healthcare finance, accounting, financial analysis techniques, financial
environments, and terminology. (HMP Competency: A1, A4)
a. Identify implications of major types of payment system such as FFS, Medicare PPS
system and Capitation in MCOs in healthcare financial management. (A1, A4)
b. Discuss revenue and cost determination in PPS and managed care environments. (A4)
2. Describe and contrast various types of costs and cost accounting approaches. (HMP
Competency: A1, C8)
a. Define and contrast various types of cost and also describe how each type of cost
behaves. (A1)
b. Contrast process costing and product costing. Discuss methods of indirect cost
allocation in healthcare and evaluate its impact on planning and control. (A1)
c. Discuss the concept and feasibility of new approaches for decision making, including
activity based costing. (C8)
3. Articulate financial accounting process, understand components of financial statements, and
analyze and utilize information from financial statements for strategic financial planning,
including capital budgeting. (HMP Competency: A1, C5, C8)
a. Describe the process used for healthcare financial accounting, and evaluate its relations
with financial statements. (A1)
b. Describe and contrast components in financial statements in healthcare organizations.
(C5)
c. Describe and contrast financing methods, capital cost, and capital planning in either
investor-owned or not-for-profit healthcare organizations. (A1)
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d. Analyze financial reports and use such information for financial condition of healthcare
organizations. (C5, C8)
4. Describe relevant information and apply it for various financial or managerial planning,
control, and decision making. (HMP Competency: C8)
a. Interpret financial and operational ratios to evaluate performance of healthcare
organizations.
b. Discuss concepts of present and future value of money and its application to health care
financial planning/decisions.
c. Illustrate the relationships of price, fixed and variable cost, and quantity relative to
breakeven analysis in health care financial planning, control, and decision making.
d. Describe budget planning, and discuss the importance of budgets in strategic planning
and managerial control. Analyze variance for performance improvement.
5. Develop knowledge of tools for financial analysis and utilize financial techniques in case
analysis. (HMP Competency: B6, C8)
a. Utilize computer applications like Excel spreadsheet for financial analysis. (B6)
b. Apply financial management concepts or cost information to healthcare settings through
the case study assignment, and also utilize analytical tools to solve specific issues in
assigned cases. (C8)
Textbooks:
Required: Fundamentals of Healthcare Finance, AUPHA, Louis C. Gapenski.
Supplemental: Financial Management in Healthcare, AUPHA, Louis C. Gapenski.
Class format:
This course is consisted of lectures, class discussions/demonstrations/exercises, assignments. The
instructor will hand out lecture materials and other resources for discussions and exercises. The
detailed guideline for a group project will be described below.
Lecture and discussion: See the class schedule for details.
Preparation/Review Questions: Some questions (T/F, multiple choices) will be given to
encourage your preparation for each class and to check up last week.
Practice: Practices will follow after lecture on the application of theories to practical
situations. Students must have a calculator. Excel spreadsheet may be used for the selected
topics such as present value analysis. Resources for practices will be posted on the BlackBoard.
Assignments:
- Written Case Analysis: two cases will be assigned to a student or a group of students.
Each case analysis does just require a written report for a case (less than three pages). A
simple guide of report will be provided. Email your group members (less than three) by
September 9.
- Homework: Each homework assignment requires some write-ups and calculations. Expect
three to four homework assignments.
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Course Requirements:
- Class Participation
- Assignment
o Case analysis (20%)
o Homework (20%)
- Mid term Exam
- Final Exam
(10%)
(40%)
(25%)
(25%)
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
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.
Expectations: Students are expected to:
- Arrange your schedule now to insure that you will be present at all sessions. The instructor will
be available to discuss issues related to class attendance, check the office hours.
- Read/study the assigned readings, websites, and other materials prior to class sessions.
- Be on time for all class sessions. For guest lectures dress and behave professionally. Especially
put your cell phone off or at least make it silent.
- Participate in class practice and discussions. You are expected to arrive at each class session
with a carefully thought-out set of ideas, observations and questions related to the week’s topic
based on: assigned readings in the texts; materials posted on the course’s web site; and your
own experiences.
- Log-on to the Blackboard site regularly and; monitor announcements; complete assignments
and read materials posted in the documents section. All class material will be posted in a pdf
format including lecture handouts (3 slides per page).
Academic Integrity: All level of policies, SDSU, GSPH, or HMP level, will be enforced and
applied in this course for academic integrity, including cheating and plagiarism. For the
definition and academic sanctions for cheating and plagiarism can be found on
http://its.sdsu.edu/classic/resources/turnitin/pdf/Plagiarism_AcadSen.pdf.
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Course Schedule
Week
Topics
Date
Topics: Introduction
- Introduction: syllabus
1
Foundation Concepts
Sep 2
- Healthcare finance
- Healthcare business basic
Topics: Revenue sources and reimbursement
2
- Paying for health services
Sep 9
- Reimbursement: FFS and Capitation
- Provider incentive and financial risk
Topics: Costs
3
- Types of costs
Sep 16
- Cost allocation
- ABC
Topics: Pricing Decisions
4
- Price setting strategy
Sep 23
- Profit analysis, breakeven analysis
- Marginal analysis
Topics: Budgeting and Budget evaluation
5
- Strategic planning
Sep 30
- Budgeting types
- Variance analysis
Topics: Financial Operations
- Revenue cycle
6
- Cash management
Oct 7
- Receivables management
- Operational ratio analysis
7
Mid Term Exam
Oct 14
Topics: Reporting profits
8
- Accounting process
Oct 21
- Financial statements
9
Topics: Reporting Assets, financing, and Cash Flow
Oct 28
- Financial statements
Topics: Analyzing Financial Statements
10
- Financial statement analysis
Nov 4
- Du Pont analysis
11
Veterans day, No class, APHA annual meeting
Nov 11
Topics: Business Financing and Cost of Capital
12
- Financing decisions
Nov 18
- Cost of capital
13
Thanks Giving Break, No Class
Nov 25
Practice/
Assignments
Practice
Readings
Ch 1
Ch 2
Practice
Ch 3
Ch 17
(pp. 1-10)
Practice
Ch 4
Case 1
assigned
Practice
Ch 5
Ch 17
(pp. 11-)
Practice
HW
Ch 6
Practice
Ch 7
Appendix A
Case 1 report
due
Ch 11
Ch 12
Case 2
assigned
Practice
HW
Ch 12
Ch 13
Ch 13
Appendix B
Practice
HW
Ch 8
4
Week
Date
14
Dec 2
15
Dec 9
Topics
Topics: Capital investment Decisions
- Time line analysis
- Breakeven analysis
- Discount cash flow analysis
Topics: Project Cash flow Estimation and Risk Analysis
- Cash flow estimation
- Risk analysis
Practice/
Assignments
Practice
Ch 9
Case 2 report
due
Ch 10
Readings
16
Final Exam
Dec 16
This course schedule is subject to be changed without notice.
Supplementary Readings and Resources: Some of them will be available on BB FYI.
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.
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 Performaces,” Healthcare
Financial Management, 43;5, 1898, 36-48.
Cleverly, W. and Harvey, R. 1992. “Does Hospital Financial Performance Measure Up?” Health Care
Financial Management 46(5), 21-26
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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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