BM6711
HOSPITAL TRAINING
FINANCIAL MANAGEMENT IN HOSPITALS
Presented To: Presented By:
The Department of Biomedical Vishal SB,
Engineering, 4th Year, Department of Biomedical Engineering,
SSN College of Engineering SSN College of Engineering
Reg No: 312213121063
1
COVERED TOPICS
• At the end of the session you will be expected to
have an idea about the following topics:
– Health Care sector
– Financial Management and its application in Hospitals
– Different business organizations and its effect on Financial Management
– Concepts of Tax, Reimbursement techniques employed and insurance
– Organizational Structure of Finance Department and the Fiscal Services
– Different Documentations used in Financial Reporting and Financial Cycle
– Internal Control problem and Regulation
– Effect of various decision parameters in Financial Management
» Hospital Location
» Hospital Facilities
– Financial Risks and Management of these risks
05/08/2016 2
HEALTH CARE
Courtesy: Google images
05/08/2016 3
HOSPITAL FINANCIAL MANAGEMENT
05/08/2016 4
FINANCIAL MANAGEMENT-AN INTRO
• What is it?
• How important is it?
• Is it the same as Accounting?
05/08/2016 5
HOSPITAL FINANCIAL MANAGEMENT-
ORGANIZATIONS
• How different is it from conventional
Financing?
• What kind of Business Organization does
Health Care fall into?
05/08/2016 6
HOSPITAL FINANCIAL MANAGEMENT-TAXES,
INSURANCE AND REIMBURSEMENT
• How does a hospital earn revenue?
• What are the risks associated with Health
Care Sector?
• Reimbursement, Taxes and Insurance
05/08/2016 7
HOSPITAL FINANCIAL MANAGEMENT-CHIEF
FINANCIAL OFFICER(CFO)
Courtesy: http://www.slideshare.net/sanofimohin/hospital-management-system-60230444
05/08/2016 8
HOSPITAL FINANCIAL MANAGEMENT-CHIEF
FINANCIAL OFFICER(CFO)
Courtesy: http://www.slideshare.net/sanofimohin/hospital-management-system-60230444
05/08/2016 9
HOSPITAL FINANCIAL MANAGEMENT-FISCAL
SERVICES
Department Responsibilities Typical Person In
Charge
Accounting Handles all general ledger Controller
accounting, monthly reporting,
and subsidiary ledger
accounting for the hospital;
typically responsible for
maintaining fixed asset records,
reconciling all general ledger
accounts monthly, and assisting
department leaders with
understanding monthly reports.
Business Office Handles all aspects of billing Business Office Director or
and collections for patient Patient Accounts Director
accounts.
Payroll Handles all payroll functions for Payroll Manager or Supervisor
the hospital.
Accounts Payable Handles all payments to Accounts Payable Manager or
vendors for the hospital. Supervisor
Purchasing and Handles all procurement and Materials Manager and
Materials materials warehousing and Purchasing Manager or
Management distribution for the Hospital. Supervisor
10
05/08/2016
HOSPITAL FINANCIAL MANAGEMENT-
FISCAL SERVICES
Department Responsibilities Typical Person In
Charge
Decision Support Analyzes financial and Director of Decision
clinical data across the Support or
hospital and supports Financial Analyst
strategic decision making.
Treasury In larger organizations or Treasurer or Director of
health-care systems, a Treasury
separate treasury function
will manage investments
and cash Accounts.
Cost Reporting Prepares annual cost Director of Reimbursement
reports for Medicare and or
other governmental payers Cost Reporting Supervisor
as required and keeps the
organization current on
changing Regulations.
From: Review of Financial Management and Cost Accounting Principles
Ronald P. Powell, Jr. Noel C. Hodges
05/08/2016 11
HOSPITAL FINANCIAL MANAGEMENT-
FINANCIAL REPORTING
• Basic Financial Statements
» Balance Sheet
» The Income or Operating Statement
» Net Revenue
» Reimbursement Methodologies
» Excess of Revenues over Expenses or EBIDTA
» Statement of Owner’s Equity or Fund Balance
» Statement of Cash Flows
05/08/2016 12
HOSPITAL FINANCIAL MANAGEMENT-
THE CYCLE
Courtesy: http://www.who.int/management/Reading/en/index3.html
05/08/2016 13
HOSPITAL FINANCIAL MANAGEMENT-
INTERNAL CONTROL
• What is Internal Control?
• Why is it an important factor in Finance
Management?
• INTERNAL CONTROL PROBLEM
05/08/2016 14
HOSPITAL FINANCIAL MANAGEMENT-
INTERNAL CONTROL
FROM: REGULATION AND INTERNAL CONTROL IN HOSPITALS
JEFFREY E. HARRIS, M.D., Ph.D.
05/08/2016 15
HOSPITAL FINANCIAL MANAGEMENT-
INTERNAL CONTROL
• Current System of Internal Control
• Possible problems and impact on revenue
• What to do????
05/08/2016 16
HOSPITAL FINANCIAL MANAGEMENT-
REGULATION
• A mechanism to bridge gap between
Administration and Physicians
• Will help plug all the loss due to Internal
Rationing
05/08/2016 17
HOSPITAL FINANCIAL MANAGEMENT-
HOSPITAL PLANNING
• The Meaning of Hospital Planning
• Various components
• The necessity for Financial Management
in Hospital Planning
05/08/2016 18
HOSPITAL FINANCIAL MANAGEMENT-
LOCATION
• How does location affect efficiency of a
hospital?
• Various locations???
05/08/2016 19
HOSPITAL FINANCIAL MANAGEMENT-
LOCATION
• How does it affects the financial aspects of
hospitals?
• Various examples- The good, the Bad and
the Ugly
05/08/2016 20
HOSPITAL FINANCIAL MANAGEMENT-
HEALTH CARE FACILITIES
• Amenities in Health Care
• Each has a cost attached to it
• Trade-off between initial cost and revenue
generation
05/08/2016 21
HOSPITAL FINANCIAL MANAGEMENT-
FINANCIAL RISKS
• Risks in Finances?
• How does it apply to the sector of Health
Care??
• Various risks- Insurance fraud, wrong
decisions, equipment damage etc
05/08/2016 22
HOSPITAL FINANCIAL MANAGEMENT-
RISK MANAGEMENT
• A mechanism to curb losses
• It can either be implemented from the start
or during a crisis to limit the losses
• Various examples
05/08/2016 23
HOSPITAL FINANCIAL MANAGEMENT-
CHALLENGES
Courtesy: Google images
05/08/2016 24
HOSPITAL FINANCIAL MANAGEMENT-
SOFTWARE SYSTEMS
• All services are integrated
• Typical examples are:
» Healthland
» HCS
» ORMED
courtesy: http://www.healthland.com courtesy: http://www.ormed.com/
courtesy: http://www.hcsinteractant.com
05/08/2016 25
ANY QUESTIONS?????
05/08/2016 26
REFERENCES
• UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT, Fifth
Edition ,Louis C.Gapenski (Chapters 1-3)
• Review of Financial Management and Cost Accounting Principles, Ronald P.
Powell, Jr. And Noel C. Hodges, Chapter 1
• Regulation and Internal control in hospitals, Jeffrey E. Harris, M.D., Ph.D.,
MIT
• Risk Management in Hospitals, Balbir Singh and M. Habeeb Ghatala,
International Journal of Innovation, Management and Technology, Vol. 3,
No. 4, August 2012
• Hospitals: Facilities Planning and Management, G. D. Kunders
8/24/2012 27
THANK YOU!
8/24/2012 28
