PHHA 223

HEALTH CARE FINANCIAL MANAGEMNET

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 Objectives of the course
At the end of this course students will:
- Understand the basic knowledge of healthcare financial
management.
-Able to define healthcare business and financial environment
-Able to understand the cost, price and profit context to healthcare
organization
-Able to prepare the budget for healthcare organization
-Learn to take the investment decision
-Learn the method of reporting profits
-Advise strategies to use financial analysis and improve a healthcare
organizations performance.
-To learn the art and methods for analyzing projects

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 Chapter
Chapter 1
Introduction to Healthcare Financial
Management
Chapter 2
Healthcare Business and Financial
Environment
Chapter 3
Estimating Costs
Chapter 4
Pricing Decisions and Profit Analysis
Chapter 5
Budgeting
Chapter 6
Managing Financial Operations
Chapter 7
Capital Investment Decision Basics
Chapter 8
Reporting Profits

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 Chapter-1
Introduction to Healthcare Financial Management

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Chapter Objective:
Definition of healthcare financial management
The role of healthcare finance
Regulatory and legal issues

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 Health Care Financial Management
What is Financial Management?
Financial management may be defined as a function
in an organization which arrange and manage cash
and credit for organization to achieve organization
objective.

What is healthcare financial management

Healthcare financial management is the management
of finance within healthcare organizations.

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Healthcare financial management has two
functions:

Accounting function concerns the cost of resources,

operations, and financing of an organization.
Financial management function provides the theory,
concepts, and tools necessary to help managers make
better financial decisions.

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Role of Financial management in Health care
organization

The primary role of financial management in health

provider organizations is to plan, to acquire, and
to utilize resources (cash and credit) to maximize
the performance of the organization.

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Financial management activities includes:
 Planning and budgeting: evaluating the financial
effectiveness of current operations and planning for
the future. Eg. Budgets
 Financing decisions: All organizations must raise
capital to buy the assets
 Capital investment decisions: focus on the
acquisition of land, buildings, and equipment.

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 Financial reporting: it is important for businesses to
record and report to outsiders the results of
operations and current financial status through a set
of financial statements.
 Contract management: Health services
organizations must negotiate, sign, and monitor
contracts with managed care organizations and
third-party payers.
 Financial risk management: control financial risk.

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Four C’s concept in Financial management
Costs. Costs must be continuously monitored to
ensure that they are not excessive for the amount of
services provided.
Cash. Businesses must have sufficient cash on
hand to meet payment responsibility.
Capital. Businesses must raise the capital (money)
necessary to buy the amenities and equipment to
provide services.
Control. Businesses must control their resources to
ensure that they are used wisely.
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 Regulatory Issues
Entry into the health services industry is heavily
regulated:
 Licensure
 Certificate of need (CON): It is a legal document required in many states and
some federal jurisdictions before proposed acquisitions, expansions, or creations of
facilities are allowed. CONs are issued by a federal or state regulatory agency with
authority over an area to affirm that the plan is required to fulfill the needs of a
community. 
 Cost containment and rate review
Although designed primarily to protect consumers,
critics of regulation contend that it protects providers
more than consumers.

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 Legal Issues
The primary legal issue facing healthcare providers is
professional liability.
Other issues include:
 General liability
 Antitrust

 Right to die

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 Current Challenges
Surveys of healthcare managers reveal the following
concerns:
Financial challenges
 Transition from FFS (Fee-for-service) to value-based payment
 Information technology investments

 Increase in self-pay patients

 Billing and collections process (revenue cycle)

Balancing clinical and financial issues

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Thank You

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