PPD 510A Financial Management of Health Services

Syllabus Fall 2009

Instructor: Dr. John Raffoul, FACHE

Time and Classroom: Mondays 6:00pm – 9:20pm, VKC-106

Contact Information: John Raffoul

Office Hours: John Raffoul: By appointment.

Office: 323-268-5000 ext 1969

Cell: 323-806-6008

Course Objectives and Expectations

This course has several objectives:

1)to introduce basic finance concepts, theories, and techniques appropriate for the financial management of health care organizations,

2)to apply financial knowledge and tools in analyzing major types of financial decisions faced by health care organizations,

3)to develop an appreciation for the financial oversight responsibilities of non-financial senior health care management.

By the end of this course each student should be able to:

  • Understand and communicate with basic finance language
  • Analyze financial statementsand assess financial performance
  • Examine capital financing and investment decisions
  • Manage working capital efficiently and effectively

Prerequisite

Accounting is a prerequisite for this class. This requirement can be satisfied by completing PPD 318the accounting course or the accounting challenge exam. Any student who can not fulfill this requirement should speak to the instructor immediately.

Teaching Approach

Financial management for health services is about learning the basic corporate finance conceptsandapplying critically to the health care organizations. Weadopt a teaching model to emphasize not only the academic training students in any finance course should have, but also the applied knowledge and skills by bringing in guest speakers who are experts in their fields, and a group project that sends students out to the real world.

In the classroom, you will learn the concepts and principles largely through examples and, to the extent possible, case studies. Generally, the class will start with a short lecture highlighting the key points from the readings. The lecture will be illustrated by examples or to be followed by more in-depth cases that extend the understanding and application of the topics.

Depending on the nature of the subject, some of the cases are more straight-forward and have “correct” answers. However, for others, the problems presented in thecase may not have one "right" answer. There will generally be a set ofinsights and solutions that is better than others. It is in working through the details to find these insights and solutions – both through your own preparation andthrough class discussion – that the concepts and principles introduced in the readingsand lectures will come to life for you.

For a case discussion to be a valuable learning experience, it is essential that you

come prepared to discuss the cases and readings assigned for that class. Please do not seek outside information or solutions on the cases. Seeking information from students who have taken the course before is a violation of the honor code.

You are encouraged to work in study teams. Teams may turn in the case assignments as a group. In addition, teams are encouraged to meet in advance to prepare for in-class casediscussions.

Grading

Grading will be based on 5 components:

  1. Midterm Examination [25%]– A in-class closed-book midterm examination will be given for all the cases, readings, and lectures covered through Midterm. More details will be given as the date approaches.
  2. Final Exam [30%] – A in-class closed-book final examination will be given on the last day of class. The exam will include all the materials taught in the semester with a focus on topics covered after the midterm.
  1. Case Assignments [15%] – Two case study assignments are required for each student. You or your group (if you choose to work in a group) will sign up two cases and lead the discussion the day the case is discussed. The assignments are due one week after the case is discussed by 6pm. Submissions are via Blackboard only, and late submission will not be accepted.
  1. Class Participation [10%] –Attendance, preparation, and participationare essential in class discussions. Obviously, you cannot participate if you are not present. In addition, learning is maximized when all students are actively engaged in class discussion. Please make thoughtful comments that pertain to the topics/questions discussed, listen carefullyto other students’ comments, and seek opportunities to make comments that move the class discussion forward.

Every other week two students will summarize one or more important health-related current events and lead a short 10-minute discussion in the class. Each of the two students should prepare a written 1-page summary of issues and questions to distribute to the class.

  1. Group Project [20%]– To facilitate integrating the concepts and tools you learn from this course, your group is required to work with a client to analyze a critical financial issue facing the organization. You need to make at least 3 visits to the organization, and work closely with your preceptor there as well as professorRaffoul. The groups should start making initial contacts the week before the mid-term . Group project will be due on the last class period before the final examwith both anexecutive report and an 20-min oral presentation.

Format of Written Assignments

As a graduate course that prepares you as leaders in the health care industry, we expect that the written assignments will reflect business professionalism. Please be structured, logical, concise and creative in presenting your analyses and recommendations. A good format in non-directed cases and group project has the following major sections: (1) background, (2) key issues and complication, (3) analysis, and (4) conclusion and/or recommendations. A professional presentation of the assignments should be typed in a word processor and aided by a spreadsheet if necessary.

Incomplete Policy

An “incomplete” will be granted only if a student has been participating toward the end of the semester in all aspects of the class, including at least class participation, case assignments, midterm, and group project with presentation. A written request for difficulty completing the class should be made no later than the final exam day. An “incomplete” will be for a period not to exceed six weeks following the end of the course.

Communication

We will be using the USC Blackboard System and emails to communicate with students. Lecture slides, reading materials, case studies, and solutions will be posted at the Blackboard if possible, or otherwise handed out in class. Class updates, last minute changes and other messages will be posted there and distributed by emails as well.

Required Materials

Textbook:L. Gapenski, Understanding Health Care Financial Management; Fifth Edition, Health Administration Press.

Reference:Richard Brealey, Stewart Myers, Principles of Corporate Finance, Fifth Edition, McGraw Hill, Inc. 1996

Calculator:A financial calculator is required as we will be performing many financial calculations. Although the calculations can be performed on either a calculator or spreadsheet, we require your being able to use financial calculator in order to pass the class.

We recommend the purchase of a calculator with the built-in financial functions of PV, NPV, FV, PMT and a y to the x function (power). The Hewlett Packard models, the 12c, 17b or 19b, have had good reputations. You would want to avoid the low end ones because this is an item that you will continue to use throughout your career.

Optional Resources

  • News: Wall Street Journal, Financial Times
  • Journals: Modern Healthcare

Frontier of Health Services Management

Journal of Healthcare Management

  • Magazine: The Economist

Academic Integrity [1]

The University as an instrument of learning is predicated on the existence of an environment of integrity. Any academically dishonest act intentionally violates the community of trust upon which the pursuit of truth is base. The following sections serve to illustrate some specific acts of academic dishonesty. The list of examples, however, is meant to be neither exclusive nor exhaustive.

Examination Behavior

Any use of external assistance during an examination shall be considered academically dishonest unless expressly permitted by the instructor. The following are considered unacceptable examination behavior:

  1. Communicating in any way with another student during the examination
  2. Copying material from another student’s examination
  3. Allowing another student to copy from one’s examination
  4. Using unauthorized notes or other devices.

Fabrication

Any intentional falsification or invention of data or citation in an academic exercise will be considered a violation of academic integrity. The following are examples of academic dishonesty involving fabrication:

  1. Inventing or altering data for a laboratory experiment of field project
  2. Resubmitting returned and corrected academic work under the pretense of grader evaluation error when, in fact, the work has been altered from its original form.

Plagiarism

Plagiarism is the appropriation and subsequent passing off of another’s ideas or words as one’s own. If the words or ideas of another are used, acknowledgement of the original source must be made through recognized referencing practices. Use of another’s ideas or words must be properly acknowledged as follows:

Direct Quotation: Any use of a direct quotation must be acknowledged by footnote citation and by either quotation marks or appropriate indentation and spacing.

Paraphrase:If another’s ideas are borrowed in whole or in part and are merely recast in the student’s own words, proper acknowledgement must, nonetheless, be made. A footnote or proper internal citation must follow the paraphrased material.

Other Types of Academic Dishonesty:

  • Submitting a paper written by or obtained from other
  • Using a paper or essay in more than one class without the instructor’s express permission
  • Changing academic records outside of normal procedures and/or petitions
  • Using another person to complete homework assignments or take-home examinations without the knowledge and consent of the instructor

SPPD 510A Addendum

While it is understood that students benefit from studying and working collectively in groups, individual assignments that are completed outside the classroom must be completed by individuals rather than by a group. The following outlines the position taken by the instructors of this class:

  • Acceptable group behavior includes talking about the issues involved in the problems, discussing options for solutions, and helping each other with computer software.
  • Each student must do his/her own analysis and his/her own computer work.

If you have any questions on the definition of individual work, please bring these to the attention of the professor. Any indication that the work of one student is being completed by another will result in zero credit for both students.

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Course Outline of PPD 510a Fall, 2008

Topic(s) / Reading / Discussion
08/24 / Introduction
Accounting Review / Ch1 & 2
08/31 / Labor Day
09/07 / Time Value of Money / Ch3 / Current Events
09/14 / Securities Valuation / Ch 7 / Case Study 1 (cash flow): The Statement of Cash Flow, Exhibit 1.
09/21 / Cost of Capital / Ch 9
09/28 / Risks and Return
Capital Budgeting I / Ch 4
Ch 11 / Current Events
10/05 / Capital Budgeting II
Capital Structure / Ch 11
Ch 10 (browse) / Case Study 2 (cost of capital):
Southwest
10/12 / Midterm Exam
10/19 / Capital Financing
Lease Financing / Ch 5, Ch 6
Ch 8
10/26 / Financial Planning / Ch 14 / Current Events
11/02 / Measuring Performance / Ch 13 / Current Events
11/09 / Managing Working Capital / Ch 15 / Case Study 3 (ratio analysis):
Creekside
11/16 / HC Reimbursement
Risk Management / Ch 17
Ch18 ( pp607-614) / Current Events
11/23 / Review. Possible Guest Speaker. / Current Events
11/30 / Group Presentation
12/07 / Study Period
12/14 / Final Exam

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[1] Source: Faculty Handbook, 1984, pp.51-52