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CALIFORNIA STATE UNIVERSITY, LONG BEACH
College of Health and Human Services
HEALTH CARE ADMINISTRATION PROGRAM
562-985-5694 (Office). 562-985-5536 (Fax)
Spring 2007
HCA 341
FINANCIAL MANAGEMENT OF HEALTH CARE INSTITUTIONS
(3 Semester Hours)
Thursdays 4:00 – 6:45
E Tec 229
INSTRUCTOR
Tony Sinay, Ph.D.
Professor and Director
Office: 562-985-5304
Office Hours
Wednesdays 4:00 – 5:30
Thursdays 2:00 - 4:00
HCA 341
FINANCIAL MANAGEMENT OF HEALTH CARE INSTITUTIONS
3 Semester Hours
Course Description:
This course offers fundamentals of health services financial management, emphasizing the financial environment, payment systems, discounted cash flow analysis, risk, financial statements, capital investments, and capital budgeting. The above financial management concepts are applied to health care organizations with an emphasis on decision-making by using accounting and finance theories, principles, concepts and techniques most important to managers in the health care industry.
Primary Goal:
Develop analytical and decision-making skills using accounting and finance theories, principles, concepts and techniques most important to health care administrators.
Course Objectives:
At the successful completion of this course, the student will:
· gain specific factual knowledge in health care finance including concepts, terminology, classifications, methods and trends,
· learn health care payment systems and their role in the health care industry,
· interpret financial statements and measure financial performance,
· know the use of computer spreadsheets for financial analysis, budgeting and forecasting,
· develop competencies with the analytical tools used by financial managers in their capital investment and financing decisions,
· understand the importance of financial management for health care organizations in a rapidly changing medical delivery system,
· demonstrate oral communication skills through presentation of a case study,
· be able to discuss key topics in health care finance and express opinions.
Required Texts and Supplies:
(1) Gapenski, L. C. (2002). Healthcare Finance: An Introduction to Accounting and Financial Management, Second Ed. Chicago, IL; Health Administration Press.
(2) Business calculator-BA Models such as Texas Instruments BA-IIPLUS or SHARP EL-733A.
35 SoClass Format:
This course will consist of lectures, class discussions, assignments, group projects, and presentations. The instructor will explain topics in class as scheduled and supplementary materials will be handed when needed.
· Case Presentation and Analysis: Each group, which consists of 2-3 students, will present a selected case just like other groups, competing against each other. Group assignments will be made in the first class. Each group should plan for a formal presentation with overheads, computer slides and handouts (PowerPoint required). These case presentations should take no longer than 20-25 minutes including time for questions. Presentations will be scheduled for the last few classes.
· Assignments: To get the most out of this class, students should read the material assigned prior to coming to class and complete assignments. There will be three assignments distributed in class, and be collected the following week (see Course Outline for more information). A financial calculator is needed for many of these assignments.
· Exams: There will be a midterm and a final exam in this class. Both exams will be given IN-CLASS as they are scheduled. No make up exam is given unless there is convincing reason such as doctor’s note, etc. The midterm exam is scheduled for March 15 and the final exam is TBA.
· Participation and Absences: Attendance and participation are expected for all classes. If a student is ill, please inform the professor prior to the class and turn in the work as soon as possible. Students will receive no credit for unexcused late work. You participation grade is heavily depends on your attendance.
Course Evaluation:
Success in achieving the course objectives will be evaluated with the following instruments. Students can accumulate up to 425 points from all course requirements.
Points Weights
Midterm 100 points 24%
Final 100 points 24%
Assignments 75 points 18% [25 points x 3]
Attendance 50 points 12%
Case Presentation 75 points 18%
Student Grading 25 points 6%
TOTAL 425 points ~100%
Cutoff Points
A = 425 - 383 points
B = 382 - 340 points
C = 339 - 298 points
D = 297 – 255 points
F = less than 255 points
CASES: Eastside Memorial Hospital (A) –Assessing Hospital Performance
Beaver Creek Clinic – Cash Budgeting
Sun City Community Hospital – Breakeven Analysis
Christchurch Transplant Center- Marginal Cost Pricing Analysis
TOPIC OUTLINE
WEEK/DATE CONTENT/ACTIVITY READINGS
WEEK #1 Introductions, Course Syllabus/Outline
Feb 1 Group Assignments
Part I The Healthcare Environment
Introduction to healthcare finance Chapter 1
Definition of health care finance
Goals of the course
The role of healthcare finance
The health services industry
Regulatory and legal issues
Course organization
WEEK #2 AND 3 The financial environment Chapter 2
Feb 8 and 15 Forms of business organization
Alternative forms of ownership
Taxes and financial decisions
Third party payer system
Managed care plans
Alternative Reimbursement methods
WEEK #4 Part II Financial Accounting
Feb 22 Financial accounting basics and the income stat. Chapter 3
Introduction to financial accounting
The standard setting process
The income statement
Net income versus cash flow
The balance sheet and statement of cash flows Chapter 4
Balance sheet
Accounting identity
Assets
Liabilities and equity
Relationship between income statement and balance sheet
Statement of cash flows
WEEK #5 Analyzing financial performance Chapter 17
March 1 Purpose of performance analysis
Types of analysis
Financial statement analysis
Operating analysis
MVA and EVA Analysis
Problems with performance analysis
ASSIGNMENT I DISTRIBUTED
WEEK #6 Managerial Accounting
March 8 Managerial accounting basics, cost/profit analysis Chapter 5
Introduction to managerial accounting
Cost classifications by relationship to volume
Fixed costs
Variable costs
Profit analysis
Profit and loss statements
Graphical analysis
ASSIGNMENT I COLLECTED
WEEK #7 MIDTERM EXAM
March 15
WEEK #8
March 22 Cost allocation Chapter 6
Direct versus indirect costs
Cost allocation basics
Cost allocation methods
Traditional versus activity based costing
ASSIGNMENT II DISTRIBUTED
WEEK #9 Pricing and service decisions Chapter 7
March 29 Price setter versus price takers
Pricing approaches
Full cost
Marginal cost
Direct cost
Target costing
Analysis methods
Setting prices
Determining service
ASSIGNMENT II COLLECTED
WEEK #10 SPRING BREAK
April 5
WEEK #11 Planning and budgeting Chapter 8
April 12 Planning process
Budget types
Flexible budgeting and variance analysis
Cash Budget
WEEK #12 Basic Financial Analysis Concepts
April 19 Time value analysis Chapter 9
Future and present values
Lump sums
Annuities
Solving for I and N
Investment returns
Amortization
ASSIGNMENT III DISTRIBUTED
Week #13 The basics of capital budgeting Chapter 14
April 26 Project classifications
Role of financial analysis
Cash flow estimation
Breakeven and profitability analysis
Net present value and internal rate of return
ASSIGNMENT III COLLECTED
WEEK #14 Financial risk and required return Chapter 10
May 3 Financial risk basics
Stand-alone risk
Portfolio risk
Corporate risk
Market risk
Risk and required return
WEEK #15 CASE PRESENTATIONS
May 10
WEEK #16 CASE PRESENTATIONS
May 17
WEEK #17 FINAL EXAM
TBA
Case Presentation Evaluation Form
This presentation should be high quality, appropriate for an undergraduate study, and suitable for the board of a local health care organization. It may be done alone, or with classmates in which case both students will receive the same grade. Work-in-progress may be reviewed by the instructor for preliminary feedback. The presentation should be 20-25 minutes long, although additional time may be scheduled in advance. The Presentation should educate the audience and at least:
a. clearly state and explain the underlying case issue (s) and problem (s) to be resolved
b. describe and explain relevant health, economic, finance, and historical background of the case, issue, or problem
c. argue for and against potential solutions
d. describe the solution (s) and its actual or likely implementation
e. explain the actual (or expected ) results of the solution and relate them to the original problems and issues
f. explain how this solution (s) is viewed by relevant interest groups in the company.
Name: Topic: Date:
Criteria Points Comments/Suggestions
Introduction
[0 – 5 points]
Focus
[0 – 3]
Organization
[0 – 10]
Content (a- f above)
[0 – 15]
Original thinking
[0 – 4]
Use of time
[0 – 5]
Delivery
[0 – 15]
Computer-made visuals
[0 –10]
Questions and Answers
[0 – 8]
……………………………………………………………………………………………………………………
Total [0 –75]
TEAM MEMBERS RATING FORM
Your name:
Date:
Team project:
The ratings you provide on this form will be used to determine individual grades for your fellow team members. If you feel that someone has contributed less than, or more than, a fair share, then you can reflect those feelings on this evaluation form. As you consider each team member’s contribution, you should think about such things as:
1. attending team meetings
2. defining and clarifying tasks
3. researching and gathering need information
4. analysis and problem solving
5. working well with others
6. ensuring that final products are done well
7. giving time, effort, and energy,
8. offering useful ideas
9. helping to lead the team
10. other contributions to the team and project
Rate each team member, excluding yourself, in terms of above criteria. List the names of the team members other than yourself, in the spaces below. Then, assign a number of points to each person to reflect your rating for each person’s contribution to the team project. These ratings must total 100. Someone who contributed more to the team would receive a higher number of points than someone who contributed less. Remember, the points must total 100. The instructor will use this information to assign an individual grade to each team member.
Group Member Names Points Assigned
Total points=100
Comments (Use other side if necessary)
Are there problems in the group such that the instructor should intervene? If so, for what purpose? (Use the other side if necessary).
STUDENT INFORMATION SHEET
HCA 341 – Fall 2004
(TURN IN TO INSTRUCTOR)
Name______
Name you prefer to use______
Address______
______
Phone(s):______
Best time/place to reach you:______
Fax(es):______
E-mail address:______
Please describe briefly:
a. Your educational background and work experience:
b. Future educational and career plans:
c. Your reasons for taking this course, what you hope to learn from it:
d. Languages you speak, read and write