Financial Management Strategies for Hospitals and Healthcare Organizations: Tools, Techniques, Checklists and Case Studies

350 Pages·2013·4.62 MB·English

by  David Edward Marcinko

Financial Management
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Healthcare Organizations: Tools, Techniques, Checklists and Case Studies integrates prose, tm
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reports, charts, tables, and diagrams. It has a natural flow, starting with costs and revenues, an
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I. Costs and Revenues: Fundamental Principles ra
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III. Institutional and Professional Benchmarking: Advanced Applications
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agement and health economic principles in healthcare, the book includes coverage of the financial
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features of electronic medical records, financial and clinical features of hospital information sys-
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tems, entity cost reduction models, the financial future of mental health programs, and hospital p Dr. David Edward Marcinko, MBA, CMP™
revenue enhancements. i
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a Prof. Hope Rachel Hetico, RN, MHA, CMP™
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6000 Broken Sound Parkway, NW Foreword by Neil H. Baum, MD Foreword by David B. Nash, MD, MBA
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Financial Management
Strategies for Hospitals and
Healthcare Organizations
Tools, Techniques, Checklists and Case Studies

Financial Management
Strategies for Hospitals and
Healthcare Organizations
Tools, Techniques, Checklists and Case Studies
Edited by
Dr. David Edward Marcinko, MBA, CMP™
Prof. Hope Rachel Hetico, RN, MHA, CMP™
Foreword by Neil H. Baum, MD
Foreword by David B. Nash, MD, MBA
CRC Press
Taylor & Francis Group
6000 Broken Sound Parkway NW, Suite 300
Boca Raton, FL 33487-2742
© 2014 by iMBA, Inc.
CRC Press is an imprint of Taylor & Francis Group, an Informa business
No claim to original U.S. Government works
Version Date: 20130716
International Standard Book Number-13: 978-1-4665-5874-8 (eBook - PDF)
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Dedication
It is an incredible privilege to edit Financial Management Strategies for Hospitals
and Healthcare Organizations: Tools, Techniques, Checklists and Case Studies.
One of the most rewarding aspects of this career has been the personal and
professional growth acquired from interacting with protean professionals
of all stripes. The mutual sharing and exchange of practice management
ideas stimulates the mind and fosters advancement at many levels.
Creating this text was a significant effort that involved all members of
our firm. Over the past year we interfaced with numerous outside private
and public companies—as well as the Internet blogosphere—to discuss
its contents. Although impossible to list every person or company that
played a role in its production, there are several people we wish to thank
for their support and encouragement: Kristine Mednansky, Senior Editor
Business Improvement (Healthcare Management); Karen Sober, Editorial
Assistant; and Richard O’Hanley, CRC Press (A Taylor & Francis Group).
Any accolades are because of them. All other defects are my own.
Of course, this text would not have been possible without the support of our
families, whose daily advocacy encouraged all of us to completion. It is also
dedicated to our clients, and to the contributing authors, who crashed the
development life cycle in order to produce time-sensitive material in an expedient
manner. The satisfaction we enjoyed from working with them is immeasurable.
Dr. David Edward Marcinko, MBA, CMP™
Editor-in-Chief
© 2010 Taylor & Francis Group, LLC

Contents
Foreword ...........................................................................................................................................ix
Preface............................................................................................................................................xiii
Disclaimer ........................................................................................................................................xv
Acknowledgments ..........................................................................................................................xvii
Editors .............................................................................................................................................xix
Contributors .................................................................................................................................xxiii
Section i costs and Revenues: Fundamental Principles
Chapter 1 Managerial Medical Cost Accounting, Structure, Modeling, and Behavior ................3
David Edward Marcinko and Hope Rachel Hetico
Chapter 2 Understanding Medical Activity–Based Cost Management ......................................37
David Edward Marcinko
Chapter 3 Lean Hospital Materials Processes and Throughput Costs in an Increasingly
Tightened Economic Market ......................................................................................53
Adam Higman, Brian Mullahey, Kristin Spenik, and Jerzy Kaczor
Chapter 4 Managing and Improving the Hospital Revenue Cycle Process ................................65
Carol S. Miller and David Edward Marcinko
Section ii clinic and technology: contemporary issues
Chapter 5 Financial and Clinical Features of Hospital Information Systems ............................97
Brent A. Metfessel
Chapter 6 Community and County Mental Health Programs of the Future ............................121
Carol S. Miller
Chapter 7 Internal Audit Control Measures for Medical Practices and Clinics .......................157
Gary L. Bode and David Edward Marcinko
Chapter 8 The Early Promise of Health 2.0 to Enable Wellness, Improve Care, and
Reduce Cost in Support of Population Health Management ....................................165
Jennifer Tomasik, Carey Huntington, and Fabian Poliak
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© 2010 Taylor & Francis Group, LLC
viii Contents
Section iii institutional and Professional Benchmarking:
Advanced Applications
Chapter 9 Interpreting and Negotiating Healthcare Contracts .................................................183
David Edward Marcinko and Hope Rachel Hetico
Chapter 10 Investment Policy Statement Benchmark Construction for Hospital Endowment
Fund Management ....................................................................................................227
Perry D’Alessio and David Edward Marcinko
Chapter 11 Valuation of Hospitals in a Changing Reimbursement and Regulatory
Environment .............................................................................................................261
Robert James Cimasi, Todd A. Zigrang, and Anne P. Sharamitaro
Chapter 12 Research and Financial Benchmarking in the Healthcare Industry ........................299
Robert James Cimasi, Todd A. Zigrang, and Anne P. Sharamitaro
Epilogue ........................................................................................................................................319
© 2010 Taylor & Francis Group, LLC
Foreword
INSTITUTIONAL FOREWORD
It should come as no surprise to our readers that the nation faces a financial crisis in healthcare.
Currently, the United States spends nearly 16 percent of the world’s largest economy on providing
healthcare services to its citizens. Another way of looking at this same information is to realize that
we spend nearly $6,500 per man, woman, and child per year to deliver health services.
And, what do we get for the money we spend?
This is an important policy question, and the answer is disquieting. Although the man and
woman on the street may believe we have the best health system in the world, on an international
basis, using well-accepted epidemiologic outcome measures, our investment does not yield much!
According to information from the World Health Organization and other international bodies, the
United States ranks somewhere toward the bottom of the top fifteen developed nations in the world
regarding outcomes in terms of improved health for the monies we spend on healthcare. From a
financial and economic perspective then, it appears as though the 16–18 percent of the gross domes-
tic product going to healthcare may not represent a solid investment with a good return.
It is then timely that our colleagues at the Institute of Medical Business Advisors, Inc. (iMBA),
have brought us their newest work: Financial Management Strategies for Hospital and Healthcare
Organizations: Tools, Techniques, Checklists and Case Studies.
Certainly, this textbook is not for everyone. It is intended only for those physicians, nurse-
executives, and administrators who understand that clinics, hospitals, and healthcare organiza-
tions are complex businesses, where advances in science, technology, management principles, and
patient/consumer awareness are often eclipsed by regulations, rights, and economic restrictions.
Navigating a course where sound organizational management is intertwined with financial acu-
men requires a strategy designed by subject-matter experts. Fortunately, Financial Management
Strategies for Hospital and Healthcare Organizations: Tools, Techniques, Checklists and Case
Studies provides that blueprint. Allow me to outline its strengths and put it into context relative to
other works around the nation.
For the last year, the research team at iMBA, Inc., has sought out the best minds in the healthcare
industrial complex to organize the seemingly impossible-to-understand strategic financial backbone
of the domestic healthcare system. The book, a follow-up companion to their Hospitals & Health
Care Organizations: Management Strategies, Operational Techniques, Tools, Templates, and Case
Studies, is organized into three sections, with twelve chapters, to appropriately cover many of the
key topics at hand. It has a natural flow, starting with costs and revenues, progressing to clinic and
technology, and finishing with institutional and professional benchmarking.
Section I, on Managerial Medical Cost Accounting, Structure, Modeling, and Behavior (Chapter 1),
Understanding Medical Activity–Based Cost Management (Chapter 2), Lean Hospital Materials
Processes and Throughput Costs in an Increasingly Tightened Economic Market (Chapter 3), and
most especially Managing and Improving the Hospital Revenue Cycle Process (Chapter 4) has
broad appeal and would be of interest to hospital chief executive officers, physician-executives and
clinic administrators, and chief finance officers and comptrollers.
Section II, on the Financial and Clinical Features of Hospital Information Systems (Chapter 5),
Community and County Mental Health Programs of the Future (Chapter 6), Internal Audit Control
Measures for Medical Practices and Clinics (Chapter 7), has great appeal to chief executive officers,
chief operations officers, psychiatrists, psychologists, health fraud and control auditors, and forensic
accountants.
ix
© 2010 Taylor & Francis Group, LLC