FINANCIAL MANAGEMENT IN HEALTHCARE

Financial Management in Healthcare

Financial Management in Healthcare

Since its inception in 1975, Patton - Fuller Community Hospital has been dedicated to providing cutting-edge medical care to the people of Kelsey and the surrounding communities. PFCH is a for-profit hospital and is owned by physicians active at the facility. Quality patient care is the key to a hospital's success and as shareholders in PFCH; physicians are motivated to provide the best patient care possible. Our commitment to quality patient care has allowed us to grow to where we are today. As a 600-bed, full-service hospital, Patton - Fuller Community Hospital is the premier healthcare facility in the Northwest Valley.

Question 1

Primary revenue sources for the Hospital`s General Fund are property taxes, sales taxes, business and occupational licenses, meals taxes, state revenues, and contributions from the Hospital's Utility Departments. In establishing the budget, historical and trend data are analyzed. In addition to analyzing historical data, economic indicators and the impact the economy will have on the historical data is taken into consideration. Throughout the year, management monitors revenues and economic indicators to determine if they are on target with the analysis used to develop the budget (David, 1999). General Fund revenues and expenditures per capita have both trended upward over the last five years with the recent economic downturn shown over the last 12 months. Although the overall increase in revenue per capita is partially attributable to a declining population, there was a 2% decrease in revenues from 2009 to 2010. Expenditures have increased 11% from 2009 to 2010, demonstrating management's excellent efforts in containing costs despite ever increasing costs of goods and services. Expenditures in FY 2010 decreased about $2.5 million due to debt refinancing which lowered the debt service requirements.

Hospital has new agreements with third-party payers that provide for payments at amounts different from its established rates. Net patient revenue is reported at estimated net realizable amounts for rendered services (White, 2002). Contractual adjustments result from these agreements, with various organizations providing services for amounts that differ from billed charges, including services under Medicare, Medicaid, and certain managed care programs. These are recorded as deductions in net patient revenue. Hospital recognizes that revenue from managed care organizations is significant to the operations, and management believes that there is significant credit risks associated with these payers. Accordingly, an adjustment has been made to the provision for doubtful accounts and patient ...