Assignment: Sick And Elderly

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Assignment: Sick And Elderly

Assignment: Sick And Elderly

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cost accounting





capital analysis






ratio analysis








exHIbIt 1.1 Financial Management Relationships

Other disciplines

Operations research

Economics Statistics

Cost accounting

Managerial accounting

Financial management

Finance Financial


00_Nowicki (2339) Book.indb 7 5/17/17 10:57 AM

I n t r o d u c t i o n ➤ t o ➤ t h e ➤ F i n a n c i a l ➤ M a n a g e m e n t ➤ o f ➤ H e a l t h c a r e ➤ O r g a n i z a t i o n s8

mAjor objectIves of HeAltHcAre fInAncIAl mAnAgement In this section, we will examine six major objectives of healthcare financial management: (1) to generate income, (2) to respond to regulations, (3) to facilitate relationships with third-party payers, (4) to influence the method and amount of payment, (5) to monitor physicians, and (6) to protect tax status.

generAte Income

While the purpose of healthcare financial management is to provide accounting and finance information that assists healthcare management in accomplishing the organization’s objec- tives, all organizations have at least one objective in common: to survive and grow. Orga- nizations in other industries might refer to this objective as maximizing owners’ wealth; healthcare organizations typically refer to it as maintaining community services. In either event, the organization will be of little use if it cannot afford to continue to operate.

Therefore, the most important objective of healthcare financial management is to generate a reasonable net income (i.e., the difference between collected revenue and expenses) by investing in assets and putting the assets to work.

resPond to regulAtIons

Although financial management in healthcare organizations has similar objectives to that of organizations in other industries, different objectives also exist. The government regulates healthcare to a significant degree because healthcare organizations are in a position to take advantage of the sick and the elderly; regulation protects individuals who cannot protect themselves. Federal, state, and local governments pay more than 55 percent of all health insurance expenditures and therefore have a vested interest in ensuring that government money is well spent (Martin et al. 2016).

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