Exam #3 Notes - HLTH 3350 Chapter 10 Managing Cost and...

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HLTH 3350 3/24/2014 Chapter 10: Managing Cost and Revenues What is Financial Management? It is the process of: o Providing oversight of the healthcare organization’s day-to-day financial operations o Planning the organization’s long-range financial direction (both internal and external) o Increasing the organization’s revenues (=good) and decreasing its costs Definitions**** (ON EXAM)!!!!! Profit (accounting) , the difference between purchase price and the costs of bringing to market (revenues) In Classical (economics) and Marxian economics, profit is the return to an owner of capital stock (means of production) in any productive pursuit involving labor, or a return on bonds and money invested in capital markets Major Objectives of Financial Management Generate a reasonable net income Set prices for services Facilitate relationships and manage contracts with third party payers Record and analyze cost information Prepare, audit, and disseminate the organization’s financial reports Invest in long-term capital assets Ensure that payroll is covered and that suppliers are paid Protect the organization’s tax status Respond to government regulators, external auditors, accrediting agencies, and quality consultants Control financial risk to the organization Tax Status of Healthcare Organizations For-profit, investor-owned o Serve private interests and pay taxes o Goal is to maximize profits for the owner (classical economics) o Must also serve the community Not-for-profit o Serve public interests and are tax-exempt o Goal is to provide community benefit and optimal patient care (including indigent) o Two types : Business-oriented (private), and government-owned o Must also turn a profit for sustainability
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Not-For-Profit Attributes Exempt from taxes Primarily serves community or public interests May not participate in political campaigns or influence legislation
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