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Techniques used for receipt acceleration are deposit

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Unformatted text preview: s (or other clinical basis) Expense Budget The expense budget combines volume data with detailed resource utilization data to forecast expenses. To be most useful, expenses must be broken down into fixed and variable components. Like revenues, expenses must be forecasted at multiple levels. Operating Budget For larger organizations, the operating budget, which focuses on projected profitability, combines information from the revenue and expense budgets. Smaller organizations may use a single operating budget in place of multiple budget types. Variance Analysis A variance is the difference between actual results and the budgeted (standard) value. Variance analysis is a technique applied to budget data to: o Identify problem areas o Enhance control ? Why is variance analysis so useful to health services managers? Flexible Variance Analysis The variance analysis just performed is a simple analysis in that it compares actual results with initial (beginning of year) assumptions. We can glean additional information by constructing a flexible budget, which is based on all initial budget assumptions but then adjusted (flexed) to reflect actual (realized) volume. Now, the variances will reflect financial performance differences other than those that stem from volume forecast errors. Chapter 7 Managing Financial Operations - Revenue cycle – all activities associated with billing and collecting for services. o Should ensure that: Patients are properly categorized by payer - - Correct and timely billing takes place Correct and timely payment is received o Before – Service activities Insurance verification Certification of managed care patients Patient financial counseling o At- Service activities Insurance verification Service documentation/claims production o After- service activities Claims submission Third- party follow- up Denials management Payment receipt and posting o Monitoring and Reporting Monitoring Review and improvement o Each of the activities is closely monitored to ensure that: The correct amount of reimbursement is collected on each patient Reimbursements are collected as quickly as possible. The costs associated with the revenue cycle are minimized consistent with rapid and correct collections. o Two important keys to good revenue cycle management are 1. Information technology 2. Electronic claims processing Receivables management o If a service is provided for cash, the revenue is immediately received. o If the service is provided on credit, the revenue is not received until the receivable is collected o It is important that healthcare managers continuously monitor the firm’s receivables to ensure that: Payment is received promptly Receivables quality does not deteriorate o Monitoring methods include: Average collection period – days in patient accounts receivable Aging schedules o Receivables are monitored both in aggregate and by specific payer Cash and marketable securities management o The goal of cash management is to hold the minimum amount necessary to meet liquidity requirements o The primary cash management technique is float management: Acceleration of recipts Disbursement control o The cost of cash management initiatives must be balanced by corresponding benefits...
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