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Use of financial reports in managing pharmacies.

The use of financial reports for preparing and monitoring the pharmacy budget is reviewed. Internal reports are generated within the department or hospital and are used to compare actual financial performance with budgeted projections. External reports are usually prepared by outside agencies and are used to compare the productivity, operations, and financial performance of one hospital with others in a predetermined group. The level of detail used in preparing financial reports determines the level of detail that can be used to monitor the budget. Internal reports on revenue, nonlabor expense, and labor expense are discussed, and the limitations of external reports comparing hospitals are presented. Effective use of financial reports is important in accurate budget forecasting, and pharmacy managers must seek out the financial information that will be of most value to them.

Budgets↗

Patient accounting systems: needs and capabilities.

In the first article of this series, it was stated that most finance executives are not very satisfied with the performance of their current patient accounting systems. What steps can a patient accounting system planner take to help ensure the system selected will garner high ratings from managers and users? Two primarily steps need to be taken. First, the planner needs to perform a thorough evaluation of both near- and long-term patient accounting requirements. He should determine which features and functions are most critical and ensure they are incorporated as selection criteria. The planner should also incorporate institutional planning into that process, such as planned expansion of facilities or services, to ensure that the system selected has the growth potential, interfacing capabilities, and flexibility to respond to the changing environment. Then, once system needs are fully charted, the planner should educate himself about the range of patient accounting system solutions available. The data show that most financial managers lack knowledge about most of the major patient accounting system vendors in the marketplace. Once vendors that offer systems that seemingly could meet needs are identified, the wise system planner will also want to obtain information from users about those vendors, to determine whether the systems perform as described and whether the vendor has been responsive to the needs of its customers. This step is a particularly important part of the planning process, because the data also show that users of some systems are significantly more satisfied than users of other patient accounting systems.

Accounting↗

Investment management. 8 steps to improve performance.

Today's troubling economic times call for financial managers to take a back-to-basics approach to investment management. Goals and investment practices should be reexamined to determine if they continue to meet the organization's needs. The policy asset allocation and portfolio should reflect the appropriate weight and mix to serve the organization's present and long-term goals. Consultants, investment managers, and custodians should be evaluated carefully to support cost-efficient, effective service.

Capital Financing↗

The utility of Pro Forma Income Statements.

Recent headlines surrounding the financial demise of the nation's seventh largest company, Enron, and its subsequent entanglements with its accounting and consulting firm, Arthur Andersen, have placed a cloud of suspicion upon many reasonable business practices that otherwise are considered standard procedure. The proforma income statement is one of those practices. An oft-used tool in financial management, pro formas play a useful role for projecting financial performance based on predictable forecasts or assumptions. Regardless of the current scrutiny, there is still a valid use for accurately prepared statements.

Accounting↗

The financial impact on community mental health centers of capitated contracts with Medicaid: the Utah Prepaid Mental Health Plan.

Under the Utah Prepaid Mental Health Plan, three of the eleven Community Mental Health Centers in Utah signed capitation contracts with the state Medicaid program. The capitated Centers initially accepted the risk for inpatient care, with the risk later being extended to also include outpatient services. This study contrasts the financial experiences of the capitated Centers and five noncontracting Centers. While various patterns of financial management are evident in the data, it appears that the decision to contract had, at worst, a neutral effect on overall financial performance. Managed care programs with different designs may have different results.

Capitation Fee↗

Managing clinical trials--frustration or bliss?

The proper financial administration of clinical trials is becoming a major priority and necessity for involved institutions. The Office of Inspector General in the Department of Justice is sharpening its radar on this growing field. Institutions involved in the conduct of a clinical trial need to become more proactive in the financial management to successfully pass audits and improve financial outcomes. Budget tools standardizing itemized costs can be built to aid clinical trials managers. Using tools already available in a clinic or hospital setting can help even the most junior budget negotiator. Establishing guidelines to streamline and aid the management of a clinical trial program will make managing less challenging.

Clinical Trials as Topic↗

IDS technology management strategies.

The formation of integrated delivery systems has created new challenges for healthcare financial managers. Among these challenges is the need to respond to cost-cutting pressures related to technology acquisition, financing, and management. A well-developed technology management strategy can reduce technology costs and risks, free up capital for other strategic uses, and maintain the system's ability to adapt to change.

Capital Financing↗

Understanding and implementing hospital information systems.

One of a hospital's greatest resources is its information. The hospital's information system, whether computerized or manual, is the means by which data is collected, integrated, and retrieved. However, because optimal patient treatment, financial management, and hospital operation require that decisions be based on current, accurate, complete, and well-organized data, a computerized hospital information system (HIS), when correctly implemented, can be the most effective means of disseminating valuable information to decision makers. Although the systems currently in place in most hospitals are used primarily to manage finances, an integrated HIS is much more than a financial system; it can, in fact, coordinate all of a hospital's information needs. An integrated HIS develops over time, typically several years. Merely automating existing procedures may not provide many of the potential benefits of a new system and may even carry forward most of the drawbacks of the old system. Determining how information is currently processed in the hospital and putting together an effective team to carry out acquisition and implementation of an HIS must precede the purchase of computers, networks, and software applications. In Part 1 of this article, we describe hospitals' general information needs and provide an overview of the current state of HISs and what hospitals can expect to gain from implementing a new system; in Part 2, we describe the steps hospitals can take when putting the system in place. We caution readers that, although we will be discussing many benefits of successful HISs, little documented or quantified evidence exists to show that these benefits are being realized; most evidence is subjective and qualitative, and claims are not thoroughly substantiated. Few, if any, hospitals have achieved the completely integrated system model--or even come close. Nevertheless, this article provides the groundwork for hospitals to make a thoughtful beginning. In upcoming issues, we will be publishing further articles in our information systems series. Also see our extensive Guidance Article on Laboratory Information Systems in Health Devices 23(10-11), October-November 1994. ECRI will also be increasing the number of reports on information systems in its Healthcare Product Comparison System.

Capital Expenditures↗

Institutional perspective strong suit of new PRRB. Interview by Wendy Herr.

The Provider Reimbursement Review Board (PRRB) is the body appointed by the Secretary of Health and Human Services (HHS) to provide an appeal mechanism for healthcare providers to whom Medicare fiscal intermediaries deny reimbursement for services under Medicare. HFMA Colorado Chapter member Michael D. Richards, CPA, formerly director of finance at St. Mary's Hospital and Medical Center, Grand Junction, Colo., was appointed to the PRRB by HHS Secretary Donna Shalala for a three-year term that began in July 1993. HFMA policy services group executive Wendy Herr, FHFMA, CMPA, interviewed Richards in September for Healthcare Financial Management.

Decision Making, Organizational↗

CFO award winner has record of results.

For Arlan R. Yoder's part in turning around the financial fortunes of a Kansas hospital system and maintaining its strong credit rating, the 40-year-old chief financial officer has been named the winner of the Cain Brothers, Shattuck & Co. award, which recognizes an outstanding member of the healthcare financial community. The award will send Mr. Yoder to Harvard Business School this summer for a two-week, intensive course in corporate financial management.

Awards and Prizes↗

Physician employment: this time around, give finance a leading role.

Finance managers can play a leading role in determining the success of physician employment by addressing physicians' financial concerns. Physicians can benefit from financial managers' help in clarifying how practice decisions affect financial outcomes, and making the entire process transparent. Communication should include validation of data integrity, development of targeted reports, education, and frequent opportunities for dialogue.

Employment↗

Trend reports a tool for efficiently managing materials.

Healthcare organizations reviewing supply and inventory expenses should consider developing monthly trend reports to help financial managers and administrators make accurate appraisals of materials management procedures. The reports are designed to identify purchasing trends, review progress in controlling costs, and stimulate discussions among the parties involved.

Costs and Cost Analysis↗

Managing resources and ensuring accountability: understanding return on investment.

Leaders of colleges of nursing face increasing challenges associated with insufficient resources coupled with growing market demands. Managing financial resources and ensuring accountability are essential leadership skills for deans and academic leaders across the nation. An understanding of "return on investment" or "ROI" analysis as a mechanism to negotiate and validate outcomes with varied stakeholders is critical to building a financial business case. ROI analysis is one component of metrics for knowledge management and must be understood from a business perspective. Providing leadership to a resilient college of nursing requires a willingness to utilize innovative strategies and effective metrics to measure outcomes. By raising the effectiveness of base spending, thereby increasing ROI, an academic leader is better positioned to innovate, which is crucial to the future success of nursing education.

Administrative Personnel↗

Creating a market strategy for 'brand loyalty'.

A healthcare organization's financial well-being stems from sound strategic planning, which increasingly requires the merger of marketing intelligence and financial management expertise. As a participant in strategic planning, a hospital's chief financial officer (CFO) ensures that plans achieve organizational goals for growth and return on investment. CFOs can apply their analytical and measurement skills to help determine areas of strength and potential growth, then match those services to market segments.

Financial Management, Hospital↗

Strategic renegotiation of managed care contracts.

Given the myriad revenue and cost pressures faced by today's organizational providers, it behooves healthcare financial managers to identify opportunities to improve the terms of their managed care agreements when renewal time is near. Selection of a contract renegotiation strategy should be preceded by a focused analysis of situational variables and followed by conscientious performance monitoring. Through careful consideration of the compatibility to their goals, core values, and operational capabilities, healthcare providers and managed care organizations can craft agreements with the potential for sustaining meaningful long-term partnerships.

Contract Services↗

Information management in the age of managed competition.

BACKGROUND: Today's information requirements differ from those of the past, in terms of both the internal and external reporting needs of health care organizations. Demands for information are currently generated by physicians, quality managers, total quality management (TQM) teams, marketing staff, financial managers, regulators, insurance plans, accreditation agencies, purchasers, coalitions, and other customers. DISCUSSION: Health care organizations respond to these demands in different ways, depending on their size and type. Six aspects of information needs that would be relevant under managed competition are analyzed: standardization, linkages among data banks, risk adjustment, comprehensive institution-based indicators and information systems, comprehensive population-based indicators and information systems, and methods for protecting confidentiality of patient records. RECOMMENDATIONS: Six recommendations to hospitals/managed care plans that decide to establish information management systems are made: set goals, set priorities, describe current system, identify external data sources, develop (a plan), and check back (reassess).

Centers for Medicare and Medicaid Services, U.S.↗

Practice management: a third-year clerkship experience.

BACKGROUND AND OBJECTIVES: This report describes a curricular experience that introduces the basics of practice management to third-year family medicine students. The curriculum includes evidence-based medicine, managed care concepts and terminology, financial management terms and concepts, laws and legal issues, and insurance and coding. METHODS: In 1999-2000, a three-session practice management curriculum was implemented in five family medicine third-year clerkship rotations at the University of North Carolina at Chapel Hill, Wilmington site. The learning activities included readings, a "quiz show" game, and a patient practice-centered project. RESULTS: Students reported greater knowledge and confidence in the selected topics. The practice management curriculum was positively evaluated overall. CONCLUSIONS: This interactive learning module for the family medicine students begins the process of incorporating practice management skills and knowledge.

Clinical Clerkship↗