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LEARNING OBJECTIVES
Discuss healthcare managers' typical fiscal responsibilities.
For a given physical therapy practice assets, analyze property, location, equipment selection factors, costs, and depreciation.
Identify fixed, variable, direct, and indirect costs and potential sources of waste or excess that increase practice costs.
Compare different payer mixes to analyze their impact on revenue.
Discuss other possible sources of revenue.
Analyze factors that enhance reimbursement from third-party payers (i.e., authorizations, coding, billing, contract negotiation).
Discuss the use of Current Procedural Terminology (CPT) codes.
Identify alternative revenue sources.
Discuss the importance of financial statements and budget reports.
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All aspects of healthcare finances and accounting are scrutinized for compliance with a range of laws, regulations, contracts, and operation systems. Compliance leads to a standardization of many financial systems in any type of healthcare organization. The responsibilities for these systems are either led by professional financial experts in large organizations or managed with the assistance of financial consultants in smaller organizations.
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All organizations have two components to their finances. The first component is financial management, which is a factor in strategic planning that includes funding of assets with a focus on profits and losses. The other component is the controller functions for the day-to-day operations of the business. The functions include recording all business transactions; focusing on revenue and expenses; and guarding against theft, waste, or loss of assets and other resources.
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To communicate effectively with these experts about finances, upper-level managers should be able to grasp:1
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financial statements
basic principles of accounting and finance
cost accounting
capital and operational budgeting
reporting and control
reimbursement and capitation
databases
information systems' relationship to financial and strategic planning
basic economics (supply and demand)
contracts
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Healthcare financing has become so complex that organizations are compelled to prepare mid-level managers at varying levels of involvement for many of these financial responsibilities. Large organizations develop ongoing training programs because financing decisions are tightly linked to changes in healthcare policy and reimbursement requirements. Because small private practices face the same challenges, ongoing education of owners and staff is necessary to remain current with changes. The American Physical Therapy Association (APTA) webpages provide the latest information to assist in meeting these needs. Links are available in Web Resources.
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This chapter is a basic introduction to the complexities of fiscal responsibilities. Outpatient practice is used as the example in all of the activities to demonstrate the interaction of these factors in a straightforward manner and to guide the development of program proposals, feasibility studies, and business plans. The general concepts, however, may apply to any type of healthcare service with consideration for how it fits into a larger organization, its major source of funding, and whether or not it is a cost center (a center that generates expenses but no direct revenue). Section 3 of the text ...