Question

Healthcare Finance

1. Explain the two (2) criteria for true comparability

2. How important is the understanding of comparative data as a healthcare manager to the finances of the facility?

3. Briefly discuss the two (2) sources of operating budget information

4. Explain how a flexible budget is useful in healthcare

5. Briefly relate Diagnostic-Related Groups (DRGs) to financial management in healthcare.

Answer 1

1) 1st criteria is the informed decision by the patients which affects the quality vs cost comparison. The current market for health care services provides little reward to care providers who improve the quality of their processes and outcomes through investments in systems engineering tools, information/communications technologies, or other innovations. 2nd Criteria: Interlinking between finance and the operational processes: The non-financial managers who have technical knowledge will be able to interpret and negotiate interactions between and among viewpoints

2) Healthcare service delivery is a business and the concept of financial management assists in balancing the inflows and outflows that are part of the business. Financial leaders of hospitals face a lot of issues towards maintaining the financial health of the business. Hospital need to understand the comparative data in order to understand the cost and the revenue model where areas of cost cutting needs to be addressed.

3) i) Consolidate data from financial, employee and patient centric sources. . ii) Provide statistically driven approaches to enable efficient what if modelling. A statistically-driven approach enables efficient flow-thru of volume/rate changes.

4) Flexible budget helps in better management reporting which enables for showing volume adjustment plans and helps in identification of controllable expenses.

5) Diagnosis Related Group (DRG) is a patient classification system that standardizes prospective payment to hospitals and encourages cost containment initiatives. In general, a DRG payment covers all charges associated with an inpatient stay from the time of admission to discharge. It standardizes the management reporting system which enables better data integration form where the flow of data becomes smooth. This helps in better financial management through better planning, processing and channelizing the data aggregation methods.