Chapter 1: The Healthcare Environment

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Chapter 1: The Healthcare Environment by Mind Map: Chapter 1: The Healthcare Environment

1. Concept of a buisness

1.1. Choosing legal form

1.2. How to raise capital?

1.2.1. Debt financing

1.2.2. Raise money from owners

1.2.3. Raise money from community if not-for-profit

1.3. What are the physical assets should be acquired to create services?

1.3.1. Facilities/ equipment

1.4. A governmental agency has a budget that is fixed by appropriations. Must operate in a business like manner, but they do not operate like a business.

1.4.1. How does this work with military hospitals?

2. Role of Finance in Health Services Organizations

2.1. Finance activities

2.1.1. Planning and budgeting

2.1.2. Financial reporting

2.1.3. Capital investment decisions Capital budgeting

2.1.4. Financing decisions Interal/ external funds Debt vs. equity capital Long-term vs. short-term debt Lease vs. conventional financing

2.1.5. Working capital management

2.1.6. Contract management

2.1.7. Financial risk management

2.2. In times of high profitability and abundant financial resources, the finance functions tend to decline in importance. When most healthcare providers were reimbursed on the basis of costs incurred, the role of finance was minimal. In response to payer (Medicare) requirements, providers (primarily hospitals) churned out a multitude of reports both to comply with regulations and to maximize revenues. The complexities of cost reimbursement meant that a large amount of time had to be spent on cumbersome accounting, billing, and collection procedures. Instead of focusing on value-adding activities, most finance work focused on bureaucratic functions.

2.3. Finance structure

2.3.1. Chief Financial Officer (CFO) Comptroller Patient Accounts Manager Treasurer Cash Manager

2.3.2. Business (Practice) Manager

3. Health Service Settings

3.1. Hospitals

3.1.1. The Joint Commission

3.1.2. General acute care hospitals

3.1.3. Specialty hospitals

3.1.4. Governmental hospitals Federal Public hospitals (nonfederal)

3.1.5. Private not-for-profit hospitals

3.1.6. Private hospitals

3.2. Ambulatory (Outpatient) Care

3.3. Long-Term Care

3.3.1. Nursing homes Skilled nursing facilities (SNF) Intermediate care facilities (ICF) Residential care facilites

3.4. Integrated delivery system

3.4.1. Services Invest heavily in primary care services Prevention Early intervention Wellness programs


4.1. Physicians petition for privileges to practice in hospitals. They are not hospital employees and are not directly accountable to hospital management.

4.2. Clinical integration among the various providers and components of care is essential to achieving quality, cost efficiency, and patient satisfaction

4.3. It is estimated that 5-10% of healthcare coast are a result of the current malpractice system

5. Regulatory and Legal Issues

5.1. Licensure

5.2. Certificate of Need (CON) legislation

5.2.1. Cost-containment programs Rate review system Detailed budget reviews with approval or setting of rates Formula methods which use inflation formulas to set target rates Negotiated rates involving joint decision making between the provider and the rate setter

5.3. Professional liability

5.3.1. Malpractice