Explain how financial determinants are created and used in healthcare organizations

In this project, you will demonstrate your mastery of the following competency:

  • Explain how financial determinants are created and used in healthcare organizations

Scenario

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Blackstone Hospital is a nonprofit healthcare organization located in a rural town just outside of Laramie, WY. You are the manager of the nursing department at Blackstone Hospital. Two new managers in radiology lab and pharmacy departments have recently been hired. These individuals are both coming to Blackstone from a for-profit healthcare organization in urban neighborhoods. During their onboarding process, the managers will need to consider how financial determinants, or financial data and reports, are used to assess the financial performance of the organization and inform operational decision making in healthcare organizations.

Based on your experience working in both nonprofit and for-profit hospitals, you have been asked to assist in the development of a specialized training for these individuals. You will act as the subject matter expert and work with the project manager and a web developer to create a web-based training that identifies the key differences in how financial determinants are created and used in nonprofit and for-profit healthcare organizations. The purpose of this training is to inform new managers on how their departments fit into the larger organization’s finances, as they will be responsible for operational decision making in their departments.

Directions

Create a web-based training guide that explains how financial determinants, or financial data and reports, are created and used for operational decision making in nonprofit and for-profit healthcare organizations. The training should include examples from financial statements to indicate similarities and differences of determinants. Specifically, the project manager guiding the training development has asked you to cover the following concepts in an outline using the training guide template to send to the web developer.

The new managers will need a fundamental understanding of how ownership and the populations served differ between nonprofit and for-profit organizations, and how this impacts the financial data and reports used for operational decision making in their departments. Specifically, the project manager asks you to provide content that addresses the following in the first two training modules:

  • Module 1—Our Structure: Describe similarities and differences among ownership in nonprofit and for-profit healthcare organizations, and provide an example that describes how ownership impacts the organization’s financial data and reports and, therefore, operational decision making by healthcare managers
  • Module 2—Who We Serve: Describe similarities and differences among the populations served in nonprofit and for-profit healthcare organizations, and provide an example that describes how the populations served impact the organization’s financial data and reports and, therefore, operational decision making by healthcare managers

Just as nonprofit and for-profit organizations differ in their foundational purposes, there are several differences in the accounting methods these organizations use. One key difference lies in the presentation of financial statements. Each type of entity uses a different set of financial statements. In the third module, the managers will learn how to interpret financial statements for healthcare organizations. The project manager asks you to provide content that addresses the following in part one of the third training module:

  • Module 3.1—Financial Performance: Describe similarities and differences among the financial data and reports that are created and used to report the financial performance of nonprofit and for-profit healthcare organizations. Specifically, the project manager asks you to provide examples of revenue and expenses from line items from the appropriate financial statements, and consider the following in your explanation:
    • How do sources of revenue differ among nonprofit and for-profit healthcare organizations?
    • What is the main expense difference among nonprofit and for-profit healthcare organizations?
    • How do differences in revenue and expenses impact operational decision making from a managerial position?

Financial statements are used to assess the financial performance of a healthcare organization. This process does not vary much among nonprofit and for-profit healthcare organizations, but it is an important element of healthcare management. In the third module, the managers will learn how to assess the financial performance of healthcare organizations. The project manager asks you to provide content that addresses the following in part two of the third training module:

  • Module 3.2—Financial Performance: Discuss how financial performance is assessed using ratio analysis in healthcare organizations. Specifically, the project manager has asked you to identify three commonly used ratios in healthcare finance and describe what each ratio is used for.

Finally, there are vast differences in reporting requirements among nonprofit and for-profit healthcare organizations. In the fourth module, managers will learn how to use the financial determinants effectively to create, file, and submit financial reports. The project manager asks you to provide content that addresses the following in the last training module:

  • Module 4—Reporting Requirements: Discuss the role of financial reporting for nonprofit and for-profit healthcare organizations. Consider the following in your response:
    • What are the financial reporting requirement differences?
    • How do healthcare managers use generally accepted accounting principles (GAAP) in the preparation and dissemination of their financial statements during the year-end financial statement audit?
    • Why is it important for nonprofit healthcare organizations to meet guidelines, compliance, and accounting regulations? What about for-profit organizations?

What to Submit

Every project has a deliverable or deliverables, which are the files that must be submitted before your project can be assessed. For this project, you must submit the following

Use the template provided below by the web developer to create a training guide for the new managers. In your guide, provide sufficient information and examples that can be used to develop a comprehensive web-based training on the use of financial determinants in nonprofit and for-profit healthcare organizations. You may include examples in text format or by taking screenshots of the financial statements and denoting each example appropriately. Cite all sources appropriately.

 

Welcome to Blackstone Hospital

Instructions from the Project Manager and Web Developer: We will use your responses and examples in this guide to create a web-based online training for new managers at Blackstone Hospital. Please utilize your expertise to address the following in the spaces provided below. The textboxes will expand as you type, so please ensure you provide sufficient information, and insert images or text to refer to examples in each response.

 

Module 1: Our Structure

Describe similarities and differences among ownership in nonprofit and for-profit healthcare organizations. Provide an example that describes how ownership impacts the organization’s financial data and reports and, therefore, operational decision making by healthcare managers.

 

Module 2: Who We Serve

Describe similarities and differences among the populations served in nonprofit and for-profit healthcare organizations. Provide an example that describes how the populations served impact the organization’s financial data and reports and, therefore, operational decision making by healthcare managers.

 

 

 

Module 3: Financial Performance

Describe similarities and differences among the financial data and reports that are created and used to report the financial performance of nonprofit and for-profit healthcare organizations. Provide examples of revenue and expenses from line items on the financial statements.

 

Consider the following in your explanation:

 

  • How do sources of revenue differ among nonprofit and for-profit healthcare organizations?
  • What is the main expense difference among nonprofit and for-profit healthcare organizations?
  • How do differences in revenue and expenses impact operational decision making from a managerial position?

 

Discuss how financial performance is assessed using ratio analysis in healthcare organizations. Identify three commonly used ratios in healthcare finance and describe what each ratio is used for.

 

Module 4: Reporting Requirements

Discuss the role of financial reporting for nonprofit and for-profit healthcare organizations. Consider the following in your response:

 

  • What are the financial reporting requirement differences?
  • How do healthcare managers use GAAP in the preparation and dissemination of their financial statements during the year-end financial statement audit?
  • Why is it important for nonprofit healthcare organizations to meet guidelines, compliance, and accounting regulations? What about for-profit organizations?

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