To Buy or Not to Buy, That Is the Question

Order Description
To Buy or Not to Buy, That Is the Question
Buying expensive items is not easy for individuals with limited economic resources. Even though the budgets of most health care organizations (e.g., hospital, clinic, doctor’s office) are significantly larger than the budget of the average American family, most of these organizations operate with limited resources too. Health care managers use planning and budgeting information to make resource use decisions.

To prepare for this Discussion, complete the readings in your Learning Resources. Think about a significant purchase you have made in the past. How did you pay for it? Did you shop around for the best deal? What was the impact on your own budget and finances?

Post a comprehensive response to the following:
• Share an example of something that you had to budget and plan to pay for. How does your personal decision-making process differ from what you learned about planning and budgeting in health care?
• How do most individuals monitor and control their cash flow? Provide specific examples.
• How does the monitoring of cash flow of a health organization compare to the monitoring the cash flow for individuals handling their personal finances? Explain your choice.

Required Resources
Media
• Interactive Media: Laureate Education, Inc. (Executive producer). (2011). Good Samaritan Hospital organizational chart—Week 2: Finance in health care. Baltimore, MD: Author.

This week, Vice President of Finance Deana Stout explains how finance integrates with hospital strategic planning and the hospital goals; Vice President of Strategic Planning and Business Development Jennifer Weiss Wilkerson shares the challenges health care administrators face in having their expenses met; and President Jeff Matton speaks about the MedStar family of health care settings and the way it allocates resources to satisfy the marketplace needs for health care.
Video Transcripts (zip file)
Readings
• Course Text: Introduction to Health Care Economics & Financial Management
o Chapter 3, “Financial Reporting in Managed Care Settings”

In this chapter you will apply the concepts of managed care to analyze and evaluate utilization and costs for a sample pediatric office.
o Chapter 4, “Types and Components of Budgets”
Budgets are a way to review, monitor, and plan the production of goods and services. This chapter focuses on the descriptive function of various types of budgets commonly encountered in health care settings.
o Chapter 5, “Budget Monitoring and Control”
This chapter shows how budgets are used to monitor resource use. Budget information helps to identify performance problems, investigate their sources, and suggest opportunities to take corrective action.
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o Chapter 6, “Budget Preparation”
In this chapter, you will see how budgets are used to plan for the future and to prepare budgets for the following year or more. The concepts relevant to budget preparation for operating and capital budgets are discussed. Considerations in preparing a cash flow budget and zero-based budgeting are included.
• Article: Northeast Health System. (2011). Strength upon strength: Northeast Health System annual report 2011. Retrieved from http://www.beverlyhospital.org/media/548871/nehs_2011annualreport_web.pdf
• Article: Powell, A., Davies, H. & Thomson, R. (2003). Using routine comparative data to assess the quality of health care: understanding and avoiding common pitfalls. Retrieved from ttp://www.ncbi.nlm.nih.gov/pmc/articles/PMC1743685/

This article discusses the ways in which quality of care is currently assessed is by taking routinely collected data and analyzing them quantitatively. It also touches on the fact that the use of routine data has many advantages but there are also some important pitfalls. It also covered how collating numerical data in this way means that comparisons can be made—whether over time, with benchmarks, or with other healthcare providers (at individual or institutional levels of aggregation).
• You use the following document for this week’s Application assignment:
o Course Document: Instructions for Calculating Percentage of Variance
o Course Document: Week 2 Application Assignment spreadsheet
Websites
• Healthcare Financial Management Association
http://www.hfma.org/
• The Healthcare Financial Management Association is a membership organization for health care financial management executives and leaders. The association is considered a respected thought leader on top trends and issues facing the health care industry. The HFMA website provides a knowledge center with useful supplemental information on a number of health care financial topics, publications, news, and a career center.
• Healthcare Financial Management Association Knowledge Center
http://www.hfma.org/BrowseTopic.aspx

The Healthcare Financial Management Association provides a wide assortment of current articles, seminars, and other breaking news about various aspects of health care financial management.

Optional Resources
• Accounting Financial Tax. (2012). How to calculate cost variance [8 Types]. Retrieved from http://accounting-financial-tax.com/2008/12/how-to-calculate-cost-variances-8-types/