*** MUST BE I APA 7 FORMAT***
*** I WILL POST THE RESPONSES FROM THE OTHER CLASSMATES ONCE I RECEIVED THEM TO BE ANSWER****
Penner, S. J. (2017). Economics and financial management for nurses and nurse leaders (3rd ed.). New York, NY: Springer Publishing.
- Chapter 12, “Assessing Financial Health” (pp. 365–395)
Ellison, A. (2015, September 29). 200 hospital benchmarks. Becker’s Hospital Review. Retrieved from https://www.beckershospitalreview.com/lists/200-ho…
Discussion: Paying by the Rules
Working in the healthcare field often requires many years of schooling, on-the-job training, and hours of professional development to keep licenses current. You have likely spent considerable time and money to get where you are today. Whether you are currently working in a healthcare facility, looking to change to a different one, or applying for employment, the financial health of the facility is important to your future. You want to work somewhere that will pay you on time and provide benefits and job security. According to Flanagan (2018), 8% of the roughly 6,000 private and public hospitals are at risk of closing due to poor financial health.
While managers need to be fluent in the language of finances and financial statements, anyone working in the healthcare field should be able to read an annual report as a gauge of financial health. The annual report is one of the few financial reports that are available to the public. If you are considering a change, knowing whether your new place of employment is fiscally sound would be a good step in your research.
There are many financial statements organizations use to track spending, cash flow, budgets, and, ultimately, financial health. A manager needs to be familiar with these statements, what they mean, and how they can be used to improve financial performance and, ultimately, the financial health of a department or institution.
Resources: Flanagan, C. (2018). U.S. hospitals shut at 30-a-year pace, with no end in sight. Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2018-08-21…
- Review the Learning Resources for this week and reflect on how the accrual principle is different for you as an individual from those in a healthcare setting.
- Reflect on how financial statements can be used to demonstrate financial health and how these statements can improve financial performance of a department in a healthcare setting.
- Review the key terms provided in the beginning of Chapter 12 of the textbook and the impact these have on financial reporting in healthcare.
By Day 4
Post a comprehensive response to the following:
- Explain how the basic accounting rule under the accrual principle might differ for you as an individual (or family) from those applied in a healthcare setting. Be specific and provide examples.
- Explain how financial statements might be used to demonstrate the financial health of a healthcare setting.
- Provide an example of how a manager would use a financial statement to improve the financial performance of a department in a healthcare setting. Be specific and provide examples.
- Select three terms from pages 365 and 366 in Chapter 12 and explain how those key factors might influence financial reporting in healthcare.
By Day 6
Respond to at least two of your colleagues and support, expand upon, or dispute the example of how a manager might use a financial statement described by your colleagues.
Expert Solution Preview
Introduction: This assignment is focused on the importance of financial health in the healthcare field. Students will explore the accrual principle in healthcare accounting and the use of financial statements to demonstrate financial health and improve financial performance. Additionally, this assignment examines several key terms that influence financial reporting in healthcare.
1. The basic accounting rule under the accrual principle might differ for an individual (or family) from those applied in a healthcare setting primarily due to the complexity and scale of financial transactions. In an individual setting, cash transactions are more common, and accounting records can be less frequent, whereas, in healthcare settings, transactions with clients, vendors, and employees are more complex and involve larger sums of money. For example, a clinic may provide services to clients and the resulting revenue may not be received until weeks later. This would be treated as accrued income in healthcare accounting, but in individual accounting, the revenue would likely be recorded as soon as it was received.
2. Financial statements, such as income statements, balance sheets, and cash flow statements, can be used to demonstrate the financial health of a healthcare setting. For example, an income statement would show an organization’s net profit or loss over a specific period of time, whereas a balance sheet would show assets, liabilities, and equity at a specific point in time. These statements can provide insight into an organization’s liquidity, solvency, and profitability.
3. A manager can use a financial statement to improve the financial performance of a department in a healthcare setting in several ways. For example, reviewing the income statement can help identify areas of overspending or underperformance, allowing the manager to take corrective action. Additionally, reviewing cash flow statements can help ensure that the organization has appropriate cash reserves to meet operational needs. Lastly, reviewing the balance sheet can help identify areas where the department may need additional funding to meet operating expenses.
4. Three key terms from pages 365 and 366 in Chapter 12 that influence financial reporting in healthcare are “accounts payable,” “accounts receivable,” and “budget variance.” Accounts payable refers to money owed to vendors or suppliers for goods or services purchased. Accounts receivable refers to money owed to the organization for goods or services provided. Budget variance refers to the difference between an anticipated budget and actual performance. If the budget variance is positive, the organization performed better than expected; if the budget variance is negative, the organization performed worse than anticipated. Understanding these terms is critical for accurately reporting financial transactions, forecasting financial performance, and identifying areas where performance can be improved.