JSGS 834 FINANCIAL MANAGEMENT OF HEALTH CARE ORGANIZATIONS

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1 JSGS 834 FINANCIAL MANAGEMENT OF HEALTH CARE ORGANIZATIONS Instructor: University of Regina Campus Dr. Wallace Lockhart Phone: Office Hours: Office Location: Online Term: Winter 2016 Room: Date and Time: Education Building Online - URCourses N/A CALENDAR DESCRIPTION This course covers the financial management function in health care organizations including operating and capital budgeting processes along with budgetary and financial controls. There will be extensive use of financial analysis tools for the health care organization and skills needed to develop basic finance and accounting foundations will be reviewed. COURSE CONTENT AND APPROACH Beginning with a foundation in financial management concepts, students will study and learn about financial management tools & reports by examining and applying analytical and reporting tools of both financial and managerial accounting. This will be done by examining the perspectives of decision makers in different scenarios: A front-line acute care clinical manager with budgetary responsibility, within the context of a large regional health authority A manager responsible for co-ordination and support of a regional group of primary care service organizations General management of a regional hospital which is a stand-alone entity (not part of a regional health authority). Within each study module, students will be responsible for both independent study (readings and analysis) and contributing to small group learning through asynchronous discussion forums. Integration of student learning will be achieved through a group project in which students will set priorities & prepare an operating budget for a health care organization.

2 REQUIRED and OPTIONAL READINGS Textbook (reference): Gene Siciliano, Finance for Nonfinancial Managers, 2nd Edition, This is a small book & covers basic concepts of financial reporting, managerial accounting and budgeting. Students will likely find it valuable as a resource for the course. In addition, readings will be assigned for each module of the course. These will include documents on financial reporting standards, documents published by the organizations studied in the course (budget, financial report, annual report), and select journal articles and reports. EVALUATION Course grades are allocated as follows: Discussion Forum 20 Module 1-6 Assignments 7 Marks Each 42 Module 6 Team Budget Project 38 Project Report (Team) 30 Personal Reflection (Individual) 8 DISCUSSION FORUM The class discussion forums will be a key part of your ongoing, active participation in the class. Students will be assigned to groups of about for the discussion forums in each module. The forums are an informal meeting place where you might contribute your own research / perspectives, ask others, or explore areas which are not directly addressed in the course materials. Your contribution may include: Your views on / your reaction to readings & course notes your own research / analysis discussion with others about their views, their organizations response to discussion questions presented by the instructor Marks for your contribution to the discussion forum will be based on leadership, breadth & depth of effort & research, and overall contribution to peer learning and insight into course topics. ASSIGNMENTS For each of Modules 1-6 there are written assignments required. Each is weighted 7% of the total course grade. Generally students are asked to analyze & apply the concepts from the module. Written reports are submitted online through the class page. Assignments should be presented with a cover page, table of contents, 12 point font and numbered pages. All assignments will be submitted via the URCourses Turnitin tool. AT LEAST FIVE OF ASSIGNEMNTS 1-6 must be completed by each student.

3 LATE ASSIGNMENTS Assignments are due Saturday 11PM at the end of each module. Late assignments will be accepted up until the last day of the course as part of completing course requirements but assigned a score of zero. TEAM BUDGET PROJECT All students are required to complete the budget project as part of a team (groups of four). All students should set aside sufficient time for research, analysis, writing and team communications. Teams are expected to self-manage work plan and ensure equitable contributions and effort from each team member. Each team will submit a professional report including their integrated budget and plan for the coming year. Each student will also prepare a report with their individual reflections on the budget project. STUDENTS WITH SPECIAL NEEDS Students in this course who, because of a disability, may have a need for accommodations are encouraged to discuss this need with the instructor and to contact the Coordinator of Special Needs Services at ACADEMIC INTEGRITY AND CONDUCT Ensuring that you understand and follow the principles of academic integrity and conduct as laid out in the University of Regina s Graduate Calendar is vital to your success in graduate school (available at ). Ensuring that your work is your own and reflects both your own ideas and those of others incorporated in your work is important: ensuring that you acknowledge the ideas, words, and phrases of others that you use is a vital part of the scholarly endeavour. If you have any questions at all about academic integrity in general or about specific issues, contact your course instructor and to discuss your questions. COURSE TOPICS - OVERVIEW # Topic Dates 1 Learning Foundations Financial Reporting & Analysis Jan Overview of Financial Management in Canadian Health Care Jan Financial Management in a Primary Care Setting Jan 31 Feb 13 Midterm Break Feb Financial Management at the Front Lines Acute Care Feb 21 Mar 5 5 Financial Management for an Acute Care Organization Mar 6 Mar 19 6 Planning and Budgeting Work Plan Mar (One Week) 7 Term Project: Budget and Operational Plan Mar 27 - Apr 9 *** Midterm break is Feb 15-19

4 COURSE TOPICS & DETAILED DESCRIPTION Module 1: Learning Foundations Financial Reporting & Analysis Topics: Statement of Operations (Income Statement) Statement of Financial Position (Balance Sheet) Fund Accounting: Operating vs Capital / Restricted Funds Working with a Fundraising Foundation (projects & capital funding) Ratio Analysis: Benchmarking vs standards / other organizations Trend Analysis: Benchmarking against your own organization over time Cost Behaviour: Fixed vs variable, controllable costs, sunk costs Siciliano Book: Chapters 1-4 & 7. This is for your familiarization with accounting & reporting concepts. Review: Financial Statements & Annual Reports: Saskatoon Regional Health Authority, Lake of the Woods District Hospital, Palliser Primary Care Network, Saskatoon Community Clinic. Purpose: Familiarity with financial statements for the organizations we will study in the course. Powerpoint & Lecture Videos (2) Excel worksheet with financial statements of the organizations we will study Assignment: Analysis of financial & annual reports of health care organizations. Choose a Canadian Health Care organization (hospital, health region, clinic, etc) to examine financial statements. It may be the organization you work for or another organization you would like to learn about. 1) Re-package the Statement of Operations (Income Statement) and Balance Sheet (Statement of Financial Position) into the simple format we are using for our examples (excel template provided). 2) Discuss revenue sources: What percentage of operating revenue comes directly from Ministry / Government sources? Revenue from clients / patients? Other sources? What do the revenue sources tell you about the organization? 3) Discuss operating expenses: What percentage of expenses relate to people costs (compensation, benefits)? Are medical/physician costs included in this total or reported separately? What expenses are growing at the highest rate? How easy would it be for managers to adjust monthly operating expenses? 4) Examine the Balance Sheet: What is the current ratio? Are there sufficient funds to meet current commitments? To what degree is debt employed to finance the organization? Does the debt level present a financial risk? A potential opportunity? Present the information in a professional report format. Excel tables should be embedded in the document. Target a maximum of 1,000 words.

5 Module 2: Overview of Financial Management in Canadian Health Care Topics: Financial Reporting: Different Users / Different Reporting Stewardship & Internal Accountability: Board vs Management Roles External Accountability: MIS (Federal), Ministry (Province) RHA/LHIN, Public Managerial Accounting: Financial & Non-Financial Information Financial Decisions & Levers of Control Public Funding & Managing Revenue Streams Operating Expenses: Managing People Costs / Other Costs Measuring Performance: Where do financial measures fit in? Managerial Accounting: Can we use the textbook tools? Siciliano Textbook Chapter 8 (Cost Accounting info for managers) Powerpoint & Lecture Video Canadian Institute for Health Information. Canadian MIS Database: Hospital Financial Performance Indicators, to Methodological Notes. Ottawa, ON: CIHI; Saskatchewan Ministry of Health. Corporate Governance Tool Kit: A Guide to Health Services (appendix report in tool kit package). Focus on Board Accountability Martin LA, Neumann CW, Mountford J, Bisognano M, Nolan TW. Increasing Efficiency and Enhancing Value in Health Care: Ways to Achieve Savings in Operating Costs per Year. IHI Innovation Series white paper. Cambridge, Massachusetts: Institute for Healthcare Improvement; (Available on Assignment: Familiarize yourself with your organization (web site, strategic plan, annual report & financial statements, interview notes). Prepare a brief report (maximum 1,000 words). Discuss: - What is the organization s mission? What things does it do to achieve it s goals? - What do the financial statements tell us about the mission & accomplishments? - What do the financial statements tell us about the organization s financial state? Who might be pleased / concerned with information in the statements? - What management accounting reports / analysis are you able to see? What types of info do you think would be beneficial to your organization?

6 Module 3: Financial Management in a Primary Care Setting Topics: - Public Funding & Managing Revenue Streams - Capital Funding: The Foundation, charities, the Ministry - Fee for service (private model) vs block funding (public model) - Managerial accounting: What is performance? What to measure? Powerpoint & Lecture Video Palliser Primary Health Network Business Plan, Palliser Primary Health Network Annual Report, Palliser Primary Health Network Financial Statements, Saskatoon Community Clinic Annual Report, Assignment: Financial Reporting in Context. Familiarize yourself with the Palliser Primary Care Network organization (web site, strategic plan, annual report & financial statements, interview video). Prepare a brief report (maximum 1,000 words). Discuss: - What is the organization s mission? What things does it do to achieve it s goals? - What do the financial statements tell us about the mission & accomplishments? - What do the financial statements tell us about the organization s financial state? Who might be pleased / concerned with information in the statements? - What management accounting reports / analysis do you think would be beneficial to Palliser PHN? How might they differ from a primary care clinic?

7 Module 4: Financial Management at the Front Lines Topics: Manager with only spending responsibility Decision maker? What authority? Budgeting within organizational constraints Control systems: Reporting expenditures vs budget Managerial accounting: What is performance? What to measure? Benchmarking. Powerpoint & Lecture Video Additional Readings / Organizational References TBA ASSIGNMENT: Guidance to the new clinician manager. Prepare a Financial Management Guide for New Clinician-Managers in an acute care setting (or in your organization with instructor approval). Consider: Competencies they will need to develop, what is their scope of authority / control, what should they expect to be doing as part of the financial management control cycle (planning & budgeting, financial & managerial reports, dealing with variances & financial challenges). Target a maximum of 1,000 words. You may choose a format for this guide (it does not have to be a report / word document).

8 Module 5: Financial Management for an Acute Care Organization Topics: External Reporting: MIS Reporting Requirements in Canada Public funding & decision levers: What can we change? Operating Costs: It s mostly about staffing. Staff costs: What can we manage / change / control? Facilities & Technology: Capital costs & funding sources. Managerial accounting: What is performance? What to measure? Powerpoint & Lecture Video Lake of the Woods District Hospital Annual Report Lake of the Woods District Hospital Financial Statements Quality-Based Procedures Indicators: An Implementation Guidance Document. Ministry of Health and Long-Term Care of Ontario, April 2014 Canadian Institute for Health Information. Canadian MIS Database: Hospital Financial Performance Indicators, to Methodological Notes. Ottawa, ON: CIHI; Assignment: Familiarize yourself with the Lake of the Woods District Hospital organization (web site, strategic plan, annual report & financial statements, interview notes). Prepare a brief discussion (maximum 1,000 words). - What is the organization s mission? What things does it do to achieve it s goals? - What do the financial statements tell us about the mission & accomplishments? - What do the financial statements tell us about the organization s financial state? Who might be pleased / concerned with information in the statements? - What management accounting reports / analysis do you think would be beneficial to LWDH?

9 Module 6: Planning and Budgeting Topics Budgeting in the Health Sector Key Roles and Responsibilities Budget Cycle: Fiscal year, budget process, players Reality Check: What can we really control / direct / change? Types & Purposes of Budgets (Capital & Operating; Fixed & Variable) Planning & Budgeting Cycles, including Long-Range Financial Planning Implications for Health Care Services (Distribution, Utilization, Accessibility, etc.) Control of Environment & Processes (Spending) & Cash Management Reallocations & Reductions The Human Element: Power, Influence & Priority Setting Dealing with Deficits & Competing Priorities in Health Care (Tradeoffs Bone from a Dog) Contingency Planning & Managing Change Siciliano Textbook: Chapters 11 & 12 Powerpoint & Lecture Video Canadian Institute of Actuaries. An Actuarial Model for Projecting Future Health Care Costs. A CIA/NBHC Joint Project (Powerpoint Presentation, New Brunswick Health Council Briefing) Lesson From Canada's Universal Care: Socially Disadvantaged Patients Use More Health Services, Still Have Poorer Health. Alter, David A;Stukel, Therese;Chong, Alice;Henry, David Health Affairs; Feb 2011; 30, 2; ABI/INFORM Global pg. 274 Assignment: Working with your project team (4 people), prepare a Budget Project & Report Work Plan for your organization (TBA). This will be both a work plan (for your team) and an accountability document (to your instructor) to ensure the project is well planned and organized. Target a maximum of 1,000 words for the report.

10 Module 7: Budget and Operating Plan Team Project Students will work in teams to prepare an annual budget: strategic priorities, operating plan & budget, capital plan & budget. Key components: Financial Plan, Internal (Managerial) Plan, External (Public & Ministry) Plan TBA Assignment: 1) As a team: Complete and submit your Budget and Operational Plan for Included should be: Community & environmental scan: What is happening in your community and in Canada, what affects your organization & population health, and what does it mean to the organization? Discussion about strategic priorities: What priorities are most important, how are you addressing them, and what are the financial implications of your priorities? Monthly projections of revenues and expenses (Statement of Operations) Detailed analysis / explanation of all revenue and expense items Management discussion. Include: What re-allocations of resources are included in your budget and operating plan? How will you measure performance (both financial and non-financial measures)? 2) Individually, prepare a personal reflection about your experience with this budget project. You may choose what specific items to discuss. Possible topics: What worked well / did not? Was your team effective? What role did you play in team success? What information did you not have which may have limited effectiveness? What information / analysis was most helpful in developing the plan? What are the most important lessons that you will carry forward in your job and in your career?