MBA 627 The Financing of Health Care Eastern Mennonite University Spring, 2008

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1 MBA 627 The Financing of Health Care Eastern Mennonite University Spring, 2008 Faculty: Keith R. Stuckey, MS, MBA Phone: Office Hours: I can be reached at the above number between the hours of 8a and 8p EST. If there is no answer, please leave a message and I will return your call as soon as possible. Course Site: Course Text: Nowicki, Michael (2008). The Financial Management of Hospitals and Healthcare Organizations. Chicago: Health Administration Press. ISBN: Kaufman, Kenneth (2006). Best Practice Financial Management: Six Key Concepts for Healthcare Leaders. Chicago: Health Administration Press. ISBN: Description: The financing of healthcare delivery across the delivery system will form the focus for this course, as well as the context of the U.S. economy and how it affects the delivery of healthcare. The operational management of the finances for a healthcare organization will be discussed, including budgeting, and the management of multiple revenue streams. The prospective payment system and health insurance will be discussed as well as options for financing of healthcare delivery outside of the prospective payment system. Fundraising as well as planning for capital investments and long-term planning for organizational financial viability will be analyzed, as well as emerging issues that affect the financing of healthcare delivery. An application project that analyzes and assesses the operation, financial performance and strength of a health care organization of the student s choice will give the student an opportunity to apply course content to actual live organizational issues.

2 Objectives: 1. Demonstrate how the financial functions and roles along with the tax status of an organization influence the financial and strategic management of a healthcare organization. 2. Compare and contrast how the major revenues streams in healthcare and their impact upon the operations of healthcare organizations shape financial decisionmaking for an organization. 3. Utilizing selected parameters, engage in financial planning and budgeting for healthcare organizations. 4. Using financial analysis and reporting techniques, assess whether financial performance in an organization is optimized. 5. Evaluate the need for capital acquisition and compare the major types of capital instruments available to healthcare organizations so that the benefit to the organization is optimized. 6. Building on factors that create creditworthiness for not-for-profit healthcare organizations, demonstrate how capital structure options can help to achieve an organization s mission. 7. Assess how future developments and challenges in healthcare financial management and required performance will impact the management of the organization to support the strategic goals. Course Expectations: Online Participation: Because of the online nature of this course, active and vigorous participation in the online course shell is expected. See Expectations for Online Discussion Participation at the end of the syllabus for specific expectations. Emergencies: It is the nature of our time together as a class to occasionally have colleagues who experience work or family emergencies. Please contact me immediately if you find yourself in such a situation. I will then work with you to determine the best approach for how you can meet the course objectives and stated assignments and not disrupt the learning of others in the class. Academic Honesty: Integrity and honesty in all academic work and interaction is expected. Please refer to the graduate catalog for specific expectations regarding honesty in academic work.

3 Instructor Availability: If at any time during the semester you are experiencing difficulty in the course, please contact me immediately so that we can resolve any issue. I am more than happy to work with you and it enhances my effectiveness in helping you if you contact me early rather than later. Together we can work effectively to mitigate any difficulty you may be experiencing so that you can be successful in this course. Final Examination: There will be a final examination at the end of the semester that is cumulative and will focus on the course objectives. You will be responsible for all content found in course readings, activities and discussions. The exam will involve written demonstration of course content, as well as quantitative analysis of scenario-based situations in financial management. The format of questions will be essay and/or calculation/problem solving. Grading: Online Discussions: 130 points possible Problems/Exercises: 85 points possible Individual Project: 100 points possible MHA Report 35 points possible Final Exam: 150 points possible Total Points = 500 points possible A = % (455+ points) B = 81-90% (405+ points) C = 71-80% (355+ points) D = 61-70% (305+ points) F = 60% or below (300+ points)

4 Course Schedule Week Of: Course Topics: Learning Activities: 1/6 1/12 Week 1 1/13 1/19 Week 2 1/20 1/26 Week 3 1/27 2/2 Week 4 Unit 1: Financial Management Financial Management in Context Organization of Financial Management Tax Status of Healthcare Organizations Managing the Capital Cycle Unit 2: Operating Revenues Third Party Payment Medicare and Medicaid Cost Accounting Read: Nowicki: chs 1 and 2 Read: Nowicki Practice Book: The Case Method, pp. 71, 72 and Case Study: Bobcat Integrated Delivery System pp Submit two questions in Our Space for class members to help you understand the situation in the case. discussions. Introduce yourself to the instructor in the online discussion area. Read: Nowicki: ch 3 Kaufman: Ch 1 discussion Bobcat IDS: respond to question 2 p. 74. Read: Nowicki: chs 4 and 5 discussion. Bobcat IDS: respond to questions 1a, 5, pp. 74, 75 Setting Charges Read: Nowicki: ch 6 discussion Nowicki Self-Quiz Problems: pp. 5, 6, 9, 18 Bobcat IDS: respond to question 7, p. 75.

5 Week Of: Course Topics: Learning Activities: 2/3 2/9 Week 5 2/10-2/16 Week 6 2/17 2/23 Week 7 2/24 2/29 Week 8 3/2 3/8 Week 9 Unit 3: Resource Allocation Strategic and Operational Planning Budgeting Capital Budgeting Integrated Strategic and Financial Planning Read: Nowicki: ch 7 discussion Nowicki Self-Quiz Problems: pp. 21, 25, 31. Submit: name, location, one paragraph description, name of the CEO of the organization you have selected for your Individual Project. Read: Nowicki: chs 11 and 12 discussion Bobcat IDS: respond to question 9, p.75. Read: Nowicki: ch 13 Kaufman: ch 3 discussion Nowicki Self-Quiz Problems: pp. 52, 55, 58. Read: Nowicki: ch 10 discussion from Sunday a.m. through Friday at 5:30 pm EST. Nowicki Self-Quiz Problem: p. 62. Bobcat IDS: respond to question 14, p. 76. Mid-Semester Break

6 Week Of: Course Topics: Learning Activities: 3/9 3/15 Week 10 3/16 3/20 Week 11 3/24 3/29 Week 12 3/30 4/5 Week 13 4/6 4/11 Week 14 Unit 4: Financial Analysis and Management Reporting Unit 5: Capital and Credit Management Group session at Mennonite Health Assembly, St. Louis Unit 6: Concluding Concepts Final Exam Read: Nowicki: ch 14. discussion Nowicki Self-Quiz Problem: p 67 Read: Kaufman: chs 2 and 6 discussion from Sunday a.m. through 5:00 p.m. EST. Bobcat IDS: Provide an overview of your assessment of Bobcat s credit worthiness/ability to borrow significant amounts to fund future initiatives. Participate in onsite class session, March 26, 1:00pm- 9:30pm, St. Louis (MHA). Includes presenting Individual Project report and group activities. Participate in MHA, March and submit report. Read: Nowicki: ch 15 Kaufman: Concluding Comments Participate in online class discussion Submit MHA Participation Report Respond to one question provided by instructor on continuing issues in the financial management of health care organizations. Complete your final exam by Friday at 12 MN EST.

7 Guidelines for Online Discussions: 1. Because the nature of the online format is different from traditional class sessions, the expectations for class participation throughout the semester include an ongoing presence in the online course. I consider this element of the course an essential part of the course. The establishment of our learning community for the semester is contingent on all students interacting frequently and heartily. Your presence is made by what you post online, so if you don t post, I don t see evidence of your grappling with the content and making a positive contribution to our learning community. 2. Each week there will be at least one online discussion item for your use. I will serve as the moderator of the discussion and facilitate our ongoing dialogue. My role will be to keep the discussion going, ask probing questions, and help each of learn from each other s experience and thoughts. Because of that role, I may not respond to each of your individual postings, but be assured that I am reading each and every one. 3. Your participation in the course is expected at a minimum of three different days throughout the week, with the first posting made no later than Tuesday evening (exceptions are the weeks of midsemester break and the Easter recess week along with the week of Mennonite Health Assembly see syllabus schedule for posting times in those weeks. The onsite class discussion at Assembly will take the place of the online discussion that week and the points will be allotted to the class time). Participation is defined as making postings in the online discussion area first, responding to the discussion questions posted for the week, then responding to any follow-up questions that you are asked by me or by any of your colleagues, and then responding to your colleague s postings with follow-up comments and questions. Because your colleague s learning is enhanced when all participate throughout the week, credit will not be earned for posts appearing all at the end of the week, so budget your time throughout the week to be a full participant in our online community and dialogue. 4. A maximum of 10 points can be earned each week (Weeks 1-13) for your online discussion format. This participation is worth just over one-fourth of your total grade, so you will want to make sure that you keep up with the discussions throughout the term. 5. Your responses should add content and perspective to the discussion and raise the discussion to a higher level than when you entered it. Comments such as I agree or I disagree do not elevate the discussion and will not receive credit.

8 6. Because we do not have the benefit of the nonverbal aspects of communication in an online environment, please take special care in crafting your posting responses. It is easy to misinterpret what is posted without the context of being in another s presence so if you are in doubt about how a post will be interpreted, it is probably a good idea not to post it. 7. Use of derogatory language or tone, flames, personal attacks or any other kind of disparaging behavior will not be tolerated. Grading Rubric The grading of your online discussion participation is based both on quantity and quality. If you make only an entry and do not comment on what others are saying or interact with them, I consider the quality of the post minimal. If you comment on another s post and add another idea to the discussion or answer a question that I or another student poses, that moves your participation to an acceptable level. If you are able to read a number of your colleague s comments and synthesize what they are saying into some salient remarks and add some additional insight of your own, that is the true mark of exceptional quality in posting. Strive for that level of activity throughout the term. In addition to the above qualitative statements, the following points will be awarded: Excellent Participation (8-10 points) This participation level in the online discussion shows postings that are able to synthesize and build on the course content and other s postings. Students posting at this level are able to apply the content learned to real-life or hypothetical situations and determine an appropriate level of response. Participation at this level is vigorous and well beyond the prescribed minimum requirements. Good Participation (6-8 points) This participation level in the online discussions shows postings that in addition to grasping the course content are able to build and amplify on other s postings. Thoughtful analysis of course content is shown in the posting. Supplemental content from additional reading or experience is added to the discussion and moves it beyond the place it started. Participation level exceeds the minimum standards and elevates the discussion to higher levels.

9 Satisfactory Participation (4-5 points) This participation level in the online discussion shows postings that reflect well-thought answers to the questions posted and answers to follow-up questions. Students at this level are in the online discussion area posting and interacting at the prescribed minimum level of three times/week. Minimal Participation (1-3 points) This participation level in the online discussion shows postings that reflect little insight into the course content. Minimal comments are made and little new information is added to the discussion. Students at this level are in the discussion area less than the prescribed minimum level. No participation (O points) This non-participation in the online discussions earns no points. I am unable to grade what I cannot see. If you have a legitimate reason for why participation is not possible in the unlikely event of no access to the course or some other legitimate reason, do contact me immediately so that we can determine an appropriate course of action so that you can meet the objectives of the assignment.

10 Guidelines for Individual Project OBJECTIVE To become acquainted with a functioning not for profit health care provider, to understand the challenges to its financial viability and to assess its current financial performance and strength utilizing concepts learned in the course. METHODOLOGY 1. Select a not for profit health care provider in your community to be the object of your study (Acquire instructor approval of your choice.) 2. Research basic organizational information: Mission Service line Market Revenue sources Financial performance (If amenable to the organization, acquire the latest audited financial statements. If financial statements are not available, contact the instructor.) 3. Interview the CEO or CFO to understand: The greatest challenges to the financial viability of the organization The organization s strategy to strengthen the organization financially The most challenging aspect of the financial management of the organization How the organization generates capital to maintain and/or grow the organization What the tax status of the organization is. If the organization is not for profit and tax exempt, what is the basis of its tax exemption? (For your report, not part of the interview: Does the organization s audited financial report or latest Form 990 suggest it meets its tax exemption standards?) PRESENTATION 1. Write a 3-5 page report: (not including any additional attachments selected to accompany the written report) Describing the organization incorporating the above criteria Summarizing your learning from the interview Providing your assessment of the financial performance and strength of the organization, using concepts learned in this course. 2. Present a 30 minute summary of your report in the in person class session at Mennonite Health Assembly (distribute report electronically the week before the class meeting) Use A/V technology as the medium for presentation. 3. Respond to questions about the organization from the class.

11 Utilize APA format as a guideline for the style of your paper. The current bibliographic reference for this book is as follows: American Psychological Association. (2001). Publication manual of the American Psychological Association: Fifth edition. Washington, DC: American Psychological Association. You may also find relevant assistance by utilizing these links on the web as follows:

12 Grading Rubric for the Individual Project: Section of the Project Points Possible Description Paper 1) Description of organization assessed 15 2) Summary of learning about the financial management of the organization from the interview 30 3) Assessment of financial performance and strength 30 Address criteria listed in the project guide. Provide a succinct, but comprehensive description Provide some of the organization s own descriptive materials. Provide succinct summary of what you learned from your document research and interview. Utilize concepts learned and benchmarks provided in the course to provide a brief assessment of the financial performance and strength of the organization, as can be concluded from available material. Presentation 1) Attractiveness of report presentation 5 2) Clarity and interest of verbal reporting to the class 10 3) Quality of response to class questions 10 Total Points 100 Provide clear, succinct, engaging audio visual presentation. Utilize the technology effectively In brief form, help the class understand the nature of the organization s business Identify the challenges and priorities in the financial management Utilize and demonstrate knowledge of the organization, and course concepts in response to class questions.

13 Grading Rubric for Problems/Exercises Each assigned problem or exercise from the Nowicki self-quiz and Bobcat IDS case study will be graded on the basis of 5 points possible, even though some problems will require differing amounts of time. With common points possible, students will not be more adversely impacted if they struggle with one course concept versus another. The answer to most problems and exercises will be available to students. Therefore, the key to gaining 5 points for a problem completion will be to demonstrate to the instructor the method (utilizing course concepts) by which the answer is obtained/generated. A demonstrated methodology that clearly achieves a correct response will earn 5 points. Methodology that demonstrates partial understanding of concepts involved, but produces an incorrect result or does not actually demonstrate the correct result will earn 1-4 points. No demonstrated methodology will earn 0 points. Responses to non-quantitative exercises will be evaluated based on: Demonstrated understanding of relevant course concepts Clarity of the response Completeness of the response.

14 Eastern Mennonite University MBA 627 The Financing of Health Care In Person Class Session At Mennonite Health Assembly Wednesday March 26, 2008 Objectives To understand the nature of events and learning opportunities and assignments at Mennonite Health Assembly To demonstrate personal ability to utilize course concepts in an organizational environment Activities 1. Introductions and catching up with each others experiences 1:00 pm 2. Overview of Mennonite Health Assembly and class assignment 1:30 3. Discussion of selected course concepts (guided by instructor) 2:00 4. Break 3:00 5. Individual Project reporting 3:15 6. Break and dinner 5:15 7. Individual Project reporting continued 6:45 8. Break 7:45 9. Group case study project 8: Adjourn 9:30

15 Mennonite Health Assembly Participation and Report March 26-30, 2008 Participation Students are expected to participate in: The one-day class session on March 26. The points normally allotted to the online discussion time each week will be utilized in this session. The MHS Alliance members meeting on the afternoon and the opening Assembly session of March 27 At least 3 Assembly events on both March 28 and 29 (At least one session/event should be chosen for its potential tie to discussion of financial issues within health care organizations) The concluding worship service on March 30 Report A 3-4 page written report which: Lists the events/sessions participated in Addresses the following questions: 1. What is the one most enduring impression you take away from Mennonite Health Assembly? 2. Describe an interaction with one individual at the Assembly that helped you gain new insight into health care management. What is that new insight? 3. Describe one course concept you experienced being addressed at Mennonite Health Assembly. How did the Assembly conversation/experience reinforce or modify the course concept?