70135 - Accounting in Healthcare

Learning outcomes

At the end of the course student is introduced to the essential accounting issues in health organizations. Accounting information and business transactions. Conceptual framework for financial reporting. Financial reporting and financial statement analysis. The Context of Healthcare Financial Management. Principles and Practices of Health Care Accounting. Principle of Cost Accounting in Health Organizations. Essential of Programming, Budgeting and Management Control in Health Systems.

Course contents

This course will provide students with some frameworks and ways of thinking about how healthcare organizations manage or, in several instances, should manage, their business. In particular, it will focus on how financial accounting, management accounting information and management control systems can help improve the performance of healthcare organizations. Starting from the basic tools of management accounting and management control, the course will explore the issues that healthcare managers face in working in an organization where professionals (especially clinicians) influence decision-making, and where a growing demand for services can compromise financial sustainability.

 

Students who complete the course successfully will know about:

·     The characteristics of healthcare organizations that affect the way they do business, and that influence how they design their management control systems

·     Ways that organizations can account for their costs and how the cost accounting effort can assist managers to deliver more efficient services, and also help them to determine appropriate prices when necessary

·     How to use responsibility centers to encourage all the actors to adhere to the organization's strategic goals

·     How to use cost drivers to prepare the operating budget in a healthcare setting

·     How the technique of variance analysis can improve a manager's understanding of the reasons underlying the differences between actual and budgeted financial results, and thus help the manager to choose the appropriate course of action.

·     How to design a useful set of reports for managers of a healthcare organization

·     How to implement a change when there is physician resistance

·     How to link the management control system to other organizational activities.

 

Detailed program

 

The title of each session, its focus, and the preparation requirements (in italics are the cases contained in the e-packet) are as follows:

 

1.   Introduction to the Course

Mon. 7 April 2014, 2-4pm (teachers: Emanuele Padovani & Sabrina Gigli)

Goal:

To review the syllabus, discuss course expectations, answer questions about the course, and discuss the process of analyzing a case.

Assignment:

1.   Read the syllabus and the Preface to the book, and be prepared to ask any questions you have about the course.

2.   Read but do not analyze Harbor City Community Center case.

2. Full cost accounting – fundamentals
Thu. 10 April 2014, 2-5pm (teacher: Sabrina Gigli)

Goal:

To discuss and train on fundamentals of full cost accounting (tutorial).

Assignment:

1.   Read Chapter 2, Essentials of Full-Cost Accounting.

2.   Be prepared to actively participate in solving the problems presented by the teacher.

 

3. Full cost accounting

Mon. 14 April 2014, 1-4pm (teacher: Emanuele Padovani)

Goal:

To prepare and use a stepdown analysis in full cost computation for decision-making purposes.

Assignment:

1.  Re-read Chapter 2 and review what you have done during the tutorial session (class #2).

2.  Analyze Harbor City Community Center. Complete the assignment at the end of the case.

 

4. Differential cost accounting – fundamentals

Tue. 15 April 2014, 2-5pm (teacher: Sabrina Gigli)

Goal:

To discuss and train on fundamentals of differential cost accounting (tutorial).

Assignment:

1.   Read Chapters 3 & 4, Cost Behavior and Differential Cost Accounting.

2.   Be prepared to actively participate in solving the problems presented by the teacher.

 

5. Full cost accounting

Mon. 28 April 2014, 1-4pm (teacher: Emanuele Padovani)

Goal:

(same of Lecture #3)

Assignment:

(same of Lecture #3)

 

6. Differential cost accounting – fundamentals

Tue. 29 April 2014, 1-4pm (teacher: Sabrina Gigli)

Goal:

(same of Lecture #4)

Assignment:

(same of Lecture #4)

 

7. Differential cost accounting

Mon. 5 May 2014, 2-5pm (teacher: Emanuele Padovani)

Goal:

To decide whether to keep or discontinue a product line operating at a loss.

Assignment:

1. Re-read Chapters 3 & 4 and review what you have done during the tutorial session (class #4).

2. Read and analyze Lakeside Hospital. Complete the assignment at the end.

 

8. Budgeting

Thu. 8 May 2014, 2-5pm (teacher: Emanuele Padovani)

Goal:

To build a budget using cost drivers.

Assignment:

1. Read Chapter 9, Operational Budgeting.

2. Read and analyze Los Reyes Hospital (A). Complete the assignment at the end.

 

9. Responsibility accounting

Tue. 13 May 2014, 11am-1pm (teacher: Emanuele Padovani)

Goal:

To distinguish between cost accounting and responsibility accounting, and to identify the responsibility accounting framework.

Assignment:

1. Read Chapters 6 & 7, Responsibility Accounting: An Overview and Designing the Responsibility Accounting Structure.

2. Read and analyze Franklin Health Associates (A). Complete the assignment at the end.

 

10. Measuring & Reporting

Tue. 13 May 2014, 2-4pm (teacher: Emanuele Padovani)

Goal:

To compare actual results to the budget using cost drivers.

Assignment:

1. Read Chapter 11, Measuring and Reporting.

2. Read and analyze Los Reyes Hospital (B) - this case is not included in the e-packet and will be handed out after Class #8. Complete the assignment at the end.

11. Implementing a new responsibility accounting system

Thu. 15 May 2014, 2-5pm (teacher: Emanuele Padovani)

Goal:

To analyze the management control reports, and incorporate physician concerns into the design effort.

Assignment:

1. Read Chapter 12, Implementing a New Responsibility Accounting System.

2. Read and analyze Union Medical Center. Complete the assignment at the end.

Readings/Bibliography

The course uses the following textbook:

David W. Young (2014) Management Accounting in Health Care Organizations (3rd edition), San Francisco, Jossey-Bass

The book has been published in March 2014 and for this new edition all teaching cases will be sent out to students as separate e-packet by the teacher who has already gotten in touch with the publisher.

Teaching methods

The course will use a combination of readings, interactive lectures, and case discussions.  Almost all classes are conducted according to the case method of instruction.  Cases bring a small chunk of the real world into the classroom setting, where students can examine it, determine what problems exist, discuss optional approaches to dealing with them, and assess the consequences of alternative courses of action. 

This is not a course where a professor lectures and students write down what he/she says.  Almost all classes require the students to read and analyze a case study in advance, and then to contribute in a significant way to the class discussion of the case. As a result, most of the learning comes from students' analyses of the cases and the discussion of those analyses during the class sessions.   For many students this will be a major change from their previous educational experiences.  

Assessment methods

Grading will be based on a combination of two written case analyses and students' contributions to the class discussions. The first written analysis will be done by teams. The second will be an individual effort. How to prepare a good written case analysis is discussed during the first class and is contained in a document that is distributed to students upon request.

Classroom contribution will be evaluated in terms of the analytic rigor of a student's comments, coupled with his or her contributions to a productive and rich case discussion. Students therefore need to prepare each case in advance and engage actively in the discussion of the case in class.

The grading percentages are as follows:

- Class Contribution (50%)

- Team case analysis (20%)

- Individual case analysis (30%).

Non-attending students must send 3 individual memos (on any of the cases listed above) out by email to the teacher 30 days before the date of the exam (see Almaesami portal for the next date available) that will consist of an interview.

Office hours

See the website of Emanuele Padovani

See the website of Sabrina Gigli