70135 - Accounting in Healthcare

Course Unit Page

SDGs

This teaching activity contributes to the achievement of the Sustainable Development Goals of the UN 2030 Agenda.

Good health and well-being Sustainable cities

Academic Year 2019/2020

Learning outcomes

This course provides students with some frameworks concerning the use of accounting in the healthcare sector. In particular, it focuses on how management accounting information can support managers of healthcare organizations in decision making. Starting from the basic tools of management accounting and management control, the course explores the issues that healthcare managers face in working within 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 know about: • The characteristics of healthcare organizations that affect the way they do business, and that influence how they design their management accounting 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 responsibility centers can be used to encourage all the actors to adhere to the organization’s strategic goals • Why some programming decisions require a capital investment analysis, and how to undertake the appropriate analyses through accounting information • Some ways to prepare the operating budget in a healthcare setting • The important characteristic of performance measurement in healthcare organizations • How to design a useful set of reports (both financial and non-financial) for managers of a healthcare organization • 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

Course contents

The title of each session, its focus (Goals and Content of the class), and the preparation requirements (Assignment) are as follows:

Class #1- Introduction to course
Goal of the class: To review the syllabus, discuss course expectations, answer questions about the course, and discuss the process of analyzing the final case.
Assignment: Read Chapter 1

Class #2 - Full Cost Accounting
Goal of the class: To discuss and train on fundamentals of full cost accounting.
Content of the class: Be prepared to actively participate in solving the problems related tu full cost accounting presented by the teacher.
Assignment: Read Chapter 2.

Class #3 - Full Cost Accounting (continued)
Goal of the class: As class #2.
Content of the class: As class #2.
Assignment: Re-read Chapter 2.

Class #4 - Activity-Based Costing
Goal of the class: To discuss and train on Activity-Based Cost (ABC) concepts.
Content of the class: Be prepared to actively participate in solving the problems related to ABC presented by the teacher.
Assignment: Read Chapter 5.

Class #5 - Cost Behavior and Differential Cost
Goal of the class: To discuss and train on cost behavior and the related differential cost concepts.
Content of the class: Be prepared to actively participate in solving the problems related to cost behaviour and differential cost presented by the teacher.
Assignment: Read Chapters 3&4.

Class #6 - Cost Behavior and Differential Cost (continued)
Goal of the class: As class #5.
Content of the class: As class #5.
Assignment: Re-read Chapters 3&4.

Class #7 - Mid-term assessment & Responsibility Accounting
Goal of the class: To evaluate your level of knowledge of full cost, cost behaviour, differential cost and ABC; introduce the concept of Responsibility Accounting
Content of the class: Be prepared to solve two exercises in your team (1.30 hours); introduction of the concept of Responsibility Accounting (1 hour)
Assignment: Training on practice cases contained in the book, Chapters 2 to 5.

Class #8 - Measuring and Reporting
Goal of the class: To compare actual results to the budget using cost drivers.
Content of the class: Introduction of the concept of variance analysis; starting case analysis and discussion in teams.
Assignment: Read Chapter 11 and Los Reyes Hospital case published on IOL.

Class #9 - Measuring and Reporting (continued)
Goal of the class: To compare actual results to the budget using cost drivers.
Content of the class: Case analysis in teams continues.
Assignment: Los Reyes Hospital analysis.

Class #10 - Measuring and Reporting (continued) & Closure
Goal of the class: To compare actual results to the budget using cost drivers.
Content of the class: Case discussion all together.
Assignment: Los Reyes Hospital analysis.

Readings/Bibliography

The course uses the following textbook:

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

Further materials are published on IOL e-learning platform.

Teaching methods

The course will use a combination of readings, interactive lectures and case discussions.

Classes 1 to 7 will be based on a mix of readings and interactive lectures, with several practical short cases to get acquainted with the basic concepts of cost accounting.

The last three classes (8 to 10) will be taught with the case method of instruction. Students will be required to prepare, in teams, a case during lectures 8 & 9, that will be then discussed all together during class 10. 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.

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, that correspond to the final written exam. 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 after the first class.

Attending students.

  1. 20%, i.e. 0-6 points, for the mid-term assessment (in teams) on Class 7: each team's member will be awarded with the team's grade
  2. 20%, i.e. 0-6 points, for team's solution of Los Reyes Hospital case analysed and discussed on Classes 8 to 10: 6 points awarded per each member of the team if the solution is assessed at least fair
  3. 60% (and extra points), i.e. 0-20 points, for the individual written open book final exam that will consist of a case analysis.

Non attending students. 1. and 2. will be replaced by an interview after the individual written exam.

Office hours

See the website of Emanuele Padovani