Hcs 405 Week 2 Paper

Week 2 discussion questions

What are the largest expense categories incurred by health care service organizations?

In opinion, one of the biggest expenses for medical facilities is unpaid services. Costs occurred from patients that are unpaid privately or not fully reimbursed from insurance companies would be one of the biggest expenses incurred in health care services. Another expense that is high on the list of expenses for health care services would be equipment and personnel. Health care personal have high salaries as well as costs for additional training and tuition reimbursement if the health care facility participates in such programs.

Equipment also can cost in the tens of thousands of dollars to over a million
to buy the equipment, depending on the equipment. Then there is the training for the personnel operating it, the maintenance on the equipment and anything else having to do with each specific piece. A medical facility has costs no matter what it is they do. The overhead costs, which includes the operating of the building, the salaries of the personnel in the building and anything that has to do with that account for much of the expenses incurred in health care facilities along with services rendered.

What are the titles and functions of the four financial statements usually included in an audited financial report?

The four basic financial statements include the balance sheet, the statement of revenue and expense, the statement of fund balance or net worth, and the statement of cash flows.
The balance sheet records what an organization owes and what it is worth if for profit organization and uses fund balance rather than equity for nonprofit organizations. Like the name suggests the balance sheet balances finances in the organization. It is stated at a particular point in time. It displays the total of assets of the organization and the total of what the organization owes. That is its liabilities and its net worth (fund balance). This can be visualized as Assets- Liabilities- Net worth/ Fund balance. The statement of revenue and expense covers a point in time rather than one single date or point in time. The concepts shows that revenue, or inflow, less expenses , or outflow, result in an excess of revenue to expenses if the year has been good, or an excess of expenses over revenue resulting in a loss if the year has been bad, The formula for a condenses statement of revenue and expense would be: operating revenue- operating expenses=operating income. A statement of changes in fund balance/net worth is linked to the previous financial reports. The excess of revenue flows back into equity or fund balance through the statement of fund balance/ net worth. The statement of cash flows deals a lot with accrual basis accounting. For example, Depreciation is recognized within each year as an expense, but it does not represent a cash expense. This is a concept that now enters into the statement of cash flows. The fourth major report—the statement of cash flows—interlocks with the other three major reports. (Baker & Baker,
2011).

Reference:

Baker, J. J., & Baker, R. W. (2011). Health care finance: Basic tools for nonfinancial managers (3rd ed.). Sudbury, MA: Jones & Bartlett Publishers.

What are the key components of a successful business office operation in a health care setting? What are some examples?