ACCOUNTING, FINANCIAL PLANNING - BUDGETING, AND FINANCIAL CONTROL IN HEALTH CARE INSTITUTIONS
Over the past two decades, the financial environment within which health care institutions in the United States function changed dramatically. Perhaps the most apparent change to most people is the ascendancy of the managed care concept. For financial managers with the health care sector, however, the changes in payment protocols from retrospective to prospective to capitation that accompanied the ascendancy of managed care also ushered in different approaches to and requirements for accounting, financial planning - budgeting, and financial control in health care institutions.
This paper reviews the financial environment within which health care financial administrators perform their functions and discharge their responsibilities today. Broadly, the structure of the review addresses the three major areas of interest mentioned รน accounting, financial planning - budgeting, and financial control in health care institutions. The review also addresses sub-topics and ancillary issues within these major interest areas that also affect the functioning of health care financial administrators.
Accounting in Health Care Institutions
When the transitions in the financial environment for health institutions in the United States began two decades ago, most large health care institutions were not-for-profit institutions that were reimbursed within a retrospective payment framework. Within such a financial environment, procedures such as cost accounting not only were seldom used, there also was strong opposition within the community of health care professionals to the very consideration of their use (Mendenhall, Shepherd, & Kabrinski (1987). Today, some opposition remains to the use of cost accounting and other financial tools in the health care sector; however, the application of such tools today is essential to the continued financial via...