Submitted by: Submitted by fred1499
Views: 225
Words: 9590
Pages: 39
Category: Business and Industry
Date Submitted: 11/04/2012 08:21 AM
Purpose of This Chapter
This chapter will provide an overview of the health-care industry and hospital financial
accounting and reporting issues. The reader will gain insight to the industry and to the
accounting and reporting issues facing hospitals today. This chapter will provide the framework for more detailed discussions in subsequent chapters.
The “Business” of Health Care
Make no mistake, health care is business—big business. At over 15 percent of the gross
national product (GNP), health-care spending continues to rise sharply. This creates tremendous pressure on hospital leaders to manage their organizations—whether organized as
community-based/not-for-profit, for-profit, or academic medical centers—more effectively
than many other businesses. Operating efficiently and generating a return on investment
is crucial for all hospitals, regardless of ownership, to provide replacement equipment and
new technology to keep up with the demands of consumers. For some hospitals, another
important aspect of efficient operations is making interest payments on bonds and other
indebtedness or making dividend payments to shareholders. For other hospitals, especially
rural facilities, efficient operations simply equates to survival.
Mission and Community Focus
Hospitals are guided by a mission and a focus on the community. This characteristic distinguishes hospitals from most other businesses. Today’s health-care managers, including
pharmacy directors, must balance between making solid business decisions and providing
services or programs for the community. With limited resources, health-care leaders often
must choose carefully how resources are used and which needs the hospital can reasonably
meet.
Another area that distinguishes hospitals from most other businesses is the number of
stakeholders involved. How many other businesses provide services to customers (patients)
as ordered by independent practitioners (physicians not typically employed by the...