Term
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Definition
- function of the prices & utilization rates of HC services
- Costs = Price X Utilization
- price: rate that HC providers set for services (like hospital rate or physician fee)
- utilization: quantity or volume of services provided (like diagnostic tests or # of visits)
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Term
| administrative efficiency/waste |
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Definition
- one of the causes of increasing HC prices
- mainly the result of large # of clerical personnel needed to process reimbursement forms from multiple payers
- U.S. hospitals spend 20% of budget on billing administration
- some hospitals advocate for elimination of multiple payers
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Term
| 4 major methods for reimbursement |
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Definition
- charges
- cost-based reimbursement
- flate-rate reimbursement
- captitated payments: rate based on designated services over designated time
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Term
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Definition
| all allowable costs payed, retrospective, each payer determines what the allowable costs are for each visit/service/procedure |
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Term
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Definition
- cost of providing service plust markup,
- retrospective,
- 3rd party payers often put limits on what they will pay by establishing usual and customary charges by surveying all providers in a certain area,
- providers gradually raise their prices
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Term
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Definition
| amount of payment is determined after services are delivered |
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Term
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Definition
- based on the provision of specified services to an individual over a set period such as 1 year
- providers paid a per-person-per-year (or per-month) fee
- provider absorbs loss or profit
- capitation is mode of payment used by HMOs and other managed care systems
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Term
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Definition
- rate decided in advance
- prospective
- if the costs of care are greater than the payment, the provider absorbs the loss (but also can make a profit for the reverse)
- Medicare implemented a flat rate reimbursement system in 1983 that uses diagnosis-related groups (DRGs) as the basis for payment
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Term
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Definition
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Term
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Definition
- discount that exists when reimbursed costs are less than the full charge for the service in charges and cost-based reimbursement methods
- these methods were predominant payment methods in the 1960s and 1970s but have been largely supplanted by payer fee schedules determined before before service delivery
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Term
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Definition
- health plan that includes both service & finance
- in contrast with traditional fee-for-service plan where insurers pay based on cost
- a major goal is to decrease unnecessary services
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Term
| organized delivery systems (ODSs) |
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Definition
- networks of organizations; providers & payers
- typically, joint venture between hospitals, physicians & insurance companies
- the aim is to develop & market a comprehensive package of HC services for large # of consumers
- risk-sharing is expected to provide incentives for efficiency & quality
- physicians have generally not shared much risk
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Term
| major areas nurse managers can manage costs |
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Definition
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Term
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Definition
| those costs in a unit that do not change as the volume of patients change (i.e., rent, loan payments, admin salaries, salaries of minimum # of staff) |
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Term
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Definition
| vary in direct proportion to patient volume/acuity (i.e., nursing personnel, supplies, meds) |
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Term
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Definition
| tool that uses fixed and variable costs for determining the volume of pts needed to just break even (revenue = expenses) or to realize a profit or loss |
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Term
| patient classification systems |
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Definition
| used appropriately, pt classification systems can help eval changing practice patterns & pt acuity levels and provide info for budgeting processes |
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Term
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Definition
- financial plan for the day-to-day activities of the organization
- most time-consuming financial function of nurse managers
- expected revenues & expenses given a specified volume of pts are stated
- the personnel budget is the largest part of the operating budget for most nursing units
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Term
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Definition
- organizational unit for which costs can be identified & managed
- a personnel budget & supply & expense budget is calculated for each cost center as part of the expense part of the operating budget
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Term
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Definition
- a measure appropriate to the work of the unit, such as patient days, clinic visits, hours of service, admissions, deliveries or treatments
- used to calculate workload volume
- inpatient units: workload volume = hours of care per pt X number of pt days
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Term
| full-time equivalents (FTEs) |
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Definition
- used to determine how many staff members are needed to provide care when preparing the personnel budget
- one FTE = 40 hrs/wk, 52 wks/yr, 2080 hrs of work paid per year
- 0.5 FTE = 20 hrs/wk
- # of hours in an FTE may vary per organization
- 2080 hrs paid to an FTE consist of both productive & nonproductive hours
- productive: paid time that is worked
- non-productive: vacation, holiday, orientation, education, sick days
- total # of FTEs needed: divide total patient care hours required by # of productive hours per FTE
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Term
| productive hours calculation |
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Definition
- Method 1: add all nonproductive hours/FTE and subtract from paid hours/FTE
- Method 2: multiply paid hours/FTE by percentage of productive hours/FTE
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Term
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Definition
- operating plan for monthly cash receipts & disbursements
- org survival depends on paying bills on time
- orgs can be making a profit & still run out of cash
- profitable trend can induce a cash shortage in the short run as supplies are bought
- major capital expenditures can cause a cash crisis
- cash is lifeblood of the org
- usually prepared by financial officer
- can be used by nurses to discern when constraints on spending are necessary & the importance of carefully predicting when budgeted items will be needed
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Term
| total FTEs needed calculation |
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Definition
| required pt care hours / productive hours per FTE = total FTEs needed |
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Term
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Definition
- data about the volume & types of patients & reimbursement sources that are necessary to project revenues in any HC org
- revenue budget usually developed by the finance office
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Term
| capital expenditure budget |
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Definition
- expenses related to the purchase of major capital items such as equipment and physical plant
- a capital expediture must have a useful life of more than 1 year and must exceed a cost level specified by the org
- minimum cost requirement for capital items in HC is usually between $300 & $1000; below that is routine operating cost
- capital expenses kept separate from operating budget; subtracted from revenues, affecting profit; depreciate each year
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Term
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Definition
- cost of providing HC to employees increases price of goods, compromising our ability to compete in the world marketplace
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Term
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Definition
- Gathering info & planning (priorities, objectives, assumptions like employee raises, inflation)
- Developing unit & departmental budgets
- Operating & capital budgets
- Developing cash budgets
- Negotiating & revising
- Evaluating
- Analysis of variance
- Critical performance reports
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Term
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Definition
- the difference between the projected budget and the actual performance for aparticular account
- negative variance: budgeted amount less than actually spent
- positive variance: budgeted amount more than spent
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Term
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Definition
| major control process used in relation to budgeting |
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Term
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Definition
- ratio of outputs to inputs
- productivity = output/input
- output: nursign services measured by hours of care, # of visits, etc
- input: personnel hours, supplies, etc
- hours per patient day (HPPD) often used as measurement unit
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