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BRIEF CONTENTS

VIEWS: 43 PAGES: 7

finance

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									BRIEF CONTENTS

[First Page]

Preface xiii PART I The Healthcare Environment

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Lines: 0 to 58

1 Introduction to Healthcare Finance . . . . . . . . . . . . . . . . . . . . . . . . . . 3
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2 The Financial Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
PART II Financial Accounting

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3 Financial Accounting Basics and the Income Statement . . . . . . . . 59 4 The Balance Sheet and Statement of Cash Flows . . . . . . . . . . . . . . 93
PART III Managerial Accounting

5 Managerial Accounting Basics, Cost Behavior,
and Profit Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

6 Cost Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 7 Pricing and Service Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 8 Planning and Budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
PART IV Basic Financial Management Concepts

9 Time Value Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263 10 Financial Risk and Required Return . . . . . . . . . . . . . . . . . . . . . . . . 301

BOOKCOMP, Inc. — Health Administration Press / Page v / Printer proof Healthcare Finance 4th ed. / Gapenski

PART V Long-Term Financing

11 Long-Term Debt Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341 12 Equity Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379 13 Capital Structure and the Cost of Capital . . . . . . . . . . . . . . . . . . . 411
PART VI Capital Investment Decisions

14 The Basics of Capital Budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 451
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15 Project Risk Assessment and Incorporation . . . . . . . . . . . . . . . . . . 491
PART VII Other Topics
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16 Current Asset Management and Financing . . . . . . . . . . . . . . . . . . 523 17

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18 Lease Financing and Business Valuation . . . . . . . . . . . . . . . . . . . . . 597
Glossary 627 Index 647 About the Author 659

BOOKCOMP, Inc. — Health Administration Press / Page vi / Printer proof Healthcare Finance 4th ed. / Gapenski

DETAILED CONTENTS

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Preface xiii
Lines: 94 to 159

PART I The Healthcare Environment

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1 Introduction to Healthcare Finance . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Defining Healthcare Finance, 3; Purpose of the Book, 5; The Role of Finance in Health Services Organizations, 6; The Structure of the Finance Department, 8; Health Services Settings, 9; Regulatory and Legal Issues, 15; Current Challenges, 17; Organization of the Book, 17; How to Use this Book, 19 ——— Normal Page PgEnds: TEX [-7], (3)

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2 The Financial Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Alternative Forms of Business Organization, 25; Alternative Forms of Ownership, 30; Organizational Goals, 34; Tax Laws, 36; Third-Party Payers, 38; Managed Care Plans, 42; Alternative Reimbursement Methods, 44

PART II Financial Accounting

3 Financial Accounting Basics and the Income Statement . . . . . . . . 59
Historical Foundations of Financial Accounting, 60; The Users of Financial Accounting Information, 61; Regulation and Standards in Financial Accounting, 62; Basic Concepts of Financial Accounting, 65; Accounting Methods: Cash Versus Accrual, 68; Recording and Compiling Accounting Data, 71; Income Statement Basics, 74; Revenues, 75; Expenses, 79; Net Income, 82; Net Income Versus Cash Flow, 84; Income Statements of Investor-Owned Firms, 85; A Look Ahead: Using Income Statement Data in Financial Statement Analysis, 86

BOOKCOMP, Inc. — Health Administration Press / Page vii / Printer proof Healthcare Finance 4th ed. / Gapenski

4 The Balance Sheet and Statement of Cash Flows . . . . . . . . . . . . . . 93
Balance Sheet Basics, 94; Assets, 96; Liabilities, 102; Equity, 104; Fund Accounting, 108; The Statement of Cash Flows, 108; Transactions, 112; Another Look Ahead: Using Balance Sheet Data in Financial Statement Analysis, 117

PART III Managerial Accounting

5 Managerial Accounting Basics, Cost Behavior, and Profit
Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
[-8], (4) The Basics of Managerial Accounting, 127; Cost Classifications: Fixed and Variable, 129; Cost Behavior, 130; Cost Classifications: Semi-Fixed, 133; Profit (CVP) Analysis, 134; Breakeven Analysis, 139; Operating Leverage, 142; Profit Analysis in a Discounted Fee-for-Service Environment, 144; Profit Analysis in a Capitated Environment, 149; The Impact of Cost Structure on Financial Risk, 156

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6 Cost Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
Direct Versus Indirect (Overhead) Costs, 163; Introduction to Cost Allocation, 164; Cost Allocation Basics, 165; Cost Allocation Methods, 169; Direct Method Illustration, 171; Changing to a Better Cost Driver, 177; Step-Down Method Illustration, 180; Activity-Based Costing, 182; Final Thoughts on Cost Allocation, 186

7 Pricing and Service Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
Healthcare Providers and the Power to Set Prices, 194; Price Setting Strategies, 195; Target Costing, 197; Setting Prices on Individual Services, 198; Setting Prices Under Capitation, 199; Setting Managed Care Plan Premium Rates, 207; Using Relative Value Units (RVUs) to Set Prices, 212; Making Service Decisions (Contract Analysis), 214

8 Planning and Budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
The Planning Process, 226; Operational Planning, 229; Introduction to Budgeting, 231; Budget Types, 232; Budget Decisions, 235; Constructing a Simple Operating Budget, 237; Variance Analysis, 240; The Cash Budget, 248

BOOKCOMP, Inc. — Health Administration Press / Page viii / Printer proof Healthcare Finance 4th ed. / Gapenski

PART IV Basic Financial Management Concepts

9 Time Value Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263
Time Lines, 264; Future Value of a Lump Sum (Compounding), 265; Present Value of a Lump Sum (Discounting), 270; Opportunity Costs, 273; Solving for Interest Rate and Time, 275; Annuities, 277; Perpetuities, 282; Uneven Cash Flow Streams, 283; Using Time Value Analysis to Measure Return on Investment (ROI), 286; Semiannual and Other Compounding Periods, 290; Amortized Loans, 294

10 Financial Risk and Required Return . . . . . . . . . . . . . . . . . . . . . . . . 301
The Many Faces of Financial Risk, 302; Introduction to Financial Risk, 303; Risk Aversion, 305; Probability Distributions, 305; Expected and Realized Rates of Return, 307; Stand-Alone Risk, 308; Portfolio Risk and Return, 311; Measuring the Risk of Investments Held in Portfolios, 319; Portfolio Betas, 325; Relevance of the Risk Measures, 326; Interpretation of the Risk Measures, 327; The Relationship Between Risk and Required Return, 328

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PART V Long-Term Financing

11 Long-Term Debt Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341
The Cost of Money, 341; Common Long-Term Debt Instruments, 343; Debt Contracts, 348; Bond Ratings, 350; Credit Enhancement, 352; Interest Rate Components, 352; The Term Structure of Interest Rates, 356; Economic Factors That Influence Interest Rate Levels, 358; Debt Valuation, 359

12 Equity Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379
Equity in For-Profit Businesses, 379; Types of Common Stock, 383; Procedures for Selling New Common Stock, 383; The Market for Common Stock, 386; Regulation of Securities Markets, 387; The Investment Banking Process, 389; Equity in Not-for-Profit Businesses, 391; Common Stock Valuation, 393; Security Market Equilibrium, 400; Informational Efficiency, 401; The Risk/Return Trade-Off, 404

BOOKCOMP, Inc. — Health Administration Press / Page ix / Printer proof Healthcare Finance 4th ed. / Gapenski

13 Capital Structure and the Cost of Capital . . . . . . . . . . . . . . . . . . . 411
Capital Structure Basics, 411; Impact of Debt Financing on Accounting Risk and Return, 412; Capital Structure Theory, 415; Identifying the Optimal Capital Structure in Practice, 418; Not-for-Profit Businesses, 420; Cost of Capital Basics, 422; Cost of Debt Capital, 423; Cost of Equity Capital, 425; The Corporate Cost of Capital, 434; Cost of Capital Estimation for Small Businesses, 436; An Economic Interpretation of the Corporate Cost of Capital, 439

PART VI Capital Investment Decisions
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14 The Basics of Capital Budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 451
Project Classifications, 452; The Role of Financial Analysis in Healthcare Capital Budgeting, 453; Overview of Capital Budgeting Financial Analysis, 454; Cash Flow Estimation, 454; Cash Flow Estimation Example, 461; Breakeven Analysis, 468; Return on Investment (Profitability) Analysis, 469; Some Final Thoughts on Breakeven and Profitability Analyses, 475; Capital Budgeting in Not-for-Profit Businesses, 475; The Post-Audit, 478; Using Capital Budgeting Techniques in Other Contexts, 479 Lines: 269 to 331 ———

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15 Project Risk Assessment and Incorporation . . . . . . . . . . . . . . . . . . 491
Types of Project Risk, 492; Relationships Among Stand-Alone, Corporate, and Market Risk, 493; Risk Analysis Illustration, 494; Sensitivity Analysis, 496; Scenario Analysis, 499; Qualitative Risk Assessment, 502; Incorporating Risk into the Decision Process, 503; Making the Final Decision, 506; Adjusting Cash Outflows for Risk, 507; Divisional Costs of Capital, 509; An Overview of the Capital Budgeting Decision Process, 510; Capital Rationing, 512

PART VII Other Topics

16 Current Asset Management and Financing . . . . . . . . . . . . . . . . . . 523
An Overview of Short-Term Financial Management, 523; Current Asset Investment and Financing Policies, 525; Cash Management, 530; Marketable Securities Management, 534; Long-Term Securities Management, 535; Receivables Management, 536; Supply Chain Management, 541; Short-Term Financing, 544

BOOKCOMP, Inc. — Health Administration Press / Page x / Printer proof Healthcare Finance 4th ed. / Gapenski

17 Financial Condition Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 561
Financial Statements, 562; Financial Ratio Analysis, 565; Tying the Financial Ratios Together: Du Pont Analysis, 577; Other Analytical Techniques, 579; Operating Indicator Analysis, 580; Limitations of Financial Ratio and Operating Indicator Analyses, 583; Economic Value Added (EVA), 584; Benchmarking, 585; Key Performance Indicators and Dashboards, 586

18 Lease Financing and Business Valuation . . . . . . . . . . . . . . . . . . . . . 597
Leasing Basics, 597; Tax Effects, 599; Financial Statement Effects, 601; Lease Evaluation, 603; Motivations for Leasing, 611; Business Valuation, 615 [-11], (7)

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Glossary 627 Index 647 About the Author 659

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BOOKCOMP, Inc. — Health Administration Press / Page xi / Printer proof Healthcare Finance 4th ed. / Gapenski


								
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