Discuss importance of making Health Care Budget.

Discuss importance of making Health Care Budget.
The paper below uses data retrieved from Dignity Health financial statement of the year ranging from July 2013 to June 2014 to analyze its budget. The firm specializes in offering health services. Dignity health is a California nonprofit benefits corporation exempted from state and federal taxes (Health). Dignity health owns and operates health care facilities in California, Arizona, and Nevada. The healthcare services offered include; inpatient, outpatient, sub- acute, home health care services among others (Health). Health Care Budget Essay Paper

Question 1
The method used in measuring the nursing cost is the standard costing method. The nursing costs incurred as wages remain relatively the same between 2014 and 2013. Standard cost defines as an estimate or predetermined cost of producing a good or service under normal conditions (Avercamp, 2004-2015). Standard cost differs primarily to actual expenses. Instead of using the cost of direct labor, the firm employs a standard cost to minimize errors and fluctuation. The differences cumulated fall under variances, that is, standard cost subtract actual costs. A variation signals the management of a difference between the standard and actual cost.Health Care Budget Essay Paper

When actual cost exceeds the standard cost, management ought to be worried. The negative variance predicts that ceteris paribus, the profit will be less than planned. Further, if the difference is positive, that is, the standard costs exceeds the actual cost, management is content. Such variance predicts that ceteris paribus, the actual profit will exceed the planned.
The firm should not change the costing method. The standard method of costing stands out as an objective method. Particularly so since, it is a comparative method. It rationalizes profits against sales. Further, changes through the years indicate profits or losses. The standard costing method works efficiently for the firm, evidenced by the profits posted.

Question 2
Dignity Health grasps the need to grant payment options for its clients. In that light, they accept insurers as a legitimate method of paying bills accrued. Majority of these insurers, fall under the government’s programs. Dignity health collects net patient revenue of $243.2 million and $684.5 million (Health). The sums payment happens as Medi- Cal paid under the California provider fee program. Further, Medicaid payments affect the bottom-line. Purchased services and net patient revenue coupled with other expenses result in a net income impact of $40.9 million (2014) and $13.4 million (2013).Health Care Budget Essay Paper

The Medicare and Medicaid programs aim to pay qualifying hospitals over four years on a transitional schedule. The qualification required to receive the payments are stringent and curtailing. A hospital ought to use certified electronic health records (EHR). In 2013 and 2014, Dignity Health recorded appropriate and efficient use of $53.8 million and $60. 4 million related to Medicare and Medicaid (Health). In 2014 and 2013, net patient revenue includes $27.0 million and $67.7 million. These were in favorable net, compared to prior year’s reimbursement settlements from Medicare, Medicaid, and other programs.

Question 3
Percentage profit measures how much of every unit in sales a company keeps in profits. A higher percentage profit implies a profitable company vis a vis the costs.
For 2014;
Profit = $912680
Expenses = $10450297
Profit margin (%) = 912680/10450297
= 8.733%
For 2013
Profit = $839260
Expenses= $10100589
Profit margin = 839260/10100589
= 8.31%

The firm in the last year made a percentage profit of 8.733% (Health). The percentage profit posted in 2014 improves in comparison to the one posted in 2013.Health Care Budget Essay Paper

The profit met the operating costs for Dignity Health. The firm credited the accounts payable with $128954 as wages and payment for services rendered. Workers compensation and professional and general liabilities account received a credit of $14044. Accrued salaries and benefits received a credit of $20244. Provider fee assets and liabilities received a credit of $170567. Other accrued liabilities account received a credit of $90876 (Health). Further, the hospital purchased investments debited as ($4787919). The net amount used in investing activities debited as ($212878).


Question 4
Direct billing contemplates an arrangement between a health insurance provider, a doctor, or medical facility (Avercamp, 2004-2015). Here, the doctor sends bills due for services delivered to your medical insurance company. Consequently, the patient need not put in a separate claim with their insurance company.

Dignity Health has signed agreements with third -party payors that provide for payments at amounts different from each hospital-established rate. The expenditures involve but are not limited to; prospectively determined rates per discharge, per diem payments, discounted costs and reimbursed charges. Dignity Health first sends a patient bill to the health insurance company on behalf of the patient.

Patient account receivable and net patient revenue reports as the net realizable amounts from patients, third- party payors, and others for services rendered. Calculation of settlements with such payors accrued on an estimated basis during the period of service delivery, and adjusted in the future periods as final settlements.Health Care Budget Essay Paper

Dignity healthy operates with the sole purpose of serving the community. In that regard, Dignity has at-risk agreements with several payors to provide medical services to enrollees. Under such, dignity receives monthly payments computed from the number of enrollees. Estimates of incurred but not reported (IBNR) claims fall categorically here.

Moreover, Dignity health operates a traditional charity care program. Charity care is free or discounted medical service towards persons who cannot afford healthcare. The amount of service quantified, as customary charges were $822.5 million for 2014 (Health).

In conclusion, Dignity health despite been a nonprofit organization employs efficient accounting and financial services which rival the private sector. Its balance in addressing the needs of the various economic segments augur well with the real goal of any healthcare facility worth its salt; providing affordable and quality healthcare to everyone indiscriminately (Avercamp, 2004-2015).

Avercamp, H. (2004-2015). Accounting principles. Accounting Coach .
health, D. (n.d.). Dignity Health | Excellent care Delivered with Compassion for All. Retrieved March 26, 2015, from www.dignityhealth.org. Health Care Budget Essay Paper

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