Question

Submit written responses to these questions. List several efforts that have been enacted by payors to control costs. Explain the ramifications of allowing/disallowing an individual to be able to sue his or her HMO. What are each of the financial statements commonly called in for-profit health care organizations and in not for-profit care organizations? The following questions relate to the statement of operations of not for-profit health care organizations. What is the analogous for-profit statement called? What are the main sections of the statement of operations? What are revenues, gains, and other support? What are expenses and losses? Funds released from restricted net assets to unrestricted net assets are presented in what section of the statement of revenue, expenses and other activities? The following questions relate to the statement of changes in net assets. What is the traditional name for this statement? What is the purpose of this statement? What are the main sections of this statement? Discuss the difference between permanently restricted and temporarily restricted net assets. The following questions relate to the statement of cash flows of a not-profit health care organization. What are its main sections? What is the purpose of this statement? Where in the financial statements would there be important explanatory information? In what financial statement would one identify the purchase of long-term investments? How does the accrual basis of accounting differ from the cash basis of accounting?

Answer 1

1. List several efforts that have been enacted by payors to control costs.

Employers shifting cost of healthcare to its employees via benefit plan design. Employees are not having to pay more for their health care coverage. Information technology is more widely used. Physician preferences in medical supplies being overridden by hospitals. More generic drugs being used because patents are being lost, reducing medical errors, and streamlining the patient discharge process

2. Explain the ramifications of allowing/disallowing an individual to be able to sue his or her HMO.

It could increase costs and result in insurers further narrowing provider networks to cut costs, it creates gratuitous litigation, tremendous costs are created on the part of the insurer to defend itself. The costs of health care delivery will increase, HMOs could be included as defendants in the malpractice suits, HMO’s would could face a increase in expensive lawsuits for common mistakes insurers make on a constant basis, like forgetting to make timely payments. More people will sue for malpractice or the HMOs refusal to pay for services needed

3. What are each of the financial statements commonly called in for-profit health care organizations and in not for-profit care organizations?

For- profit: Balance sheets, Statement of income and comprehensive income, Statement of changes in stockholder’s equity, Statement of cashflows, Notes (footnotes to the financial statements)

Not for-profit: Balance sheet, Statement of operations, Statement of changes in net assets, Statement of cashflows, Notes (footnotes) to the financial statements

The following questions relate to the statement of operations of not for-profit health care organizations.

1. What is the analogous for-profit statement called? Balance sheet

What are the main sections of the statement of operations?

Operating income, other income, gains, excess of revenues, and other support expenses

2. What are revenues, gains, and other support?

Revenues– refers to the amounts either earned by the entity or donated to it

Gains – can come from transactions like selling assets for more than their carrying value

Other support – includes such items as appropriations from governmental entities and unrestricted donations

3. What are expenses and losses?

Expenses - costs used up in earning revenue for the company's main operations

Losses - the outflow of money not due to business dealings but other occurrences of no economic benefit.Funds released from restricted net assets to unrestricted net assets are presented in what section of the statement of revenue, expenses and other activities?

The following questions relate to the statement of changes in net assets.

1. What is the traditional name for this statement?

Changes in Working capital

2. What is the purpose of this statement

The purpose of this statement is to recap the change in unrestricted net asserts and add the changes in temporarily and permanently restricted net assets.

3. What are the main sections of this statement?

Unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets

4. Discuss the difference between permanently restricted and temporarily restricted net assets.

Restricted net assets are funds that have limitations imposed on them by outside donors. Permanently restricted net assets are given to the organization by outside individuals with specific restriction on how to use the funds. The money can only be used for the purpose it was intended, nothing else.

The following questions relate to the statement of cash flows of a not-profit health care organization.

1. What are its main sections?

Cash flows from investment activities, cash flows from operating activities, and cash flows from financing activities

2. What is the purpose of this statement?

The purpose of this statement is to summarize where the entity’s money came from and how it was spent during the year.

3. Where in the financial statements would there be important explanatory information?

Under the supplemental information

4. In what financial statement would one identify the purchase of long-term investments?

Under investing activities

5. How does the accrual basis of accounting differ from the cash basis of accounting?

Revenues are reported on income statements at the time cash is received from customers and expenses on income statement when the money is paid out under the cash basis. Under accrual basis, revenues are reported on income statements when earned, many times before receiving money from customers. Expenses are reported on the income statement when they expire or occur. Most often, a time different from when payments are made.