Table of contents for Management accounting in health care organizations : an activity based management and costing focus / Robert W. Hankins and Judith J. Baker.


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 	MANAGEMENT ACCOUNTING IN HEALTH CARE ORGANIZATIONS:
	An Activity Based Management and Costing Focus
Preface	
PART I	 Background 
 Chapter 1.	Accounting and Management
Chapter Learning Objectives
Accounting Defined
The Work of Managers
Planning
Strategic plans
 		Operational plans
Organizing
 			Leading
Controlling
		Discussion Questions
Narrowing the Management Accounting Arena
Expanding Management Accounting Beyond Money Measurement
Discussion Questions
For-Profit and Not-for-Profit Objectives
Discussion Question
Conclusion
Summary of Key Points
Exercises
	Exercise #1
	Exercise #2
References
 Chapter 2.	Management Accounting and Internal Decision Making
Chapter Learning Objectives
Decision Characteristics
	Specificity
	Routineness
Discussion Questions
Decision Models
Non compensatory models
	Conjunctive models
	Disjunctive model
	Lexicographical models
Compensatory models
		Discussion Questions
 		Information Systems
Appropriate information
Usable form
Appropriate recipient
 		Proper timing
	Discussion Questions
Information Systems and the Decision Environment
Decision maker problems
		Discussion Question
Decision environment problems		
		Discussion Questions
Conclusion
Summary of Key Points
Exercise
References
PART II COSTS AND COSTING
 Chapter 3.	Perspectives on Costs 
Chapter Learning Objectives
eGeneral Considerations
Definitions
Cost objects
Production costs
Direct costs
 		Indirect costs
			Fixed overhead
			Variable overhead
			Joint cost
Balance of Fixed Costs vs. Variable Costs
Overhead Cost Behavior
Product -Direct vs. Center-Direct Costs
Unit Cost
Summary of Production Costs
Selling and Administrative Costs
Discussion Questions
Marginal Costs
Committed Costs
Sunk Cost
Discretionary Costs
Discussion Questions
Standard Costs
True Cost
Costs and Charges
Summary of Key Points
Exercise
 
 Appendix 3: Cost Behavior Analysis
Graphical View of Overhead Costs
		Figure 3A-1
		Figure 3A-2
		Figure 3A-3
 		Distinguishing Fixed from Variable Costs
				Figure 3A-4
The Hi-Lo Method of Analysis
Example
		Figure 3A-5
The Regression Method of Analysis
Problems
	Problem #1
	Problem #2
	Problem #3
 Chapter 4. Introduction to Costing 		
Chapter Learning Objectives
Introduction
Product Costs for Management Decisions
Payment Mechanisms
Fee for service
Prospective Payment
 	Capitation
 	Identifying Appropriate Cost
		Fee-for-service
		Prospective payment
		Capitation
		Summary: increasing financial risk
	Discussion Questions
Final versus Intermediate Products
The Capacity Issue
Departments and Activities
Discussion Questions
Identifying Activities
Example: A Primary Care Clinic
			Table 4-1
			Figure 4-1
			Table 4-2
Management's interpretation
Assumptions and accuracy
	Differentiating cost components
	Fixed cost considerations
		Table 4-3
	Historical versus projected data
	Overhead revisited
Case summary
		Discussion Questions
Summary of Key Points
Problem 
		References
 Chapter 5.	Formalizing the Analysis of Activities and Costs
Chapter Learning Objectives
Categories of Activities
Discussion Questions	
Organization Centers - The Loci of Activities
	Differences among activity types		
Implications for service centers
Cost Drivers
Activity drivers
 		Resource drivers
Relative value units (RVUs) as drivers
	RVUs set as an average of direct costs
		Example
				RVUs set by subjective judgment
				RVUs set for determining rates in a fee schedule
Implications for product centers
Drivers as linkages
		Figure 5-1
Organization sustaining activities
		Discussion Questions
Comprehensive Cost Analysis
Flows to the cost objective
The fixed cost problem
		Discussion Questions
Example: Organization and Production Sustaining Costs
Identifying cost targets
		Figure 5-2
Institutional overhead
			Exhibit 5-1	
Intermediate activity centers
		Exhibit 5-2
Overhead flow
		Figure 5-3
		Table 5-1
Considering Multiple Levels of Overhead
The Scope of an ABC Analysis
Summary of Key Points
References
Appendix 5 Charting Activity and Resource Flows
Introduction
Basic Symbols
			Table 5A-1
	Parameters
	Factors
	Capacity
	Volume
	Policy
Some Examples
	Unit factor
			Figure 5A-1
	Constant factor
			Figure 5A-2
	Total factor	
	Charting inefficiencies
			Figure 5A-3
Summary
Exercise
	Exercise: An Application - Charting the Cost Flow in a Primary Care 
Clinic
	Solution to Exercise 
			Figure 5A-4
Appendix 5.1 Another Way to Chart Activity and Resource Flows
		Introduction
		Basic Approach
			The process hierarchy
			Modeling phases
		Basic Modules
					Figure 5A.1-1
					Figure 5A.1-2
					Figure 5A.1-3
		Example
					Figure 5A.1-4
		Summary
Chapter 6.	Organization Structure and Costing
Chapter Learning Objectives
Introduction 
Comparing Structural Units
			Exhibit 6-1	
Cost centers versus profit centers
Service centers
Product centers
		Discussion Questions
Transfer Prices and Pseudo Profit Centers	
Discussion Questions
Uses of Center-Specific Cost Information	
 	Service centers
		solating separable service activities
 	Product centers
Discussion Questions
Example: Product Center -Diagnostic Radiology
			Table 6-1
			Table 6-2
	Summary
Direct versus Indirect Costs
Fixed versus Variable Costs
Cost Flows to Health Care Products
Major diagnostic categories (MDCs)
			Exhibit 6-2
			Exhibit 6-3
Capitation
Other organizing schemes
		Discussion Questions
Summary of Key Points
		Exercise
			Problem #1
		References
Chapter 7.	Aggregating Activity Costs	
Chapter Learning Objectives
Introduction
Product Center Overhead 
Discussion Questions		
 	Example-Health Care Example
	Summary
				Figure 7-1
	Discussion Questions
 	Batch Level Overhead Activities
Unit Level Activities
Example
Example-a clinical laboratory 
		Supply processing and distribution (P&D)
		Maintenance
		Calculating laboratory test setup costs
			Table 7-1
		Tools and Equipment (T&E)
		T&E cost per test
		Clerical support
		Remaining costs
			Table 7-2
			Figure 7-2
Discussion Questions
Bottom-Up and Top-Down Analysis
			Figure 7-3
			Figure 7-4
Discussion Questions
A Reflection
Example
Example-An Operating Room 
			Figure 7-5
			Table 7-3
Summary of Key Points
References
		
Chapter 8.	Revealing Activity Structures and Cost Drivers
		Chapter Learning Objectives
		Introduction
		Isolating Separable Activities
			Documents
				Organization Charts
				Job Descriptions
				Procedure Manuals
			Interactions
				Observation
				Interviews
				Group Discussions
			A Comment
		Discussion Questions
		Isolating Drivers
			Activity Drivers
			Resource Drivers
			Resource Use Analysis
				Observation and Interviews
				Relative Value Units (RVUs)
				Engineering Work Study
				A Macro Level Time Study
					Figure 8-1
					Figure 8-2
					Figure 8-3
					Figure 8-4
		Discussion Questions
		Example
General Example - A Return to Arthroscopic Knee Surgery
					Figure 8-5
		Additional Comments
		Summary of Key Points
		Exercise and Problems
			Exercise 
			Problem #1
			Problem #2
		References
Chapter 9.	Planning, Designing and Implementing ABC Systems
		Chapter Learning Objectives
		Introduction
Planning ABC System Design
	Determining Management Motivation
			Exhibit 9-1
	Determining Management Priorities
			Exhibit 9-2
Applying Management's Criteria to the Project
		Exhibit 9-3
	Decision-Making	 
			Exhibit 9-4
	Exercise
Designing the ABC System and Its Implementation		
	Determining Stages of Implementation
	Determining Responsibility Structure
			Figure 9-1
		Implementation Responsibility
		Documentation Responsibility
		Maintenance Responsibility
		System Update Responsibility
	Determining Actual Detail of System Structure
		Determining Inputs
		Determining Outputs
	Example
		Computation of Operating Cost
		ABC System's Method for Assigning Cost
			Figure 9-2
	Determining Report Structure
	Determining System Update Schedule
	Scope of ABC Analysis
			Figure 9-3
Implementation by Stages
	Setting Up Project Management 
		Project Team
		Reporting and Documentation
	Implementing Pilot Projects
		Timeline
		Test Results
		Adjust Methods
	Training
	Implementing System-Wide
	Performing System Evaluations
	Maintaining Project Structure
		Encourage Communication
		Plan for On-Going System Improvement
Implementation with Multiple Cost Systems
Implementation with ABC Upgrades
An ABC Incremental Implementation Approach
	Full Costs Are Not Relevant
	Incremental ABC Estimates
	Example
		Step 1: Identification of all relevant costs
			Table 9-1
			Table 9-2
		Step 2: Clustering and counting of services
		Step 3: Identifying activity measures or cost drivers
			Table 9-3
		Step 4: Applying the activity measures or cost drivers
			Table 9-4
		Step 5: Accounting for external costs
			Table 9-5 	
		Step 6: Sorting of costs
		Step 7: Estimating the costliness of the factors
		Step 8: Aggregating the functional costliness of a unit of service
			Table 9-6
	Summary
Conclusion
Summary of Key Points
References	
PART III. MANAGEMENT ACCOUNTING APPLICATIONS
Chapter 10.	Traditional Costing to Support Financial Accounting
 Chapter Learning Objectives
 Introduction	 
	 Measures of Financial Performance
 Discussion Question
 Traditional Department Focused Overhead Costing
			Figure 10-1
 	Service department cost allocation
Another influence on service department groupings
	Exhibit 10-1
Step-down allocation
Reciprocal allocation
Subjective view of relative cost assignments
The averaging problem revisited
Managerial cost component allocation proportions
Discussion Question
Profit center overhead cost allocation
 		Cost-to-charge ratios
 		Relative value units (RVUs)
 		Expert judgement
Discussion Questions
A Summary of Traditional Costing Applied to Health Care
Example
Example: Return to the clinical laboratory
			Table 10-1
			Exhibit 10-2
			Table 10-2
Types of Costing Systems
	Process Costing
	Job Costing
	Operational Costing
			Exhibit 10-3
	Job Shops and the Patient
		Job Shops
		The patient as a job
Discussion Questions
		Differences between Financial and ABC Cost Accounting
		Discussion Question
		Summary of Key Points
		Problems
			Problem #1
			Problem #2
		References
 Chapter 11.	Cost Prediction
 		Chapter Learning Objectives
		Introduction
		Forecasting Cost
Selecting drivers
		Example	 
		Discussion Questions
The starting point 				
Forecasting Trends
Discussion Questions
Other Trend Analysis
Regression 
	Regression supporting cost driver analysis
Time-series regression
	Figure 11-1
			Exponential smoothing
					Table 11-1
			Moving averages
		Discussion Questions
Learning curves
		Examples
			Example #1
			Example #2a
		Table 11-2
		Figure 11-2
Example #2b
		Discussion Questions
Evaluating Forecast Methods
			Figure 11-3
General Conclusions
	Regression analysis
	Moving averages
	Exponential smoothing
Discussion Questions
Fixed Cost Forecasting
Example
Discussion Questions
Further Observations
Summary of Key Points
Chapter 12.	Budgets, Budgeting and Control
		Chapter Learning Objectives
Strategy, Plans and Activities			
Discussion Questions
Operating Budgets				
Zero based budgeting				
 		Incremental budgeting
		Discussion Questions
Steps in Creating an Operating Budget
Uses of Operating Budgets
Cash Budgets
Discussion Questions
Programs and Strategic Budgets
Discussion Questions
Marketing, ABC and Control
Organization Structure, People and Control
Discussion Questions
Control and Accounting Capability
Different perspectives for different decisions
Computers and data bases
Profit control versus cost control
Product lines
Cost structure implications
		Discussion Questions
		Exercise
		Flexible Budgets and Standard Costs
		Static Budget
		Discussion Questions
		Summary of Key Points
		References
Appendix 12	Cash Budgets
		Learning Objectives
		An Example
					Table 12A-1
			Construction of the Cash Budget
				Converting revenue to cash inflows
				Converting material expenses to cash outflows
				Converting labor costs to cash outflows
				Converting lease and contract expenses
					Table 12A-2a
				Completing the cash flow budget
					Table 12A-2b
				Another situation
		Observations and Summary
Chapter 13.	Cost Variance Analysis
		Learning Objectives
Introduction
Discussion Questions								 
Direct Cost Variances 				
	Direct material variances
Volume variance					
Efficiency variance
Price variance	
Direct labor variances
		Examples
			Example #1- Direct Cost Variances
		Discussion Questions
		Overhead Variances
		Examples
			Example #2 - Variable Overhead (VOH)Variances
			Example #3 - Fixed Overhead (FOH) Variances	
			Example #4 - A Complete Overhead Variance Analysis
Limitations
Discussion Questions
Summary of Key Points
Problems
			Problem #1 - Direct Cost Variances
			Problem #2 - Overhead Cost Variances	
			Problem #3 - General Variance Analysis
 Appendix 13 	Revenue Variances
		Learning Objectives				
Revenue and Contribution			
Causes of Profit Variances
Revenue Variances
 		Market size variance
Market share variance
Product mix variance
Sales price variance
		Example
 Chapter 14. 	Classical Cost-Based Decision Models
		Learning Objectives
		Introduction
		Marginal, Relevant and Sunk Costs
Categories of Marginal Cost Problems
Discussion Questions 
		The Cost-Volume-Profit Model					 
			Figure 14-1
Break-even analysis
Target analysis
		Examples
			Example #1
			Example #2
			Example #3
			Example #4
		Discussion Questions
		Price Discounting
		Examples
			Example #5
		Discussion Questions
		Outsourcing
		Examples
			Example #6
			Example #7
		Subjective Considerations
		Discussion Question
		Dropping Products
		Example
			Example #8
			Example #9
		Adding Products
		Example
			Example #10
		Discussion Questions
		Summary of Key Points
		Problems
Problem #1
			Problem #2
			Problem #3
			Problem #4	
Chapter 15. 	Performance Measures
		Learning Objectives
		Introduction
		Financial Perspective
			Income statements
			Balance sheet
			Joint measures
		Discussion Questions
		Customer Perspective
			Patients
				Services
				Access
				Quality
				Price
		Discussion Questions
			Physicians
				Services
				Quality
				Price
		Discussion Questions
			Third party payers
				Services
				Price
				Prices charged by the payer
		Discussion Questions
		Detecting Unwanted Customers
			Detecting
			Terminating
		Internal Perspective 
 			Organization standards
			Industry standards
			Regulatory standards
		Discussion Questions
		Learning and Growth Perspective
		Discussion Question
		Supplier Perspective
		Discussion Questions
		Balanced Score Cards
		Summary of Key Points
		Exercise
		References	
Appendix 15	Performance Measure Examples
		Introduction and Commentary
			Quantitative Measures
				Physician Performance Reports Prepared by Hospitals
				Comparative Facility Performance Reports Issued by 
Governmental Agencies
				Facility Profiles Published as Guides by Commercial Entities
			Qualitative Measures
				Emergency Room Customer Satisfaction Survey
				Inpatient Customer Satisfaction Survey
		Examples
Figure 15A-1 Hospital's Physician Performance Report - Quantity of 
Services Provided by Each Clinician
Figure 15A-2 Hospital's Physician Performance Report - Laboratory 
Testing Ordered by Each Clinician for Each Type of Service
			Figure 15A-3 Governmental Facility Performance Report - Hospital 
Comparative Report
			Figure 15A-4 Governmental Facility Performance Report - Lung 
Infections, Complicated
			Figure 15A-5 Facility Profile Example
			Figure 15A-6 Emergency Room Customer Satisfaction Survey
			Figure 15A-7 Inpatient Customer Satisfaction Survey
 Chapter 16.	Management Accounting Reports
		Learning Objectives
		Introduction
		Periodic Performance Reports
Balanced Score Cards
	Objective hierarchies
		Figure 16-1
	Objectives and control
	Report card uses
		Discussion Questions
			Executive management			
			Operations managers
			Report complexity
			Report frequency
			Management accountants and performance report cards
		Appropriate Periodic Report Information
		Discussion Questions
		Non-Routine Decision Support
			Understanding decision models
			Established models
			Decisions without precedence
			Ad hoc reporting information
		Discussion Questions
		Content Formats
			Graphic presentation
					Table 16-1
				Pie charts
					Figure 16-2
				Column charts
					Figure 16-3
				Line charts
					Figure 16-4
					Figure 16-5
				Summary symbols
		Graphic Choices
		Report Distribution
					Figure 16-6
					Figure 16-7
		Discussion Questions
		Summary of Key Points
		References
 Chapter 17. 	Summary and a Look to the Future
		Summary
			The health care environment
			Power of third-party payers
			Over capacity
			Motivation for efficiency
		A Look to the Future
		References
Appendix A	A Review of Financial Accounting Concepts
		The Concept of Financial Accounting: Introduction
		Organizational Structure Affects Financial Accounting
			Organization's Type of Business	
					Exhibit A-1
			Organization's Purpose
		The Overseers of Financial Accounting
			Financial Accounting Standards Board (FASB)
			Governmental Accounting Standards Board (GASB)
			Securities and Exchange Commission (SEC)
			Public Company Accounting Oversight Board
			American Institute of Certified Public Accountants (AICPA)
		Other Influences on Health Care Reporting
			Medicare Cost Reports
			Medicaid Cost Reports
			Specially Funded Projects Such as Research or Demonstration Projects
			American Hospital Association (AHA)
		Financial Accounting Characteristics, Criteria and Assumptions
			Financial Accounting Characteristics 
			Financial Accounting Criteria
			Financial Accounting Assumptions
				Organization is a separate entity
				Organization is a going concern
				Uniform measures
				Periodicity
		Reporting Financial Results
			Financial Reports Prepared Within the Organization
			Financial Reports Prepared by an Outside Firm
				Compilations and reviews
				Audits
		Accounting Principles 
			The Time Period Principle
			The Revenue Principle
			The Matching Principle
		Accounting Methods; Accrual Basis versus Cash Basis
			Accrual Basis
			Cash Basis
			Modified Cash Basis
					Exhibit A-2
		Financial Statements
			Financial Statement Presentation
			Time Periods
			Comparative Statements
			Financial Statement Titles Vary
					Exhibit A-3
			The Three Primary Financial Statements
			Balance Sheet
					Exhibit A-4
			Statement of Income
					Exhibit A-5
			Statement of Cash Flow
					Exhibit A-6
			The Fourth Financial Statement
					Exhibit A-7
					Exhibit A-8		
			Example
			Balance Sheet
					Exhibit A-9
				Current Assets
				Long-Term Assets
				Current Liabilities
				Long-Term Liabilities
				Partners' Equity
			Income Statement
					Exhibit A-10
				Operating Revenues
				Operating Expenses
				Other Revenue
			Statement of Cash Flow
					Exhibit A-11 
				Cash Flow from Operating Activities
				Cash Flow from Investing Activities
				Cash Flow from Financing Activities
			Statement of Changes in Partners' Equity
					Exhibit A-12 
Appendix B	Basic Concepts in Statistical Analysis
		Variation and Probability
					Table B-1a
Figure B-1
Figure B-1a
			Measures of Central Tendency
				Arithmetic average (or mean)
					Table B-1b
				Median
					Table B-1c
				Mode
					Figure B-2a
					Figure B-2b
				Use of mean, median or mode
			Measures of Variability
			Standard Deviation and Shape
					Figure B-3a
					Figure B-3b
					Figure B-3c
			Distributions and Inference
			Areas Under the Curve
					Figure B-4
			Inference from Data Samples
		Example
					Table B-2
			Correlation, Regression and Prediction
					Figure B-5a
					Figure B-5b
					Figure B-5c
			Simple Regression




Library of Congress Subject Headings for this publication: Health facilities Accounting, Health facilities Costs Accounting, Health services administration, Managerial accounting, Health Services Administration economics, Costs and Cost Analysis methods, Decision Support Systems, Management