Understanding basic accounting principles is imperative to the health care manager role. Reading a balance sheet and recognizing the importance of cash flow are skills that are compulsory to this function. With this in mind, discuss the following:

Discuss the most important headings in a balance sheet and what the summary numbers mean.
Explain 4-5 reasons why cash flow is important to a health care organization.
Use 2 references to validate your response. Validation means that references have been used to prove your assertions and statements. Academic work is not what is thought to be true, but is what is researched to be true.

Part 2 (2-3 pages)

As a health care manager, daily management tasks include financial management. Financial management includes items such as labor cost, equipment cost, and a budget that controls the operations. Proper operations requires planning and control. The budget is created using the basic financial information and accounting principles that an organization uses in its monthly, quarterly, and annual financial reports.

After learning the basics of financial statements, it is very important for a health care manager to understand the basic five areas of performance that set the financial plan for the organization. Define and provide an example of what the following mean:

Short-term solvency
Activity
Financial leverage
Profitability
Value
Define the following terms, and explain why they are important in a health care organization:

Current ratio
Total asset turnover
Debt ratio
Profit margins
Include a minimum of 2 references.

Part 3 (400-600 words)

You are the manager in a health care organization, and you have been directed to come up with a plan to cut your budget by 5%. Discuss the following:

What expenses will you cut? Justify the cuts you choose.
Describe how these cuts will affect patient-centered care.
Include both positive and negative effects.
Provide at least 1 reference for this discussion.

Part 4 (3-4 pages)

You have been placed on a committee in your health care organization. The committee has to create a set of cost containment strategies that will positively impact (decrease) operating expenses. The committee is also challenged with increasing reimbursement.

Provide 5 cost-cutting strategies that the committee could recommend to the executive board.
Describe how these cuts will benefit patient care or business systems.
Provide 5 ideas on how to increase revenue or reimbursement. This answer can include short-term and long-term goals.
Describe how these revenue or reimbursement systems benefit patient care or the business systems.