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Note on Statement 18: Public Disclosure of Financial and Operating Information by Healthcare Providers
The Principles and Practices Board undertook this project to identify the types of financial operating data that should be disclosed by healthcare providers on an ongoing basis. This statement seeks to improve the understanding between those who provide financial information and those who seek and use this information. An exposure draft of this statement was issued on August 1, 1993.
1.1 With increasing frequency, healthcare providers1 are being asked to disclose a great deal of financial and operating information. The requests come from Federal, state, and local governments; business coalitions, payers, and potential payers, such as insurance companies, Blue Cross plans, HMOs, and PPOs; researchers; patients; holders and purchasers of bonds; the media; and others.
2.1 The objective of this statement is to identify the types of financial and operating data that should be disclosed by healthcare providers. Considerations related to the provision of special additional financial and other information is described in this statement. This statement seeks to improve and balance the understanding between those who provide financial and operating information and those who seek and use this information.
3.1 Disclosure of information about healthcare provider organizations has been fostered by the industry. For example, the American Hospital Association (AHA) first issued a chart of accounts for hospitals in the 1920s and has since updated it periodically in order to provide a framework for reporting financial information in a consistent manner. The Principles and Practices (P&P) Board's Statement No. 3 concluded that supplementary reporting, to more fully meet the needs of financial statement users, is appropriate. In 1980, AHA issued guidelines titled the "Disclosure of Financial and Operating Information by Health Care Institutions." This AHA statement was updated in 1990 in a management advisory released by AHA's Institutional Practices Committee. AHA recommended that health care institutions prepare annual financial statements in accordance with generally accepted accounting principles. AHA also encouraged institutions to provide supplementary information in the form of an annual report to explain its financial statements.
3.2 There are various methods for collecting and disclosing financial and operating information about healthcare providers. Many Medicare and other cost information reports are publicly available and the data included in those reports are compiled by and available through commercial services. Publicly held investor-owned organizations, including investor-owned healthcare providers, disclose extensive financial and other information in conformity with the Securities and Exchange Commission (SEC) rules. Internal Revenue Service (IRS) filings by tax-exempt healthcare providers are available for public scrutiny and analysis. Most states have agencies that collect healthcare data. State and Federal agencies, payers, and others that collect data are using increasingly sophisticated methods to collect data and are striving to improve comprehensiveness, timeliness, accuracy, and comparability of information.
3.3 The disclosure demands in the current environment, however, are far more extensive than the information contained in general purpose, external financial statements, their supplemental schedules, or other publicly available sources of information. In view of the extensive data already provided, many healthcare providers question the demands for additional information, and consider such demands unreasonably burdensome and intrusive. Competition among healthcare providers also necessitates a degree of confidentiality. However, healthcare providers are recognizing that failure to fulfill demands for financial or operating information raises questions, fosters mistrust, and interferes with the positive, constructive relationship that should exist between healthcare providers and the various agencies, organizations, and individuals that seek data. While some confidentiality is necessary, it should not be used to justify a failure to make reasonable disclosure.
4.1 Healthcare providers, in general, have demonstrated a willingness to disclose financial and operating information which is reliable, timely, and useful. There are many considerations related to the disclosure of financial and operating information. They include, but are not limited to, the following:
4.2 The disclosures recommended in section 5 of this statement should be readily available. Healthcare organizations should have a specific process for fulfilling information requests.
5.1 In its Statement No. 3, the P&P Board described the financial reporting requirements of hospitals and recommended supplementary reporting that would help meet the needs of users of financial reports. This statement expands upon Statement No. 3 and recommends that healthcare providers prepare an annual (or more frequent) report, including financial and operating information that facilitates an understanding of the financial status of the organization. This report should consist of:
A. Financial Statements
B. Management Discussion and Analysis of Financial and Operating Information
5.2 Guidance as to the form and content of the financial statements is included in the American Institute of Certified Public Accountant's (AICPA's) audit and accounting guide, "Audits of Providers of Healthcare Services." In most instances it is appropriate to provide stakeholders with a complete set of comparative audited financial statements, including related notes.
5.3 A management discussion and analysis should accompany the financial statements. Items to consider in management's discussion and analysis are outlined in the Appendix and should include both financial and operating data. Trends and changes should be discussed, and may require the presentation of information covering more than two years of operations.
The following items are not intended to be all inclusive nor will all items be relevant in each provider's circumstance.
II. Trends in operating results and key financial ratios
III. Employees, medical staff and governing board
IV. Regulatory environment
V. Risks and uncertainties
VI. Statistical data
VII. Major sources of revenues
VIII. Plans for the future
John T. Bigalke, FHFMA, CPA
Eugene R. Curcio, FHFMA, CPA
Richard J. Donoghue, CPA
Daniel F. Governile, CPA
Robbin R. Grill, CPA
Manfred Heinzeller, CPA
Catherine A. Jacobson, CPA
Maribess L. Miller, CPA
Bonnie L. Phipps, FHFMA, CPA
Kenneth C. Robinson, FHFMA, CPA
John J. Sheehan, CPA
Kirby O. Smith, FHFMA, CMPA
Patricia Hlavinka, CPA
1. The term healthcare providers is used to reference organizations that provide healthcare services. Examples include hospitals, continuing care retirement communities, skilled nursing facilities, subacute care facilities, multispecialty clinics, freestanding ambulatory centers, home health agencies, and HMOs.
2. An organization's stakeholders are those with an interest in the financial and operating performance of the organization. Stockholders are stakeholders of an investor-owned healthcare provider. Elected representatives are stakeholders of governmental healthcare providers. A Catholic order may be the stakeholder of a Catholic healthcare provider. The citizens of a community are stakeholders of a community healthcare provider. Other stakeholders may include brokers, bondholders, employees, employers, insurance companies, investment analysts, lenders, regulators, and suppliers.
Publication Date: Monday, August 01, 1994
A leader from McKesson discusses how healthcare reform is forcing hospitals and health systems to take a different approach to capacity management and patient flow.
Patient financial engagement is more challenging than ever – and more critical. With patient responsibility as a percentage of revenue on the rise, providers have seen their billing-related costs and accounts receivable levels increase. If increasing collection yield and reducing costs are a priority for your organization, the metrics outlined in this presentation will provide the framework you need to understand what’s working and what’s not, in order to guide your overall patient financial engagement initiatives and optimize results.
Emad Rizk, MD, president and CEO of Accretive Health, discusses the uncertainty facing hospitals and the transitions affecting revenue cycle management.
No two patients are the same. Each has a very personal healthcare experience, and each has distinct financial needs and preferences that have an impact on how, when and if they chose to pay their healthcare bill. It’s no longer effective to apply static billing techniques to solve the complex challenge of collecting balances from patients. The need to tailor financial conversations and payment options to individual needs and preferences is critical. This presentation provides 10 recommendations that will not only help you improve payment performance through a more tailored approach, but take control of rising collection costs.
Jim Bohnsack, vice president, solution & corporate development for Conifer Health Solutions, explains how the company helps healthcare providers leverage data to deliver better outcomes while optimizing reimbursement for all payment arrangements.
This white paper, written by Apex Vice President of Solutions and Services, Carrie Romandine, discusses the importance of patient segmentation and messaging specifically related to the patient revenue cycle. Applying strategic messaging that is tailored to each patient type will not only better educate consumers on payment options specific to their billing needs, but it will maximize the amount collected before sending to collections. Further, targeted messaging should be applied across all points of patient interaction (i.e. point of service, customer service, patient statements) and analyzed regularly for maximized results.
Steve Scibetta, senior director of channel sales for Ontario Systems' healthcare product line, shares insights into effectively managing receivables.
This white paper, written by Apex President Patrick Maurer, discusses methods to increase patient adoption of online payments. Providers are now seeking ways to incrementally collect more payments due from patients as well as speeding up the rate of collections. This white paper shows why patient-centric approaches to online payment portals are important complements to traditional provider-centric approaches.
Elena White, vice president of risk, quality, and network solutions for Optum, discusses how healthcare providers can leverage data and technology as they enable risk in their organization.
Increased electronic engagement between healthcare providers and patients provides significant opportunities for improving revenue cycle metrics and encouraging patients to access EHRs. This article, written by Apex Founder and CEO Brian Kueppers, explores a number of strategies to create synergy between patient billing, online payment portals and electronic health record (EHR) software to realize a high ROI in speed to payment, patient satisfaction and portal adoption for meaningful use.
Somnia President and CEO Marc Koch, MD, MBA, explains how hospitals can drive transformative change in the perioperative experience for outstanding clinical and financial outcomes.
Faced with a rising tide of bad debt, a large Southeastern healthcare system was seeing a sharp decline in net patient revenues. The need to improve collections was dire. By integrating critical tools and processes, the health system was able to increase online payments and improve its financial position. Taking a holistic approach increased overall collection yield by 10% while costs came down because the number of statements sent to patients fell by 10%, which equated to a $1.3M annualized improvement in patient cash over a six-month period. This case study explains how.
PMMC President Roger L. Shaul discusses the effects of healthcare reform on revenue cycle management and how PMMC's products help clients adapt to a changing financial environment.
With the ICD10 deadline quickly approaching and daily responsibilities not slowing down, final preparations for October 1 require strategic prioritization and laser focus.
Greg Burgess, Founder and Chief Product Officer at Burgess Group shares insights and opportunities for payment integrity in the rapidly changing healthcare IT landscape.
Read how Gwinnett Medical Center provides clear connections to financial information, offers multiple payment options for patients, and gives onsite staff the ability to collect payments at multiple points throughout the care process.
Read how Orlando Health was able to perform deeper dives into claims data to help the health system see claim rejections more quickly–even on the front end–and reduce A/R days.
To maintain fiscal fitness and boost patient satisfaction and loyalty, healthcare providers need visibility into when and how much they will be paid–by whom–and the ability to better navigate obstacles to payment. They need payment clarity. This whitepaper illuminates this concept that is winning fans at forward-thinking hospitals.
Financial services staff are always looking for ways to improve the verification, billing and collections processes, and Munson Healthcare is no different. Read about how they streamlined the billing process to produce cleaner bills on the front end and helped financial services staff collect more than $1 million in additional upfront annual revenue in one year.
Effective revenue cycle management can be a challenge for any hospital, but for smaller providers it is even tougher. Read how Wallace Thomson identified unreimbursed procedures, streamlined claims management, and improved its ability to determine charity eligibility.
Before launching an energy-efficiency initiative, it’s important to build a solid business case and understand the funding options and potential incentives that are available. Healthcare leaders should consider taking the steps outlined in the whitepaper to ease the process of gaining approval, piloting, implementing, and supporting sustainability projects. You will find that investing in sustainability and energy efficiency helps hospitals add cash to their bottom line. Discover how hospitals and health systems have various options for funding energy-efficient and renewable-energy initiatives, depending on their current financial structure and strategy.
Health care is a dynamic mergers and acquisitions market with numerous hospitals and health systems contemplating or pursuing formal arrangements with other entities. These relationships often pose a strategic benefit, such as enhancing competencies across the continuum, facilitating economies of scale, or giving the participants a competitive advantage in a crowded market. Underpinning any profitable acquisition is a robust capital planning strategy that ensures an organization reserves sufficient funds and efficiently onboards partners that advance the enterprise mission and values.
The success of healthcare mergers, acquisitions, and other affiliations is predicated in part on available capital, and the need for and sources of funding are considerations present throughout the partnering process, from choosing a partner to evaluating an arrangement’s capital needs to selecting an integration model to finding the right money source to finance the deal. This whitepaper offers several strategies that health system leaders have used to assess and manage capital needs for their growing networks.
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Of all the transformations reshaping American health care, none is more profound than the shift toward value. Access HFMA’s Value Project to discover how healthcare finance leaders are joining this transformation.
Copyright 2016, Healthcare Financial Management Association.
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