Reference no: EM132243375

Accounting Principles Assignment

Real-World Cases

Bright Hospital is a 270-bed, not-for-profit community hospital. Its largest percentage of patients consists of mothers and newborns, followed by a mix of cardiovascular-related admissions. It has an emergency department staffed by hospital employees. Bright’s fiscal year follows the calendar year, ending December 31. In August, Bright began its year-end budget process by establishing its financial assumptions for the following two years. Bright assumed that revenue would remain constant, that it would continue its existing contracts with payers, that its Medicare population percentage would not change, and that no major infrastructure maintenance would be required in the upcoming fiscal year. No major capital projects were anticipated. In its operational budget, administration plans to include resources for a Joint Commission steering committee and related activities to prepare for the anticipated accreditation visit in the subsequent year.

Administration distributed operational and capital budget compilation packages to department managers for completion and return by September 30.

Bright Hospital does not have a large marketing department. It has one marketing professional on staff whose responsibilities include the development and publishing of brochures and coordination of patient satisfaction surveys, which are compiled and analyzed by an outside vendor. In the past two years, there has been a slight, but continuing, decline in patient satisfaction among maternity patients. Suggestions for improvement have varied, but common complaints center on the lack of soothing ambiance in labor and delivery and the hospital policy prohibiting overnight visitors.

The maternity and newborn departments have been very concerned about declining patient satisfaction. They are worried that the current year’s slight decline in maternity admissions is the result of that dissatisfaction and that patients are traveling a little further to give birth at a neighboring medical center, at which some of their physicians also have privileges. The departments would like to renovate the maternity and newborn wing, forming a women’s center with increased emphasis on wellness and ancillary services. This would be a two-year capital project that would require marketing support and some minor disruption of services during construction.

The cardiology department is very excited. It has just learned that a well-respected cardiologist has retired to the area and is exploring the idea of opening a small consulting practice. The cardiologist has not yet applied for privileges at any area hospitals, but it is known that she is used to working in a facility with its own cardiac catheterization lab. Because the current chief of the medical staff at Bright is a personal friend of the cardiologist, the cardiology department believes that she could be lured on staff if the hospital had its own lab. Based on the volume of patients that Bright currently sends out to another facility for cardiac catheterization, the cardiology department believes that patient care would be facilitated by the expansion and that the increased revenue would help justify the cost.

The HIM department has recently lost several employees to retirement and promotions within the facility. It is currently down two coders and a clerk, and has reduced its weekend coverage to one person, day shift only. Transcription is handled largely by the department, with an outside service processing any overflow. The HIM department would like to outsource all of its transcription and move to a new coding system that would allow the coders to work from home. This plan would improve productivity, decrease transcription and coding delays, and shorten billing time. All three departments submitted capital budget requests for the projects described.

Discussion Questions- Please answer all three discussion questions.

If the hospital can only approve one of the proposed projects, which do you think has the best chance of being approved? Why?

Ideally, how should Bright’s finance department analyze these projects? What do you think is the best method for analyzing them under the circumstances?

If you were the director of the HIM department, how would you justify your department’s project so that it is presented most favorably?