Comparative Summary

Topics: Health care, Health economics, Corporate finance Pages: 5 (1474 words) Published: October 3, 2012
Comparative Summary
Rebecca Ingli
October 1, 2012

Comparative Summary
Health care is a provision of for profit, not-for-profit, and government organizations. Health care consists of insurers, suppliers, and providers. Each organization has a financial structure, polices, and management practices prevalent in the financial environment. Effective financial management is more difficult in health care than any other industry. Entities

For-profit, not-for-profit and government facilities exist throughout the country. People Incorporated Mental Health Services in the Minneapolis, Minnesota, is a not-for-profit entity that offers a spectrum of services to mental illness patients (People Incorporated, 2011). Redwing Chiropractic Clinic in Redwing, Minnesota, is a for-profit clinic that specializes in treating conditions, including spine, and menstrual pain (Redwing Chiropractic Clinic, 2011). The Veterans Administration Health Care System (VAHCS) is a government facility operating from Minneapolis, Minnesota. The VAHCS provides care to America’s Veteran population (United States Department of Veterans Affairs, 2011). Financial Structure

The type of provider and the size of the organization affect the structure and size of the health care organization’s finance department. Businesses and health service organizations have a primary role. The plan is to use and acquire resources to increase and maximize efficiency and worth of the organization. The financial structure must meet the basic requirements of the health care organizations finance activities. The finance activities include budgeting, planning, financial reporting, capital investment decisions, financing decisions, working capital management, contract management, and financial risk management (Gapenski, 2008).

Large health care organizations, such as the Veterans Health Administration generally structure the finance department with a chief financial officer (CFO) or vice-president. The CFO directs the organizations finance activities, and the senior managers. The senior managers include the comptroller who is responsible reporting budgeting, payables management, financial statements, and accounting. The treasurer is responsible for employment and acquisition of cash, capital, and debt management, financial risk management, lease financing, and endowment funds. The CFO reports to a chief executive officer (CEO) (Gapenski, 2008).

Smaller health care entities combine different financial positions into one. Smaller health care entities combine the senior management positions, such as the treasure, comptroller, and assigned managers to an individual. “In the smallest health services organizations, the entire finance function is managed by one person, often call the business manager” (Gapenski, 2008, p. 8). A business manager in the Chiropractic clinic controls the financial structure. Not-for-profit entities such as People Incorporated lease financial management activities to a larger organization (Gapenski, 2008) Policies unique to each financial environment

The policies unique to each financial environment, for-profit, not-for-profit, and government, depends on the nature of the organization. Not-for-profit entities do not pay property or income tax, and benefit from provision of charity services. For-profit entities, such as the chiropractic clinic, have a requirement to pay federal and state taxes. Accreditation by Joint Commission is a service available to health care entities. The service is voluntary. The Joint Commission promotes high standards of care. The cost of accreditation can be substantial, but the accreditation makes health care entities eligible for Medicare program participation (Gapenski, 2008).

Not-for-profit entities betroth in charitable missions, contribution, and community service. These entities receive benefits from tax exemptions from state and federal income taxes, exemptions from sales and property...

References: Finkler, S.A. & Ward, D.M. (2006). Accounting Fundamentals for Health Care Management. Jones and Bartlett Publishers, Inc
Gapenski, L
Gorin, S. H. (2011). The Affordable Care Act: Background and Analysis. Health and Social Work 36 (2), 83-86.
Horwitz, J.R. (2005). Making Profits and Providing Care: Comparing Nonprofit, For-Profit, and
Government Hospitals
People Incorporated. (2011). Securing Independence for People with Mental Illness. Retrieved from http://
Redwing Chiropractic Clinic
United States Department of Veterans Affairs. (2011). National Center for Veterans Analysis and Statistics. Retrieved from
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