1. Hospitals HAS 4320

2. Revenue Philanthropy and grants Global budgets Charges Per diem

3. Revenue Cost reimbursement Per Case Capitation Managed care contracts

4. Funds Out Payroll = 54% Professional fees = 4% Supplies and other = 33% Capital depreciation and interest = 9%

5. Financial Management Cost shifting Losing proposition Medicare and Medicaid Services and patient groups

6. Financial Management Medicare changes Cream skimming …Managed care systems

7. Capital Financing Hill-Burton Act (1946) Borrowed funds Three factors Guaranteed revenues Tax exemption Cost reimbursement

8. Capital Financing Borrowing loses steam Hospital systems

9. Who gets the profits? Hospitals are doctors’ workshops Hospitals are managed for managers Little difference between for-profit and not-for-profit

10. Competition Among Hospitals Pros and cons Why is it good and why is it useless Think about… One hospital versus 10 hospitals 10 hospitals agreed not to compete on price 1975 versus today

11. Some findings… Stanford 1980s competition is bad 1990s competition is good Technology Advantages

12. Centers of Excellence DHHS Office on Women’s Health 15 centers $12 million in funding $129 million more Enhanced research Increased opportunities Expanded resources

13. Centers of Excellence Increased capacity Increased women’s involvement Closest to us UCLA UCSF Univ of Washington

14. Regulation Some hospitals cost more than others Short-run versus long-run

15. Uncertainty and budgeting Foreseeable and unknown How do managers deal with change?

16. Theory and Accounting Measures Deviation raises costs Unobvious charges Average over many days

17. Economies of scale 400-bed hospital is good Too few beds is bad Too large is bad Contracting out

18. Quality and cost New cures are cheaper No price competition

19. Measuring competition Survivor analysis Community care Monopolies Market share