Week 10

Hey guys!! My final week with the finance and accounting crew at Banner Medical Group's Mesa Corporate office was both bitter and sweet. Although it was awesome and fulfilling to finish my senior project, I will definitely miss working with Mr. Chad Cornell. I learned so much from him and because of my time there I will definitely pursue finance for my career. The last day I spent there I went over all of the key medical finance concepts I had learned this spring with him and wrote my own proforma. A profroma is essrlentislly a financial statement detailing the costs and benefits of making a purchase. In this case it was on the hiring of a new orthopedic surgeon. Financial statements that utilize the pro forma method of calculation are often designed to draw focus to specific figures when an earnings announcement is issued by a company and made available to the public, particularly potential investors. These pro forma statements may also be designed to indicate a change proposed by a company, such as an acquisition or a merger. Investors should be aware a company’s pro forma financial statements may hold figures or calculations that are not in compliance with generally accepted accounting principles. In some instances, pro forma figures are vastly different than those generated with GAAP. We finished our day with an office pizza party!!

Week 9

This week was another excited one at Banner Medical Group's Mesa Corporate office. I learned about maximizing operating revenue, Which is essentially profits for Nonprofit companies.
In economics, profit maximization is the short run or long run process by which a firm determines the price and output level that returns the greatest profit. There are several approaches to this problem. The total revenue–total cost perspective relies on the fact that profit equals revenue minus cost and focuses on maximizing this difference, and the marginal revenue–marginal cost perspective is based on the fact that total profit reaches its maximum point where marginal revenue equals marginal cost.

Any costs incurred by a firm may be classed into two groups: fixed costs and variable costs. Fixed costs, which occur only in the short run, are incurred by the business at any level of output, including zero output. These may include equipment maintenance, rent, wages of employees whose numbers cannot be increased or decreased in the short run, and general upkeep. Variable costs change with the level of output, increasing as more product is generated. Materials consumed during production often have the largest impact on this category, which also includes the wages of employees who can be hired and laid off in the span of time (long run or short run) under consideration. Fixed cost and variable cost, combined, equal total cost.

Revenue is the amount of money that a company receives from its normal business activities, usually from the sale of goods and services (as opposed to monies from security sales such as equity shares or debt issuances).

Marginal cost and revenue, depending on whether the calculus approach is taken or not, are defined as either the change in cost or revenue as each additional unit is produced, or the derivative of cost or revenue with respect to the quantity of output. For instance, taking the first definition, if it costs a firm 400 USD to produce 5 units and 480 USD to produce 6, the marginal cost of the sixth unit is 80 dollars.

To obtain the profit maximizing output quantity, we start by recognizing that profit is equal to total revenue (TR) minus total cost (TC). Given a table of costs and revenues at each quantity, we can either compute equations or plot the data directly on a graph. The profit-maximizing output is the one at which this difference reaches its maximum.

In the accompanying diagram, the linear total revenue curve represents the case in which the firm is a perfect competitor in the goods market, and thus cannot set its own selling price. The profit-maximizing output level is represented as the one at which total revenue is the height of C and total cost is the height of B; the maximal profit is measured as CB. This output level is also the one at which the total profit curve is at its maximum.

If, contrary to what is assumed in the graph, the firm is not a perfect competitor in the output market, the price to sell the product at can be read off the demand curve at the firm's optimal quantity of output.

Week 8

I spent this week learning about MACRA, the legislation to be implemented in 2019 that will reward healthcare providers based on their quality of care. The Quality Payment Program makes Medicare better by helping providers focus on care quality and the one thing that matters most – making patients healthier. The Quality Payment Program ends the Sustainable Growth Rate formula and gives you new tools, models, and resources to help give patients the best possible care. Hospitals can choose how you want to take part based on your practice size, specialty, location, or patient population.

The push to pay for quality, not quantity in health care is rapidly accelerating. Doctors and hospitals are being evaluated on myriad quality metrics by rating services, insurance companies, professional groups and government programs—with results increasingly tied to financial penalties or bonuses.

But payers, providers and patients don’t always agree on what quality means, and there is no official set of standards.


The quality programs grew out of two realizations: Health care is unsafe and outcomes are poor. But there is no single measure of a doctor’s or hospital’s quality that will fix those problems. Instead, we’re measuring processes. Of the 123 different metrics in the government’s Hospital Compare website, 102 measure processes. That’s important, but it has become too burdensome for the benefit it delivers.

Quality should focus on the functional outcomes that mean the most to patients. For a patient who got a knee replacement, can she walk and climb steps? For a man having prostate surgery, can we operate without causing incontinence and impotence? To find the keys, and not just look in good light, we need to track and report functional outcomes across all patients by each team or hospital.

Week 7

Week 7 was different from my other weeks so far. I did not do as much hands on independent research, but I spent my time learning new concepts in the field of finance. I learned mostly about the acquisition, usage, and retention of capital. Financial capital is any economic resource measured in terms of money used by entrepreneurs and businesses to buy what they need to make their products or to provide their services to the sector of the economy upon which their operation is based, i.e. retail, corporate, investment banking, etc.

Financial capital or just capital/equity in finance, accounting and economics, is internal retained earnings generated by the entity or funds provided by lenders (and investors) to businesses to purchase real capital equipment or services for producing new goods/services. Real capital or economic capital comprises physical goods that assist in the production of other goods and services, e.g. shovels for gravediggers, sewing machines for tailors, or machinery and tooling for factories.

Financial capital generally refers to saved-up financial wealth, especially that used to start or maintain a business. A financial concept of capital is adopted by most entities in preparing their financial reports. Under a financial concept of capital, such as invested money or invested purchasing power, capital is synonymous with the net assets or equity of the entity. Under a physical concept of capital, such as operating capability, capital is regarded as the productive capacity of the entity based on, for example, units of output per day. Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power.

Financial capital is provided by lenders for a price: interest. Also see time value of money for a more detailed description of how financial capital may be analyzed.

Furthermore, financial capital, is any liquid medium or mechanism that represents wealth, or other styles of capital. It is, however, usually purchasing power in the form of money available for the production or purchasing of goods, et cetera. Capital can also be obtained by producing more than what is immediately required and saving the surplus.

Financial capital can also be in the form of purchasable items such as computers or books that can contribute directly or indirectly to obtaining various other types of capital.

Financial capital has been subcategorized by some academics as economic or "productive capital" necessary for operations, signaling capital which signals a company's financial strength to shareholders, and regulatory capital which fulfills capital requirements.

Week 6

My 6th week was far more interesting than my other ones so far. I learned much about quality metrics and their contribution to Banner Health Network's revenue. 

Quality measures are tools that help medical groups measure or quantify healthcare processes, outcomes, patient perceptions, and organizational structure and/or systems that are associated with the ability to provide high-quality health care and/or that relate to one or more quality goals for health care. These goals include: effective, safe, efficient, patient-centered, equitable, and timely care. Many of these metrics monitor the health of patients by ensuring providers are spending sufficient time screening their patients. 

The Center for Medical Services (CMS) uses quality measures in its quality improvement, public reporting, and pay-for-reporting programs for specific healthcare providers. Data on quality measures are collected or reported in a variety of ways, such as claims, assessment instruments, chart abstraction, registries. Click on Related Links Inside CMS below for more information.

CMS is currently testing the submission of quality measures data from Electronic Health Records for physicians and other health care professionals and will soon be testing with hospitals. 

The shift to ensure that providers are hitting these quality metrics began for the most part in the last 4 years. So, I spent this week looking at Banners success in reaching these metrics. The way Banner ensured that its providers were reaching these metrics was interesting. As i said before, provider productivity is measured in relative value units, and these providers are given bonuses based on these RVUs. Banner Health Network gave more RVUs to providers when they successfully achieved these quality metrics. 

As healthcare reform continues, the industry’s headlong shift from fee-for-service to a pay-for-performance model means quality improvement projects have become more top-of-mind for hospitals and healthcare systems, and this means that clinical metrics are more important than ever.

Between government regulations that carry heavy penalties for poor or unacceptable outcomes and financial incentives for improving population health, hospitals and healthcare systems are finding increased urgency in evaluating how care is being delivered and determining the best practices to follow in the future. As always, follow the money.

What makes all of this possible, of course, is the wealth of clinical data now available. While electronic health records (EHRs) aren’t quite perfect, they have given us a way to take data that was once isolated and proprietary to individual physicians or practices and use it to see a larger picture of management. When clinical data is combined with financial, operational, and other data, organizations have a powerful foundation to use in driving quality.

Week 5

Spring Break🔥🔥🔥🔥🔥🔥

Week 4

During my fourth week at the Banner Medical Group Corporate office, I was given an unprecedented amount of freedom. I was given access to confidential information regarding the financial integrity of Banner’s clinics throughout the Valley. I was told by mentor Chad Cornell to determine the five most successful and five least successful clinics in the East Valley of 2016.

In order to determine the success of these clinics, I had to analyze how much revenue they produced and compare it to their expenses. Although this process may seem trivial there are far more nuances to it than you might think. In terms of expenses, the most important metrics to analyze are supply expenses in total, per relative value unit, per patient visit, other expenses, and provider salaries. Moreover, clinics often incur random expenses, in terms of both the number of providers, provider salaries, and random operating expenses. When these expenses occur, the amount of revenue often flexes in the same direction of these random expenses. When analyzing revenue, I had to look at the collection rate, which is how much money the clinic collects divided by how much they charge. Clinics often collect a small portion of what they charge because insurance companies are very unreliable. I also had to look at the number of relative value units made per provider. This show how productive each doctor is. If this number is too low, then the hospital has a provider that is not seeing enough patients.

Maintaining profitability these days is far more difficult than it used to be. With an ever-growing list of costly mandates, increasing overhead, and declining reimbursements, the pressure to remain profitable has undoubtedly intensified for many office-based primary care physicians (PCPs), according to practice management experts.

The business challenges in 2017 likely will become even more magnified as patient demand increases, the supply of available PCPs decreases, and the focus on the healthcare sector shifts to cost reduction overall.

The key to building an economically healthy and viable practice, experts say, is to start with a sound business plan that focuses on patient engagement, serves a valuable need, and addresses key issues important to the economic viability of the practice. A business plan is essential to giving you and your practice firm footing on the path to financial health, and such a plan is not just beneficial to those approaching the completion of residency.