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Health Care Accounting-Druid City Hospital

Health Care Accounting-Druid City Hospital

Druid City Hospital (DCH) is selected as the analysis organization for this report. The health care center operates three hospitals in Fayette, Northport, and Tuscaloosa. The report is covered in the following topics.

Trends in Expenses and Revenue Analysis

The latest available financial data relate to the fiscal period that ended in September 2022. Various trends are observed and analyzed to establish whether budgetary objectives are met. In the fiscal year that ended in 2021, the hospital stood to lose up to $60 million due to additional costs of combating the COVID-19 pandemic. Despite the increase in expenses, there was no substantial increase in reimbursements, thus worsening the company’s financial position going into 2022. The trend of increasing expenses and reduced revenues was fuelled by a $35 million increase in part-time workers hired by the hospital. Another major driver behind the increasing expenses was the competition from other regional hospitals, which were attempting to remain staffed adequately even after the pandemic effects reduced. The competition put pressure on DCH’s ability to recruit and retain its employees full-time.

The cost of medical supplies is another trend that is increasing, as shown in DCH’s finances. The rise in the cost of medical supplies was up by around 30% in the healthcare sector (Richard et al., 2022). For DCH, this reflected an increase in the cost of medical supplies by $24 million in 2022 compared to 2021. The increased cost of medicine and pharmaceutical supplies brought about another $3 million increase in expenses. Lastly, an additional $10 million expenses increase resulted from salary increments. As an increasing trend in expenses occurred from 2021 to 2022, the state and federal funding for helping hospitals fight the COVID-19 pandemic was cut. Notably, this left the hospital with new expenses to offset.

The budgetary targets were not met as intended for 2021 and 2022. Although the budgetary targets for revenues and expenses were met in some months, such as February, most were underachieved. The trend of increasing expenses and reducing revenues failed to achieve a budgetary target of a $23 million loss. Instead, the loss went as high as $60 million. The failure to meet these budgetary targets curtailed the hospital’s ability to increase the leadership team, increase staff, and ability to merit market adjustments. It is worth noting that most hospitals were affected the same, with most failing to meet their budgetary targets due to adverse increases in staffing and supply chain expenses (Kapoor et al., 2023). Reimbursements were cut from the government when the impacts of the COVID-19 pandemic eased, leaving the hospitals with significant expenses to meet in the following fiscal periods.

How the Organization can Contain or Reduce Expenses Without Damaging Services or Quality of Care

A memo from the DCH hospital in 2022 set out various strategies to contain and reduce expenses. The strategies entailed a very conservative capital spending approach to reduce expenses. However, this may likely impact the quality of care being offered. Therefore, a multi-faceted approach is suggested, including several actions to be taken by DCH to reduce expenses. First, the hospital should streamline its operations for maximum efficiency. Notably, this can be done by streamlining administrative processes, eliminating redundancies, and automating tasks wherever possible. By implementing efficient workflows and technology solutions, the organization can reduce waste and improve productivity, leading to cost savings. Second, the hospital should consider shifting focus from reactive treatments to preventative care and population health management. According to Kwasnicka et al. (2022), healthcare organizations can reduce the incidence of chronic diseases and costly hospitalizations by promoting healthy lifestyle choices and early intervention. DCH should invest in wellness programs, and patient education empowers individuals to take charge of their health and avoid expensive treatments.

Third, DCH should cut costs by utilizing technology and telemedicine. Embracing digital health solutions and telemedicine is a major way to improve efficiency and reduce costs in modern society. Telemedicine enables remote consultations and monitoring, reducing the need for in-person visits and associated overhead costs. Further, implementing electronic health records (EHRs) can help to streamline data management, enhance coordination among healthcare providers, and minimize paperwork expenses. Fourth, DCH should implement evidence-based quality improvement initiatives to enhance patient outcomes while reducing costs. When healthcare processes are enhanced to reduce medical errors and prevent unnecessary hospital readmissions, the organization can achieve cost efficiencies without compromising care quality. Lastly, DCH should work with buyers and suppliers to reduce costs. This can be achieved by negotiating with pharmaceutical companies, medical suppliers, and insurance payers to secure better pricing and contracts. Further, this can occur through bulk purchasing of medical supplies and medications, reducing costs significantly. Also, collaborations with insurance companies can result in more favorable reimbursement rates, reducing the financial burden on the organization.

Reimbursement Strategy

 Improving the DCH’s reimbursement strategy can indeed increase revenue. One effective approach to achieve this is to implement a value-based care model in the operations undertaken by the company. In a traditional fee-for-service reimbursement system, providers are paid based on the volume of services they deliver, which can lead to overutilization and increased costs. However, value-based care focuses on delivering high-quality care and achieving positive patient outcomes while controlling costs. Implementing this strategy will involve several steps. First, DCH should establish specific quality metrics and performance indicators that align with patient outcomes, satisfaction, and cost-effectiveness. Providers would then be incentivized to meet these targets through performance-based payments or shared savings arrangements. Second, the organization encourages care coordination among healthcare providers, specialists, and ancillary services, which can improve patient outcomes and reduce redundant services. Engaging patients in their care through personalized care plans and follow-up support can lead to better adherence to treatment regimens and, ultimately, cost savings.

Third, DCH should implement advanced data analytics tools to identify high-risk patients and prioritize interventions. This will prevent complications and costly hospitalizations. Additionally, population health management strategies can address the health needs of specific groups, reducing overall healthcare expenses. Fourth, DCH should utilize bundled payment models for specific medical procedures or episodes of care. Instead of separate payments for each service, a single payment is made for the entire episode, encouraging more efficient and coordinated care. Fifth, the hospital should negotiate contracts with payers to ensure fair reimbursement rates that reflect the value delivered by the organization. Demonstrating a track record of positive patient outcomes and cost savings through value-based care can strengthen negotiation positions. Lastly, DCH should administer a culture of continuous improvement and learning. Notably, this should be undertaken by regularly assessing the effectiveness of value-based care initiatives, gathering feedback from patients and providers, and making necessary adjustments to enhance the reimbursement strategy.

Brand Building

DCH’s financial performance is a critical determinant of its overall success and reputation. In the competitive healthcare landscape, the organization should demonstrate strong financial health and utilize this performance to build a strong and resilient brand. According to Koh et al. (2022), an organization can build its brand through financial performance by maintaining transparent and accurate financial reporting. Transparent reporting builds trust among investors, customers, and other stakeholders, demonstrating a commitment to ethical practices and accountability. A strong reputation for financial integrity can positively influence brand perception and attract more stakeholders to invest in and engage with DCH. Second, good financial performance can reinforce DCH’s brand values and corporate identity. For example, the hospital values sustainability, and thus, it should invest in eco-friendly initiatives and showcase how these efforts positively impact financial results. Essentially, the alignment of financial objectives with brand values helps to strengthen brand authenticity and credibility.

Financial success can motivate employees by linking their efforts to the company’s financial achievements. For instance, incentive programs or bonuses tied to financial performance can increase employee motivation and foster a sense of ownership in the DCH’s success. Engaged employees are likelier to become brand advocates, promoting the organization’s values and successes to their networks, further enhancing the brand’s reputation. Lastly, when an organization experiences positive financial trends, such as revenue growth or improved profitability, it communicates the results to stakeholders. Essentially, highlighting success stories and milestones can foster a positive brand image.


Kapoor, R., Standaert, B., Pezalla, E. J., Demarteau, N., Sutton, K., Tichy, E., … & Nolan, T. (2023). Identification of an Optimal COVID-19 Booster Allocation Strategy to Minimize Hospital Bed-Days with a Fixed Healthcare Budget. Vaccines11(2), 377.

Koh, H. K., Burnasheva, R., & Suh, Y. G. (2022). Perceived ESG (environmental, social, governance) and consumers’ responses: The mediating role of brand credibility, Brand Image, and perceived quality. Sustainability14(8), 4515.

Kwasnicka, D., Keller, J., Perski, O., Potthoff, S., Ten Hoor, G. A., Ainsworth, B., … & Sanderman, R. (2022). White Paper: Open Digital Health–Accelerating Transparent and Scalable health promotion and treatment. Health Psychology Review16(4), 475-491.

Richards, F., Kodjamanova, P., Chen, X., Li, N., Atanasov, P., Bennetts, L., … & El Khoury, A.

(2022). Economic burden of COVID-19: a systematic review. ClinicoEconomics and Outcomes Research, 293-307.


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A good financial strategy can always be improved. Having knowledge of your organization’s finances provides the leverage to make decisions that
affect the outlook and goals of the company. This assignment gives you an opportunity to examine company practices from a financial lens, which
provides you with an insight into what drives financial decisions for a healthcare system.
Obtain a recent financial statement for your organization, detailing expenses and revenues. (This can be from within the last year. You may need
to work with your supervisor to obtain a financial statement).

Health Care Accounting-Druid City Hospital

Health Care Accounting-Druid City Hospital

Note: If you cannot access a financial statement, discuss it with your faculty member.
Write a 1,225- to 1,575-word report on the major trends in your organization’s expenses and revenues. Include the following points:
• Analyze any trends in expenses and revenue that you see. Are they on target to meet budget goals?
• How can your organization contain or reduce expenses without damaging services and quality of care?
• Can your organization’s reimbursement strategy be improved to increase revenue? If so, what would it be, and how would it be
• How can your organization use its financial performance to build its brand?

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