About the Book

1
About the Book

• Code Blue, McDermott Stocks
• Accounting Version

2
Learning Objectives

• Understand the format and purpose of a
  textbook/novel
• Introduction to service industry accounting
• Introduction to the healthcare industry
• Review of employment opportunities

3
Introduction to Text

• Format is textbook/novel
• Novel section (pages 15 - 171) provide background
  on industry necessary in understanding service
  industry accounting
• Supplement section (pages 172 - 253) provide
  technical material on design of service industry
  cost accounting

4
Introduction to Text

• Format is textbook/novel
• Learning in context
• Material is more interesting and therefore easier
  to understand when presented in a real-world
  framework
• People understand theory when attached to a story
  that illustrates the principle

5
Introduction to Text

• Exercises and problems are found on McDermotts
  web page.

6
Introduction to Text

• Medical, Economic and Accounting Terms used in
  Text --page 254
• Abbreviations used in the text--page 262
• Cast of characters--page 13

7
Why Service Industry Cost Accounting?

• In 1954 the number of jobs in service industries
  passed the number in manufacturing
• Services industries presently constitute 75 of
  the economy

8
Why Service Industry Cost Accounting?

• Price competition is driving many service
  industries to costing systems
• In recent years, hospitals alone have spent in
  excess of 4 billion designing and implementing
  cost accounting
• Service industry cost accounting is different
  from the traditional manufacturing cost accounting

9
Why illustrate with a hospital cost accounting
case study?

• Hospital cost accounting is relatively new and
  addresses issues such as quality, ABC costing
  etc.
• Hospital cost accounting is the most
  comprehensive of the service industry cost
  accounting systems
• Principles learned can be applied to other
  service industries

10
Why illustrate with a hospital cost accounting
case study?

• The health care industry provides many
  opportunities for accountants
• It is currently the largest industry in the U.S.
• It is bigger than the second and third industries
  combined (Education and Defense)

11
Employment Opportunities

• Consulting--one of the fastest growing consulting
  fields in the country

12
Employment Opportunities

• Financial Accounting--prospective reimbursement
  has made healthcare one of the most complex areas
  in revenue recognition
• Cost Accounting--developed in the early 1980s
  with the introduction of prospective
  reimbursement
• New and exciting job opportunities

13
Hospitals are big business

• It is not unusual for a regional medical center
  to have in excess of
• 250 million annual operating budget
• 2,000 employees
• 60 revenue and cost centers

14
The End