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Accounting for Health 1

Accounting for Health 1. Money Theory or Health Economics in Health care Systems. Money…..is one of the wheels of trade: it is the oil which renders the motions of the wheels more smooth and easy David Hume. We are just statistics, born to consume resources Horace 65-8 B.C. Epistles.

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Accounting for Health 1

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  1. Accounting for Health 1 Money Theory or Health Economics in Health care Systems petersims@upng.ac.pg

  2. Money…..is one of the wheels of trade: it is the oil which renders the motions of the wheels more smooth and easy David Hume petersims@upng.ac.pg

  3. We are just statistics, born to consume resourcesHorace 65-8 B.C. Epistles • Peter Sims • Professor of Public Health Medicine • University of Papua New Guinea • PO Box 5623 • BOROKO • NCD 111 petersims@upng.ac.pg

  4. Aim-To appreciate the agenda of money in health care • Objectives • To distinguish Economics from Accountancy • To see the value of the Health Economist in Health Planning • To outline some tools of the Health economist petersims@upng.ac.pg

  5. Accountancy versus Economics petersims@upng.ac.pg

  6. Private Sector versus Public Sector in Health care Maximising Return on Capital Employed To deliver value for Money from the Resource Provided petersims@upng.ac.pg

  7. Value for Money • Economical…doing it as cheaply as possible • Efficiency…doing it right • Effectiveness….doing the right thing petersims@upng.ac.pg

  8. Time Perspective Financial Accounting is -The Year End -financial accounts are Historic Documents Management Accounting is forward looking -Projections, Plans petersims@upng.ac.pg

  9. Capital versus Revenue petersims@upng.ac.pg

  10. COST PRICE VALUE petersims@upng.ac.pg

  11. COST PRICE VALUE petersims@upng.ac.pg

  12. Average Cost == total number of procedures (N) divided by The total cost ($) = N/$ The cost remains the same regardless of volume Marginal Cost = the cost of doing one more or one less procedure There is a minimal cost per procedure and this is determined by volume and expenditure Average Costs versus Marginal Costs petersims@upng.ac.pg

  13. AVERAGECOST A C Minimal Cost B Quantity petersims@upng.ac.pg

  14. AVERAGECOST Minimal Cost Quantity petersims@upng.ac.pg

  15. As the price increases so the demand for an article of goods is diminished Some goods are very elastic and the amount drops or rises exactly in line with price As the price increases so the supply of goods is increased for more producers come into the marketplace It is possible to influence the marketplace by rationing or taxation The Marketplace and the Laws of Supply and Demand petersims@upng.ac.pg

  16. Supply and demand Price Demand Curve Supply curve B A Quantity petersims@upng.ac.pg

  17. Some economic terms • Cost Efficiency • Cost Effectiveness • Cost Benefit petersims@upng.ac.pg

  18. Some Useful Concepts • Opportunity Costs • Discounting • Assets petersims@upng.ac.pg

  19. Some Useful Concepts • Investment Appraisal • Option Appraisal petersims@upng.ac.pg

  20. Economics-the dismal science, but it requires both Love and Money to make the world go round petersims@upng.ac.pg

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