BUSINESS FINANCE 7750 HEALTHCARE FINANCE Course Syllabus 3 Credit Hours Spring Semester 2016 TR 9:35 10:55AM / 210 Gerlach Hall Instructor: Dr. Bill Rives TA: Chris Kvale Phone: (614) 292-2979 Phone: Phone, office, e-mail and Office: 312 Fisher Hall Office: office hours to be posted E-Mail: rives.4@osu.edu E-Mail: Office Hours: By appointment only Office Hours: COURSE DESCRIPTION This course provides an introduction to the field of healthcare finance. 7750 is designed to follow PUBHHMP 7620 (Health Services Finance I) in the graduate program in Health Administration in the Ohio State College of Public Health. 7620 provides an introduction to financial and managerial accounting for the healthcare industry. 7750 is cross-listed with PUBHHMP 7621 (Health Services Finance II) in the MHA program. The major focus of 7750 is financial management. Key topics include: Time value analysis (time value of money) Financial risk and required return Long-term debt financing Equity financing and securities markets Capital structure and the cost of capital Capital budgeting Project risk analysis Lease financing and business valuation Financial management is designed to provide managers with the financial tools to make better financial decisions. Major tools include time value analysis and financial risk and required return, but these are not the only tools in common use. Applying financial tools in the most effective manner requires a working knowledge of financial and managerial accounting. In effect, accounting information forms the statistical foundation for much of business financial analysis. A major focus of financial management is the analysis of capital (investment) projects projects designed to take an organization into new markets, expand or add new product and service lines, strengthen an organization s competitive position, reduce operational risk through diversification and enhance financial performance. These projects must be financed with debt and / or equity securities, which pulls the markets for debt and equity financing into the discussion. Capital projects also are subject to different forms of risk, which must be identified, measured and managed the focus of project risk analysis.
COURSE OBJECTIVES AND CORE COMPETENCIES Upon successful completion of this course, you should be able to: 1. Evaluate streams of cash flows using time value analysis. 2. Explain the logic behind the Capital Asset Pricing Model (CAPM) and apply CAPM to determine required rates of return. 3. Describe the different debt instruments available for business financing. 4. Describe the system of credit ratings for debt securities and explain the importance of these ratings to both lenders and borrowers. 5. Value a debt security and explain how the result should be interpreted. 6. Describe the investment banking process and the market for equity financing. 7. Value a common stock and explain how the estimated value should be interpreted. 8. Determine the component costs and the overall (enterprise-wide) cost of capital for a business organization and explain how these costs should be interpreted. 9. Describe the role of capital budgeting in business organizations. 10. Prepare an elementary capital budgeting analysis. 11. Explain the difference between sensitivity and scenario analysis and the pros and cons of each technique. 12. Conduct a capital project risk assessment. 13. Explain how lease financing affects a corporation s financial statements. 14. Conduct a simple lease analysis from the perspective of the lessee. 15. Explain the process of business valuation and conduct a basic valuation analysis. These talents support the following MHA Competencies MHA 7, 8, 10, 21, 23 and 24. COURSE MATERIALS AND RESOURCES Required Course Text Louis C. Gapenski Healthcare Finance: An Introduction to Accounting and Financial Management Fifth edition, Health Administration Press, 2012 (ISBN 9781567934250) Each student must own a copy of the text (no sharing). We do not support earlier editions of the text, which can differ significantly from the current edition. Business Finance 7750 Course Syllabus / Spring 2016 Page 2
Required Calculator You will need a calculator for this course capable of performing basic time-valueof-money (TVM) calculations. Financial calculators enable you to perform these calculations using pre-programmed functions. In contrast, scientific (statistical) calculators require you to enter values manually into mathematical formulas. If you already own a scientific (statistical) calculator, there is no need to purchase a financial calculator unless you prefer the convenience of pre-programmed TVM functions. You will not be at a disadvantage without a financial calculator. Carmen Website The course has a website on Carmen. All course materials (apart from the text, and unless otherwise indicated in class) can be found on the website. Be sure to check the website frequently for new postings. Among other course resources, the website houses the text chapter quizzes (see Course Requirements, below) and the text chapter PowerPoint slides. CLASS FORMAT Most lectures are presented in a discussion format, usually organized around questions, problems and practical exercises drawn from the text, reading assignments and current events. Lectures are designed to engage students and promote broader participation in class discussion. Participation in class discussion is a great stimulant for learning. Some lectures may be presented with PowerPoint slides. When used, the slides will be posted to Carmen. Guest speakers may be added to the mix from time to time to enrich topic discussion. Notice will be posted to Carmen when a speaker has been scheduled. COURSE EXPECTATIONS While the topics covered assume no prior accounting or finance coursework, the course will be taught at the graduate level. Both the work required and the pace of the course should prove challenging. Readings from the text are assigned each week, and may be accompanied by articles from professional journals and periodicals, industry reports and working papers, and other limited-distribution or unpublished material. All supplemental reading material will be posted on Carmen, with appropriate prior notice. In addition to regular reading assignments, you will be required to take an online quiz (on Carmen) on each text chapter covered, complete and submit a problem assignment for each chapter and prepare answers to chapter problems assigned for class discussion. We expect you to manage the workload of this course in a professional manner, coming to class prepared, contributing to class discussion, and demonstrating a commitment to learning and personal development. Should you have a problem with the course during the term, and want to speak with someone, we encourage you to seek our assistance. Business Finance 7750 Course Syllabus / Spring 2016 Page 3
COURSE REQUIREMENTS Chapter Quizzes (course grade weight = 30% applied to the average score on all quizzes assigned) You will have an opportunity to complete a quiz on the material in each text chapter we cover. These quizzes are designed to assist your learning and your exam preparation. Each quiz contains 12 questions based on chapter topics. Quiz question banks employ both multiple-choice and true-false questions. The quiz time limit is 30 minutes (strictly enforced). You will take quizzes on Carmen using the Carmen quizzing tool. Each quiz will be available on Carmen for a limited time period ( quiz window ). Missed quizzes may not be rescheduled; however, solely at the instructor s discretion, a missed quiz may be dropped for reasons beyond a student s control that prevented the student from taking the quiz during the quiz window. Under no circumstances will a student be excused from a quiz that could have been taken. Each quiz may be taken twice; if you do take a quiz twice, you will earn the higher of the 2 scores. Because questions for each quiz are drawn at random from a larger question bank, no 2 quizzes will be exactly the same. Once a quiz window closes, you will have an opportunity to review the questions you missed on each quiz you took. Chapter quizzes should be completed on an individual basis (no group efforts!). Dates and times associated with quiz windows can be found on Carmen. Problem Assignments (course grade weight = 40% applied to the average score on all assignments) Each text chapter covered contains a set of end-of-chapter problems. These problems, which can be found immediately following the end-of-chapter questions, are designed to illustrate the application of basic tools and techniques of analysis to common situations. A selection of these end-of-chapter problems will constitute a problem assignment. You will be asked to solve the problems assigned and submit your solutions for grading prior to the class for which the problems are assigned. Problems assigned for each chapter can be found on the syllabus (see Course Schedule, below). Each completed problem assignment should be posted to the Carmen Dropbox by 5:00 PM ET on the date shown on the Course Schedule (below). Be sure to save a copy of your solutions for class discussion. Problem assignments will not be graded solely for content. We are equally interested in the fact that you made the effort and your solutions appear reasonably complete and are easy to follow (good clarity, well formatted). We will discuss the assignment grading scheme in class. You can check your solutions during class discussion of the problems. Business Finance 7750 Course Syllabus / Spring 2016 Page 4
Final Exam (course grade weight = 30% applied to the overall exam score) You will take a comprehensive final exam at the end of the course. The exam will cover text chapters 9-15 and chapter 18, plus supplemental reading assignments and material from class discussion not contained in the text. The exam is designed to assess your understanding of key concepts and your ability to work independently to apply tools and techniques of analysis to practical problems. Exam format, procedures and ground rules will be discussed in class toward the end of the term. The exam may be offered online (on Carmen) and proctored at the University Testing Center, an approach many students prefer for the greater scheduling flexibility. TA RESPONSIBILITIES The TA assigned to this course will be available to meet with students (as needed) and to lead group review sessions for students who need help with the course material. All questions concerning Carmen to include quizzes, the Dropbox, and other Carmenbased resources should be directed to the TA. The TA may assist with scoring assignments; however, the instructor will assign all final grades. Questions concerning grading should be directed to the instructor, not the TA. ACADEMIC MISCONDUCT In accordance with University Faculty Rule No. 3333-5-487, all instances of alleged academic misconduct must be reported to the Committee on Academic Misconduct, which recommends appropriate sanctions to the Office of Academic Affairs. We aggressively pursue violations of University standards on academic conduct. DISABILITY SERVICES The Office of Disability Services (ODS) verifies students with specific disabilities and develops strategies to meet their needs. Students requiring accommodations based on identified disabilities should contact the instructor at the beginning of the term to discuss their particular needs. Students with a specific disability are encouraged to contact ODS to explore potential accommodations available to them. POLICY ON EXTRA CREDIT No student may complete additional work for extra credit without the permission of the instructor. Business Finance 7750 Course Syllabus / Spring 2016 Page 5
POLICY ON CLASS ATTENDANCE You are expected you to attend class on a regular basis. Should circumstances warrant missing class, you should notify the instructor with an explanation of your absence. While attendance is not separately graded, you can expect failure to attend class on a regular basis in particular, missing more than a few classes to have an adverse effect on your performance in the course and ultimately, on your course grade. POLICY ON THE USE OF ELECTRONIC DEVICES IN CLASS Cell phones may not be used in class at any time. During class, your cell phone must be set to SILENT (not vibrate) or turned OFF. No calculator that is part of a cell phone may be used on an exam. Laptops and tablets may be used in class only with the instructor s permission. Lectures and other presentations may not be recorded (audio or video). Any electronic device not mentioned elsewhere in this section may be used in class only with the instructor s permission. This policy does not apply to electronic devices used for medical reasons. The instructor may amend this policy at any time, should circumstances warrant. Business Finance 7750 Course Syllabus / Spring 2016 Page 6
COURSE SCHEDULE Class Dates JAN 12 JAN 14 JAN 19 JAN 21 JAN 26 JAN 28 FEB 2 FEB 4 FEB 9 FEB 11 FEB 16 FEB 18 FEB 23 FEB 25 MAR 1 Activities Topics Requirements Course Administration and Introduction Discussion of course topics, requirements, policies and procedures Time Value Analysis 1. Read Chapter 9 before class on JAN 14 2. Review Chapter 9 before class on JAN 19, JAN 21 and JAN 26 3. Download the Time Value Analysis Problem Set (Carmen) and work Problems 1 & 2 before class on JAN 14 Bring the Problem Set and your solutions to Problems 1 & 2 to class on the 14 th (solutions will not be collected) 4. Chapter Problem Assignment: a. Answer Problems 1, 2, 3, 4, 7, 12, 13 (pages 323-325) b. Post your solutions to the Carmen Dropbox by 5:00PM ET, WED JAN 27 c. Be prepared to discuss your solutions in class on JAN 28 IMPORTANT: Beginning JAN 14, bring your calculator / tablet / laptop to every class should you need to crunch numbers Financial Risk and Required Return 1. Read Chapter 10 before class on FEB 2 2. Review Chapter 10 before class on FEB 4 a. Answer Problems 1, 2, 5, 6, 7 (page 363-365) b. Post your solutions to the Carmen Dropbox by 5:00PM ET, MON FEB 8 c. Be prepared to discuss your solutions in class on FEB 9 Long-Term Debt Financing 1. Read Chapter 11 before class on FEB 11 2. Review Chapter 11 before class on FEB 16 a. Answer Problems 1, 4, 5, 6, 7 (pages 405-407) b. Post your solutions to the Carmen Dropbox by 5:00PM ET, WED FEB 17 c. Be prepared to discuss your solutions in class on FEB 18 Equity Financing and Securities Markets 1. Read Chapter 12 before class on FEB 23 2. Review Chapter 12 before class on FEB 25 a. Answer Problems 2, 3, 6, 7, 9 (pages 442-443) b. Post your solutions to the Carmen Dropbox by 5:00PM ET, MON FEB 29 c. Be prepared to discuss your solutions in class on MAR 1 Business Finance 7750 Course Syllabus / Spring 2016 Page 7
COURSE SCHEDULE Class Dates MAR 3 MAR 8 MAR 10 MAR 15 Activities Topics Requirements Capital Structure and the Cost of Capital 1. Read Chapter 13 before class on MAR 3 2. Review Chapter 13 before class on MAR 8 a. Answer Problems 1, 3, 4, 5, 6 (pages 482-484) b. Post your solutions to the Carmen Dropbox by 5:00PM ET, WED MAR 9 c. Be prepared to discuss your solutions in class on MAR 10 Spring Break NO CLASS MAR 17 MAR 22 MAR 24 MAR 29 MAR 31 APR 5 APR 7 APR 12 APR 14 APR 19 The Basics of Capital Budgeting 1. Read Chapter 14 before class on MAR 22 2. Review Chapter 14 before class on MAR 24 a. Answer Problems 4, 5, 7, 8, 9 (pages 524-528) b. Post your solutions to the Carmen Dropbox by 5:00PM ET, MON MAR 28 c. Be prepared to discuss your solutions in class on MAR 29 Project Risk Analysis 1. Read Chapter 15 before class on MAR 31 2. Review Chapter 6 before class on APR 5 a. Answer Problems 2, 3, 4, 5, 6 (pages 563-565) b. Post your solutions to the Carmen Dropbox by 5:00PM ET, WED APR 6 c. Be prepared to discuss your solutions in class on APR 7 Lease Financing and Business Valuation 1. Read Chapter 18 before class on APR 12 2. Review Chapter 18 before class on APR 14 a. Answer Problems 1, 2, 3, 4, 5 (pages 673-675) b. Post your solutions to the Carmen Dropbox by 5:00PM ET, MON APR 18 c. Be prepared to discuss your solutions in class on APR 19 Business Finance 7750 Course Syllabus / Spring 2016 Page 8
COURSE SCHEDULE Class Dates APR 21 Activities Topics Requirements Course Wrap and the Final Exam 1. Looking back What did you gain from this course? 2. Looking forward Introduction to PUBHHMP 7622 next semester 3. Online Course Assessment 4. Final Exam requirements and procedures We reserve the right to correct errors in this document at any time during the course, with appropriate notice. Supplemental reading assignments can be found on Carmen. Additional reading assignments may be posted at any time during the course, with appropriate notice. Business Finance 7750 Course Syllabus / Spring 2016 Page 9