Health Care Finance: Cost, Productivity, and Strategic Design. - Review - book review

Healthcare Financial Management, July, 2000 by Richard McDermott

Steven R. Eastaugh

Aspen Publishers, Inc., Gaithersburg, Maryland, 1998

272 pages; $43

Health Care Finance is a comprehensive resource covering financial issues that face healthcare administrators and controllers. The book's broad range of topics include payment incentives, hospital specialization, financial and managerial accounting, marketing, pricing, quality control, and long-term financing. Although some material duplicates information found in introductory financial textbooks, most is focused, timely, and relevant to the 21st century healthcare financial manager.

In Chapter 2, "Specialization, Accounting, and Standard Costing," Eastaugh describes the current state of management accounting, summarizing ways costing tools used in manufacturing can be adapted to a service industry.

In Chapter 3, "Paying the Doctor," Eastaugh discusses incentive payment systems. He offers an insightful critique of the RBRVS system and discusses important issues of workload and outcomes.

Eastaugh's discussion of quality improvement in Chapter 7 summarizes the best research on a topic that is becoming increasingly important to employees as managed care programs restrict patient choice. Controllers and administrators also will gain new insights from chapters on productivity marketing, pricing, and managed care.

The book is well documented, and with the exception of the last chapter, presents both sides of complex issues in a fairly balanced fashion. In the final chapter, which addresses future policy options, Eastaugh supports a proposal that the Federal government set insurance company premiums "at no more than 6% of the family income for low-income families," and suggests that insurance companies that oppose this proposal do so out of malice or greed.

If one accepts that the final chapter is editorial in nature, then Eastaugh's approach probably is acceptable. But a more balanced presentation of alternate viewpoints would have strengthened the book. Taken as a whole, Health Care Finance is a thoughtful treatise on the complex private and public policy issues facing the healthcare industry.

Richard McDermott, PhD, professor of accounting and health administration, Weber State University, Ogden, Utah, and a member of