Demystifying Accounting

By Carole A. South-Winter, EdD, CNMT, RT, FAEIRS and Jason Porter, PhD

Accounting is commonly referred to as “the language of business.” Since it is a separate language usually studied by business majors and accountants, and not necessarily by healthcare professionals, it’s okay to not yet be fluent in “accounting speak.”

Budgeting, payroll, spreadsheets, tables, finances: for many newly promoted imaging managers and even some seasoned administrators these words invoke more stress than a Code Blue. Imaging departments are a major component of healthcare systems in the United States. Between imaging and surgery, it also has some of the most expensive equipment, which takes up a significant portion of an organization’s budget. However, the typical career progression for an imaging administrator has been promotion because of outstanding performance as a technologist or therapist, which has a completely different skill set from a managerial position. These leaders, when promoted into management “often become managers by default, learning on the job in a reactive method rather than a pro-active fashion.”¹ Imaging administrators are promoted because of their successes as technologists in technical aspects of radiology, and in deference to their years of experience dealing with administration, especially accounting.

Capital budgeting requests are often one of the most difficult areas to champion without financial justification. You have to know and use the numbers more carefully when asking for the funds to make big purchases. However, numbers don’t have to be intimidating. In fact, with a little training and the right attitude, they can help get the job done more efficiently and make arguments for resources more effective.

Financial management focuses on payback periods, net present values, and other accounting decision-making methods because they provide a way to compare the large number of capital budget proposals seen every year. They also use them to make sure that investments today will not hurt the organization, or as a way to see how much they need to make in fundraising to offset negative values and still retain the ability to grow. Keep in mind that most business decisions, as least from a healthcare perspective, have to balance the needs of current patients with those that they want to be able to serve in the future. The numbers provide information on whether or not the facility can be kept running for the next 50 years to help the community as much as possible.

If you’d like to know more about financial management, join us at 2:15 PM on Tuesday, July 11 at the 2017 AHRA Annual Meeting where we will present a session on “Demystifying Accounting.” We will discuss why the numbers are so important, as well as how to gather them and put them to work and how to use them to make a compelling argument.

If you’re unable to attend the Annual Meeting, you can catch up on our four-part series on accounting basics in Radiology Management:

Accounting Basics Part 1: Application in Healthcare
Accounting Basics Part 2: Justify Capital Spending
Accounting Basics Part 3: Time Value and Internal Rate of Return
Accounting Basics Part 4: Net Present Value

Reference:

Moran P, Duffield C, Beutel J, Bunt S, Thornton A, Wills J, Franks H. Nurse managers in Australia: Mentoring, leadership and career progression. Canadian Journal of Nursing Leadership. 2002;15(2),14-20.

Carole A. South-Winter, EdD, CNMT, RT, FAEIRS is an assistant professor health services administration at the University of South Dakota in Vermillion, South Dakota. She can be reached at carole.south-winter@usd.edu.

Jason Porter, PhD is an associate professor of accounting at the University of South Dakota in Vermillion, South Dakota. He can be contacted at Jason.porter@usd.edu.