PUBPOL 5631 - [Health Care Finance]

Fall. Not offered: 2024-2025. Next offered: 2025-2026. 1.5 credits. Letter grades only.

Recommended prerequisite: Managerial/Corporate Finance (e.g., AEM 2241, AEM 5241, NCC 5560, or something similar) or instructor’s permission. Students must have a solid understanding of corporate finance and some familiarity with accounting.

S. Nicholson.

This case-based course focuses on the financial analyses that managers in the health care industry use to make strategic and operating decisions. We will begin by examining how health insurers design and price their products and manage enrollees’ medical expenditures. The reimbursement methods that public and private insurers use in turn affect how physicians, health systems, and other providers are organized and managed. Therefore, we will measure a health system’s profitability by product/service line and examine how reimbursement can be used to align physician and hospital incentives. In the second half of the course we will review bond financing, estimating the value of drugs in development, and how firms set prices. We will then review and apply three different methods of valuing medical products/services and companies: the expected net present value of free cash flows, multiples, and the venture capital method.

Outcome 1: Understand the financial incentives facing the key stakeholders in the health care system and how each stakeholder’s products and services add value.

Outcome 2: Perform analyses to identify the financial impact of the strategic and operating options facing an organization.

Outcome 3: Develop strategic and operating recommendations for various stakeholders and justify why the recommendations are optimal.