REVIEWED BY JERRY WIDMAN
Finance In Brief: Six Key Concepts for Healthcare Leaders
Kenneth Kaufman
Health Administration Press, Chicago
2000, 105 pp., $40.00 (paperback)
Every so often a publication surfaces that truly deserves the label "must reading."
Finance in Brief: Six Key Concepts for Healthcare Leaders, by Ken Kaufman,
is one such publication. Although only 105 pages long, it is "must reading"
for executives, board members, and all those in a leadership capacity in health
care. Kaufman, principal in KaufmanHall, a health care consulting firm based
in Northfield, IL, currently serves as the unrecognized guru of health care
corporate financial practices. But this book, and his continuing commitment
to the field, will help change the designation from "unrecognized" to "recognized."
Using a clever question-and-answer approach, the author guides the reader
through six primary concepts and hundreds of insights and perspectives. Finance
in Brief is neither a textbook nor a collection of articles. Kaufman addresses
some basic concepts, illustrating them with his question-and-answer format,
and in doing so imparts new knowledge and insights to his readers. A wide range
of health care leaders-including chief executive officers, chief financial officers
(CFOs), finance committee chairpersons, board chairpersons, investment bankers,
accountants, consultants, and practitioners-could profit by reading this book.
Kaufman leaves nothing to guesswork or chance. He provides exhibits, graphs,
and charts (including bar charts, bell-shaped curves, and histograms) and makes
each a teaching moment. He offers these teaching aids in the interest of increasing
the knowledge of, and appreciation for, sound corporate financial practices
in the health care field.
For example, Kaufman makes the much-maligned process of "capital allocation"
understandable. We learn everything-from why capital allocation is important,
to governance factors, to quantitative techniques that can be used in the capital
allocation process. There are as many "how to" questions as there are "what"
questions in the list of 98 questions that Kaufman answers. He buttresses his
answers, moreover, with references to other writers. These references-besides
being a kind of hidden bonus for the reader who wants to learn more-testify
to the thoroughness of the author's approach.
Many of America's hospitals were founded in the late 19th century, or, in
some cases, even earlier. Until cost reimbursement was replaced by prospective
reimbursement, hospitals had few incentives for instituting sophisticated corporate
financial practices. Now that situation has changed. Board members as well as
executives need to step up to their accountability in this ever-changing arena
called health care. Whether we are CFOs or finance committee chairpersons, we
must adopt sound corporate financial practices if we expect our organizations
to survive and thrive in the new millennium. Finance in Brief offers
us a place to start in improving our sophistication.
Jerry Widman
Advisor on Healthcare Finance
Wellspring Partners
Chicago