Overview

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Build the skills to evaluate healthcare contracts, model costs, and set sustainable prices. You’ll start with risk‑based (capitated) contracts—how revenue is recorded, how medical claims expense is estimated (RBUC/IBNR), and how to account for loss‑generating arrangements—so you can quantify financial risk and performance under value‑based care. Next, transition into managerial accounting to classify fixed, variable, and mixed costs; apply cost‑volume‑profit (CVP) analysis; and see how reimbursement type (fee‑for‑service vs. capitation) affects profitability and decision‑making. Then, master departmental costing and cost allocation. Practice the Direct and Step‑Down methods, understand when and why allocation choices matter, and learn how cost pools and cost drivers (e.g., square footage, revenue) shape service line profitability. Finally, apply these tools to pricing strategy. Work through price‑setter vs. price‑taker scenarios, bundled pricing, marginal vs. full‑cost pricing, and sensitivity analysis to establish breakeven and profit‑targeted prices and to negotiate feasible contract terms. By the end, you’ll be able to evaluate contracts, allocate costs fairly, and determine prices that align with financial and strategic goals. Complete the full specialization to become eligible for Credit‑By‑Exam toward university credit.

Syllabus

Risk Contracts

In this module, we discuss risk contract arrangements, also referred to as capitated contracts. We discuss intended incentives under these arrangements, and the risk borne by providers. We discuss the revenue flow under risk contracts, and how it differs from fee-for-service arrangements. We also cover the estimation processes used to accurately capture medical claims expense under risk contracts. Lastly, we review the accounting for risk contracts that generate losses for the provider.

Cost Behavior, Activity Analysis, and Cost Estimation

In this module, we transition from financial accounting to managerial accounting. We discuss the differences between the two types of accounting, and how managerial accounting supports decision-making within a healthcare organization. We cover the classification of costs according to their relationship with volume, and how we use this information to conduct profit analyses using the Cost-Volume-Profit model. We also discuss how reimbursement contracts (Fee-for-Service and Capitated) impact profit analysis. We also discuss the differences between direct and indirect costs, and why healthcare organizations have to consider both when making decisions. We review cost allocation methodologies, with a primary focus on the Direct and Step-Down methods.

Service Line Profitability

This module focuses on service line profitability, pricing strategy, and financial decision‑support tools. You will evaluate departmental margins, model bundled pricing strategies, analyze marginal vs. full‑cost pricing, and determine break‑even or profit‑targeted pricing using the CVP framework. You’ll also assess mixed market environments where organizations act as both price setters and price takers, applying sensitivity analysis to determine feasible variable costs, pricing floors, contract negotiation boundaries, and the financial viability of altering utilization rates or adding cost‑management programs.

Final Exam and Assignment

In this final module, you’ll pull together the major ideas from the course and apply them to practical healthcare finance situations. We take a big‑picture look at how risk‑based contracts work, what drives medical claims expenses, and how organizations estimate and manage key financial obligations. You’ll also work with core cost and pricing concepts, like direct and indirect costs, cost behavior, cost allocation, and basic pricing methods, to see how financial information supports real decision‑making. To wrap up the course, you’ll complete a final quiz and a short assignment that give you a chance to demonstrate what you’ve learned and apply it in a realistic healthcare context.