This article discussed the following key areas in modern hospital financial management. Based on asset full counts and asset management, hospital could develop cost accounting for department, medial project, single disease all three levels,and build cost management system including cost prediction, cost execution, cost plan, cost calculation, cost control, cost analysis and related performance review. Based on historical cost data, hospital also could make overall plans and take all factors into consideration of budget control for all hospital operation activities. A system of performance evaluation and distribution should be established to ensure the implementation of cost management and full budget. The concepts of “capital cost” and “risk”should be import of hospital financial management to optimize capital flow for hospital fund raise, investment and operation.