Contribution Margin - ANSWER--Difference between marginal revenue and
marginal cost.
Break-even point - ANSWER--Level of sales volume of a product producing
the exact amount of contribution margin needed to cover fixed costs.
Overhead - ANSWER--Indirect Costs
Activity-based costing (ABC) - ANSWER--Method of determining product
costs using cost drivers or activity measures, which cause indirect costs to
be incurred.
Three main types of Cost standards. - ANSWER--Predetermined
(Synthetic), Negotiated (Historical), and Customized (Engineered)
Four Types of Individual Cost behaviors - ANSWER--Variable, Fixed Cost
Pattern, Semi-Variable Cost Pattern, Semi-Fixed or Stepped Variable
Three Principal Types of expense variances - ANSWER--Price, Volume,
and Efficiency
The 4 Primary payment methods used in managed care - ANSWER--Fee-
for-Service, Per Diem Rate, Case Rate, Capitation
Healthcare providers should develop different modeling tools depending on
- ANSWER--the reimbursement method proposed in the contract
The general categories of provider excess loss insurance are - ANSWER--
per-person, aggregate, and carve-out.
A Strategic Plan allows organizations to - ANSWER--have a clear plan as
to why they are in business and how they can stay in business in the future.
The main types of control budgets include - ANSWER--operating, capital,
and cash.
A budgeting process develops assumptions for the following: - ANSWER--
Admissions, ALOS, Expense per visit, Inflation on expense, FTE per visit,
Productivity on FTE per visit, Labor cost per FTE, Net Rev per visit
Operating budget's statistical factors include - ANSWER--Historical
statistics, Historical relationship of department volume, anticipated effects
of new programs, clinical practice patters, covered lives in global payment
risk programs, changes in regulatory environment, technical developments,
process improvements, marketing efforts, demographic trends
The primary purpose of measuring productivity is - ANSWER--for
management to determine if resources are being used efficiently
Budget types include - ANSWER--fixed and flexible
The four budget variances used to explain by cause are - ANSWER--
Volume, rate (charged), price (of a supply), and efficiency (cost per
procedure).
Three common Capital Evaluation techniques - ANSWER--Payback, Net
Present Value Method, Return on Investment
Users of ratio analysis - ANSWER--Board of Directors, Management,
Health Systems Agencies, Creditors, Employee Unions, Rate Regulators
The categories of ratios used - ANSWER--Profitability Ratios, Liquidity
Ratios, Activity Ratios, Capital Structure Ratios
Two common types of long-term debt - ANSWER--Revenue bonds and
General Obligation Bonds
Undertake debt restructuring by either retiring or reacquiring existing debt
for 4 reasons - ANSWER--Take advantage of lower interest rates, change
Two types of equity financing - ANSWER--Internal and External
In a capital lease, all of the benefits and risks of owner except title or
ending (salvage value) - ANSWER--get transferred to the lessee. The
lessor recovers full price and interest during the lease.
An operating lease is - ANSWER--when the hospital is liable for the leasing
cost; renewal options are determined by the fair market value
Advantages of leasing - ANSWER--working capital is conserved, budgetary
control, tax benefits may be realized, project may be financed 100%,
lessee has greater flexibility in replacing equipment
Disadvantages of leasing - ANSWER--Cost of extending the lease may be
more than the actual purchase price, Interest costs are higher than debt,
third parties will recognize a full lease payment as allowable only if a true
operating lease, the leasing company frequently passes the cost of
property tax to the lessors
When issuing a rating on a specific organization, a rating agency will
commonly consider the following - ANSWER--Provisions or structure of the
financing, competitive environment and market position, medical staff
characteristics, management capability, financial
Methods of a Cash budget: - ANSWER--Cash receipts and disbursements
Method, Adjusted Net Income Method, Working Capital Differential Method
Primary purposes of a cash budget: - ANSWER--Identify cash
requirements and sources for a certain period of time, control the flow of
cash funds
Healthcare organizations use commercial banking services for: - ANSWER-
-Controlled Disbursement Account, Depository Account, Concentration
Account and Zero Balance Account, Sweep Account
The components incorporated in a cash budget: - ANSWER--Ability of the
organization to manage overall revenue cycle, projection of costs,
variability in activities that impact both revenues and expenses, regularly
recurring or periodic expenses, timing of capital purchases
An investment policy - ANSWER--Establishes a framework to make
investment decisions and evaluate results
The returns, risks, and correlation are the primary inputs for - ANSWER--
asset allocation models
Different types of asset allocation risks are as follows: - ANSWER--maturity
(liquidity) risk, interest rate risk, credit risk, political (legal) risk, market
(price) risk
Three Internal control objectives: - ANSWER--Effectiveness and efficiency
of operations, Reliability of financial reporting (external and internal),
compliance with applicable laws and regulations
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