Healthcare Finance Final Exam
a medical facility arranges a five year $50,000 line of credit with its bank with a monthly interst rate of 04%. the facility borrowed $10,000 intially but paid that off six months later. two months have passed with no additional borrowing. what will the line of credit interest expense be for the most recent month
$0
when a $10,000 loan is paid off, the balance in the bank loan liability account will be ____
$0
a two year investment $10,000 has an interest rate of 4% per year. what is the future value
$10,816
sources of information and guidelines for safety of risk management
-Centers for Disease Control and Prevention •Standard Precautions for medical care -Occupational Safety & Health Administration •Workplace safety requirements and guidelines
missed appointments
-Continuing problem for medical facilities -Get multiple contact telephone numbers when appointment is made -Call to confirm appointments one day ahead -Counsel patients who miss appointments
work expands to meet the time available
-Employees may look busier than they are -Patient flow may look efficient when it's not
t/f a hospital busy a super scanner that costs, 10,000,000. the hospital accountant was told it is expected to last for 12 years. one year later the accountant learns the life expectancy was incorrect, ant it will last only 6 years. the accountant should not change the depreciaiton schedule or amend the previous years financial report
false
t/f a not for profit hospital must prepare a stockholder report annually
false
work place safety
CDC, OSHA (federal, state)
rule of 72
lets one estimate the number of years for an investment to double in value
which of the following would be considered a current asset
money in a checking account
monthly budget review is ___
a way to identify cash flow problems and embezzlement
describe the process of balance billing and given an example of where it is used in healthcare
billing pts for difference between services full charge and amount pd by third party. In healthcare, used in health insurance. can happen when somone receives care from a doctor or practice that is not within their health insurance coverage
corporate and tax free municipal bonds
bonds are promises to pay bond holder interest and at maturity and original value. interst from corporate bonds taxable
managing workload
bottlenecks can occur when workload is high, workload can be rebalance among staff, training reviewed to ensure high efficiency, time-saving technology may be available
A hospital accountant performs a trial balance and notes a discrepancy of over $600,000 payments to flybynight suppliers. the accountnat tries to talk with the purchasing clerk who approved the payments, but she has been absent from work for 8 days. the accountant should ____
recommend a forensic audit
Most proprietorship from professional corporations in order to ____
reduce malpractice liabilities
evaluation of risk
reduce number of preventable incidents by staff, visitors, pts, facility, assets, reduce change of lawsuits being filed from incidents, minimize cost of claims
Majority of revenue from third party payers: Claims filed electronically
errors result in rejected claims, additional work for staff, and delayed payments, accuracy enhanced by using encounter form w/ CPT/ICD9M codes, a coding expert who keeps up with changes, review of charges prior to submitting claim
helens home collection business makes a payment on the loan. The payment of $1000 consists of $900 principal and $100 interest. The cash account will be ___
reduced by $1000
describe the financial effects to a medical facility of missed appts.
reduction in revenues w/o corresponding reduction in costs. fewer patient visits for revenue drives up average cost per patietnt
describe the process of benchmarking costs for budgeting purposes
refers to comparing something to a standard. salaries and benefits for a healthcare facilities employees typically compared with other nearby facilities. supply costs per admission/encounter, ratios for nurses to pts, pharmacy costs per admission, etc.
modern accounting software is relatively easy to correct a transaction error. Minor errors discovered after the annual financial report is prepared are not corrected. why not?
retracting an annual report is not appropriate for minor errors
the annual budget combines which two annual budgets
revenue and expenditure
what does a statistical budget project
revenues from providing services
what are generally accepted accounting principles (GAAP) and why are they important
rules for recording financial transactions and reporting financial information. standards for businesses acctountants to follow for financial transactions/information. includes going concern concepts, matching, consistency, materiality, and full disclosure
safety
safety of the principal intevested is always the first consideration
rules of investing funds
safety, liquidity, yield
collection policies and procedures
establish a payment plan before service is provided, collected pay at time of service, verify pt information at time of service (address, number, insurance), bill pt for balance owed after insurance payment received
T/F salvage value refers to money saved by purchasing used equipment instead of new
false
the equal pay act of 1963
similar wages must be paid for similar work
evaluation of risk (by risk manager)
-Areas of exposure to risk outlined -Potential severity of each risk is assessed
a city government run mental health clinic is so badly managed that all clinicians and nurses quit. the city was forced to close the clinic. which of the following stakeholders bears the greatest lost
taxpayers
present value of a single sum
tell how much to invest now at a particular interest rate to reach a desired future value on a specific date
bad debt expense is ___
the amount of revenue due that is written off as uncollectible
in double entry accounting a trial balance is prepared. the expected result is ___
the credit accounts and debit accounts have equal totals
The change that had the biggest financial impact on hospitals in the 1980s and 1990s was ___
the reimbursement based on patient diagnoses
revenue cycle management
has the goal of collecting funds owed for medical services quickly and efficientyly
available funds
money not immediately needed to meet financial obligations should be invested
benefits of rapid collection of revenues
more cash on hand to meet operating needs, avoidance of loans and interest costs, greater probability of collecting payments (collection rate falls as receivalbe get older)
what is the most likely reason that some individuasl in Massachusetts pays the fine of approx $1000 each year for not having approved healthcare insurance policy
they do not expect to need healthcare, and the fine is less than the premiums
Most healthcare providers receive most of their payments from ___
third party payers
Which of the following financial management issues differentiates healthcare form other businesses
third party payers
Investments decisions based on epected future needs and how much risk medical facility will accept
three investment considerations safety liquidity, yield
Dr. Ray performs a limited exam of a pt with XYZ healthcare insurance. Dr. Ray knows that XYZ will pay $65 for that service. Why does the acct entry in the medical services acct list the standard fee of $90
to enable calculations of discounted fees
the final statement of bottom line of an annual statement of cash flows is the end of year ___
total assets
t/f a dental practice has fiscal year revenues of $850,000 and expenses of $520,000. the practices net income for the fiscal year is $330,000
true
A medical office has many pts covered under WeCare, a preferred health insurance company. A level 1 office visit has a standard charge of $80. WeCare pays 50. The past history shows that WeCare denies 5% of claims of level 1 office visits. There are 100 level 1 office visits by wecare pts the past month. assuming the same past hx, what will totals be for accts receivable and less allowance for uncollectible payments
$8,000 and $400
A healthcare facility buys a super scanner for $60000. It has a six year life expectnacy and estimated salvage value of $10,000 The acountant recommends a straight line depreciation method. What is the annual charge for depreciation of the super scanner
$8,333.3
out litigious society
-Many civil legal actions (torts) for injury to someone's person, reputation, or property -Large organizations have professional risk managers, safety officers, and employment law experts to reduce risks -Insurance purchased to reduce financial losses from torts
•Medical facility can contract with a claim clearinghouse
-Medical facility uploads claims data -Clearinghouse "scrubs" claims and sends them to the proper insurance companies -Claims with errors returned to medical facility -Insurers pay medical facility via the Automated Clearing House banking system -Medical facility gets explanation of benefits
•Financial risk exposure types that can be transferred to insurers:
-Property -General liability -Automobile liability -Crime losses -Medical malpractice
organizations face risks to do business
-Property damage or loss -Injuries to workers, customers, or visitors -Violations of employment-related laws -Professional negligence
identification of risk
-Review of incidents -Information from professional organizations -Information provided by insurers
billing errors
-Some cannot be fixed such as lack of pre-certification or expired insurance information -Many can be corrected with rework and resubmission, but extra staff time is needed -Review errors and change procedures to limit the number of payment denials
workers compensation:
-State-mandated financial protection for employees injured on the job •Payments for treatment and rehabilitation •Compensation for lost wages until employee is cleared to return to work
first step in analyzing profitability
-Total operating costs for a period of time divided by number of patient encounters -Multiply medical facility average cost by a factor to provide reasonable profit margin -When looking for new patients, calculate medical facility marginal cost -Use both results as basis for negotiating insurance contracts
timing of appointments
-Use short, standard, and long visit categories -Patients need to arrive on time -Staff needs to move patients efficiently -Clinicians need to stay on time
A chiropractor facility sells a custom blended herbal product to its patients for $20 a bottle. at the end of its fiscal year it has 50 bottles. How should this be entered in the balance sheet
1000 of inventory
in a hospitals physical therapy dept a therapist can perform 2 units of service per hour. the expected service needs in the next fiscal year is 200units of service per week. how many PT FTEs are needed for this workload
2.5
helens home collection business sends phlebotomists to patients homes to collect blood samples. the business bought a car two years ago for $20000 the car is an asset worth ___
20000 minus two years depreciations
the numbers in each choice are the percentages of total receivables as follows: Receivables < 30 days old, 21-60 days old, and > 60 days old respectively. which of the following results represents the best cash flow
75, 15, 10
how much money do you need to have $90,000 is 4 years with an interest rate of 4%
90,000*0.8548 = 76,932
revenue sources
Patients: private pay, deductibles, copayments, payments for insurance companies and governemtn programs
What type of healthcare insurance coverage is most common in America
Private insurance from employer
a business has a lump sum of cash available for investment for two years. describe how to use future value calculations to compare investment option that have different periods and different interest rates.
calculate the future value at 2 years for each of the options. if they are equally safe and equally liquid, then choose the option with the greatest future value
cocept of interst
a dollar available today is worth more than a dollar received in the future
industrial devlopment revenue bonds
can be issued by most non-profit hospitals
which type of healthcare reimbursement system pays a fixed amount per patient
capitation
Helens home collection business borrows 25000. this amount should appear as a debit to the ___account
cash
the net cash and cash equivalents from an end of fiscal year statement of cash flows should match the ___
cash and cash equivalents on the balance sheet
revenue cycle management is concered with ___
collecting revenues quickly and efficientyly
borrowing sources for medical facilities
commercail banks most commonly used, corporations can sell stock shares or bonds, government facilities can issue bonds
a medical practice uses its revenues to purchas a $20,000 certificate of deposit that matures in two years. the $20,000 CD should be recorded as
a long term investment
A small, closely held corporation is owned by ___
a proprietorship
which factor is most responsible for causing rapid rises in the salaries of healthcare professionals
a shortage of qualified professionals
Nursing home costs for elderly americans
are mostly covered by long term care insurance
A medical lab bought a courier vehicle in 2008 and used a six year depreciation schedule. The next year, the lab bought a simliar vehicle and used a five year depreciation schedule. this violates the accounting principle of ___
consistency
in a revenue budget for healthcare business, net medical revenue is gross medical revenues minus ____
contractual adjustments
a healthcare corporation that regularly makes substantial profits (and pays taxes on them) has money to invest for five years. The CFO is considering give year corporate or municipal bonds. what are the advantages and of those options
corporate bonds are debt securities issued by corporations and sold to investors. that need to have have collateral to prove repayment potential. bonds riskier and higher interst rates. Muni bonds are loans investors make to local gov, cities, states, etc. interest paid tax free.
many investment choices
corporate stocks, corporate or municpal bonds, US treasury bills and notes, bank deposits with fixed maturity dates such as certificates of deposit
a municipal bond can be issued by a ___
county hospital
Describe the American Recovery and Reinvestment Act of 2009(ARRA), its relation to COBRA, and how costs are paid
created new obligations for COBRA. COBRA provides coverage for indviduals who are laid off and want to continue w/ health insurance. The gov pays 65% of premiums for period of time.
liabilities are divided into ___
current and non current
deferred revenues are a type of
current liabilities
a large for profit hospital has been losing millions of dollars each year on emergency dept services. it stops providing emergency services. which of the following stakeholders will most adversely affected by this action
customers
The book value of a dental practice is $400,000. The dental practice was sold for $480,000. The additional $80,000 is recorded on the books as ___
goodwill
a business that uses accrual accounting with monthly accounting periods gets a utility bill on June 2nd for the 30 day period April 16 thru May 15. how should the bill be posted
half april, half may utility expenses
liquidity ratio of 9 indicates that a business ___
has liquid assets equivalent to the costs of 9 days of operations
a radiologist plans to retire in the next 2-5 years. he buys a new $20,000 xray machine that is expected to last 10 years. His accountant recommends depreciation method that reduces value by 30% each year (20,000 to 14,000 to 9800 to 6860 etc) why would this be recommended instead of a simple $2000 per year depreciation
he will sell xray machine separately or with facility. Med equipment loses much of its resale value in first few years. a two year old xray machine will be worth only about half of the price pd when new. straightline depreciation would give incorrectly high value of 80%
which program provides federal funds for the automation of electronic medical records
health information technology for economic and clinical health act
identify risks
incident reports, risk management departments
explain the roles of bookkeepers and accountants in a business
include recording financial transactions. acctants must approve the entries, prepare financial statemtents and analyses, design the financial safeguards, etc.
which of the following is true about the statement of cash flows
included among generally accepted accounting principles
Describe the Childrens Health Insurance Program of 1997
increased poverty levels (up to 200%) for children to be granted Medicaid healthcare coverage.
Explain why widespread use of high deductible healthcare insurance plans would probably reduce the costs of routine outpatient services
individual has to pay more for care they are more liekly to ask about costs of services and choose less expensive testing or services or decline unnecessary testing
transfer of risk
insurance
transfer of risk
insurance is the most common method, coverage tailored to organizations needs
the time value of money is based on the concept of ___
interest
when doing a bank reconciliation, which of the following is subtracted from the cash balance from accounting records
interest received
yield
interest to be earned on the investment is an important consideration, however it is always third in priority after safety and liquidity
the rule of 72 __
is a quick way to estimate doubling time for fixed interest investments
a small medical facility sells some old equipment and receives $10,000 in salvage costs. what will happen to its liquidity ratio after that money is posted to the account
it would increase
banking relationships-large healthcare organization needs to work with commercial bank that will
lend money at favorable terms, offer business checking accounts with reasonable fees, pay competitive interest rates on short term investments, provide good support to customers
what are the advantages of cash accounting for a small business
lets owners know exactly how much the business has at given time
the current ratio and quick ratio assess __
liquiditiy
a small medical facility is investing funds that will form an emergency reserve. which of the following is most appropriate order of importance ranking (most important first) for investments characteristics
liquidity, safety, yield
what is a chart of accounts, provide examples
list that a company as made of the acct names that are available and identified for the recording transactions in gen ledger. ex: assets, liabilities, stockholders, operating exp, revenue, other exp and revenue, etc.
a creditor of a medical facility is an entity that ___
loaned money to the facility, has not been paid for goods or services provided
fixed rate and variable rate debt
loans and bonds can have fixed or variable interst rates, variable rates usually tied to an index such as london interbank offered rate (LIBOR)
municipal bonds
loans investors make local governments, issued by governments cities, states, etc. interest paid tax free
which of the following factors will generally result in a higher rate of interst on an investments
longer term
describe the calculation of and use of average marginal cost per patient at medical facility
marginal cost per pt is the cost for seeing one additional pt. calculated by subtracting fixed cost of operation per pt from average cost per pt at medical facility. marginal cost per pt is used to est profits from adding more pts and for negotiating contracts with health care insurers
healthcare faces unique risks
medical malpractice, implied consent and confidentiality violations
the full charge for a medical service is $180. The group heatlhcare insurer pays $100 for that service. Which of the following is a current way to record the $80 difference
medical services revenue $80 debit
which of the following is a goal of revenue cycle management
minimizing time between providing service and getting paid
What are the economic justification for specialist physicians receiving high fees for services
more school to pay for and enter the work force later d/t school requirements.
workers right
must know and honor, if no HR dept, this is office managers responsiblitiy
workers compensations
must offer
the manager is of a hospital blood bank learns that american red cross will increase its charges for blood prodcuts by 7% next year. what will she need to do when its time to prepare the blood banks operating budget
need to increase expected charges for blood supplies by 7% and apply that to the expected needs for blood products in the next fiscal year. the expected needs will come from the statistical budget
A physician decides to radically change her practice. She now only provides services to patients who will pay her full charges at the time of service. She was able to lower her charges because the new practice ____
needs to billing staff
bank typically assigns a relationship manager to each business acount
needs to know financial status of medical facility. needs to keep current on financial status of bank
a patient does not have insurance coverage for a medical service performed. the patient cannot pay the full charge for the service. what should the medical facility staff member responsible for patient billing do first
negotiate flexible payment terms
the net worth of a government owned healthcare facility is referred to in accounting as __
net assets
when a budget is balance, expenditures equal borrowing plus ___
net revenues
Healthcare insurance premiums increased significantly shortly after passage of the patient protection and affordable care act of 2010. A part of the increased premiums was due to ___
no deductibles or co payments for preventative care services
title XII civil rights act of 1964. equal pay act, family medical leave act of 1993, americans with disabilities act of 1990
no discrimination in hiring process (you can ask questions in areas of discrimination_
describe financial advantages of not for profit hospital over for a profit hospital.
not for profit-do not pay taxes, service the needs of community, must prove beneficial to community to stay afloat. For profit--rely on investors of hospital, have more services available, repay investors who invest in their company
under accrual accounting, patietn charges for medical services are posted as revenues on the date ___
of service
financial policies and procedures
offer flexible payment terms w/ written agreement signed by pt. use collection agency for non-payment pts. first confirm address of pt that multiple bills were sent to correct address. consider dismissing pt from practice for non payment of bills
for a going concernt, obligations are typically paid for purchased items ___
one the due date of the bill
historically in the US relationships between clinicians and healthcare insurers have been ___
one way with insurers dictating terms
Many medical facilities need to borrow money to
open or expan facilities or buy equipment, meet short term operating needs
variance analysis is most commonly performed on ___
operating budgets
what is the financial reason for a medical facility patient appt scheduler to estimate the amt of time each appt will require
optimum scheduling allows employee efficiency
present value
p = f x p(i,n) rule of 72 lets on estimate the number of years for an investment to double in value
why is the federal government a stakeholder in a privately owned facility that provides medical services to elderly patients
paid thru medicare, the pts are stakeholders, fed gov becomes stakeholder b/c its paying for services
describe contractual adjustments account in a healthcare facility
part of pts statement of bill that must not be charged for. done because of agreements with insurance company. adjusted if insurance company has agreed to pay only under certain circumstances
Individuals covered by a high deductible health plan within a preferred provider organization use fewer outpatient services and shop around for lower cost outpatient services because they __
pay directly for routine care
Americans without heath insurance (private or government)
pay directly for routine medical care
when medicare and medicaid were established in 1965, their costs increased much more than government planners expected. What was changed in 1982 in an attempt to keep costs down
payments to healthcare providers were based on patients diagnoses
which of the following is true about payroll in a large healthcare facility
payroll tasks are complex and labor intensive
When a person injured with a preferred provider organization plan receives health services from a provider who does not participate in the plan, the insured person ___
pays more for the service
a medical lab supervisor has been spending 20 hours per week working in the lab as a tech because of a staffing shortage. if she works more than 40 hours per week, the lab ___
pays no overtime b/c she is an exempt employee
pregnancy discrimination act of 1978 PDA
pregnancy must be treated the same as any other medical or personal leave
describe a large healthcare facilitys internal controls related to payments to vendors.
prior to payment, employee ensures vendor invoice, purchase order, delivery tickets indicate ordered items received/have agreed upon chanrges. payment voucher signed by supervisor, proper acct charged for expenditure. check to vendor prepared, accounting supervisor review related documents before the check is sent
return on equity is a type of ___
profit level ratio
which of the following is a characteristic of a capital budget
projects purchases of capital assets
describe the process of transferring financial risk to others through the purchase of insurance
property, general liability, automobile liability, crime losses, medical malpractice
the ratio of (cash + short term investments + accounts receivable) to current liabilities is the __
quick ratio
accounts receivable aging report
receivables grouped by days since billing, measures effectiveness of collection policies
A large healthcare organization will prepare a request for propsal (RFP) that states its banking needs
sent to competing banks that must write detailed responses, responses reveiewd and scored, existing bank customers contacted about their satisfaction with bank services, best bank chosen
commercial bank loan tpes
single payment loan, line of credit, terms of loan
financial policies need to be followed
staff needs proper training, periodic reinforcement needed
corporate stock
stockholder owns a poriton of corporation, stocks traded on stock exchanges such as new york stock exchange
during stable financial, investments that pay the highest interest rates are ___
the most likely to lose money for the investor
T/F Healthcare spending in America has risen faster than the cost of living index for decades
true
T/F the patient protection and affordable care act of 2010 eliminated the donut hole in prescription drug benefits for medicare beneficiaries
true
t/f TRICARE insurance is a private pay company contracted by the federal government to provide healthcare insurance to members of the armed forces
true
t/f a computerized double entry accounting system will never allow the posting of a transaction in which the credits and debits do not match
true
t/f a medical practice that posts revenue on the day the service was performed and posts expenses when suppliers are ordered is using accrual accounting
true
t/f a small drug company is researching promising new drug that if approved will generate annual sales of approx 10 mill dollars. during animal testing, one third of the mice died. this info must be published in the companys annual report based on the principle of full disclosure
true
t/f an expenditure budget for the next fiscal year is combined operating budgets for depts or units, plus the next years capital budget, plus annual depreciations and amortizations
true
t/f bond insurance protects the bond issuer and the bond buyers
true
t/f in double entry accounting, interest paid on a loan is posted as an expense
true
t/f manual accounting systems use records referred to as ledgers
true
t/f net pay is gross wages or salary minus (costs of benefits + retirement contributions + payroll taxes)
true
t/f preferred provider organizations PPO plans are a form of managed care
true
t/f proponents of government run or government funded healthcare for all residents call such a system universal healthcare
true
t/f salaries and benefits is almost always the largest expense category for hospitals and nursing homes
true
t/f the amount of money a medical service provider would receive if all services were paid at the full price charge is termed gross medical service revenues
true
t/f the federal governments first involvement in healthcare financing was based on the social security amendments of 1965
true
t/f the operating margin ratio is net income divided by total revenues
true
a physician provides the same service to two patients with a charge of $80. one patient pays cash. the other has insurance coverage. which is correct for a double entry system
two credit postings of $80 in the medical services account
which of the following is a common liability for a healthcare facility
upaid bills for supplies
a medical practice that uses accrual accounting and straight line depreciation of durable equipment bought an exam table for $2000 that will depreciated over ten years. at the end of the second year, the posting for annual operating expenses related the exam table will be___
$200
the american with disabilities act of 1990
•Employers cannot discriminate against anyone who can perform the essential tasks of a position •Employers must make reasonable accommodation for employees with disabilities
Laws that protect employees: title VII civil rights act of 1964
•Equal Employment Opportunity Commission •Protected classes: minorities, women, people over 40 years old, people with disabilities, people with special religious beliefs •Employers have restrictions on questions they can ask of job applicants •Law covers sexual discrimination and harassment
family and medical leave act of 1993
•Expanded rights of PDA by forcing employers to grant up to 12 weeks of unpaid family leave for the birth or adoption of a child or for caring for a family member with a serious health condition
reduction/elimination of risk use best practice procedures
•Industry-specific, standardized processes •Procedures adapted to organization •Staff trained on the procedures •Stringent controls established and monitored
workers comp employer pays premium based on
•Number of employees and size of payroll •Known risks of specific occupations
Many healthcare insurance companies offer incentives for covered persons to improve their health by exercising, not using tobacco products, and losing weight. When such incentives work, the insurance companies' costs should go __ and future medicare costs of inviduals should go __
Down, up
which type of healthcare insurance plan uses primary care clinician gatekeepers to coordinate the care of plan participants
Health maintenance organizations
T/F A recent trend in healthcare is the growth of public corporations that own multiple hospitals and other healthcare facilities
True
T/F Healthcare is more heavily regulated than most other businesses in the U.S.
True
explain the difference between accounts payable and accrued liabilities
accts payable are accounting entries in the current fiscal year for goods and services that wont be pd for until the next fiscal year. Accrued liabilities are accounting entries at the end of a fiscal year for expenses (such as payroll and interest payments) that will cross to the next fiscal year.
accounts receivable for a physicians office contains
accumulated charges for services performed
A not for profit hospital must ___
adopt a corporate structure
which of the following would be included in the billining accounts receivable
amount owed by patient after insurance payment received
which of the following is a requirement for a publicly held healthcare corporation but not for proprietorship
annual financial report audited by an outside accountant
income statements must be prepared __
annually
assets and liabilities are classified as current or non current. why is the cutoff for such classifications one year? why not six months or three years?
b/c payments of these are done by each fiscal year. some paid once a year. some monthly and paid off by end of year. end of each year these must be reported on to show how much is left to pay and what is paid off
Why will medicare cost rise of the next two decades even if cost control efforts prevent an increase in the average cost per medicare benficiary per year
baby boomers. They will go to nursing homes with limited coverage for nursing homes. d/t chronic conditions, cont with med care. average age of living continues to increase, more chronic conditions constant med care.
the final section of the statment of cash flows reconciles cash to the ___
balance sheet
describe the information obtained from statement of cash flows that is not found on the balance sheet or income statement
balance sheet shows cash and cash equivalents at end of fiscal period does not show total changed since begining of fiscal period. balance sheet shows asset value at end of fiscal period does not show effects of depreciation/amortizations. income statement shows net revenues/other income for fiscal period does not show periods changes in accts receivable, inventory, prepaid expenses, accts payable
time value of money
based on concept of interest
small facility may choose banks
based on personal connections
Usual, Customary, and reasonable fees are ___
based on surveys conducted by insurance companies
reduction and eliminations of risk
best practice, trained staff
Healthcare providers who participate in a capitated payment type of health maintenance organization ___
get paid a per member per month rate
corporate bonds
debt securities issued by corporations and sold to investors, need to have collateral to prove repayment potential, riskier, higher interest rates
some healthcare providers lose a huge amount of revenue because ___
delaying reimbursements as much as possible
which of the following can be used to legally reduce the amount of federal income tax withheld from an employees pay
direct deposits to a healthcare insurance account
a for profit hospital recently issued its annual financial report. which of the following needs to be disclosed as a subsequent event
discovery of mold in a transplant unit resulting in temporary closure
Federal tax revenues are based on C Corporations ____
dividends
Why are hospitals most affected by large numbers of uninsured persons
do not have PCPs. receive some/all care thru ER. Unable to afford PCP. Do not follow up from ER w/ PCP. wait till super sick and most of time get admitted
Rising health care insurance costs in a tight employment (fewer jobs and many qualified applicants) will likely result in employers ____
dropping part-time positions in favor of fewer full time positions
The largest expense category for most healthcare organizations is ___
employee salaries and benefits
Define operating expenses and give examples of such expenses for a physicians office
expenses business, office, institute, etc. acquires thru normal operation. cost of staff salary, building rent/mortgage, billining system, EHR system, equipment office furniture, supplies, liability/malpractice ins.
future value of single sum
f= p x f(i,n) f=future value p= present value i =interest rate n = number of years
T/F the income statement reports on revenues, cash, and short term investments
false
in a typical medical facility, the cash budget will be the same for each month of a fiscal year
false
t/f Most clinicians with a solo practice employ a full time accountant
false
t/f a healthcare facility has $100,000 line of credit from its bank. it regularly pays interest on the $100,000
false
t/f accrued liabilities are the total of all liabilities in the current fiscal year
false
t/f approximately 20% of medical revenues come from private pay (self pay) patients
false
t/f bank reconciliation refers to the process of ragaining good credit after missing payments on a bank loan
false
t/f it is always legal and ethical to dismiss a patient who will not pay for a medical service that was performed
false
t/f new medical diagnostic technologies and new therapies reduce healthcare costs by reducing the time between disease onset and proper treatmnet
false
t/f the amount of money owed to a medical practice for service provided today is entered as a credit in the expense account
false
t/f the net worth of a company is its revenues minus its expenditures
false
t/f to reduce the risk of theft by an employee, a business should have one employee who receives the cash for the cash drawer, accepts the cash payments to make changes, and performs the cash drawer balancing at end of day
false
illustrate revenue improvement from improve patient scheduling
fine ineffieciens, maintain quality, find the flow
identify appropriate ways to dea with insurance companies and government programs
follow directions - folder for each insurance company on policy, appropriate coding, are pre-auth needed, what is preferred method of submission, check for proper reimbursements
liquidity
funds are invested in securities that are readily marketable or may be surrendered without excess if the funds are needed sooner than expected
rate of interest reflects the
future value
efficiency of a healthcare business operation is assessed by the operating margin ratio that divides net income by total revenues. Explain why total revenues are used instead of gross medical service revenues
used b/c they give actual amount of money that has been spent. gross med service revenues would be total amt of money that healthcare business would get if service pd in full when service received. services pd by third party typically discounted. why you cannot gross medical services revenues as many are third party
A for profit healthcare business expects to make a larger profit in the next year because it has completed its payments on a mortage. To lower its taxes in its next fiscal year, it buys expensive equipemtn and __
uses accelerated depreciation
future value of a single sum
value of lump sum invested at a fixed rate of interest per period can be calculated for any future number of periods
The social security act of 1935 ___
was part of Truman's Fair Deal
future value
what an amount of money will be worth on a specified future date
risk management techniques
what can go wrong, how do we respond if something goes wrong, how will we pay the financial losses from a risk management issue. need to protect yourself, your employees, your patients
hospital management in response to the 7% increase in costs of blood procuts declares physician will be trained in coserving blood products, and that this will decrease blood usage by at least 7% therby eliminating the need to increase blood banks supply budget. describe the flaws in this plan.
will not decrease usage. should be prepared for everything. blood bank needs to take increase into consideration and prepare for it. add to expenditures, increase cost of blood products to make up for 7% increase. should not expect decrease in uage
age discrimination in employment act (1967)
workers over 40 years old are members of a protected class
what factors contributed to the rapid cost increases of the medicare and medicaid programs in the 1960s
yes, this was when fee-for-service reimbursement was in place.
when conducting breakeven analysis for a new service at a healthcare facility ___
you solve for the volume of the new service
risk management
•techniques and procedures minimize risk of liability and minimize the impact