Deck 3: Operational Finance

Question 1

An understanding of finance is important in managing operations in a healthcare organization.

Answer 1

True

Question 2

Dealing with insurers is a minor concern to healthcare provider organizations, since the patient is ultimately responsible for paying the bill.

Answer 2

False
While the patient may have some nominal amount to pay for hospital services, the vast majority of payments for hospital services come from third-party payers

Question 3

The Patient Protection and Affordable Care Act includes fee reductions to healthcare providers.

Answer 3

True

Question 4

Discounting fees in healthcare services is not a common practice, since the Charge Description Master price determines the realizable revenue for an account.

Question 5

More than one-third of hospitals in the United States have a negative operating margin.

Question 6

The income statement and the balance sheet are the most common financial statements used in healthcare organizations.

Question 7

Benchmarking hospital financial performance using audited financial statements is fairly easy since all hospitals operate under the same financial disclosure rules.

Question 8

Which of the following is not a financial statement used in management of healthcare organizations?

A) Income statement
B) Working capital ledger
C) Balance sheet
D) Cash flow statement

Question 9

Which of the following describes the amount that a healthcare provider will actually realize from billings for services?

A) Gross patient revenues
B) Charge description master fees
C) Contractual adjustments
D) Net patient revenues

Question 10

Non-patient related financial activities include:

A) Contractual adjustments
B) Fundraising and donations
C) Depreciation
D) Employee benefits

Question 11

Supply ratios include all of the following except:

A) Supply expense per discharge
B) Supply expense per bed
C) Supply expense per adjusted discharge
D) Supply expense per employee

Question 12

Which of the following describes the accounting equation?

A) Revenues - expenses = income
B) Assets + income = fund balance
C) Assets = liabilities + equity
D) Net Assets = income - expenses

Question 13

Working capital is represented by:

A) Net patient receivables
B) Levels of inventory, cash, and accounts receivable on the books at any point in time, net of any current liabilities that will consume cash
C) Fixed assets, net of depreciation
D) Net assets minus long term liabilities

Question 14

Which of the following is not a form of debt used by health care organizations?

A) Bonds
B) Leases
C) Lines of credit
D) Discounts on patient accounts

Question 15

Many hospitals are currently experiencing losses from operations. Describe ways that a hospital can improve financial performance outside of its routine operations.

Question 16

Describe how ratio analysis can be useful to operations management

Question 17

Describe the common organization of a balance sheet.

Question 18

Describe the relationship between operations and working capital management.