MAT 543 EXAM 3

Question 1

What are the most important aspects resulting from a decision made in the health care industry?

monetary increases

consequences

experiences gained

insights gleaned

Question 2

What is a required component to consider for every decision?

alternatives

previous states of the world

examples of past payoffs

current technology

Question 3

The probability of a decision’s possibility must always add up to what?

100

1/100

50/50

Question 4

Which is an example of using relevant information for the purpose of determining the potential payoff of a decision?

whether to hire more staff or not

whether to invest in equipment or not

whether or not new technology is developed

adding service hours, minus resource cost, within reasonable estimates of potential volume increases

Question 5

Regardless of the technique chosen to estimate provider times, what should be produced in relation to service times?

flow chart

histogram

scatter plot

regression line graph

Question 6

Which method to determine costs is considered the least accurate way to collect information?

direct observation

random observation

time diary

patient records

provider surveys

Question 7

Which method to determine costs is based on the proportion of time spent on an activity being equal to the proportion of observations made of that particular activity during the work day?

direct observation

random observation

time diary

patient records

provider surveys

Question 8

How is the cost-effectiveness of an intervention defined?

intervention costs divided by benefits

side effects costs divided by benefits

side effects costs minus direct medical care costs saved

intervention and side effects costs divided by benefits

Question 9

What is known as the difference between the earliest and latest start times for an activity?

slack time

delayed activities

total project time

critical path length

Question 10

A Work Breakdown Structure (WBS) should do what?

use a pictorial outline system

create heading for the whole project

be as detailed within project tasks as possible

calculate the work output

Question 11

What is a key aspect of a project?

It is an ongoing activity.

It is repeated at multiple time points.

It is executed frequently.

It is a one-time set of activities.

Question 12

The summed time of each activity on the critical path is known as what?

slack time

delayed activities

total project time

critical path length

Question 13

Harris Health is considering the development of a new ambulatory care service. The project will cost $500,000 to implement and have a useful life of five years. At the conclusion of the project’s useful life, equipment associated with the project can be sold for $45,000. Over the five years of operation, incremental revenue attributed to the project will be $180,000 annually, while incremental expenses annually will be $48,000. The organization is also considering an alternative project of similar risk and time horizon which has a rate of return equal to 4.5%. Assume Harris Health has a hurdle rate of 7% for projects of this type. From a financial perspective, should Harris pursue the project?

The computed internal rate of return is greater than the hurdle rate, therefore Harris Health should pursue the project.

The computed internal rate of return is less than the hurdle rate, therefore Harris Health should pursue the project.

The computed internal rate of return is greater than the hurdle rate, therefore Harris Health should not pursue the project.

The computed internal rate of return is equal to the hurdle rate, therefore Harris Health should pursue the project.

Question 14

What is meant by an organization’s hurdle rate?

Hurdle rate is the maximum acceptable rate of return on a project.

Hurdle rate is the minimum acceptable rate of return on a project.

Hurdle rate is the minimum acceptable expenditure on a project.

Hurdle rate is the maximum acceptable expenditure on a project.

Question 15

A specific investment provides an opportunity for the following stream of cash flows: Year CY+ 1 through CY + 5: $40,000 per year, years CY+6 through CY+10: $25,000 per year, year CY+11: $5,000. Assume a discount rate of 4%. What should you be willing to pay for this investment? Solve the problem by taking advantage of the imbedded annuity in the future cash flows.

$270,019

$269,563

$272,798

$271,244

Question 16

Assume a prevailing discount rate of 7%, what is the modified internal rate of return (MIRR) for this series of cash flows?
Year Cash Flow
CY                                    ($450,000)
CY + 1                             $79,000
CY + 2                             $125,000
CY + 3                             $140,000
CY + 4                             $135,000
CY + 5                             $45,000

5.48%

6.15%

7.63%

8.02%

Question 17

How many categories of contributing factors are parts of a Fish Bone chart?

Question 18

Which chart is a vertical histogram that lists the most common problems or problem causes in descending order based on the premise that 80% of the trouble comes from 20% of the problem?

run chart

Pareto chart

control chart

flow chart

scatter diagram

Question 19

Which chart is used to illustrate the relationship between two variables and can suggest associative properties?

run chart

Pareto chart

control chart

flow chart

scatter diagram

Question 20

Which chart is used to illustrate patterns of data collected over time and is intended to indicate patterns?

run chart

Pareto chart

control chart

flow chart

scatter diagram

Question 21

Which external factor in healthcare strategic planning is concerned with natal, mortality, and morbidity statistics?

socioeconomic

epidemiologic

economic

environmental

demographic

Question 22

Which external factor in healthcare strategic planning is concerned with income and education level?

socioeconomic

epidemiologic

economic

environmental

demographic

Question 23

Which type of planning focuses on space issues?

community

operational

business

master

strategic

Question 24

Which type of planning focuses on a community of population over a 10-year horizon?

community

operational

business

master

strategic

Question 25

Which type of planning focuses on resource allocation decisions to achieve goals and objectives?

community

operational

business

master

strategic

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