HSM 340 Midterm

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Question 1.1. (TCO 4) Which of the following is part of a statistics budget? (Points : 5)

Output expectations Responsibility for estimation Estimation methodology All of the above

Question 2.2. (TCO 4) Which budgetary issue causes the most strife in all areas of a health care organization? (Points : 5)

Setting volume levels Setting prices Allocation of indirect costs Deciding whether to use a fixed or flexible budget

Question 3.3. (TCO 4) Effectiveness is a relationship between: (Points : 5)

Outputs and organizational goals Inputs and outputs Inputs and organizational goals None of the above.

Question 4.4. (TCO 3) Estimate the total variable cost (i.e., including both routine and ancillary) per MSDRG 505 using the departmental cost/charge ratios and variable cost percentages. (Your answer might be slightly different due to rounding. Pick the closest.) (Points : 5)

$5,213 $3,892 $7,613 $5,452 $8,070

Question 5.5. (TCO 3) Your controller has told you that the marginal profit of DRG 209 (major joint procedure) for a Medicare patient exceeds the marginal profit for an average charge patient. Why might this occur? (Points : 5)

High fixed costs of treatment Low Medicare payment High prices Low prices

Question 6.6. (TCO 2) A statement that reports the financial position (assets, liabilities, and stockholders' equity) of an accounting entity at a point in time is called a(an): (Points : 5)

Income statement Statement of retained earnings Balance sheet Statement of cash flows Report of management

Question 7.7. (TCO 2) Which of the following is the BEST example of a financial metric? (Points : 5)

Degree of innovation Employee empowerment Accreditation by the Joint Commission on Accreditation of Healthcare Organizations Total margin Length of stay

1. (TCO 4) Based on the below information, what dollar effect did the increased admission rate have on cost?

You have been asked by management to explain the variances in costs under your inpatient capitated contract. The following data is provided. Use the following data to calculate the variances.
	Budget	Actual
Inpatient Costs	$12,568,500	$16,618,350
Members	42,000	42,000
Admission Rate	0.070	0.095
Case Mix Index	0.90	0.85
Cost per Case (CMI = 1.0)	$4,750	$4,900

(Points : 10)

Question 2.2. (TCO 4) Based on the information below, what rate must be set to generate the required $80,000 in profit in the preceding example? You have been asked to establish a pricing structure for radiology on a per-procedure basis. Present budgetary data is presented below:

Budgeted Procedures	$10,000
Budgeted Cost	$400,000
Desired Profit	$80,000

It is estimated that Medicare patients comprise 40 percent of total radiology volume and will pay on average $38.00 per procedure. Approximately 10 percent of the patients are cost payers. The remaining charge payers are summarized below:

Payer	Volume%	Discount%
Blue Cross	20	4
Unity PPO	15	10
Kaiser	10	10
Self Pay	5	40
	50%

(Points : 10)

Question 3.3. (TCO 4) What is the amount of variance that is attributed to the change in labor productivity? Use the following data to calculate the variances. The following information has been prepared for a home health agency.

	Budget	Actual
Wage Rate per Hour	$16.00	$17.00
Fixed Hours	320	320
Variable Hours per Relative Value Unit (RVU)	1.0	1.1
Relative Value Units (RVUs)	1,000	1,200
Total Labor Hours	1,320	1,640
Labor Costs	$21,120	$27,880
Cost per RVU	$21.12	$23.23

Budgeted costs at actual volume would be $25,344 ($21.12 × 1,200), and the total variance to be explained is $2,536 Unfavorable ($27,880 - $25,344). Be sure to specify whether the variance is favorable or unfavorable. (Points : 5)

Question 4.4. (TCO 2) How are revenues and expenses defined under accrual accounting? (Points : 5)

Question 5.5. (TCO 2) What are the double-entry accounting system and the duality concept? How are they related? (Points : 5)

Question 6.6. (TCO 1) What are social responsibility and ethics as they relate to business-oriented organizations? How should social responsibility and ethics affect the decisions of even for-profit companies? (Points : 20)

Question 7.7. (TCO 2) Define and describe the purpose of fund accounting (now called net assets). (Points : 10)