HEALTHCARE finance midterm

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1. Which of the following statements regarding the relationship between reimbursement method and risk is(are) most correct? (Points : 5)

Under capitation, risk is reduced by maximizing the percentage of fixed costs. Under capitation, risk is reduced by maximizing the percentage of variable costs. Under fee for service, risk is reduced by maximizing the percentage of fixed costs. Under fee for service, risk is reduced by maximizing the percentage of variable costs. Answers (a) and (d) are correct.

Question 2. 2. Which of the follow statements best describes the contribution margin? (Points : 5)

The contribution margin is defined as fixed costs minus variable costs. The contribution margin is the dollar amount of each unit of output that is available first to cover fixed costs and then to contribute to profit. The contribution margin is defined as revenues minus fixed costs. The total contribution margin is defined as the contribution margin multiplied by total revenues. The total contribution margin is defined as the contribution margin multiplied by total costs.

Question 3. 3. Consider the following data: Fixed costs = $10 million Variable cost per inpatient day = $400 Revenue per inpatient day = $1,200 What is the contribution margin? (Points : 5)

$400 $800 $1,200 $1,600 $2,000

Question 4. 4. Which of the following statements best describes the revenue cycle? (Points : 5)

It focuses on cash management. It focuses on inventory management. It focuses on receivables management. It focuses on cash, inventory, and receivables management. It focuses on all activities associated with billing and collecting for services.

Question 5. 5. Businesses hold short-term securities for which of the following reasons? (Points : 5)

As a substitute for cash As a temporary repository for cash being accumulated for a specific purpose As a buffer against bad debt losses Answers (a) and (b) Answers (a), (b), and (c)

Question 6. 6. The revenue cycle is composed of (Points : 5)

before-service activities at-service activities after-service activities monitoring and reporting activities all of the above activities

Question 7. 7. Which of the following statements about aging schedules is(are) most correct? (Points : 5)

Aging schedules are used to optimize patient flow at elder care clinics. Aging schedules are used to prioritize payments to vendors for supply purchases. Aging schedules are used to monitor an organization's receivables. Answers (a), (b), and (c) are correct. None of the above is correct.

Question 8. 8. Which of the following inventory management techniques is(are) currently used by healthcare providers? (Points : 5)

Just-in-time systems Stockless systems Consigned inventory systems Answers (a) and (b) Answers (a), (b), and (c)

Question 9. 9. Which of the following techniques is(are) used to interpret operating metrics? (Points : 5)

Trend analysis Comparative analysis Scale analysis Answers (a) and (b) Answers (a), (b), and (c) TEST BANK 2[L2]

Question 10. 10. Which of the following operating metrics is used to monitor labor productivity? (Points : 5)

Profit per discharge Length of stay Full-time equivalents per occupied bed Medicare percentage Outpatient revenue percentage

Question 11. 11. Which of the following strategies is most likely to ensure profitability on a contract undertaken by a price-taker provider? (Points : 5)

Full-cost pricing Marginal-cost pricing Target costing Zero-cost pricing Direct-cost pricing

Question 12. 12. Which of the following techniques is(are) used to monitor a business's receivables? (Points : 5)

Average collection period Aging schedule Collections budget Answers (a) and (b) Answers (a), (b), and (c)

Question 13. 13. Suppose a hospital writes checks of $100,000 per day and it takes, on average, seven days for them to be received by and clear the banking system. Furthermore, the hospital receives $120,000 in checks daily that take four days to be deposited and credited. What is the hospital's float? (Points : 5)

$100,000 $120,000 $220,000 $240,000 $440,000

Question 14. 14. Suppose that a clinic has third-party payer revenues of $10,000 a day. On average, it takes the clinic 50 days to collect from its payers. What will be the steady state receivables balance? (Points : 5)

$10,000 $50,000 $250,000 $500,000 $750,000

Question 15. 15. Ocala Clinic's services result in $5,000 in daily billings to third-party payers. On average, it takes the clinic 50 days to collect its receivables. If the interest rate on loans needed to finance receivables (cost of carrying receivables) is 10 percent, what is the clinic's dollar annual cost of financing its receivables balance? (Points : 5)

$25,000 $20,000 $15,000 $10,000 $5,000

Question 16. 16. Float is the difference between the balance shown on the bank's books and the balance on the business's own checkbook. (Points : 5)

True False

Question 17. 17. Under full-cost pricing, prices are set to cover all costs, including economic costs (profits). (Points : 5)

True False

Question 18. 18. The goal of inventory management is to ensure that the stock-out rate is less than 10 percent, which means that the business runs out of less than 10 percent of its inventory items in any given year. (Points : 5)

True False

Question 19. 19. Utilization management is more important for capitated patients than for fee-for-service patients. (Points : 5)

True False

Question 20. 20. Two important keys to successful revenue cycle management are information technology and electronic claims processing. (Points : 5)

True False