Questions and Answers of Financial Management For Public Health

Increased Costs. List several factors which have led to the rise in increased costs.
Cost Control. List several efforts that have been enacted by payors to control costs.
Cost Control. List several efforts which have been attempted by providers to control costs.
Ethics. What are some of the ethical issues that must be considered when making any financial decisions?
Capitation. Explain how and to whom capitation shifts the burden of risk.
Litigation. Explain the ramifications of allowing/disallowing an individual to be able to sue his or her HMO.
Drugs. Is the granting of patents good for the development of new drugs?Why or why not?
Ethics. If an uninsured individual needed expensive medical treatment and did not have the means to pay for it, should the treatment be provided? Would the answer be influenced by the financial
Ethics. Should private for-profit institutions be forced to accept patients who will not reimburse satisfactorily? Why or why not?
Definitions. Define the following terms:a. Accumulated Depreciation.b. Amortization.c. Assets.d. Basic Accounting Equation.e. Charity Care Discounts.f. Current Assets.g. Current Liabilities.h.
Financial Statement Terminology.a. What are each of the major financial statements commonly called in forprofit health care organizations and in not-for-profit health care organizations?b. Describe
Balance Equation. State the primary accounting equation that describes the balance sheet of a not-for-profit, business-oriented health care organization.
Balance Sheet. The following questions relate to the balance sheet.a. What is the name of this statement in not-for-profit health care organizations?b. What are its main sections in investor-owned
Statement of Operations. The following questions relate to the statement of operations of not-for-profit health care organizations.a. What is the analogous for-profit statement called? What are the
Statement of Changes in Net Assets. The following questions relate to the statement of changes in net assets.a. What is the traditional name for this statement?b. What is the purpose of this
Statement of Cash Flows. The following questions relate to the statement of cash flows of a not-for-profit health care organization.a. What are its main sections?b. What is the purpose of this
Financial Statement Element. Where in the financial statements would there be important explanatory information?
Financial Statement Element. In what financial statement would one identify the purchase of long-term investments?
Accounting Methodologies. How does the accrual basis of accounting differ from the cash basis of accounting?
Balance Sheet. The following are account balances as of September 30, 20X1 for Zachary Hospital. Prepare a balance sheet at September 30, 20X1 (hint: Net Assets will also need to be calculated).
Balance Sheet. The following are account balances as of September 30, 20X1 for Shoemaker Hospital. Prepare a balance sheet at September 30, 20X1 (hint: Net Assets will also need to be calculated).
Statement of Operations. The following are annual account balances as of September 30, 20X1 for Vantage Hospital. Prepare a statement of operations for the 12-month period ending September 30, 20X1.
Statement of Operations. The following are annual account balances as of September 30, 20X1 for Uptown Hospital. Prepare a statement of operations for the twelve-month period ending September 30,
Multiple Statements. The following are account balances as of September 30, 20X1 for Hightower Outpatient Center. Prepare: (a) balance sheet;(b) statement of operations; and (c) statement of changes
Multiple Statements. The following are account balances at September 30, 20X1 for Valley Medical Center. Prepare: (a) balance sheet; (b) statement of operations; and (c) statement of changes in net
Statement of Cash Flows. The following are account balances at December 31, 20X1 for Southern Memorial Hospital. Prepare a statement of cash flows for year ended December 31, 20X1. (Hint: the amounts
Statement of Cash Flows. The following are account balances (in ’000) at December 31, 20X1 for Lionville Hospital. Prepare a statement of cash flows for the year ended December 31, 20X1. (Hint: the
Multiple Statements. The following are account balances for Burlington HMO (in ’000). Prepare: (a) balance sheet; and (b) income statement for the year ended December 31, 20X0. Income Tax Benefit
Multiple Statements. The following are account balances (in ’000) at September 30, 20X1 for HMO Scotland. Prepare: (a) balance sheet; and(b) income statement. Income Tax Expense $2,100 Prepaid
Multiple Statements. The following are account balances at September 30, 20X1 for Appleton Medical Center. Prepare: (a) balance sheet; (b) statement of operations; and (c) statement of changes in net
Multiple Statements. The following are account balances at September 30, 20X1 for Shively Medical Center. Prepare: (a) balance sheet; (b) statement of operations; and (c) statement of changes in net
Multiple Statements. The following are account balances at September 30, 20X1 for El Paso Outpatient Center. Prepare: (a) balance sheet; (b) statement of operations; and (c) statement of changes in
Definitions. Define the following terms:a. Accrual basis of accountingb. Cash basis of accountingc. Contra-asset
Accrual versus Cash Basis of Accounting. Explain the difference between the accrual basis of accounting and the cash basis of accounting.What are the major reasons for using accrual accounting?
Accrual Accounting. How are revenues and expenses defined under accrual accounting?
Journal versus Ledger. What are the purposes of a journal and a ledger?
Adjustment of Three Accounts. Give two examples of transactions which involve the adjustment of three accounts, rather than the usual two accounts.
Contra-asset. Give an example of a contra-asset, and explain how it is recorded on the ledger as a transaction.
Prepaid Expense. Explain what a “prepaid expense” is and how it is recorded on the ledger as a transaction.
Timing of Transactions. How would transactions differ if Supplies were completely paid for and consumed in one period, or paid for in one period but not used until the next period?
Timing of Transactions. Are transactions recorded on a fiscal-year basis or a calendar-year basis? Does it have to be one or the other, and if so, why?
For-profit versus Not-for-profit Transactions. What are the major differences in recording transactions for a for-profit organization versus a not-for-profit, or are there any?
Transactions + Multiple Statements. List and record each transaction for S. Zee Outpatient Clinic under the accrual basis of accounting at December 31, 20X1. Then develop a balance sheet as of
Transactions + Multiple Statements. The following are the financial transactions for Family Home Health Care Center, a not-for-profit, business-oriented organization. Beginning balances at January 1,
Statement of Operations. The following is a list of account balances for Krakower Healthcare Services, Inc. on December 31, 20X1. Prepare a Statement of Operations as of December 31, 20X1. (Hint:
Statement of Operations. The following is a list of account balances for Northland Hospital on September 30, 20X1. Prepare a Statement of Operations as of September 30, 20X1. Labor Expense Provision
Statement of Cash Flows. The following is a list of account balances for Dover Hospital on June 30, 20X1. Prepare a Statement of Cash Flows as of June 30, 20X1. Transfer to Parent Corporation
Multiple Statements. The following is a list of accounts for Bauer Biomedical Supplies on December 31, 20X1. Prepare a Balance Sheet and Statement of Operations as of December 31, 20X1. (Hint:
Transactions + Multiple Statements. St. Catherine’s Diagnostic Center had the following beginning balances at January 1, 20X0, for its assets, liabilities, and net assets accounts.List and record
Transactions + Multiple Statements. Ambulatory Center Inc. had the following beginning balances for its assets, liabilities, and net accounts as of December 31, 20X0.List and record each 20X1
Definitions. Define the following terms:a. Financial Leverageb. Horizontal Analysisc. Ratiod. Trend Analysise. Vertical Analysis
Horizontal and Vertical Analyses. Compare horizontal and vertical analyses, including trend analysis. How are they used?
Vertical Analysis. Explain common-sized analysis.
Ratio Analysis. What is the purpose of ratio analysis? What are the four standard categories of ratios?
Medians. Explain why an industry median may not be an appropriate benchmark to which a particular organization wants to compare itself.
Ratio Interpretation. How do the current, quick, and acid test ratios differ from the average payment period ratio? To what categories do these ratios belong?
Ratio Interpretation. How do capital structure ratios and liquidity ratios differ in providing insight into an organization’s ability to pay debt obligations? Identify two situations where an
Ratio Interpretation. What is the difference between the operating margin ratio and a return on total assets ratio? To what categories of ratios do these belong?
Ratio Interpretation. What capital structure ratio measures the ability to pay debt service payments?
Ratio Interpretation. Discuss the plant and equipment status of a health care provider with an increasing age of plant ratio.
Profitability Analysis. Compare the profitability ratios for Glen Hall Hospital with its industry standards. Keep in mind that market conditions reveal that 90 percent of Glen Hall’s market is
Ratio Analysis. Compare the profitability and capital structure ratios for Buxton Hospital to its industry standards (see Exhibit 4–18). Exhibit 4-18 Selected Ratios for Buxton Hospital and the
Ratio Analysis. The balance sheet and statement of operations for Dogwood Community Hospital for the years ended 20X0 and 20X1 are shown in Exhibits 4–19a and 4–19b. Compute the following ratios
Ratio Analysis. Exhibits 4–20a and 4–20b show the statement of operations and balance sheet for Maryville Community Hospital for the years ended 20X0 and 20X1. Compute the following ratios for
Ratio Analysis. Exhibit 4–21 lists the financial ratios for 227-bed Hollywood Community Hospital. Assess the profitability, liquidity, activity, and capital structure of Hollywood for 20X1. Explain
Ratio Analysis. McGill Healthcare System, an 800-bed institution, is located in a highly competitive, urban market area. Using the financial ratios from Exhibit 4–22 for the current and previous
Ratio Analysis, Unknown Bed Size. Compare Hope Community Hospital’s liquidity, profitability, activity, and capital structure ratios to its national industry standards using the data from Exhibits
Ratio Analysis, Unknown Bed Size. In Exhibit 4–24 are the financial ratios for St Jude’s Hospital, whose financial condition deteriorated from 20X0 to 20X1. Identify the problem areas relative to
Ratio Analysis. Swayze Community Hospital, a 265-bed facility, is a sole provider hospital in small, rural New England serving a large area. Assess Swayze’s profitability, liquidity, activity and
Ratio Analysis. Avon Community Hospital, a small 95-bed hospital, is located in a large metropolitan area and competes with several large teaching facilities as well as other community hospitals.
Horizontal, Vertical, and Ratio Analyses. Exhibits 4–27a and 4–27b show the statement of operations and balance sheet for 190-bed Lake Community Hospital for 20X0 and 20X1.a. Perform a horizontal
Horizontal, Vertical, and Ratio Analyses. Exhibits 4–28a and 4–28b show the statement of operations and balance sheet for 375-bed Pine Island Regional Hospital for 20X0 and 20X1.a. Perform a
Horizontal, Vertical, and Ratio Analyses. Exhibits 4–29a and 4–29b show the statement of operations and balance sheet for Rocky Mountain Resort Hospital for 20X1 and 20X0. The debt principal
Horizontal, Vertical, and Ratio Analyses. Exhibits 4–30a and 4–30b show the Balance Sheet and Statement of Operations for 660-bed Williamson Academic Medical Center for the years 20X0 and 20X1.a.
Definitions. Define the following terms:a. Aging Schedule.b. Approximate Interest Rate.c. Asset Mix.d. Billing Float.e. Collateral.f. Collection Float.g. Commitment Fee.h. Compensating Balance.i.
Working Capital. What is the function of working capital?
Working Capital Cycle. In terms of cash flow, what are the stages of the working capital cycle?
Working Capital Management Strategy. Describe the two components of a working capital management strategy.
Asset Mix Strategies. Compare aggressive and conservative asset mix strategies. The comparison should address goals, liquidity, and risk.
Borrowing. What is the difference between temporary and permanent working capital needs? What is the general rule about when to borrow longterm or short-term?
Borrowing. In terms of risk and return (profit), compare the advantages and disadvantages of short- and long-term borrowing to meet working capital needs.
Cash. State the three reasons why a health care facility holds cash.
Cash. What are the main sources of temporary cash?
Loans. What is an unsecured loan?
Loans. What are the two types of unsecured bank loans? Describe each.
Compensating Balance. Describe how compensating balances impact the“true” rate the borrower pays.
Discounts. What does “1.5/15 net 25” mean?
Discounts. What is the formula to determine the approximate annual interest cost for not taking a discount? When should discounts be taken?
Collections. What are the objectives of billing, credit, and collections policies?
Float. What is the purpose of cash disbursement policies?
Float. Define float. What are the major types of float?
Float. What is a hospital’s objective regarding collection and disbursement float?
Billings. In the hospital’s billing process, why is medical records a critical department?
Float. Describe the remote disbursement technique of disbursement float.
Lockboxes. Describe the lockbox technique of collection float.
Float. What is the purpose of preadmissions screening?
Investments. Identify the alternatives for investing cash on a short-term basis, and discuss the general characteristics of each.
Accounts Receivable. List three ways to measure accounts receivable performance.
Accounts Receivable. Two methods to monitor accounts receivable are as a percentage of net patient revenues, and as days in accounts receivable. What factor can cause the former to be a better
Accounts Receivable. Identify and define two methods to finance accounts receivable.

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