Questions and Answers of Foundations Financial Management

5. When using common size financial statements, what number do analysts use for the balance sheet and what number is used for the income statements?
4. What process do organizations use to compare themselves with other organizations and how effective is this process?
3. Why is the accounts receivable turnover ratio important to the organization?
2. If you were analyzing an organization’s ability to borrow money, which ratios would be most helpful?
1. Which ratios would you consider most important in the daily and monthly operation of the organization? Why?
■■ Discuss ratio categories, why they provide useful information for the organization, and how they affect the company’s financial performance.
■■ Explain major ratio categories, including liquidity, activity, leverage, profitability, and net trade cycle.
■■ Identify key financial ratios used to improve your decision-making process.
■■ Provide qualitative analysis examples using the financial statements.
5. Which asset is considered the lifeblood of the organization, and why?
4. Goodwill and patents are considered what types of assets?
3. How would you know if the organization is a for-profit or a not-for-profit based on the information available from the balance sheet and the income statement?
2. Comparing costs in this chapter, which costs do you have little control over and why? Which costs would be most important if you are expanding your services?
1. Why should you be familiar with the balance sheet? Why is it important to the organization? And what area of the balance sheet would you consider the most critical?
■■ Help the nurse manager to read a detailed financial statement, including a balance sheet, income statement, and cash flow operating activities.
■■ Provide reporting of the finance side of the organization.
6. Write a business plan for a change, piece of equipment, or new process needed at your work.
5. How does complexity influence budget strategies and their implementation?Give examples.
4. Select one strategy from question 1 and describe how you would introduce the action or change you propose in the workplace. Then, map out what would need to happen for it to be implemented.
3. Name 10 financial strategies that would improve the finances at your work.
2. Describe the effectiveness of the budget process where you work. What is very positive about it? What needs to be improved?What could be done to improve it?
1. For each of the 10 must-do strategies, describe an action or change you can make in your department to better prepare for the second curve.
■■ Appropriately identify and deal with financial issues and processes that impede effectiveness
■■ Identify financial strategies for survival in the value-based environment.
8. Qualitative tools and techniques are often dismissed in healthcare organizations.Select one qualitative method and discuss how the technique could be used to drive improvements.
7. Using the measures selected in discussion question 6, explain tools and techniques that could be used to display and analyze the data.
6. Consider a healthcare organization and discuss measures that might be selected for a BSC. Explain the rationale for selection of each measure and describe how leaders could ensure a balance of
5. Describe how leaders can positively affect organizational and unit culture in the current healthcare environment, and then consider how the culture affects relationships, learning, change, and
4. Reflect on the mission, vision, values, and goals of a healthcare organization and provide examples of how individual employees, departments, and work units support all four of these as a
3. Discuss the process of external and internal environmental analyses, and then speculate on scenarios that may result if these steps in strategic planning are omitted or are not done well.
2. Describe positive and negative aspects of abandoning traditional healthcare strategic planning processes and adopting a contemporary approach.
1. Because visioning and effective decision making are primary tasks of leaders, discuss mechanisms that nurse managers can use to ensure that they make the best decisions.
■■ Discuss the strategic management role of the nurse manager.
■■ Identify key aspects of traditional strategic management.
■■ Compare complexity theory and contemporary strategic management.
■■ Describe two approaches to strategic management.
■■ Articulate the evolution of strategic planning to strategic management.
5. In the new value-based reimbursement environment, what other measures can a nurse manager take to enhance reimbursement and prevent revenue loss?
4. This chapter hopes to improve your understanding of fiscal management.In your opinion, which factor covered in this chapter would you consider most critical?
3. Finance departments regard nursing units as not being revenue generators. Why do you believe they are inaccurate in their assessment?
2. What is a cost-to-charge ratio? Why should a nurse manager understand this ratio, and how would he or she use it?
1. This chapter discusses the need for an interdisciplinary team approach. Why is this important? Which specific areas/departments should be involved?
■■ Recognize whether a service is profitable.
■■ Determine areas within the nurse leader’s control that influence profitability.
5. The monthly distribution register for your department’s expenses should be carefully monitored. Why?
4. In your man-hour analysis, why it is important to keep track of education and orientation hours?
3. Contract labor is usually the most expensive man-hours. Why?
2. Because staffing is usually the most expensive resource in the provision of care, what reports would provide you with valuable information for this expense?
1. What is it important for a nurse leader to understand variance reporting? How does this reporting become a valuable tool?
■■ Analyze the impact of unbudgeted overtime, contract labor, or orientation hours on the salary budget
■■ Identify methods to respond to budget variances
■■ Recognize the value of budget variance analysis as a tool for nurse leaders to control costs
4. How should a nurse leader use a patient classification (acuity) system to justify nursing hours per day/staffing mix/nurse-to-patient ratios for budget purposes that would be understood by the
3. As a nurse leader, you have to set up a new patient service budget. What sources of information do you need to build the budget?
2. This chapter deals with specific units of service for nursing workload requirements.What role should the nurse leader play and how should the leader interact with the finance department for a
1. How does “minimum staffing” impact your ability to meet your budgeted numbers?
■■ Understand the impact that incidental overtime hours can have on a department’s budget.
■■ Calculate budgeted FTEs, replacement FTEs, and indirect work hours (orientation and education).
■■ Demonstrate a working knowledge in the development of a staffing budget.
5. Besides a department budget approach, what other alternatives are available in the budgeting process?
4. How should a nurse leader prepare to handle minimum staffing requirement costs in the budget process in case this is challenged?
3. Nurse leaders have many responsibilities when it comes to the development of the budget. What issues would be considered most important for the nurse leader in this process?
2. Although budget figures are estimates of future projections, why and how should nurse leaders be prepared to explain short-term variations?
1. Why is it important for the nurse leader to provide a reasonable and fair operation budget?
■■ Demonstrate the steps in budget preparation for a nursing department.
■■ Discuss the impact of productive and non-productive hours.
■■ Describe how variable costs and fixed costs impact an organization’s budget.
■■ Understand a high-level overview of the budgeting process.
10. Explain reasons that chaos theory offers hope for the future of health care.
9. Describe how complexity theory applies to your practice.
8. What are ways to promote employee safety?
7. Discuss how Lean thinking and Six Sigma can be used together to improve healthcare quality.
6. Discuss the use of run charts and control charts to improve quality.
5. Why is it important to provide evidence-based care? Discuss some of the challenges nurse administrators face in creating an environment in which bedside nurses use evidence-based care.
4. State five ways that administrators promote patient safety.
3. Provide examples of the 10 IOM (2001)rules for redesign applied to your healthcare setting.
2. What administrative practices support PI efforts?
1. Describe strategies used by the nurse administrator that provide patients with what they want and value.
■■ Synthesize how nurse leaders can promote patient value while achieving quality, safety, and cost-effectiveness.
■■ Propose ways that nurse leaders can promote evidence-based practice.
■■ Analyze the nurse leader’s role in patient safety.
■■ Describe administrative practices that support performance improvement efforts.
■■ Explain the four most important hospital strategies to be implemented to prepare for value-based payments.
12. What is your definition of profit?
11. From an economic perspective, describe the cost of regulation in the healthcare environment.
10. Should there be minimum safe staffing ratios—from the standpoint of the profession?Why or why not?
9. Should there be minimum safe staffing ratios—from the standpoint of the hospital?Why or why not?
8. Should there be minimum safe staffing ratios—from the standpoint of the patient?Why or why not?
7. Why is the provision of sick care (hospital)services said to be a derived demand?
6. What is healthcare regulation and what are some of its costs?
5. Is hospital care overregulated? Cite some examples to support your argument.
4. Are hospitals competing on the basis of price, quality, or both? Explain.
3. Frame some arguments for or against the policy of mandated minimum staffing ratios in the positive versus normative economic dichotomy.
2. Discuss how margin and mission are related, or not related, in the hospital environment.
1. Support or refute the statement “Well, supply and demand . . . it just doesn’t work in health care!”
■■ Demonstrate the impact of electronic medical records and how this affects the healthcare industry.
■■ Understand the impact of regulation in the U.S. healthcare system and the costs associated with it.
■■ Provide a broad view of the economics involved in the hospital environment that includes competition, regulation, and patient care.
4. Who are the various regulators that affect your healthcare organization? What is your role in the respective regulatory process?
3. What is important for nurse leaders to share with their staff regarding payers? Why?

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