Questions and Answers of Health Care Finance

Describe the marketing segment of a business plan. LO.1
Describe the organization segment of a business plan. LO.1
Understand the construction of a business plan. LO.1
Do you think this was the best way to make the decision? If not, what would you change? Why? LO.1
If so, was the decision made in a formal reporting format, or as an informal decision? LO.1
Have you ever been involved in a lease-or-buy decision in business? In your personal life? LO.1
In the examples given in the chapter, there is not much monetary difference between owning versus leasing. In these circumstances, which method would you recommend?Why? LO.1
Recognize a not-for-profit organization. LO.1
Recognize a for-profit organization. LO.1
Understand what leasing equipment involves. LO.1
Understand what purchasing equipment involves. LO.1
If so, do you think the interest expense seems reasonable for the operation? Why? LO.1
Do the operating reports you receive contain information about loan costs, such as interest expense? LO.1
If so, did you receive the information in the context of a new project (a new business loan that was made for purposes of the new project)? LO.1
Have you ever been informed of details about business loans in your unit or division? LO.1
Understand loan costs. LO.1
Explain an amortization schedule. LO.1
Recognize four sources of capital. LO.1
Understand what capital structure means. LO.1
Does your organization report time as “productive” and “nonproductive”? If not, do you believe it should? What do you believe the benefits would be?
Assignment Exercise 8–5: Depreciation Computation: Units-of-Service Study the “Units of Service” portion of the chapter closely.Required 1. Using the format in Table 8–A-5, compute units of
Assume that MHS purchased two additional pieces of equipment on April 1 (the first day of its fiscal year), as follows:1. The laboratory equipment cost $300,000 and has an expected life of 5
Assume that MHS purchased equipment for $600,000 cash on April 1 (the first day of its fiscal year). This equipment has an expected life of 10 years. The salvage value is 10% of cost.No equipment was
Study the “Calculating Inventory Turnover” portion of the chapter closely, whereby the cost of goods sold divided by the average inventory equals the inventory turnover.Required Compute two
Closely review the examples of ratio calculations in the chapter text. Also note that examples are presented in visuals as well as text.Practice Exercise 7–3: Calculating the PV Ratio The
What will the appropriate dollar cost be?(Note: this question requires a series of assumptions about the nature of the operation for the new budget period.)3a. Forecast service-related workload.3b.
What is the appropriate inflow (revenues) and outflow (cost of services delivered)relationship?
What is the proposed volume for the new budget period?
Do you believe it was a good idea to extend the deadline for ICD-10 implementation?If so, why? If not, why not?
Has your own area of work been involved in the transition to ICD-10? If so, are you aware of how project management progressed? If you had to ability to do so, how would you have changed management
Identify the three types of ICD-10 implementation costs.
Why do you think the federal policymakers decided to make the names public on a government website?
Do you know of an organization that has progressed from Stage 1 to Stage 2 in the HITECH initiative? If so, can you describe this progression?
Does your work involve dealing with “meaningful use” in some way? If so, will you describe how your work is involved?
Identify three types of measures for meaningful use.
Identify the three stages of meaningful use.
Define meaningful use.
Define certified EHR Technology.
Do you know of any private sector contributions to EHR such as those described in this chapter? If so, what are they? Please describe.
Have you encountered materials either at your place of work or elsewhere that discuss the HITECH financial incentives for either hospitals or physicians? If so, do you think these materials did a
Do you know of a healthcare organization that is either initially installing or upgrading its electronic health information technology? If so, can you describe how this organization is going about it?
Do you use electronic health records in your own work? If so, how do you use them?
Define health information technology(HIT).
Define an electronic health record (EHR).
Identify three adoption deadlines that force management decisions.
Describe the HITECH EHR incentive programs.
Describe the financial segment of a business plan.
Describe the marketing segment of a business plan.
Describe the organization segment of a business plan.
Do you know if your organization has a mission statement and a vision statement? If so, how are they communicated? Are they printed, posted on a website, or available in some other format? Please
Identify the four components of a SWOT analysis.
Describe the strategic planning cycle and its process flow.
Describe the six major components of strategic planning.
Explain an amortization schedule
Does your organization use financial benchmarking? Would you use it if you had a chance to do so? Why?
Does your organization use measurements such as the case mix adjustment over time? If not, do you believe they should? Why?
Have you, in the course of your work, had to estimate items for reports? If so, what type of items? How did you go about estimating?
Have you ever been involved in helping to create any part of a capital expenditurebudget? If so, which type of proposal was it? Was the proposal successful?
If so, why? If not, why not?
If you reviewed a budget at your workplace, do you think the major increases and decreases could be explained?
Do you believe your organization uses a flexible or a static budget? Why do you think so?
Do you believe your organization uses one or more operating budgets? Why do you think so?
Have you, in the course of your work, become involved in problems with capacity level issues such as space and equipment availability? If so, would forecasting have assisted in solving such problems?
Are you or your immediate supervisor involved with staffing decisions? If so, are you aware of how staffing forecasts are prepared in your organization? Describe an example.
Do any of the reports you receive in the course of your work use common sizing? Why do you think so?
Do any of the reports you receive in the course of your work use trend analysis? Why do you think so?
Can you think of good outside sources that could be used to obtain ratios for comparative purposes? If the outside information was available, what ratios would you choose to use? Why?
If not, do you believe ratios should be on the reports? Which reports?
If so, do you use them? How?
Are there ratios in the reports you receive at your workplace?
What is the annual management cycle for reporting results?
What are the basic system elements?
How does the information flow?
What are the four segments that make a financial management system work?
If not, do you think they should? Why?
Does your organization use responsibility centers?
In your own workplace, can you give a good example of a direct cost? An indirect cost?
Distinguish between product and period costs
Distinguish between direct and indirect costs
Prepare a cash budget for Aztec Home Health Agency for the months of May, June, and July. The firm wishes to maintain a $200,000 minimum cash balance during the period, and it presently has a
Dean Nursing Home has a payer mix of approximately 60% Medicaid and 40% private pay. The state Medicaid program recently has experienced major funding problems, and the frequency of payment for
Huntley Hospital must maintain $3.3 million in a debt service reserve fund maintained by the bond trustee. The board members would like to count this balance when determining the amount of cash that
Morgan Village is a voluntary, nonprofit, continuing care retirement center. Presently, it has $1,200,000 set aside for replacement and renovation. Its current accumulated depreciation is $1,800,000,
Understand how to prepare a cash budget.
List and describe where cash is generated by an organization and where an organization uses its cash.
Explain why an organization needs to carry cash balances.
Explain the importance of a cash budget.
ABC Medical Center (Table 22-2) expects its revenues to increase by 10% next year. If the firm can increase its current liabilities by 12% through payment extensions and limit its increase in current
Your firm has negotiated a $1,000,000 line of credit with your local bank. The terms of the line of credit call for an interest rate of 2% above prime on any borrowing plus 0.5% on any unused
Pauly Hospital has been thinking about changing its payroll period from biweekly to monthly. Pauly currently has 600 employees with an annual payroll of $18,000,000. If Pauly could earn 9.5% on
Alpha Home Health, Inc. has received an invoice for medical supplies for $5,000 with terms of a 2% discount if paid within 10 days. The invoice is due on the 30th day. What is the annual effective
Data from Table 22-2 indicate that $8,778,677 of accounts receivable was present at the end of 20X9. If this value represented 50 days of average net patient revenue and the hospital believed this
List and explain the criteria that should be used when investing an organization’s cash in the short term.
List the external resources available to an organization for its short-term financing needs.
Describe the tools an organization manager can use to manage receivables.
Describe the activities covered in the cash budget that affect working capital.
Explain what working capital is and why it is needed.
Explain why cash management is especially crucial in most sectors of the health industry.
Mayberry Hospital is considering a joint venture relationship with your physicians to acquire a full-body computed tomography (CT) scanner. Projected revenues and expenses for the scanner are
Happy Valley is considering moving from its present location into a new 200-bed facility. The estimated construction cost for the new facility is $40 million. The hospital has no internal funds and

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