7.3 Cost and Budgets

Question 1

Non-Profit Organizations

Answer 1

• Profits are reinvested into the organization to replace facility equipment, expand services, or pay for inflation of costs

Question 2

Healthcare Costs

Answer 2

• America is one of the worst at controlling costs
• Lack of universal coverage, fragmented and highly commercialized healthcare system leads to rising costs and excessive spending.

Question 3

Types of Cost

Answer 3

Cost
- The amount of money spent on something

Variable Cost
- Cost that vary in direct proportion with volume

Fixed Cost
- Cost that do not change in total as the volume changes

Question 4

Types of Budget

Answer 4

Cash Budget
- A plan for the cash receipts and cash disbursement of the organization

Capital Budget
- A plan for acquisition of long-term investments such as equipment or buildings.

Operating Budget
- The plan for day-to-day operating revenue and expenses for an organization

Revenue
- Amount of money an organization has received or is entitled to receive in exchange for goods or services provided.

Question 5

Definitions

Answer 5

Productive Hours
- Time a nurse spends treating a patient or doing a productive task

Volume
- The number of different types of patients provided for surgeries preformed, or procedures completed.

Full-Time Employee/Equivalent
- A conversion of hours for each employee based on their commitment of base hours worked. Generally full time is 40 hours a week.

Question 6

Nursing Cost On Healthcare Bill

Answer 6

• Labeled “Room and Board”
• Fixed cost for every patient receiving the same level of care.

Question 7

Contractual Allowance

Answer 7

Hospital Charge - Insurance Reimbursement = Contractual Allowance

Question 8

Operating Budget

Answer 8

Productive Hours - Hours directly spent with patient
Non-productive Hours - Sick days, vacation, and other unpaid days

A full time employee works 1840 productive hours a year.