Budget and Finance Flashcards
Forecast Budget *
Budget line items (salary, benefits) are based on the previous year’s budget and test volumes.
Appropriation Budget
Associated with governmental bodies, where a fixed amount of money is granted for a fixed amount of time.
Flexible Budget
Fixed (overhead) and variable (reagents) are itemized, allowing for changes in test volume.
Operational Budget *
Most commonly used by lab managers for standard continuous operation of the organization.
Capital Budget *
Designed for purchase of equipment, building or remodeling.
Zero-base Budget *
Each budget line is developed COMPLETELY NEW from scratch. Historical info is disregarded. Only highest ranked items are funded. Used to get rid of dead weight.
Rolling-Quarter Budget *
Prepared quarterly, more accurate than annual budget.
Cash Budget *
Financial tool prepared monthly to anticipate cash flow, rates money is reveived and spent.
What is the difference between CASH and REVENUE? *
Revenue is the total amount of income generated
Cash flow tracks the amount of cash in hand and the cash flowing in and out of the company.
Financial Accounting *
Useful for external review, looks at costs in aggregate, uses double entry book keeping and generally accepted accounting principles.
Cash Accounting *
Useful for internal purposes, less formal rules. Identifies cost on a UNIT basis. Assign costs to a revenue generating activity.
Direct costs *
Cost assigned to to production of a product; ie. a billable test. Reagents, consumables, QC, and technical labor.
Indirect Costs *
The costs not directly involved with the billable test. Non-technical labor: Phlebs, supervisors, admins, billing, couriers.
Variable Costs *
Costs that change with test volume; reagents, supplies (direct), supervisor time to review QC (indirect)…
Fixed Costs *
Costs that don’t change with test volume; equipment lease, techs needed for coverage, admin overhead…
Prime Costs *
Direct labor and direct material costs required to produce a billable test. Used to compare different methodologies.
Conversion Costs *
Direct labor and Section overhead to produce a billable result Used to compare cost to measure the same reagent and test volume on two different analyzers.
Ready to Serve Costs *
Costs required just to keep the laboratory operational; Section and admin overhead, cost to collect and report results.
Full Production Costs *
Cost to produce a billable result, excluding Indirect and Ready to Serve costs (includes Prime and Conversion costs).
Fully Loaded Costs *
Includes Full Production and Ready to serve costs.
Fully Loaded Cost Components ***
- Prime Costs (direct labor and materials)
- Conversion Costs (Direct labor and Section OH)
- Full Production Cost (Direct labor, Direct material, Section OH)
- Ready to Serve Costs (Section OH, Collect and Report, Gen Lab OH)
- Fully Loaded Costs (Prime and Ready to Serve)
Fringe Benefit Cost *
Benefit Cost (25-35% of salary) including: Health Ins. Life and Disability Ins., Retirement plan, Vacation, Sick and Maternity leaves, and Social Security tax.
Salary Costs
Employee compensation + Fringe Benefits + Recruitment, Orientation, Training, and Development
Limitations of Laboratory Cost Reduction *
Fully Loaded Costs have a high percentage of Fixed Costs. Ex. A 50% decrease in workload results in on a 14% reduction in FTE’s.
Cost to Break Even **
Fixed Costs / (Test Price - Variable Costs)
Charge to Break Even **
(Fixed Cost/Test Volume) + Variable Cost
Minimum to Break Even **
Fixed Cost / (Test Price - Variable Cost) all per unit
Contribution Margin % **
(Test Price - Variable Cost) / Test Price all per unit
Purchase Requisition *
Request to make a purchase
Purchase Order *
Order to purchase items at a given price over a given amount of time
Standing PO *
Request to certain items be delivered automatically at the requested number and frequency
Blanket PO *
A certain amount of material or total dollar amount that can be ordered within a certain amount of time at a fixed price.
Equipment Rental *
Vendor owns equipment and supplies service. Considered Operating expense and most expensive option if equipment will be kept 3 or more years.
Equipment Lease *
.Lease arrangements are for a specified amount of time. Customer can build equity
Cost Oriented Pricing *
A percent added to the known cost (markup)
Demand Oriented Pricing *
Pricing is set at what you think the buyer will pay (STAT charges)
Relative Position Pricing *
Pricing is raised or lowered according to what others are doing in the industry.
Sealed Bid Pricing *
Pricing is determined by what each bidder thinks his competition will bid
Skim Pricing *
Price is set to take advantage of a short term situation to maximize profit.
Penetration Pricing *
Offensive tactic to undercut competitors price to get new customers
Loss Leader Pricing *
Product offered at little profit in hopes they will purchase items at a higher profit margin.
Discount Pricing *
Offering various levels of pricing based on the volume of business
Segmented Pricing *
Charging different pricing for different segments even though there is no difference in cost.
Price fixing *
cant discuss pricing with competitors
Price discrimination *
Must sell product to all people at the same price unless other factors such as volume are involved.
Minimum Pricing *
Cannot sell goods below cost for extended periods to destroy competition
Deceptive Pricing *
Prohibits sellers from hiding after-sale service charges before discounting prices
Gross Patient Revenue
total facilities charges for in and out Patient care, before revenues are applied
Net patient Revenue
Gross in and out patient revenue - related deductions
Deductions
lack of Payment, charity care, and contractual adjustments
Contractual Adjustments
Any adjustment after list price.
Self Pay
Usually elective, infertility, or genetic testing not covered by insurance or government payers.
Managed Care Insurance
Generally, lab is payed a set amount per month of testing
Indemnity Plan or Fee-For- Service
Insurance pays for part of the fee, typically at Medicare rates, and the patient pays the remainder.
Medicare *
Administered by CMS under HHS for individuals 65 and older or disabled
Medicare Part A *
Inpatient hospitializations and hospice care
Medicare Part B *
Outpatient lab tests, and outpatient physician fees and services
Medicare Part C
Alternative to Part B, essentially a HMO type plan
Medicare Part D *
Prescription drug benefit
Medicaid
Coverage for low income families
CPT codes *
Current Procedural Terminology codes represent procedure performed (5 digits)
CPT Category II codes
Intended to fill a gap where Category I codes do not exist
CPT Category III Codes
Intended to be a temporary code for new and emerging technologies not covered by Category I
LOINC
Logical Observation Identifier Names and Codes, breakdown of the service into components
ICD-10-CM *
International Classification of Disease, Clinical Modifications Codes, which identify a patient’s illness, injury, symptoms or complaint, procedural codes.
