Chap 6: Economics & Finance Flashcards
What percentage of GDP is the cost of healthcare?
16-17%
What is the price elasticity of demand?
The price point that will move customers in the direction of one or another product. As little as $10 per member per month (PMPM) out-of-pocket cost controls a consumer to shift from one type of health provider to another. The easier it is to shift between providers, the more elastic the relationship
What is the difference between a monopoly and a monopsony?
A monopoly is when the seller of services represents a dominant or unique vendor.
A monopsony is when the purchaser of services represents the unique or dominant position
In terms of accounting, what is the difference between a current ratio and a quick ratio?
Current ratio = current assets /current liabilities.
Quick ratio = (current assets - inventories)/ current liabilities.
For medical managers, what is the most frequently requested accounting statistic?
ROI: return on investment
What components are included in the balance sheet?
Assets, liabilities, and owners equity.
What is more important to practicing managers then the financial statement/balance sheet?
The income statement. Lists sources of revenue, expenses with final net income at the bottom.
What is the difference between cash-basis accounting and accrual-based accounting?
Cash-basis accounting is when revenue and costs can be recognized in one month/period in which they occur.
Accrual-based accounting is when revenue and expenses cannot be neatly matched to a month, and therefore are counted when they are incurred.
Is economics the study of money?
No, it is the study of value, including things like labor and resources.
What is included on the statement of cash flow’s?
Sources of cash received by the organization.
What is managerial accounting?
Focuses more on the day-to-day operations of the corporation.
An important concept in managerial accounting is true contribution income and the contribution margin. What is this?
The revenues generated by an individual item, such as a surgical procedure, linked to its expenses, to show the “contribution margin” or profit from each individual occurrence.
Managers can use this, and fixed overhead costs, to calculate how many of these procedures they would need to do per month to cover expenses and turn a profit.
What is activity-based costing accounting?
A second important concept in managerial accounting, evaluating the profit and loss of individual so programs within the overall statement.
What is opportunity cost?
The cost to the organization of spending money in one area compared to another, such as refurbishing an office instead of spending the money on buying a new x-ray machine is the opportunity cost of refurbishing the office.
What is cost of capital?
The cost of the cash utilized for a program. In some ways an opportunity cost, and in others the loss of even interest from having invested the money in a bank instead. This cost must be subtracted from the estimated profit from the investment.
