Exam 2 Flashcards
(116 cards)
1
Q
Entity
A
Business capable of economic action.
2
Q
Cost Valuation
A
value of transactions. Options= price at sale, replacement, or purchase price. Price paid to purchase is most useful valuation.
3
Q
Double Entry
A
Each transaction has two aspects, the change in the entity’s assets and the change in the source of financing.
4
Q
Accrual
A
Recording financial transactions within an appropriate period of time.
amount of money earned or spent but not paid.
Charge for work that has been done but not yet invoiced.
5
Q
Matching
A
income of an activity must be matches with expenses of the same activity so that performance can be assessed
6
Q
Accounting methods: accrual and cash
A
Accrual= matching is consistent with use of accrual basis for accounting. Revenue recorded within the period in which it is earned. Expenses recorded in period when resources are consumed. Revenue should be credited in the same month the services were provided and the expenses incurred.
Cash= revenue is recorded when cash is received. Expenses are recorded when bills are paid. Fails to match revenue and expenses. COMMON in SMALL PRIVATE PRACTICES AND PARTNERSHIPS.
7
Q
relevance
A
helps users assess past and future efforts
8
Q
neutrality
A
relevance and reliability determine its use, rather than a need to demonstrate a particular result
9
Q
materiality
A
level of detail should be at a level that managers can use it for decision making
10
Q
comparability
A
comparing between organizations over time
11
Q
conservation
A
should error in the direction of underestimating benefits and overestimating potential costs
12
Q
costs and benefits
A
cost of obtaining and recording information should be weighed against the potential value of the information obtained
13
Q
contractual deductions
A
the differences between the price charged for a service and the price paid by third party payers
14
Q
fund accounting
A
separates the financial information of one or more sections from that of the total entity. found in hospitals and large health care businesses.
15
Q
funded depreciation
A
set aside money for the addition and or future replacement of buildings or equipment. this money is invested to counter the effects of inflation.
Depreciation= when assets lose value over time until the value of the asset becomes zero or negligible.
16
Q
financial statements
A
information collected over a certain period of time and or reported as of a specific date. Does not follow the chronological year, it follows a fiscal year.
Examples: balance sheet, income statement, cash flow statement
17
Q
balance sheet
A
information about a business’ assets, liabilities, and owners equity as of a specific date
18
Q
assets
A
economic resources owned by a business and are expected to benefit future operations. resources available to continue the operation of the business.
Ex: cash, investments, prepaid expenses, inventories, accounts receivable, capital assets, and intangibles
19
Q
accounts receivable
A
money that is owed to the business for services already delivered
20
Q
capital assets
A
land, buildings, equipment
21
Q
intangibles
A
patents, trademarks, copyrights, goodwill
22
Q
liquid assets
A
cash and assets that can readily be converted to cash
23
Q
fixed assets
A
assets that require a long conversion period
24
Q
liabilities
A
debts of the business, something the company owes
total= amount of business’ assets that are owned by its creditors
short term= repayable within one year
long term= not due or payable in more than a year
accounts payable= debts payable to individuals who have provided services to the business on credit
-money owed by a company to its creditors
accrued expenses= the value of debts that are held for payment in the future. (vacation, bonuses)
-expense recognized in books before it has been paid
Notes payable= loans, indicating the loan amount and interest due. (ex: mortgage)
-long term liabilities that indicate the money company owes
25
Owners equity
the difference between total assets and liabilities. also called net worth. the portion of assets that belong to the owners. net worth can increase if the owner invests additional resources into the business or it can increase as a result of profitable operations
26
income statement
report on the performance of a business over a specific period of time. compares revenue and expenses.
27
net income
the business made a profit and net worth was increased
28
net loss
the business lost money and net worth was reduced
29
profit (loss) centers
reflect the profit and loss of discrete parts of a larger organization (Ex: PT Depts--> HR, IT, maintenance are loss centers because they don't bill for anything)
-shows cost and associated profit with each unit
30
revenue
sale of service, products, gain from investments, gifts, assumption of risk for services.
Operating revenue= revenue form the sale of services or products
Non-operating revenue= all other services
31
expenses
money spent to produce or purchase the services and products sold
32
cash flow statement
tracks sources, use, and availability of cash
Pro Forma statements=cash flow statement that looks into the future
Pedi cash= cash on site that pays for little things
33
comparative statements
comparison between elements of the financial statement, among time periods or between planned and actual performance
Common size statement= when comparative percentages are used to further define elements of a financial statement
-each line item is expressed as a % of revenue or sales
34
financial analysis ratio
relationship between 2 quantities that have a management significance
35
liquidity ratio
assess a business' ability to meet short-term financial obligations
36
capital ratios
assess the financial structure of the organization, the mix of debt to equity
37
activity ratio
assess the use of assets to cover the expenses of the business
38
current ratio
common index of liquidity
the higher the ratio, the better a business is positioned to meet its current obligations
company's ability to pay short term obligations
39
acid test ratio
most rigorous test of liquidity
higher the ratio, the better the business' potential to meet its current obligations
Compares quick assets to current liabilities
40
days cash on hand ratio
of days a business could stay operating without incoming cash receipts
indicator of performance
higher the number, may decrease concern about buisness' ability to cover day to day expenses
too high a number may indicate failure to maximize the potential for long term investment income
cushion= should have at least 6-8 months of your paycheck or 180 days cash on hand
41
days in net accounts receivable
how long it takes to collect money owned (accounts recievable)
longer it takes--> liquidity problems in the future
Customers have ordered but not paid for
42
debt service ratio
ability to pay debt related to principle and interest on current debt
higher the ratio, the better able the business is to cover the costs of current debt and to handle additional debt in the future
want a high number
43
long term debt to fixes assets ratio
proportion of fixed assets that are financed through long-term debt
lenders use this ratio to determine the business ability to handle additional debt
the higher the ratio, the larger % of fixed assets have been financed through loans or other financing
44
long term debt to equity
ratio of both sources of long-term funding
higher the ratio, the greater the amount of long-term funding from long term debt
the higher the ratio, the harder it will be to obtain additional long-term financing
how much buisness' assets are financed by long term financial obligations (like loans)
45
operating margin
the higher the ratio the better
comparison of the economic performance of one business to industry standards, previous performance, and other investment opportunities
How much profit a company makes on a dollar of sales after paying for variable costs
46
return on assets
the higher the ratio the better
used to compare to industry standards, previous performance and other investment opportunities
used to select between alternative business strategies
How profitable a company is in relation to total assets
47
performance indicators for PT practice
volume of referrals
scheduled treatments
completed treatments
visits
case mix
revenues
costs
efficiency
48
chart of accounts
listing of all of a business' accounts
49
accounts receivable management
financial management of revenue
50
charge master (fee schedule)
listing of services and products that the business offers for sale
51
case mix
mix of patients by diagnostic grouping
used to estimate the volume of services required by patients based on historical services utilization parameters
52
payer mix
reflects % of total charges, the source of payment for services, and products sold
53
gross revenue
volume of products x price.
54
cost based reimbursement
provider is paid the lesser of charges or full allowable cost + additional amount to cover depreciation
55
fee-for-service
provider is paid for each discrete increment of services provided
56
case rate payment
pre-set charge for a specific patient POC
57
per diem rate payment
a day as the increment of time for service delivery (ex: day therapy programs)
58
capitated payments
manage care insurance plans, direct patients to certain provider, provider agrees to treat this group for a certain preset amount regardless of volume of services a person seeks
59
third party payment practice
acceptance of assignment--> provider agrees to accept preset payment schedule--> will not bill the patient for any further charges--> co-payment not included (ex: some MDs accept assignment for Medicare patients)
60
non operating revenue
incoming money that adds to the value of the business
61
operating expenses
cost of resources that are used in the production of PT services
(labor expenses, supply expenses, purchased and professional services, and accrued expenses)
62
capital expenses
purchase equipment, facilities, and other high priced items that will contribute to the production of goods and services
63
accrued expenses
incurred but NOT paid (vacation)
expenses recognized before it has been paid
64
payback period
amount invested/projected annual net cash flow
65
return on investment
KNOW EQUATION
Average projected net income/ average investment
higher ROI means a better investment
66
direct expenses
directly associated with the production of PT services
(ex: salaries, benefits, equipment, supplies education)
67
indirect expenses
costs not directly associated with the prod of PT services
(ex: administrative salaries, financial services, info services, grounds and building services, cafeteria)
68
fixed cost
remain unchanged despite changes in service volume. (insurance)
69
variable cost
increase or decrease in direct proportion to the sales volume, treatment salaries, linen, medical supplies
70
semi-variable cost
both fixed and variable elements (business telephone)
71
total cost
sum of fixed costs, variable costs, and semi-variable cost
72
cost-volume-profit analysis
predict overall financial impact of cost or volume changes
related to cost to revenue at any sales volume
as sales volume increases, total volume will increase at a rate= price per UOS
find out how changes in variable and fixed costs affect profit
73
under a capitated payment system
revenue is maximized at zero volume, as volume rises revenue per unit will decline
74
margin
difference between total revenue and total expenses
profit margin= positive margin
75
managing financial performance
financial management planning
annual budget planning
performance reporting
performance variance analysis
76
can increase revenue by...
current services (raising prices and or improving collection of accounts receivable)
expansion of service volume
77
quality control
focused on standards compliance
standards set by government and professional organizations
78
outcome assessment
cost effective and a value to customers
good outcomes at a lower price
compares its financial and clinical outcomes to the external outcome targets, called variance analysis(deviations of actual vs planned behavior)
79
comparative and common size financial reports
designed to support variance analysis
provide information in $ and as a % of the total category
comparative= financial data is side by side for years
common-size is the percentage
80
operating indicators for a PT practice
risk related to type of payment and operating indicators:
volume
revenues
costs
efficiency
81
Indemnity health insurance plans
employer and or subscriber pays a premium
subscriber agrees to pay any required deductible, co-pays and amount over the usual and customary rates
subscriber receives medical and hospital services from the provider of their choice
Choose from: hospital, OP, medical, major medical, dental
Indemnity=compensation for damages or loss
May be entitled to compensation for lost wages/damages
(workers comp?)
82
Medicare Part A
Hospital, home health, hospice, SNF
83
medicare part B
MDs, OP services, DME, services needed to diagnose or treat medical condition
funded through beneficiary premiums and co-pays
84
Medicare Part C
HMO, PPO
85
Medicare Part D
Drug plans
costs= premium, yearly deductible, copayments, costs in coverage gap
86
Bundling Model 1= retrospective acute care hospital stay only
episode of care focused on acute care
87
Bundling Model 2= retrospective acute care hospital stay plus post acute care
episode of care includes acute care hospital and all related services during the episode. Episode will end either 30,60,90 days after hospital discharge
88
Bundling Model 3= retrospective post-acute care only
acute care stay and begins at intitiaton of post-acute care services with a participating SNF, inpatient rehab, long term care hospital or HHA. must begin within 30 days of discharge from inpatient stay and end either 30,60,90 days after initiation of episode
89
Bundling model 4: prospective acute care hospital stay only
CMS will make a single prospectively determined payment to the hospital that would encompass all services furnished during the inpatient stay
90
comprehensive care for joint replacement
bundled through medicare
includes LEJR procedure, inpatient stay, and all related care covered under Medicare parts A and B within the 90 days after discharge, including hospital care, PAC, and physician services
91
Medicaid
state participation is voluntary
In order to qualify.. families income has to be below the state's poverty level
% of federal funding is based on per capita income
the lower the per capita income, the higher the federal payment of Medicaid costs
92
under a cost based method
more patients receive services
each patient receives more service
increments of service cost more to provide
-based on cost of production, manufacturing, distribution of product
93
under a fee for service /discounted fee for service
more patients receive service
each patient receives more services
increments of service are provided in the least expensive manner
-paid for each service
94
under per diem
more patients receive service
average length of service is longer
each patient receives only what they require in the least expensive manner
coordination of care
provider incentives to minimize per day utilization and cost
care plans
common complications managed proactively
-payment of fixed amount per day
95
under case rate payment
more patients receive service
each patient receives only what they need in the least expensive manner
coordinated care
provider incentives
care plans
common complications managed proactively
-based on clients characteristics, diagnosis, or presenting problems
96
under capitation
fewer patients receive services
access to and utilization of service controlled by the provider
each patient receives what they need in least expensive manner
coordinated care
care plans
common complications managed proactively
-risk adjusted amount of money for each person attributed to them, per period of time, regardless of volume of services
97
quick payment discounts
providers who do large volume of business with certain payer
provider offers the payer a discount off charges if the bill is paid quickly
no audit of charges
98
payer audits
audit medical record to verify changes
if charges can not be verifies, they will not be paid
-audit= post payment review of a claim to determine compliance with any number of payer requirements
99
pre-authorization requirements
many insurance plans require provider to receive authorization prior to a service being given
services not preauthorized will not be paid
100
resource productivity
the amount of a resource consumed in the production of an increment of output
hours worked compared to hours billed of service
101
financial productivity
total cost of the resource against the value of the output
102
3 main characteristics of expert systems
system logic
explicit knowledge base understandable by an expert in the field
able to explain its conclusions in a meaningful way
103
handwritten notes pos and negs
pos= ease of use, low cost, timeliness and familiar
neg= difficult to analyze, easy to lose, difficult to track completion, inconsistency of format and illegible
104
dictation pos and negs
pos= legible, standard format
neg= higher cost, loss of clinical time to proof read, multiple handling, difficult to analyze, easy to lose, difficult to track completion
105
computer entered pos and negs
pos= lower payroll costs, ability to aggregate data and analyze, legible, consistent format, data retrieval from any location
neg= clinical education, increased cost of computer equipment and training, reliance on a sometimes unreliable source
106
important areas of customer satisfaction
communication
respectful professional attention
consistency of service
clinician has personal knowledge of the patients case
respect for patient autonomy
107
common cause variation
large number of small sources of variation, outside the control of the person doing the work, part of the process itself, normal byproduct of the work itself.
108
special cause variation
not part of the work process, due to something out of the ordinary, good or bad. resolved by identifying the condition outside of the process that needs to change such as operator training or replacement of faculty equipment
109
CARF (commission of accreditation of rehabilitation facilities)
independent, accrediting body of health and human services
EX= rehab for a disability, treatment for addiction, home and community services, and retirement living
conformance to proven standards and are committed to continuous quality improvement
periodically evaluated on site and reconfirmed annually
They decide: 1 year, 3 year, provisional or nonaccredited
110
JCAHO, joint commission or JC
improve the quality of care provided to the public by offering accreditation
Hospitals and other health care organizations
on site surveys similar to CARF
111
CHAP (community health accreditation partner)
independent, not-for-profit, accrediting body for community-based health care organizations.
Home health, hospice, and home medical equipment services
112
NCQA (national committee for quality assurance)
accreditation program is voluntary, recognized by purchasers, consumers, and health plans as an objective measure of quality of MCOs.
Key component is development of Health Plan Employer data and information set (HEDIS)
113
NCQA star ratings
excellent= 4.5-5
commendable= 3.5-4
accredited= 2.5-3
provisional= 1-2
114
HEDIS
set of standardized performance measures desinged to ensure that purchasers and consumers have the information they need to compare the performance of MCOs
5 performance domains:
effectiveness of care
access/availability of care
utilization
risk adjusted utilization
measures reported using electronic clinical data systems
115
internal variables
quality, productivity, price
116
external variables
market share
