Financial Management Nowicki chapter 1 Flashcards
What is Financial accounting?
A type of accounting that provides historical accounting information to external users through the development of financial statements.
What is managerial accounting?
A type of accounting that provides accounting information, generally current or prospective in nature, to internal users for decision making purposes
4 basic financial statements prepared for external users
- Consolidated balance sheet
- Statement of operations
- Statement of changes in equity
- Statement of cash flows
Average daily census
The average number of patients, excluding newborns, receiving care each day during the reporting period
Average Length of stay (ALOS)
Number derived by dividing the number of inpatient days by the number of admissions
Occupancy Rate
The ratio of average daily census to the average number of statistical beds ( set up and staffed for use).
Managerial accounting requires no prescribed format and therefore…
Managerial accounting varies from organization to organization
Cost accounting is often considered either synonymous or a subset of…
Managerial accounting
Cost accounting is the study of
Costs, including methods for classifying, allocating and identifying costs
The purpose of finance…
Is to analyze the information provided by managerial accounting to evaluate past decisions and make sound assessments regarding the future of the organization
Ratio analysis
Quantitative method of determining an organization’s financial performance by computing the relationships of important line items in financial statements
Capital investment analysis
A budgeting procedure to determine the potential profitability of a long term investment
6 major objectives of healthcare financial mgmt
1.generate income
2. Respond to regulations
3. Facilitate relationships w/ 3rd party payers
4. Influence the method and amount of payment
5. Monitor physicians
6. Protect tax status
Operating income
The difference between collected revenue and expenses
What is the most important objective of healthcare financial mgmt?
To generate a reasonable operating income ( by investing in assets and putting asset to work)
what is the definition of a third-party payer?
An agent of the patient (the first party) that contracts with a provider (the second party) to pay all or a portion of the bill.
What is a prospective payment system?
A payment system in which a healthcare organization accepts a fixed, predetermined amount to treat a patient, regardless of the true ultimate cost of the treatment.
DRGs (diagnostic-related groups) are part of what type of payment system
prospective payment
APCs (ambulatory payment classifications are part of what type of payment system?
prospective payment system
Nursing homes used to use what type of prospective payment system until 2019?
(RUGs) Resource Utilization groups
Capitated Pricing is…
Is when a third party payer pays a price per head (per subscriber) before the service is provided. The organization assumes the risk of the cost of care and the utilization and intensity of care.
Utilization review of physicians
the physician’s service ordering patterns are consistent with the actual needs of the patient and minimize the organization’s exposure to legal liability through possible negligent actions of the physician.
How do organizations use financial management to help protect tax status
For-profit organizations seek ways to reduce tax liability and not-for-profit organizations try to protect their tax-exempt status
Proactive strategy to quality financial assessment attempts to adopt what type of view of quality?
a comprehensive view of quality.
Reactive strategy to quality financial management attempts to …
limit views of quality to views developed by others.
Direct measures of quality assume what?
that the organization can define and measure quality itself