IV. Managing Finances

Question 1

Income statement or revenue/expense spreadsheet

Answer 1

Budget statement

Question 2

Shows revenue generated and expenses incurred over a period of time
(month, quarter, year)

Answer 2

Income statement

Question 3

Formula of Net income

Answer 3

Net income = revenue generated — expenses incurred

Question 4

Shows the financial situation of the organization at a specific point in
time

Answer 4

Balance sheet

Question 5

This sheet contains current assets (cash, patient receivables, inventory),
current liabilities (accounts payable, accrued salaries), property and
equipment (land, building, equipment, and instruments), and long-term
obligations (bonds payable, loans).

Answer 5

Balance sheet

Question 6

Equation of assets

Answer 6

assets = liabilities + net worth

Question 7

Show the inflow and outflow of cash for a specific period

Answer 7

Cash-flow statements

Question 8

These statements show the net cash flow from operations, net flow from
investments, and net cash flow from financial activities

Answer 8

Cash-flow statements

Question 9

Miscellaneous data needed by managers

Answer 9

Test volumes per laboratory
section,
supply costs,
labor costs,
cost per billable test,
workload,
rejection
rates,
contamination rates,
and productivity

Question 10

Usually done annually as a plan for spending for the next year

Answer 10

Budgets

Question 11

Incorporates workload data, new programs, test costs, previous year
revenues, previous year costs, capital equipment costs, operating expenses,
labor costs, and equipment maintenance costs

Answer 11

Budgets

Question 12

Most organizations use data from the previous year, then estimate
increased costs for the coming year and add this figure to the budget.

Answer 12

Budgets

Question 13

Zero-based budgeting involves starting the budget process from a zero
figure and justifying and researching every cost that will be incurred
before arriving at the final budget.

Answer 13

Budgets

Question 14

The federal government pays healthcare organizations for providing
care to beneficiaries using a method called

Answer 14

Prospective Payment
System (PPS).

Question 15

Healthcare organizations are paid a lump sum for services according to
the ___ for outpatient services

Answer 15

Ambulatory Payment Classification (APC)

Question 16

Healthcare organizations are paid a lump sum for services according to
the ___ for inpatient services

Answer 16

Diagnosis-Related Group (DRG)

Question 17

is a Medicare
coding system for reimbursement at the procedural level

Answer 17

Current Procedural Terminology (CPT)

Question 18

The government established a database and derived average costs for
many illnesses based on the

Answer 18

International Classification of Disease
(ICD-9).

Question 19

For outpatient services, the healthcare provider is paid a _____ to
provide specific services per HMO enrollee.

Answer 19

set fee

Question 20

This method is based on the
number of enrollees at a specific payment amount per enrollee.

Answer 20

capitated reimbursement

Question 21

are what it costs to produce test results. This includes
direct and indirect costs

Answer 21

Operating costs

Question 22

are directly associated with producing test results. These
include supplies and labor

Answer 22

Direct costs

Question 23

indirectly contribute to producing laboratory tests.

Answer 23

Indirect costs

Question 24

These
include electricity, water, paper towels, soap, bleach, computer software,
and the labor that supports these services, as well as supervisory,
managerial and administrative labor.

Answer 24

Indirect costs

Question 25

Give examples of indirect costs

Answer 25

electricity,
water,
paper towels,
soap,
bleach,
computer software,
labor that supports these services
supervisory,
managerial
and administrative labor.

Question 26

remain the same from month to month no matter how many
tests are produced

Answer 26

Fixed costs

Question 27

change with the amount of work performed.

Answer 27

Variable costs

Question 28

are related to purchasing equipment or instruments that have
a life span of more than 1 year and cost more than a set dollar amount.

Answer 28

Capital costs

Question 29

This figure is determined by the organization and usually ranges from
$1000 to $5000

Answer 29

Capital costs

Question 30

Keeping cost as low as possible without compromising the quality
of care delivered to patients

Answer 30

Cost Management

Question 31

Employees become very valuable sources for suggestions to increase
efficiency and effectiveness of work patterns

Answer 31

Cost Management

Question 32

entails gathering data on wages, collection and handling
fees, reagent cost, control and reference materials cost, disposables cost,
instrument maintenance, depreciation, miscellaneous costs, and indirect costs.

Answer 32

Cost per billable test

Question 33

Cost for testing calculation

Answer 33

Cost for testing = instrument cost + administration costs + supplies + labor

Question 34

Revenue per test calculation

Answer 34

Revenue per test = total revenue ÷ total number of tests

Question 35

Formula for profit

Answer 35

Profit = revenue per test — cost per test

Question 36

Calculations done in Cost per Billable Test

Answer 36

Cost for testing
Revenue per test
Profit

Question 37

where revenues equal expenses

Answer 37

Breakeven analysis

Question 38

Breakeven analysis calculation

Answer 38

Breakeven (BE) test volume = annual fixed costs ÷ (test price — variable costs per test)

Question 39

BE minimum price per test

Answer 39

BE minimum price per test = [annual fixed costs + (test volume X variable costs per test)] ÷ test volume

Question 40

BE minimum revenue

Answer 40

BE minimum revenue = annual fixed costs ÷ [(test price — variable costs per test) ÷ test price]

Question 41

Systems that study costs associated with performing tests

Answer 41

Cost Accounting

Question 42

Focuses on internal processes

Answer 42

Cost Accounting

Question 43

Focuses on ways of first reducing costs, then maintaining quality

Answer 43

Cost Containment

Question 44

Give ways of Cost Containment

Answer 44

Centralized purchasing
Centralization of jobs
Decreases unnecessary testing
Focuses on ways of first reducing costs, then maintaining quality