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Powerpoint 4 Flashcards

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1
Q

What is the basic equation of accounting?

A

The basic equation of accounting is assets = liabilities + owner’s equity.

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2
Q

What are assets in healthcare accounting?

A

What are assets in healthcare accounting?

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3
Q

What are assets in healthcare accounting?

A

Liabilities represent the total capital investment borrowed by the organization.

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4
Q

What does owner’s equity represent?

A

Owner’s equity represents the total capital owned by the organization.

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5
Q

How is owner’s equity referred to in not-for-profit healthcare organizations?

A

is referred to as net assets.

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6
Q

What are net assets?

A

Net assets are the assets remaining after accounting for liabilities in not-for-profit organizations.

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7
Q

Where are an organization’s assets and liabilities reported?

A

On the balance sheet.

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8
Q

What is the purpose of financial statements?

A

Present fiscal information in a structured and easily understandable format.

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9
Q

What are the three primary financial statements?

A
  • Statement of Financial Position
  • Statement of Comprehensive Income
  • Statement of Cash Flows.
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10
Q

What is another name for the Statement of Financial Position?

A

balance sheet.

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11
Q

What does the Statement of Financial Position report?

A

a company’s assets, liabilities, and equity at a given point in time

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12
Q

What is another name for the Statement of Comprehensive Income?

A

profit and loss (P&L) statement.

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13
Q

What does the Statement of Comprehensive Income report?

A

an institution’s income, expenses, and profits over a period of time.

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14
Q

What does the Statement of Cash Flows report?

A
  • company’s cash flow activities
  • particularly its operating
  • investing
  • financing activities.
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15
Q

What does the Balance Sheet provide?

A

a snapshot of the organization’s financial position at a given point in time.

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16
Q

What does the Balance Sheet account for?

A
  • entity’s total assets
  • liabilities
  • net equity
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17
Q

What does the Balance Sheet identify?

A
  • What the organization owns (assets)
  • What it owes (liabilities).
Assest on the top of the sheet and Liabilities on the bottom
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18
Q

How does the Balance Sheet affect an organization’s financial standing?

A

It directly affects the organization’s credit rating and its ability to borrow additional funds.

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19
Q

Why is comparing Balance Sheets over time important?

A

offers a more comprehensive view of the organization’s business activities.

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20
Q

How is the Balance Sheet used in strategic decision-making?

A
  • It is used to understand the financial health of the business
  • assess the impact of strategic decisions
  • Helping determine if the organization is going in the right direction.
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21
Q

What are current assets?

A

cash or cash equivalents that can be converted to cash within the year.

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22
Q

What is the most liquid of all assets?

A

Cash is the most liquid of all assets and is always listed first on the balance sheet.

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23
Q

What is cash on hand used for?

A

To fund daily operations

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24
Q

What is “Days Cash on Hand”?

A

is a critical financial ratio.

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25
Q

How are cash and cash equivalents usually tracked?

A

by accounts receivable (AR).

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26
Q

What is reported on the balance sheet as a current asset?

A

Money owed to the organization as a result of core business activities is reported as a current asset.

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27
Q

What inventory items are considered current assets?

A
  • dressings
  • linens
  • medications
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28
Q

How are inventory items used in the organization?

A

These items are consumed in the process of generating operating revenue.

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29
Q

What must be deducted to determine current net assets?

A
  • Bad debt
  • charitable allowances
  • contractual allowances
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30
Q

What is bad debt in healthcare accounting?

A

payment for care that was expected to be paid but was not paid.

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31
Q

What are charitable allowances?

A

care provided to those with limited resources who are not expected to pay.

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32
Q

What is a contractual allowance?

A

reflects the discount to charges accorded to third-party payers by the hospital.

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33
Q
A
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34
Q

What are fixed assets?

A

Assets that cannot be converted to cash within a year, such as land, buildings, and equipment owned by the organization.

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35
Q

What is the purpose of fixed assets in an organization?

A

to serve the organization over time.

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36
Q

How is the long-term use of fixed assets accounted for?

A

through depreciation.

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37
Q

What is depreciation?

A

the process of spreading the cost of an asset over time to reflect wear and tear anticipated with its use.

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38
Q

What depreciation method is typically used by healthcare organizations?

A

The straight-line method, which spreads depreciation at a constant rate over the life of the asset.

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39
Q

How are liabilities shown on the balance sheet?

A

as current and long-term.

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39
Q

What are current liabilities?

A

Liabilities that are owed within a year.

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40
Q

What are long-term liabilities?

A

are planned to be paid off in more than a year.

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41
Q

What is the largest liability for healthcare organizations?

A

Salaries

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42
Q

How is net worth (or owner’s equity) calculated?

A

is the difference between total assets and total liabilities.
Assets- liabilities = total assets

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43
Q

What does the Income Statement summarize?

A
  • organizational and departmental revenue
  • expenses (credits and debits).
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44
Q

What does the Income Statement show?

A

whether the company made or lost money during the period being reported.

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45
Q

How often is the Income Statement typically produced?

A

Monthly and includes an accounting of all revenue.

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46
Q

What is net revenue?

A

is the expected revenue minus bad debt, contractual allowances from both governmental and other payers, and charity care.

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47
Q

What is one important indicator on the Income Statement?

A

the percentage of net revenue, also known as the “margin”

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48
Q

What does the Cash Flow Statement show?

A

An organization’s cash inflows and outflows.

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49
Q

What are the three parts of the Cash Flow Statement?

A
  1. operating
  2. investing
  3. financing activities
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50
Q

What does the operating section of the Cash Flow Statement represent?

A

Cash used to fund core business operations (i.e., patient care).

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51
Q

What does the investing section of the Cash Flow Statement represent?

A

cash deployed for interest income.

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52
Q

What does the financing section of the Cash Flow Statement represent?

A

cash borrowed and loans repaid.

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53
Q

What does the Cash Flow Statement explain?

A

Year-over-year changes in the organization’s cash position.

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54
Q

How is the Cash Flow Statement used?

A

To determine the short-term financial viability of the organization.

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55
Q

What key information does the Cash Flow Statement provide?

A

whether core business activities are self-sustaining or if the organization must pull in cash from other resources.

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56
Q

What is another name for the Departmental Operating Report?

A

The cost center report.

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57
Q

What information does the Departmental Operating Report contain?

A
  • information about a particular department or unit
  • breaking down revenue and expenses to the individual cost center.
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58
Q

What is the purpose of the Departmental Operating Report?

A
  • It helps managers keep a close eye on the money going in and out of their units
  • Provides a rationale for positive or negative variances
59
Q

What is a variance in the Departmental Operating Report?

A

is the difference between the projected budget and the actual performance.

60
Q

What does a positive variance refer to?

A

to an increase in volume.

61
Q

What does a negative variance refer to?

A

Overtime or other unplanned expenses.

62
Q

What is the role of the DNP nurse leader regarding variances?

A

Must be able to explain variances fully and develop action plans to manage them.

63
Q

What do contractual allowances reflect?

A

the amount of write-down agreed upon in advance with various government and private insurances.

64
Q

What is depreciation?

A

The loss in value the organization anticipates for its buildings and equipment over time.

65
Q

What can happen if capital equipment is replaced before it is fully depreciated?

A

result in a significant write-down of asset values.

66
Q

What does EBITDA stand for?

A

Earnings before interest, taxes, depreciation, and amortization

67
Q

What does EBITDA represent?

A

how much money a company earns if it did not have to pay interest, taxes, or take depreciation and amortization charges

68
Q

What is the paid claims ratio?

A
  • The comparison of hospital bills versus what is collected
  • Essentially measuring what the hospital collects on the dollar
69
Q

What is the comparison of numbers referred to as?

A

Ratios

70
Q

Why should ratios be compared against over a given time frame?

A

State, regional, and national benchmarks.

71
Q

What do liquidity ratios provide insight into?

A

An organization’s ability to meet its obligations over the next year.

72
Q

What do solvency ratios provide insight into?

A

an organization’s ability to meet its long-term obligations.

73
Q

What do common size ratios indicate?

A

the relative size of the organization.

74
Q

What do profitability ratios provide insight into?

A

organization’s ability to produce profits and cash flow.

75
Q

What do efficiency ratios provide insight into?

A

how efficiently an organization is using its resources.

76
Q

How does the National Academy of Medicine (NAM) define quality in healthcare?

A

“The degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge” (IOM, 1999).

77
Q

What was the National Academy of Medicine (NAM) formerly known as?

A

Institute of Medicine (IOM).

78
Q

What report provides tangible solutions to ensure quality care in healthcare?

A

The Crossing the Quality Chasm (2001) report.

79
Q

What are the six characteristics of quality care according to the Crossing the Quality Chasm report?

A
  1. Be safe
  2. Effective
  3. Patient-centered
  4. Timely
  5. Efficient
  6. Equitable.
80
Q

What does “safe” care mean in the context of quality care?

A

avoiding injury to patients.

81
Q

What does “effective” care refer to?

A

Providing care based on scientific knowledge and minimizing overuse, underuse, or misuse of care.

82
Q

What does “patient-centered” care emphasize?

A

Being respectful, responsive, and considerate of patient preferences, needs, and values.

83
Q

What does “timely” care aim to minimize?

A

delays and wait times.

84
Q

What does “efficient” care focus on avoiding?

A

waste.

85
Q

What does “equitable” care ensure?

A

That care does not vary based on race, gender, geography, or socioeconomic status.

86
Q

Who defined quality as a function of structures, processes, and outcomes of care?

A

Avedis Donabedian

87
Q

What are the seven pillars identified by Avedis Donabedian as attributes of quality?

A

One of the seven pillars is efficacy, which is the ability of care to improve health

88
Q

How does Donabedian define “effectiveness”?

A

the degree to which attainable health improvements are realized.

89
Q

What does “efficiency” refer to in quality improvement?

A

The ability to obtain the greatest health improvement at the lowest cost

90
Q

What is “optimality” in the context of quality improvement?

A

The most advantageous balancing of costs and benefits.

91
Q

What does “acceptability” refer to in healthcare quality?

A
  • Conformity to patient preferences regarding accessibility
  • The patient-practitioner relationship, amenities, effects of care, and the cost of care
92
Q

What does “legitimacy” mean in terms of quality improvement?

A

Social preferences concerning all aspects of care, including efficiency, acceptability, and equity

93
Q

How is “equity” defined in healthcare quality?

A

Fairness in the distribution of care and its effects on health

94
Q

What does the PLAN–DO–CHECK–ACT (PDCA) or PLAN–DO–STUDY–ACT (PDSA) cycle involve?

A

Successive cycle that starts small to test potential effects on processes and gradually leads to larger and more targeted changes.

95
Q

Who made the PDCA/PDSA cycle popular?

A

Dr. W. Edwards Deming

Who is considered the father of modern quality control.

96
Q

What did Dr. Deming originally refer to the PDCA/PDSA cycle as?

A

“Shewhart cycle.”

97
Q

Why did Dr. Deming modify PDCA to PDSA?

A

He felt that the term “check” emphasized inspection over analysis (“study”), so he changed it to “study.”

98
Q

What is the purpose of the “Plan” step in the Model for Improvement?

A
  • Establishes the objectives and processes necessary to deliver results in accordance with the expected output (targets or goals)
  • Focus on completeness and accuracy of the specification.
99
Q

What occurs during the “Do” step in the Model for Improvement?

A
  • The new processes are implemented
  • Often on a small scale, to test possible effects
  • Data is collected for charting and analysis
100
Q

What is the focus of the “Study” step in the Model for Improvement?

A
  • Involves measuring the new processes and comparing the results to the expected results (targets or goals)
  • Using data to identify trends for further action.
101
Q

Why is charting data important in the “Study” step?

A

Makes it easier to see trends and convert the collected data into information for the next step, “Act.”

102
Q

What is practice management in quality improvement?

A

the continuum of processes that impact the provision of patient care, often unique for each practice.

103
Q

What processes are included in practice management?

A

Staffing, scheduling, billing, and quality improvement practices.

104
Q

What is the goal of quality management in practice management?

A
  • To improve the outcomes of individuals in the department
  • Improve the systems or processes in the practice.
105
Q

What do pay-for-performance systems link compensation to?

A

To measures of work quality or goals.

106
Q

What did the 2006 IOM report, Preventing Medication Errors, recommend regarding incentives?

A

It recommended incentives so that the profitability of hospitals, clinics, pharmacies, insurance companies, and manufacturers aligns with patient safety goals to strengthen the business case for quality and safety (IOM, 2006).

107
Q

What is the key message from the 2006 report Rewarding Provider Performance: Aligning Incentives in Medicare?

A

The report stated that existing systems do not reflect the relative value of healthcare services in key areas like clinical quality, patient-centeredness, efficiency, or care coordination in prevention and the treatment of chronic conditions.

108
Q

What important aspects of healthcare are not adequately reflected or rewarded in existing systems, according to the 2006 report?

A

Clinical quality, patient-centeredness, efficiency, and care coordination

109
Q

What is the goal of value-based purchasing (VBP) according to the 2007 CMS Report to Congress?

A

Is to link payment to performance and transform Medicare from a passive payer of claims to an active purchaser of care.

110
Q

What report outlined the plan to implement a Medicare Hospital Value-Based Purchasing Program?

A

The CMS Report to Congress (2007)

111
Q

What are the three aims of value-based programs according to CMS (2017)?

A
  1. Better care for individuals
  2. Better health for populations
  3. Lower cost
112
Q

What do value-based programs reward?

A

incentive payments

113
Q

What has CMS developed since the implementation of the Affordable Care Act (ACA)?

A

multiple value-based programs as a mechanism to pay for quality care.

114
Q

Why does CMS value value-based programs?

A

they allow payments to be based on high-quality care rather than volume, which was the past practice.

115
Q

What was the goal of CMS’s original four value-based programs?

A

to link provider performance of quality measures to provider payment.

116
Q

What were the four original value-based programs introduced by CMS?

A
  1. Hospital Value-Based Purchasing (HVBP) Program
  2. Hospital Readmission Reduction (HRR) Program
  3. Value Modifier (VM) Program (also called the Physician Value-Based Modifier or PVBM)
  4. Hospital-Acquired Conditions (HAC) Program
117
Q

What does MACRA stand for, and what was its purpose?

A
  • Medicare Access and CHIP Reauthorization Act
  • Focus from volume to value
  • Pays providers based on how well they meet certain quality measures
118
Q

What system did MACRA replace, and with what did it replace it?

A
  • Sustainable Growth Rate (SGR)
  • Replaced it with the Quality Payment Program (QPP)
119
Q

What is the goal of Meaningful Measures according to CMS?

A

to increase efficiencies by focusing on quality measures of highest value and impact.

120
Q

How does Meaningful Measures align with other programs?

A

It aligns measures across value-based programs and partners, including CMS, federal, and private entities.

121
Q

What types of measures does Meaningful Measures prioritize?

A

outcome and patient-reported measures.

122
Q

What is the goal for measure transformation by 2025?

A

make all measures fully digital by 2025 and incorporate all-payer data.

123
Q

What type of measures are being developed under the Meaningful Measures initiative?

A

social and economic determinant

124
Q

What is benchmarking in healthcare quality and finance?

A

A method that assists in comparing outcomes of two or more entities.

125
Q

What entities can be compared through benchmarking?

A

providers, facilities, countries,

126
Q

Why is benchmarking considered an excellent tool?

A

Helps share improvements and how it compares to others

127
Q

What is cost–benefit analysis in healthcare?

A

the process of analyzing healthcare resource expenditures relative to their possible benefit.

128
Q

Why is cost–benefit analysis important in healthcare?

A

setting priorities when choices must be made in the face of limited resources.

129
Q

How is cost–benefit analysis used in healthcare decision-making?

A

Determine the degree of access to or benefits of healthcare to be provided.

130
Q

What is the central purpose of cost-effectiveness analysis (CEA) in healthcare?

A

to compare the costs and the values of different healthcare interventions in creating better health and longer life.

131
Q

Why is cost-effectiveness analysis important in healthcare systems?

A

It helps in making decisions within limited budgets and numerous potential spending options.

132
Q

What is cost per encounter in healthcare?

A

Expressed as the product of three key cost drivers:

  1. Intensity of services
  2. Productivity/efficiency
  3. Resource prices/salaries and wages
133
Q

What defines the intensity of services in cost per encounter?

A

The mix and quantity of services

134
Q

Why is data important in healthcare quality and finance?

A

Data is the basic element by which many critical decisions are made and supports initiatives in healthcare.

135
Q

What is crucial to ensure when using data to support an initiative?

A

It is crucial to ensure data integrity by thoroughly examining the data for accuracy and integrity.

136
Q

What is the Incremental Cost-Effectiveness Ratio (ICER)?

A
  • Is a term used in economics
  • compares the change in costs of a therapeutic intervention to an alternative
  • like doing nothing or using another treatment, to the change in effects of the intervention.
137
Q

How does ICER help in healthcare decisions?

A

helps to evaluate whether the extra cost of a new treatment is worth the additional benefits it provides compared to existing treatments.

138
Q

Measurement?

A
  • Is a atandard, a basis for comparison
  • A reference point againts which other things can be evaluated
  • A way to assess healt care againts standards
139
Q

Quality-Adjusted life year (QALY)?

A
  • Measure of disease burden
  • Includes quality and quantity of life lived
  • Invented by 2 health economist in 1956
140
Q

QALY model requires?

A
  • The utility of indenpendent
  • Risk neutral
  • Constant proportional trade off behaviors
141
Q

Risk Adujustment?

A
  • Requires a strict definition of each specific outcome
  • Severity of illness is a form of risk adjustment
142
Q

Risk adjustment mechanism of score involves:

A
  • Item selection
  • Definition
  • Collection
  • Potential biases
143
Q

Risk adjustment process to weighting risk factors involves?

A

Building multivariate models

144
Q

What affects the risk adjustment scores?

A
  • Derivation
  • Validation
  • Discrimination
  • Calibration
  • Reliability
145
Q

Risk-Benefit Analysis?

A
  • Weight potential undesirable outcomes
  • Side effects againts pontetial + outcomes of a Tx
  • Integral part of determining the necessity in the delivery of quality medical care

Healthcare Finance and Economics (1 decks)

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