Session 2 - Financial Management Flashcards
Acuity
severity of illness
Assets
the financial resources an organization has/receives.
Average Length of Stay (ALOS)
average length of time patients are staying in the hospital.
ADC (Average Daily Census)
The average number of patients on an in-patient unit at a certain point in time for a set period of time (week, month, year), almost always collected at midnight.
Bad Debt
Losses due to uninsured or not collected.
Break-even
the point at which cost is covered by revenue. This concept is often used during decision making process for equipment purchasing and program development.
Capital Budget
long range planning tool for organizations; also refers to items that cost over a certain amount of money $500, $1000, $5000.
Capitation
payment arrangement where providers are paid a pre-arranged amount for each person/ member assigned to them over a certain period of time often whether they use it or not.
Charitable Care
healthcare provided for free or at reduced prices to low income patients.
- CMI- Case Mix Index (CMI)
the average relative DRG weight of a hospital’s inpatient discharges, calculated by summing the Medicare Severity Diagnosis Related Group (MS-DRG) weight for each discharge and dividing the total by the number of discharges. The CMI reflects the diversity, clinical complexity, and resource needs of all the patients in the hospital. A higher CMI indicates a more complex and resource intensive case load. Although the MS-DRG weights, provided by the Centers for Medicare & Medicaid Services (CMS), were designed for the Medicare population, they are applied here to all discharges regardless of payer. Note: It is not meaningful to add the CMI values together. *
Contribution Margin
The profit that is contributed by a cost center without the indirect costs.
Cost-Benefit Ratio
a way for an organization or department to weigh/analyze the cost of an item/project/program with the benefit. Analysis may include non-monetary value such as charity care and community benefit.
Depreciation
amount written off annually on a piece of equipment and buildings.
Direct Costs
costs that can be attributed to a specific item or cost in a department’s or projects budget. Examples include salaries, admission kits etc.
Diagnosis Related Groups (DRGs)
categories of diagnoses defined by Medicare for payment purposes.
Fiscal year
The period of time or cycle that a 12-month budget addresses. Most common cycles include calendar year January 1st-Dec 31st or academic year September 1-August 31st.
Fixed Expenses
Remain the same regardless of the number of patients such as mortgage or loan payments.
Forecasting
The process by which a department or organization translates future needs of a new program or budget into resource needs and financial terms.
Full Time Equivalent (FTE)
2080 hours in a year for a 40-hour work week (may be different for other types of shifts).
Gross Revenue
(AKA Gross Patient Revenue)
total amount of hospital charges.
Hours per Patient Day (HPPD)
of hours worked/# of patient days
Indirect Costs/Expenses
cost not directly chargeable to one cost center or activity such as housekeeping and office supplies.
Liabilities
financial obligations of an organization i.e. bills to pay.
Margin
Difference between what is actually collected from payers and total expenses. Usually reflected in %.
Occupancy Rate
ADC per budgeted beds (%) measured typically at midnight.
Operating Expenses
Non-salary expenses including those incurred in carrying out organizations work including items like medical supplies, office supplies, pharmacy costs, education, travel, food, miscellaneous.
Operating Margin
The overall difference between what the hospital collects from patient, payers and other sources and what is spent on providing care.
Patient Classification System
method of classifying patients into different groups based on acuity/severity of illness.
Patient Days
total number of patients in beds per day. This measurement typically occurs at midnight. Generally= ADC x #of days (month or year) = pt. days.
Patient Mix
percentage of different types of patients by payment or acuity.
Patient Outcomes
patient quality of care related to set standards and processes received at the hospital or from medical care.
Position Control Plan
Plan for staffing requirements that determines how many FTEs are needed.
Profit margin
% difference between revenue and expenses.
Productive time
The time (actual number of hours) a nurse or staff spends providing direct patient care.
Productivity
Amount of work performed by a set number of employees.
Resources
human, equipment, knowledge, etc.
Revenue
Money collected.
Salary
wages paid employees. Does NOT include agency staff which are paid as a contract.
Staffing Mix
percentage of RNs compared to other types of staff e.g. LPNs or nursing assistants.
Standards of Care
guidelines set by professional organizations or regulatory bodies by which care is measured.
Technology
Medical technology encompasses a wide range of healthcare products used to treat diseases and medical conditions affecting humans. Medical technology may broadly include medical devices, information technology, biotech, and healthcare services.
Turnover Rate
of vacant positions/# of positions available for a set period of time. Rate at which employees leave their jobs. The rate is calculated by dividing the number of employees leaving by the average number of workers employed in the unit during the year and then multiplying by 100.
Unit of Service
a measure of production used in non-inpatient areas i.e. procedures performed, patients seen, patients triaged
Vacancy Rate
of vacant FTE’s/# of available FTE positions.
Variance
difference between planned and actual costs.
Variable Expenses
expenses that vary based on the census or activity level.
Zero Based Budgeting
Starts at zero each year. Objectives are important and are listed according to priority. Zero-based budgeting also indicates what will happen if an objective in eliminated, as well as when they are accomplished for less money.
What is the difference between a “For Profit” and a “Non-Profit Hospital”?
(See course handouts)
Name seven payer systems.
1) Medicare, 2) Medicaid, 3) Self Pay/Charity Pay, 4) HMO, 5) PPO, 6) SHMO, 7) PSO
What is the difference between Medicare and Medicaid?
See notes
What is the difference between a HMO and PPO?
See Notes
What is the difference between a SHMO and PSO?
See Notes
What is the primary purpose of the Affordable Care Act?
See Notes
What is the difference between DRGs and PPSs?
See Notes
Compare and contrast P4P, Value based-purchasing, & TPS.
See Notes
What are the parts of Medicare?
Part A - Hospital
Part B - Medical
Part C - Advantage Plan
Part D - Drugs
Who qualifies for Medicare & Medicaid?
Medicare - 65+, ESRD, disabilities
Medicaid - low-income children, pregnant women, and elderly
What law(s) established Medicare and Medicaid?
Social Security Act (1965) - Medicare (Title 18), Medicaid (Title 19)
What are the four quality measures for TPS?
- Performance
- Outcomes
- Patient satisfaction/experience
- Structures and technologies (EHR)
Discuss “Payment Bundling” and “Bundled Payment for Care Improvement”.
See Notes
List the phases of a budget cycle.
(Describe each)
- Development
- Monitoring
- Reporting
- Justifying
- Variance Analysis
List the parts of a master budget.
(Describe each)
- Operating
- Capital
- Cash Balance
- Specialized
