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Financial Management > test 1 > Flashcards

test 1 Flashcards

1
Q

GAAP (Generally Accepted Accounting Principles)

A

a set of accounting standards that is used in the preparation of financial statements
what is/isnt acceptable to write off

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2
Q

Healthcare is a ______________ trillion dollar industry

A

2.6 trillion

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3
Q

501 (C) 3

A

code by IRS for non-profit

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4
Q

pro forma

A

business plan made of assumptions for revenue, volume and expenses

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5
Q

Accounts Payable

A

money owed by a company to vendors

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6
Q

2 documents to review to see if you’re burning through cash

A
  • balance sheet

- statement of operations

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7
Q

Balance Sheet

A

snapshot in time of financial condition
assists - liabilities = net assets
end of month
see if you’re burning thru cash

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8
Q

3 types of hospitals

A
  • non-for profit (501(C)3)
  • investor owned (traded on market, make profit for shareholders)
  • government owned (VA, military)
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9
Q

contractural allowances

A

discounts via insurance

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10
Q

uses for financial information

A
  • eval financial condition &stewardship
  • assess efficiency & effectiveness of operations
  • eval by jco and leap frog
  • determine compliance
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11
Q

Statement of Operations

A

another name for the income statement

rev-expenses= P or L

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12
Q

Depreciation

A

an expense but noncash

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13
Q

cash flow statement

A

look at beginning & ending balance

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14
Q

most sensitive accounts for audits

A
  • contractural adjustments
  • provisions for bad debt
  • accounts receivable
  • allowance for contractural adjustments
  • allowance for doubtful accounts
  • 3rd party settlement
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15
Q

Strategic Financial Plan

A

1) financial position
2) growth —-> volume (most important)
3) debt (highly leveraged)
4) assess reasonableness ( competition scouting=environmental scan)

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16
Q

ratios

A

for comparison

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17
Q

tactics to achieve strategic plan

A

external enviro/strategic needs

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18
Q

What assumption is most critical?

A

Volume, drives everything

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19
Q

days cash on hand, must have..

A

bond covnace (loan agreement)

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20
Q

current ratio

A

tells you..

can I pay off my debts for a year?

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21
Q

Debt Service Coverage Ratio

A

annual net operating income after expenses divided by the annual debt service

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22
Q

most important part of revenue cycle

A

registration or preregistration

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23
Q

medicare

A

A federal program of health insurance for persons 65 years of age and older

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24
Q

Medicaid

A

A federal and state assistance program that pays for health care services for people who cannot afford them.

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25
Q

ACA expanded

A

medicaid

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26
Q

Part A

A

hospitals

funded thru trust fund, social security tax, employee contributions

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27
Q

Part B

A

outpatient, physician services

-funded thru patient premiums & federal treasury

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28
Q

Part C

A 
Medicare Advantage
from Balanced Budget Act
-"gap" insurance medicaid managed care
-expansion of HMO & PPO plans to cover hospitalization 
-can replace A&B
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29
Q

Balance Budget Act of 1997

A

legislation intended to reduce Medicare spending, create incentives for development of managed care plans, encourage enrollment in managed care plans, an limit free for service payment an programs

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30
Q

Part D

A

Prescription drug coverage
by Bush
funding from part A trust funds and beneficiaries premiums

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31
Q

funding for medicaid

A

joint, ran by state

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32
Q

1965

A

Johnson’s title 18&19 (medicare &medicaid)

social security act

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33
Q

funding for medicare

A

federal

34
Q

financial management has its own

A

all the above

35
Q

finance committee of the board

A

standing committee, focused on finance

has prominence, has the ultimate decision

36
Q

what does the finance committee look at?

A

balance sheet
statement of operations
statement of cash flow

37
Q

GDP in 2015

A

$18 trillion

38
Q

funding for part A

A

trust fund financed by social security tax- 3% wages

39
Q

Funding for part B

A

thru patient premiums

40
Q

funding for part C

A

medicare advantage plans— funded thru federal treasury now pays for part of part B

41
Q

funding for part D

A

trust fund D

42
Q

Which enrollment is growing @ the fastest rate?

A

medicare part A enrollees

43
Q

biggest fear of BBA?

A

baby boomers retiring

medicare system could go bankrupt

44
Q

FFS

A

fee for service

45
Q

RVU

A

how physicians bill

46
Q

medicaid

A

state run , jointly- funded , state administered

47
Q

what did BBA do in 1997

A

cut home health

48
Q

1999 Balanced Budget Refinement Act (BBRA)

A

2000 benefits improved

49
Q

Medicare Modernization Act 2003

A

new drug provision, incentives from hospitals to provide quality data

50
Q

Medicare Advantage in part C

A

use of HSAs (health savings account), putting money aside into fund to pay for medical bills -tax free, but loose it if not spent at end of the year

51
Q

ACA in 2010

A

establishment of ACOs

52
Q

preparation for audit

A

lots of prep
time consuming
lot of effort

53
Q

SOX

A

top 10 salary earners reported

54
Q

cost to charge ratio

A

just an estimate/ratio

55
Q

ratios are used for

A
  • comparison, local vs national
  • used to make decisions
  • will not predict how u will do at end of year , just if you are in range (they can change!)
56
Q

2009 GDP%

A

17

57
Q

business plans, developing budgets, pro forma, strategic planning are based off…

A

ASSUMPTIONS, then VOLUME

58
Q

assumption that drives calculation the most in pro forma

A

volume

59
Q

finance committee of the board gets power by

A

by-laws

-all the above, standing board

60
Q

what is financial management

A

Strategizing the organization’s financial direction as well as the performance of its day to day financial operations

61
Q

considered a financial player?

A 
Treasurer of the Board
Sr. V.P. of Finance or CFO (chief financial officer)
V.P. of Finance 
or 
V.P. of Revenue Cycle
Controller
Director of Patient Accounts
Director of Revenue Cycle
Director of Budget
62
Q

ratios are most important in

A

F

63
Q

most effective legislation on healthcare spending

A

BBA

64
Q

Price increase is based as a function of

A

change in Volume, Severity and Expense

65
Q

health care is a

A

$2.6 trillion dollar industry

66
Q

Nowicki’s 6 Major Objectives of Health care financial management

A

To generate income
To respond to regulations
To facilitate relationships with 3rd party payers
To influence method and amount of payment
To monitor physicians
To protect the organization’s tax status

67
Q

pro forma

A

has projected income
It contains a series of assumptions
These lead to a go or no go decision
Decision based on net present value(NPV$) or internal rate of return (IRR %)
Organization may have a “hurdle rate”- minimal threshold that the organization determines is acceptable

68
Q

3 Major Types of Health Care Organizations

A

Not for profit- no ownership, self sustaining
Investor owned- Tenet, HCA – traded on the NY Stock Exchange
Government – VA , military hospitals , city and county owned hospitals

69
Q

6 Basic Accounting Concepts

A

Entity-corporate structure is capable of taking economic actions apart from the individuals running the entity
Transactions-Requires all financial transactions to be included in accounting records and reports
Cost valuation-All financial transactions recorded as cost ( price paid to acquire)
Double entry- 2 entries (change in asset and liability)
Accrual-revenues recorded when realized, expenses recorded when contributed to operation
Matching-revenues and expenses match in monthly records

70
Q

5 Uses of Financial Information

A

Evaluating the financial condition of an entity
Evaluating the Stewardship within an entity
Assessing the efficiency of operations
Assessing the Effectiveness of operations
Determining the compliance of operations

71
Q

Major Stakeholders Using Financial Statements

A 
Governing Board
Senior Management
Department Managers
Investment bankers, rating agencies, bondholders
Community
Benefactors
Equity Investors
72
Q

5 Basic Financial Statements in Health Care Organizations

A 
Balance Sheet (page 40)
Statement of Operations (page 42)
Depreciation (page 45)
Statement of Cash Flow (page 50)
Notes to the Financial Statement (page 52)
73
Q

balance sheet

A

snapshot of financial condition of hc org at single point in time
Total Liabilities and Net Assets

74
Q

statement of operations

A
  • summarized revenues and expenses of org, resulting in profit or loss
  • Net Patient revenue ( gross revenues are based on “charges” thus allowances need to be subtracted),Total Expenses=Net Profit
75
Q

statement of changes in unrestricted net assets

A

presents a summary of financial elements that caused a change in net assets during a given period of time

76
Q

statement of cash flows

A
  • summary of the assets and liabilities that caused a change in the main cash balances during a given period of time
  • Gives info on organization’s sources and uses of cash
77
Q

notes to the financial statement

A

-presents disclosure & discussion of the info underlying the numbers reported on the financial statements
-Presents a summary of financial elements that cause a change in net assets during a given time period
Least used financial statement

78
Q

Bad Debt

A

Estimated amount of gross charges that the provider will not collect

79
Q

Bad debt expense

A

Estimated number of Patients who are unwilling to pay for services

80
Q

Charity Care write off

A

Patients who are unable to pay for services

81
Q

Depreciation

A

periodic portion of cost of building the physical plant and purchasing of all capital equipment used within it
Non cash expense on Statement of Operations
Impact on organization’s bottom line

82
Q

Financial Statement Ratios

A

a good way to determine financial viability and ability to repay principle and interest on a bond repayment

Financial Management (1 decks)

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