Test 1 CHPT 1-4 Flashcards
1
Q
What are some of the industries in the healthcare sector?
A
Health services
Health Insurance
Medical equipment and supplies
Pharmaceutical and biotechnology
2
Q
What is meant by the term “healthcare finance” as used in the book?
A
Using the accounting and financial management principles and practice applied in health service organization to insure the financial well being of the enterprise.
3
Q
What are the two broad areas of healthcare finance?
A
Accounting functions and financial management functions.
4
Q
What is the difference between a business and a pure charity?
A
Business focuses on maintaining its financial viability by selling goods or service while a Pure Charity relies solely on donation.
5
Q
Briefly discuss the role of finance in the healthcare services industry.
A
To plan for, acquire, and use resources to maximize the efficiency and value of the enterprise.
6
Q
Briefly describe Hospitals
A
known as acute care. Hospitals are healthcare settings where people go to health treatment and can stay over night.
7
Q
Briefly describe home health care
A
Home health brings the same service offered in ambulatory care setting in the patients home.
8
Q
Briefly, describe Ambulatory care
A
outpatient care, Encompasses services provided to non-institutionalized patients
9
Q
Briefly describe long-range care
A
Long-term care focuses on nursing home, acute care rehabilitation and metal health settings. They cover extended lengths of time.
10
Q
Briefly describe integrated delivery systems
A
Is a network of health care organizations under a parent holding company.
11
Q
What are the benefits attributed to integrated delivery systems?
A
Patients are kept in the corporation network of service
Providers have access to managerial and functional specialties
Informational system that track all aspects of patient are
Linked organization has better access to capital.
12
Q
What role does regulation play in the health services industry?
A
To protect the health, safety and welfare of the public.
13
Q
What is the structure of the finance function within health services organization?
A
To plan for, acquire, and use resources to maximize the efficiency and value of the enterprise.
14
Q
What is the primary legal issue facing providers today?
A
Professional liabilities
General liabilities
Antitrust Issues
15
Q
What are the major current concerns of healthcare managers?
A
Reimbursement
Medicaid and Medicare
Bad debt losses
16
Q
What are the three forms of business organization?
A
Proprietorship
Partnership
Corporation
17
Q
What are the primary differences between investors-owned and not for profit corporations?
A
Investors-owned, have stock holders who are the owners of the corporation.
Not for profit, the live of charitable donation rather than having a defined set of stock holders.
18
Q
What is the primary goal of investor-owned corporations?
A
To be fully taxable, and retain earnings of the organization
19
Q
What is the primary goal of most not-for-profit healthcare corporations?
A
To be tax free, and issue tax expect debt.
20
Q
What is Form 990?
A
A file from that reports on an organization’s governance structure and community benefits service.
21
Q
Briefly describe the major third-party payers. Public
A
Is run though our government, it consists organization like Medicare and Medicaid.
22
Q
Briefly describe the major third-party payers. Private
A
operated like unto, Blue cross blue shield, commercial insurance and self insurance.
23
Q
What are the primary characteristics of managed care plans?
A
They strive to combine insurance function and the and the previsions of health care service.
24
Q
types of managed care plans
A
HMO, PPO, POS
25
What is the difference between fee-for-service reimbursement and capitation?
Fee for service is when a hospital is reimbursement biased on how many service or treatments doctors provides to a patient
Capitation is when a hospital is reimbursement based on how many patients a doctors has.
26
List all provider incentives
Cost-based, Charge-based (Including discounted charges), Per procedure, Per diagnosis, Per Diem, Bundled payment. Capitation
27
Describe provider incentives and risks; Cost-based, Charge-based (Including discounted charges), Per procedure, Per diagnosis, Per Diem, Bundled payment. Capitation
A: Cost-based
Cost incurred un providing services
B: Charge-based (Including discounted charges)
Based on charges.
C: Per procedure
Separate payments are made on each procedures made on a patient
D: Per diagnosis
The pay rate is diagnosis on a patient diagnosis
E: Per Diem
Pays a set amount for each impatient
F: Bundled payment
is defined as the reimbursement of health care providers (such as hospitals and physicians) "on the basis of expected costs for clinically-defined episodes of care."
G: Capitation
the payment of a fee or grant to a doctor, school, or other person or body providing services to a number of people, such that the amount paid is determined by the number of patients, students, or customers.
28
What is a stakeholder?
Is a party that has an interest in a company, and they can affect or be effected by its business.
29
What is the goal of financial accounting?
To identify, measure, record and communicate the economic events and status of a organization to interested parties.
30
What are the generally accepted accounting principles?
(GAAP) – This stands for Generally Accepted Accounting Principles – These principles establish the standards for financial accounting measurements and reporting.
31
What is the purpose of the GAAP?
The purpose of GAAP is to give the info to stockholders, creditors, and other interested parties to make the best-informed decisions.
32
What organizations are involved in establishing GAAP?
GAAP has been sanctioned by Securities and Exchanges Commission. (SEC)
Developed by Financial Accounting Standard Board (FASB)
Refined by American Institute of certified Public Accountants (AIC-PA)
33
Accounting entity define
The entity (business) for which a set of accounting applies. The concepts help accounting data to business activities separate personal affairs.
34
Accounting entity define and how is it used in preparation of financial statements
The entity (business) for which a set of accounting applies. The concepts help accounting data to business activities separate personal affairs.
35
Accounting period define and how is it used in preparation of financial statements
A amount of time covered by a set of financial statements – often a year, but sometimes or quarter or time period. ????.
36
Monetary unit define and how is it used in preparation of financial statements
It is the common basis by which economic events are measured. You cannot prepare a financial statement without this common basis.
37
Historical costs define and how is it used in preparation of financial statements
the price of an asset on the balance sheet is based on its nominal or original cost when acquired by the company.
38
Revenue recognition define and how is it used in preparation of financial statements
Concept that revenues must be recognized in the accounting period when they are realizable and earned. when applying this to the financial statement this helps prepare by providing order and organize Asian to the accounting periods.
39
Revenue recognition define and how is it used in preparation of financial statements
Concept that revenues must be recognized in the accounting period when they are realizable and earned. when applying this to the financial statement this helps prepare by providing order and organize Asian to the accounting periods.
40
Cost matching define and how is it used in preparation of financial statements
expenses should be recorded during the period in which they are incurred, regardless of when the transfer of cash occurs.
41
Full disclosure define and how is it used in preparation of financial statements
-A financial statement must contain a complete picture of the economic events of the business full disclosure provides this. Anything less would be misleading by omission. For the more because financial statements must be relevant to the diversity of the user the full disclosure principle purchases prepares to include even more information in the financial statements.
42
Objectivity define and how is it used in preparation of financial statements
Is the concept that the financial statements of an organization be based on solid evidence. The intent behind this principle is to keep the management and the accounting department of an entity from producing financial statements that are slanted by the opinions and biases of the company.
43
Materiality define and how is it used in preparation of financial statements
is the universally accepted accounting principle that all material matters are to be disclosed.
44
Consistency define and how is it used in preparation of financial statements
-consistency involves the application of like guidelines to a single accounting entry overtime. What a business financial statements are compared over extend. Say, annual statements for the past 10 years users must feel confident they are comparing apples to apples not apples to oranges.
45
Conservatism define and how is it used in preparation of financial statements
a policy of anticipating possible future losses but not future gains. This policy tends to understate rather than overstate net assets and net income, and therefore lead companies to "play safe".
46
Explain the difference between cash and accrual accounting.
The recording of economic events one at cash exchange takes place.
The recording of economic events when to transaction takes place that leads to a cash exchange.
47
Briefly describe the format of the income statement.
The income statement consists of 5 different categories first category revenues second category expenses third category operating income fourth category non-operating income and fifth category net income.
48
What is the difference between gross revenues and net revenues? (Hint: Think about discounts and charity care)
net revenue refers to gross sales minus the cost of sales, including cost of goods sold.
Gross Rev. all of the income from a sale is accounted for on the income statement.
49
What is the difference between patient service revenue and other revenue?
patient service revenue is revenue that come slowly from the patient compared to normal revenue which is revenues from other services such as food services parking fees operational services administrative costs things like that.
50
What is the difference between charity care and bad debt losses?
Bad debt loss our payments that are owed but will never be reported as revenue and will never be collected.
charity care - Free or reduced fee on care provided due to the financial situation
51
What is meant by the term expense?
expenses on the cost of doing business. Expenses may be reported using either natural traffic clears classification, which classifies expenses by the nature of the expense.
52
what is depreciation expense, and what is it purpose?
Is the allocated portion of the cost of a company's fixed assets that are appropriate for the accounting period indicated on the company's income statement. It's purpose is to allocate a portion of the cost of buildings machines or equipment the company has purchased and match it with the current fiscal year.
53
What are some other categories of expenses?
Here's a list expenses insurance fees wages taxes interest supplies utilities and rent.
54
What is the difference between operating income and net income?
Operating income is the income you generate through your operations.Net income is the final bottom-line income for your business.
55
Why is net income called "The bottom line"
because that is what is left over after all expenses have been deducted from the main gross revenue.
56
What is the difference between net income and cash flow?
Main difference is how they are calculated. Net income is calculated by subtracting the expenses for the revenue. Cash flow is simply put the cash that is flowing into the company through services or products provided.
57
Are financial conditions more closely related to net income or to cash flow?
The financial conditions are more related to cash flow then net income. Because financial conditions are used as a method to summarize the state of financial markets. Net income is used in a very similar way into business. A business can measure how Will is doing by looking at its net revenue deduct their expenses from their gross revenue and gives it a good bottom line.
58
What is the purpose of the statement of changes in equality?
The purpose of this statement is to present to stakeholders and other management the entities or organizations profit or loss for reporting for reporting period.
59
What is changes in equality basic format?
Basic format of this statement is the following, that income less dividends paid increase in equity equity beginning of the year in equity at the end of the year.
60
What is the difference between the income statement and balance sheet in regards to timing?
Revenue is documented in the credit account on the income statement while expenses are recorded as debits. The balance sheet provides a snapshot of the company's finances. It reports three items: assets, liabilities and owners' equity.
61
What is the accounting identity?
Is an equality that must be true regardless of the value of its variables or statement that by definition must be true.
62
What does the accounting identity tell us about a business's equity?
Reminds us that this is an equity is a residual amount that represents the difference between assets and liabilities.
63
What are assets
An asset is an item that either possesses or creates economic benefit for an organization.
64
What are the three major categories of assets?
Current assets fixed assets financial assets. ??
65
What are the three major categories of assets?
Current assets fixed assets financial assets.
66
Provide some examples of current assets.
Good example our books that get converted into cash and mature receivables were collected in the inventories were used ill patients and collected all of the value statement on the balance sheet.
67
What is net working capital, and what does it measure?
Net working capital is what were the measures equal to current assets minus current liabilities.
68
What is net working capital, and what does it measure?
Current assets minus current liabilities.
| It is your buying capacity.
69
On the balance sheet, what is the difference between long-term investments and property and equipment?
Long-term investment represents the company's investments while property and equipment is the long-term or noncurrent asset section of the balance sheet
70
What is the difference between gross fixed assets and net fixed assets?
Gross fixed assets are total price a business has paid for its fixed assets.
Net fixed assets is the purchase price of all fixed assets.
71
What is the difference between long-term debt and notes payable?
a. Alaska nor note payables are typically short-term date so the main difference between the two is the scene the timestamp ones long term once more short-term.
72
What makes a liability a current liability?
Debts or obligations that are due within one year.
73
What is fund accounting, and why is it important to some healthcare providers?
A system for recording finical statement data that categories as restricted or unrestricted. This system helps maintain and keep the data organized.
74
What is the statement of cash flows and how does it differ from the income statement?
Statement of Cash flows a financial statement that focuses on the cash flows coming out of the business.
75
What are the three major sections of the statement of cash flows?
Our cash flow from operating activities cash flow cash flow some financing activities that increase cash and cash equivalents beginning of year cash and cash equivalents and a year.
76
What is the relationship between net income on the income statement and the equity section on a balance sheet?
Non-profit org. net income from the income statement transfers over to the statement of change of equity.
For Profit.
Find the difference between the net income and less dividends that difference goes into the statement of changes of equity.
77
1. Describe their advantages - Proprietorships
2. Describe their advantages - Partnership
3. Describe their advantages - Corporation
???
78
What are medical coding systems used to support fee-for-service payment methodologies?
??
79
1. Briefly Describe the main provisions of healthcare reform and its implications for the practice of healthcare finance.
??
80
Describe the primary features of accountable care organizations (ACOs) and medical homes. What benefits are attributed to them?
??
81
Describe their advantages - Proprietorships
A sole proprietor has complete control and decision-making power over the business.
82
Describe their advantages - Partnership
Businesses as partnerships do not have to pay income tax; each partner files the profits or losses of the business on his or her own personal income tax return.
83
Briefly Describe the main provisions of healthcare reform and its implications for the practice of healthcare finance.
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84
Describe the primary features of accountable care organizations (ACOs)
Are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients.
