MHA 706 Final Exam Questions with Complete Solutions Graded A+

Healthcare Finance - Answer: is the practice of finance, including both accounting and financial management, within health services (provider) organizations Accounting - Answer: concerns the measurement, in financial (dollar) terms, of events that reflect the resources, operations, and financing of an organization Financial managment - Answer: provides the theory, concepts, and tools necessary to help managers make better financial decisions Business characteristics - Answer: -obtains financing from the marketplace -uses the funds to buy assets -operates the assets to provide goods or services -sells the goods or services to create revenue Pure Charity - Answer: refers to an undertaking for a charitable purpose only. The relief of poverty, advancement of education, advancement of religion, promotion of health, the obtaining of good government, and the accomplishment of that which is beneficial to the community in any other respect are pure charities. Primary role of finance - Answer: is to plan for, acquire, and utilize resources to maximize the efficiency (and hence value) of the enterprise. The Four C's - Answer: cost minimization cash sufficiency capital access control of financial resources 3 categories of business organizations - Answer: proprietorship, partnership, and corporation (there are also hybrid forms) Advantages of Proprietorships and Partnerships - Answer: ease of formation, subject to few regulations, and no corporate income taxes. Disadvantages to proprietorships and partnerships - Answer: limited life, difficult to transfer ownership, unlimited liability, difficult to raise capital Advantages to corporations - Answer: unlimited life, easy transfer of ownership, ease of raising capital Disadvantages of corporations - Answer: cost of formation and reporting and double taxation for investor-owned corporations Limited liability partnership LLP - Answer: ◦Partners share general business liability, but partners are liable only for their own malpractice actions Limited liability company LLC - Answer: Members are taxed like partners and Liability like stockholders Professional corporation (PC) or professional association (PA) - Answer: Owners have benefits of incorporation. However, still liable for malpractice. Often used by individual clinicians. Stakeholders - Answer: have a (financial) interest in the business Investor-owned corporations - Answer: stems from their organizational goal: shareholder wealth maximization Not for profit - Answer: is to ensure the financial viability of the organization Characteristics for insurance - Answer: pooling of losses, payment only for random losses, risk transfer, and indemnification Adverse selection - Answer: those with greater risk are more likely to purchase insurance