Healthcare Finance Exam 2
Information found on income statement - correct answer ✔✔summarizes financial performance for one
year
-income: donations, grants, sponsorships, dues, fundraising, events, registration fees
-expenses: advertising, supplies, utilities, insurance, staff expenses
-net income: total income - expenses
Information found on balance sheet - correct answer ✔✔shows your financial position-what is coming in
and going out for a period of time
-assets: current and fixed(long-term)
-liabilities & owner's equity: current liabilities, long-term liabilities, owner's equity: share of something
you own
-common financial ratios
Difference between income statement and balance sheet - correct answer ✔✔income statement
summarizes financial performance for one year
balance sheet shows financial position
Methods of Payment for Health Care - correct answer ✔✔cost-payment basis: underlying method for
payment is provider's cost; ratio of provider's cost as compared to its charge
fee schedule: payment is predetermined according to table of diagnoses and eligible fees
price-related payment: payment is based on percentage or other factor applied to price; similar to cost-
payment, but payment is determined on pricing not cost
Pricing Health Care Services - correct answer ✔✔-creation of prices for specific services that can be
provided
-large payers(Medicare/caid) pay on a fixed fee schedule, pricing of specific services can be used to drive
payment from smaller insurers & other private payers
, Factors that Influence Pricing for Health Care Services - correct answer ✔✔desired net income:
difference between revenues and expenses (sets goal for pricing decisions)
competitive position: more competitive firms in market have greater ability to dictate price in market
market structure: more buyers of care and fewer sellers creates more favorable pricing conditions for
providers
price elasticity: large changes in demand for services when prices adjust slightly can leave firms less able
to establish their price
Health care costs must be established to cover the following factors - correct answer ✔✔average costs
losses to government payers
discounts on un-insured and self pay patients
reasonable return on investment
Revenue - correct answer ✔✔-money in
-amount earned by an organization
-actual or expected cash inflows to the organization's major business
-mostly earned by providing care to patients
-value of services rendered, expressed at facility's full established price
Cost Shift - correct answer ✔✔government programs don't cover full cost of care
margin of loss is made up by charging higher prices to non-government payers
insured pays more than the uninsured
Ways of controlling revenue - correct answer ✔✔-price setting
-payer contract negotiation: non-govt insurers may negotiate contract pricing with providers
-billing/coding management
Ways of classifying revenue (how payment is received) - correct answer ✔✔whether payment is received
before or after service is delivered; amount is influenced by this classification
Information found on income statement - correct answer ✔✔summarizes financial performance for one
year
-income: donations, grants, sponsorships, dues, fundraising, events, registration fees
-expenses: advertising, supplies, utilities, insurance, staff expenses
-net income: total income - expenses
Information found on balance sheet - correct answer ✔✔shows your financial position-what is coming in
and going out for a period of time
-assets: current and fixed(long-term)
-liabilities & owner's equity: current liabilities, long-term liabilities, owner's equity: share of something
you own
-common financial ratios
Difference between income statement and balance sheet - correct answer ✔✔income statement
summarizes financial performance for one year
balance sheet shows financial position
Methods of Payment for Health Care - correct answer ✔✔cost-payment basis: underlying method for
payment is provider's cost; ratio of provider's cost as compared to its charge
fee schedule: payment is predetermined according to table of diagnoses and eligible fees
price-related payment: payment is based on percentage or other factor applied to price; similar to cost-
payment, but payment is determined on pricing not cost
Pricing Health Care Services - correct answer ✔✔-creation of prices for specific services that can be
provided
-large payers(Medicare/caid) pay on a fixed fee schedule, pricing of specific services can be used to drive
payment from smaller insurers & other private payers
, Factors that Influence Pricing for Health Care Services - correct answer ✔✔desired net income:
difference between revenues and expenses (sets goal for pricing decisions)
competitive position: more competitive firms in market have greater ability to dictate price in market
market structure: more buyers of care and fewer sellers creates more favorable pricing conditions for
providers
price elasticity: large changes in demand for services when prices adjust slightly can leave firms less able
to establish their price
Health care costs must be established to cover the following factors - correct answer ✔✔average costs
losses to government payers
discounts on un-insured and self pay patients
reasonable return on investment
Revenue - correct answer ✔✔-money in
-amount earned by an organization
-actual or expected cash inflows to the organization's major business
-mostly earned by providing care to patients
-value of services rendered, expressed at facility's full established price
Cost Shift - correct answer ✔✔government programs don't cover full cost of care
margin of loss is made up by charging higher prices to non-government payers
insured pays more than the uninsured
Ways of controlling revenue - correct answer ✔✔-price setting
-payer contract negotiation: non-govt insurers may negotiate contract pricing with providers
-billing/coding management
Ways of classifying revenue (how payment is received) - correct answer ✔✔whether payment is received
before or after service is delivered; amount is influenced by this classification
