FINANCIAL ASPECTS OF PUBLIC HEALTH EXAM 1 QUESTIONS AND ANSWERS

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FINANCIAL ASPECTS OF PUBLIC HEALTH EXAM
1 QUESTIONS AND ANSWERS

Explaincfthecfprimarycffunctionscfofcffinance.cf-cfanswer--
providingcffinancialcfanalysescftocfimprovecfdecisionscfthatcfaffectcfthecfwealthcfofcfthecforganization;cfborrowingcffun
dscfandcfinvestingcfexcesscfcashcfresourcescfofcfthecffirm

Explaincfthecfprimarycffunctionscfofcfaccounting.cf-cfanswer--
acfsystemcfforcfprovidingcffinancialcfinformation;cffinancialcfaccountingcfrecordscffinancialcfhistorycfandcfmanagerialc
faccountingcflookscfforward;cfhelpscfmanagerscfmakecfongoingcfdecisionscftocfhelpcfthecforganizationcfmaintaincfbot

hcfitscfprofitabilitycfandcfviability

Whatcfarecfthecfprimarycfgoalscfofcffinancialcfmanagementcfforcfnot-for-profitcfhealthcarecforganizations?cf-
cfanswer--

managerscfarecfconcernedcfwithcfmaximizationcfofcfsalariescfandcfbenefits;cfprofitscfarecfnecessarycftocfachievecfthe
cfgoalscfrelatedcftocfprovidingcfhigh-qualitycfcare



Whatcfarecfthecfusescfofcfprofitcfforcfhealthcfcarecforganizations?cf-cfanswer--
healthcfcarecforganizationscfneedcfprofitscfto:
-cfinvestcfincfexpansioncfofcfservicescfsocftherecfiscfwidercfaccesscftocfhealthcare
-
cfneedcftocfearncfprofitscfoncfsomecfpatientscfincfordercftocfsubsidizecfthosecfpatientscfwhocfarecfunablecftocfbearcfthecfc

ostscfofcftheircfservices
-cfacquirecfnewcftechnologiescftocfimprovecfthecfqualitycfofcfhealthcfcare
-cfhavecfmoneycfavailablecfshouldcfancfemergencycfarise

Explaincfthecfrelationshipcfbetweencffinancialcfriskcfandcffinancialcfreturn.cf-cfanswer--
thecflowercfthecfrisk,cfthecflowercfthecfreturn
Thecfgreatercfthecfriskcfwecfmustcfincur,cfthecfgreatercfthecfanticipatedcfprofitcforcfreturncfoncfourcfmoneycfwecfdemand
.

Whatcfdocfaccountantscfmeancfwhencftheycfsaycf"short-term"cfandcf"long-term"?cf-cfanswer--short-
termcf=cf1cfyearcforcfless
long-termcf=cfmorecfthancf1cfyear

Explaincfhowcfancforganization'scfliquiditycfandcfsolvencycfarecfrelated.cf-cfanswer--
Liquiditycfreferscftocfbothcfancfenterprise'scfabilitycftocfpaycfshort-
termcfbillscfandcfdebtscfandcfacfcompany'scfcapabilitycftocfsellcfassetscfquicklycftocfraisecfcash.cfSolvencycfreferscftocfa
cfcompany'scfabilitycftocfmeetcflong-termcfdebtscfandcfcontinuecfoperatingcfintocfthecffuture.



WhycfiscfthecfUScfhealthcfcarecfsystemcfconsideredcfcomplex?cf-cfanswer--
Unlikecfmostcfindustries,cfthirdcfpartiescfoftencfpaycfhealthcfcarecfservicecfproviderscfforcfservicescfrendered

Howcfdocfhealthcarecforganizationscfgetcfpaid?cfDocfpayerscfallcfpaycfthecfsamecfratecfforcfthecfsamecfservice?cf-
cfanswer--

Usually,cfthecfbillcfiscfsubmittedcfbycfthecfhealthcfcarecfprovidercfdirectlycftocfthecfinsurancecfcompanycfforcfpayment.cf
Thecfinsurancecfcompanycfadjustscfthecfchargescfoncfthecfbillcfforcfthecfcontractualcfallowancecfandcfpayscfitscfshare.
cf

No,cfpayerscfpaycfdifferentcfratescfdependingcfoncftheircfinsurance

Whatcfiscfacfthird-partycfpaymentcfsystem?
cfHowcfdoescfthiscfpaymentcfsystemcfaffectcfthecffinancialcfmanagementcfofcfhealthcfcarecforganizations?cf-

cfanswer--Someonecfothercfthancfthecfindividualcfreceivingcfthecfmedicalcfcarecfpayscfforcfthecfservice

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, IllustratedcfAnatomycfofcfthecfHeadcfandcfNeckcf5thcfEditioncfFehrenbachcfTestcf
Stuvia.comcf-
Bank cfThecfMarketplacecftocfBuycfandcfSellcfyourcfStudycfMateri
Changes,cfsuchcfascfbundledcfpaymentscfandcfACOs,cfrequirecffinancialcfmanagerscftocfholdcfnegotiationscfwithcfot
hercfhealthcfproviderscftocfdeterminecfhowcftocfsplitcfthecflump-
sumcfbundledcfpayment,cfwhocfwillcfpaycfthecfadministrativecfcostscfofcfthecfACO,cfandcfhowcftocfdividecfany
Medicarecfsharedcfsavings

Whatcfiscfacfcontractualcfallowance?cf-cfanswer--
Thecfdifferencecfbetweencfthecfprovider'scfchargecfandcfthecfnegotiatedcfrate

Whycfarecfsomecfchargescfnotcfreportedcfascfrevenuecfforcfhealthcarecforganizations?cf-cfanswer--
Becausecfmostcfhealthcfcarecforganizationscfhavecfnocfexpectationcfofcfgettingcfpaidcffullcfchargescf(becausecftheycf
havecfalreadycfnegotiatedcfdiscountscfupcffront),cfthecforganizationcfiscfnotcfallowedcftocfclaimcfthecffullcfchargecfascfr
evenuecfwhencfitcfreportscfthecffinancialcfresultscfofcfitscfoperations.

WhatcfwerecfthecfmajorcfchangescfcontainedcfincfthecfPatientcfProtectioncfandcfAffordablecfCareActcfofcf2010?cf-
cfanswer---

cfThecfprimarycfgoalcfofcfthiscfreformcfwascftocfextendcfhealthcfinsurancecfcoveragecftocfuninsuredcfAmericans

-
cfencouragedcfthecfcreationcfofcfAccountablecfCarecfOrganizationscf(ACOs),cforcfcooperativecfgroupingscfofcfhealthc

fcarecfproviders

-
cfthecflawcfrequirescfinsurerscftocfeliminatecfannualcfandcflifetimecfcoveragecfcapscfandcfeliminatecfcopayscfforcfservic

escfdeemedcf"essential"

Whatcfiscfancfaccountingcfentity?cf-cfanswer--
thecfunitcfforcfwhichcfwecfwishcftocfaccountcf(ex:cfacfdepartment,cfproject,cforcforganization)

Whatcfarecfthecftwocfmostcfcrucialcfaspectscfofcfthiscfaccountingcfentitycfconcept?cf-cfanswer--
(1)cfoncecfthecfentitycfiscfdefined,cfthecfresourcescfandcfobligationscfofcfthecfentitycfshouldcfnotcfbecfcommingledcfwithc
fthosecfofcfothercfentities

(2)cfallcffinancialcfeventscfshouldcfbecfviewedcffromcfthecfentity'scfpointcfofcfview

Definecfassetcf-cfanswer--Thecfresourcescfownedcfbycfthecforganization

Definecfliabilitycf-cfanswer--Obligationscfofcfthecforganizationcftocfoutsidecfcreditors

Definecfnetcfassetcf(shareholders'cfequity)cf-cfanswer--
Thecfresidualcfamountcfleftcfover,cfwhencfliabilitiescfarecfsubtractedcffromcfassets

Whatcfarecfsomecfspecificcfexamplescfofcfassetscfandcfliabilities?cf-cfanswer--assetcfexample:cfx-raycfmachine
liabilitycfexample:cfmoneycfowedcftocfemployees

Whycfdocfnot-for-profitcforganizationscfusecfacffundcfaccountingcfsystem?cf-cfanswer--
Socfthatcftheycfcancfkeepcftrackcfofcfseparatecffundscfwithincfthecforganizationcf(ex:cfdonationcffund)

WhycfarecfGenerallycfAcceptedcfAccountingcfPrinciples(GAAP)cfneeded?cf-cfanswer--
Therecfarecfdifferentcfwayscfaccountantscfcancfaccountcfforcfmoney,cfsocfincfordercftocfmakecfthingscfmorecfuniform,cf
GAAPcfiscfneeded

Explaincf"Goingcfconcern"cf-cfanswer--
Financialcfstatementscfarecfpreparedcfbasedcfoncfthecfassumptioncfthatcfthecforganizationcfwillcfremaincfincfbusiness
cfforcfthecfforeseeablecffuture.cfIfcfthatcfiscfnotcflikelycftocfbecfthecfcase,cfitcfmustcfbecfdisclosed.



Conservatismcf-cfanswer--Givecfreasonablecfestimatescfaboutcftheircfprofitcfandcftheircfriskscfoncfpubliccfdocuments

Explaincfmatchingcf-cfanswer--
Expensescfshouldcfbecfrecordedcfincfthecfsamecfaccountingcfperiodcfascfthecfrevenuescftheycfwerecfresponsiblecfforcf
generating.
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