FACHE BOG Exam - all topics with 100% correct answers.

Weighted average cost of capital model (WACC) Method to measure the costs of various service of capital and the impact of the capital structure Weighted average cost of capital model (WACC) The relative amount of debt and equity in the capital structure and the cost of WACC source in the marketplace are used to determine weighted costs Evaluation techniques Economic evaluation techniques & accounting evaluation tecchniques Net present value & internal rate of return Economic evaluation techniques (adjusted for he time value of money) Accounting rate of return & pay back Accounting evaluation techniques (not adjusted for the time value of money) Net working capital On the balance sheet, what does the difference between total current assets and total current liabilities indicate? Infrastructure Budgets for new capital expenditures include requests for... Capital asset pricing model (CAPM) An equilibrium model that describes the relationship between market risk and required rate of return Full-time equivalents per adjusted averaged daily census The most common operating indicator used to measure overall staff productivity The following are considered part of the labor budget Staff salaries, hourly wages, employee benefits Contract staff expenses Are NOT considered part of the labor budget claim denial Claim denial is a major impediment to prompt payment in the revenue cycle process FTE 20.8 Expense ratio Best indicator of operating leverage when evaluating capital budgeting performance Analysis of proposed capital investment includes Cost of capital, cash flow projections, rush assessment Revenue cycle billing management typically includes Activities before services are rendered, activities that occur simultaneously with the services and activities after services are rendered. Drug prescriptions An example of direct costs Demand, cost, and output/productivity 3 basic categories of quantitative performance measures used in conventional accounting systems Under a capitated payment system... The risk sharing arrangements involve hospitals and insurers Net Present Value (NPV) A profitability measure that uses discounted cash flow Opportunity costs Must be included when determining a capital project's incremental cash flow Generally Accepted Accounting Principles (GAAP) Ensures that financial information that is reported to outsiders is consistent across businesses and presented in a manner that facilitated interpretation and judgements Internal rate of return measures Discount rate at which net present value is zero Statement of cash flows is organized in 3 sections: Cash from operations, cash from investing activities and cash flow from financing activities Financial ratio analysis Combines data from a balance sheet and an income statement to create a single number that facilitates easy interpretation Balance sheet Reviewed by CEO when s/he wants a snapshot of the financial conditions of the organization Where should charity care be shown in a financial statement? In the notes to the financial statements Best way to assign costs in responsibility management To assign costs to the department manager who is responsible for making decisions about those costs Balance sheet A financial statement that is updated daily to reflect changes in assets or composition of financing Controlling the costs of accounts receivable is heavily affected by The time or length of the payment cycle Increased productivity Occurs when a reduction occurs in the ratio of hours worked to the number of units of service rendered Price-level depreciation Depreciation method that best recognizes changes in the general purchasing power of the dollar and/or changes in the replacement cost of specific assets Delay capital improvements until funds are available When policies and programs impede the facility's fiscal capacity to renovate/model as routinely scheduled, to protect itself it must first... Internal controls To guard against the loss of assets, an administrator should implement detailed procedures, risk control, and annual outside audits Asset turnover ratio Useful in measuring managerial performance because it indicates the amount of resources required to generate a dollar of revenue A positive net present value indicates That the investment has a rate of return higher than the discount rate used in the calculation Acid-test ratio Ratio of cash, marketable securities and accounts receivable to current liabilities that is a technique most frequently used in industry to aid management in interpreting a form's balance sheet As an internal control method, a budget is most commonly used to: Serve as a numerical specification of plans and to function as a standard of control against which results can be compared Under generally accepted accounting standards, bad debts are reported as a/an Operating expense Value analysis A method used in inventory control activities to reduce cost without impairing functional efficiency municipal bond The type of bind sold on behalf of the county organization that has decided to issue bonds to fund a new building Philanthropy Source for financing capital needs for nonprofit organizations Financial statements can be used to Predict the future financial condition (real value) Liquidity ratio measures: A firm's ability to meet its current obligations in a timely manner Cost accounting is a tool that enables: The ability to determine the actual cost of providing patient care Increased use of short-term debt Reduced liquidity Examples of an asset: Property, plant and equipment Best way to reduce/contain the costs of distributing supplies throughout and organization: Minimize the number of times an item is handled from the time it is received by the organization to the time it is used Describe he statistics budegt It provides input data for other budgets Healthcare finance has 3 academic principles Financial accounting, managerial accounting, financial management Types of law Constitutional, statutory, judicial, administrative Contract law All physician-patient and institution-patient relationships are founded in contract (the patient requests treatment and the provider agrees to provide it in return for payment). This establishes certain legally enforceable duties and expectations Contractual aspects exist in relationships between a healthcare organization and Physicians, nurses, other employees, suppliers, payors, government, etc. Corporate law A corporation has a charter from the state, it receives certain benefits: perpetual existence, legal personality, corporate veil that shields the individual who created it and those who operate it. Corporate charters create legal obligations Government licensure, regulation, oversight merely to virtue of its corporate status Criminal law Prosecution and conviction for: assault, false imprisonment, violation of civil rights, defamation, environmental pollution, murder Negligence or Tort Law Violation of some prove. Standard of care or failure to exercise due care under the circumstances (alleged medical malpractice) Examples of negligence Failure to follow organization by laws; failure to monitor qualifications of healthcare workers; failure to protect substance abuse pts; HIPAA violations Examples of fraud & abuse False claims; kickbacks for referrals or Medicare pts; physician self-referrals Kickback Any inducement payment solicitation receipt offer or payment in return for referrals or for recommending ordering leasing or purchasing a service or item that may be at least partially paid for through a federal program Fraud The intentional deception or misrepresentation that an individual knows to be false or does not believe to be true...knowing that the deception could result in an unauthorized benefit (requires intent) Abuse Incidents or practices of providers that are inconsistent with accepted sound medical practices, directly or indirectly resulting in unnecessary costs to the government (can be an honest mistake) Corporate compliance Protects a healthcare company in the midst of a legal crisis by shielding the company from suffering harsher penalties or stricter sentences. Corporate compliance programs can reduce the likelihood of potential violations by Clarifying to employees what behavior is acceptable and what is intolerable