Which of the following statements about finance, accounting, and financial management is most correct? Show
Which of the following is not a finance activity? Which of the following statements about regulatory and legal issues in the health services industry is not correct? The costs to a health services organization of complying with regulation are minimal. Which of the following statements about the role of finance in healthcare organizations is incorrect? Today, the most critical finance function is …show more content…For an individual who pays personal income taxes at a rate of 30 percent, which of the following statements is most correct? For the instructor, this was question 7. An investment in a tax-exempt (municipal) bond with an interest rate of 8 percent is preferable to an investment in a taxable (corporate) bond with an interest rate of 10 percent. QUIZ 3 Which of the following statements about revenues, expenses, and net income is(are) most correct? Revenues increase the equity of an organization. Expenses decrease the equity of an organization. Net income (less any dividend payments) increases the equity of an organization. Statements (a), (b), (c), and (d) are correct. Assume Hospital A is a for-profit organization that pays taxes at a rate of 30 percent and Hospital B is a not-for-profit organization that pays no taxes. If depreciation expense for the year that ended on December 31, 2012, were doubled (e.g., from $100,000 to $200,000) for both organizations, which of the following statements is most correct? Estimated cash flow would increase for Hospital A but not for Hospital B. Assume Mercy Hospital miscalculated the amount of charity care it provided during the year that ended on December 31, 2012. If Mercy Hospital reported too little charity care in 2012, what would be the most likely effect on the income statement for Which of the following statements about finance, accounting, and financial management is most correct? a. Accounting is of no value in decision making. b. Accounting provides the theory and concepts necessary to help managers make better decisions. c. Financial management involves the measurement, in financial terms, of operational events that affect the resources and financing of an organization. d. The primary role of finance is to plan for, acquire, and use resources to maximize the efficiency (and value) of the enterprise. d. The primary role of finance is to plan for, acquire, and use resources to maximize the efficiency (and value) of the enterprise. Which of the following are not finance activities? a. Planning and budgeting b. Financial reporting c. Financial risk management d. Facilities management Which of the following statements about the finance department at large healthcare organizations is most correct? a. The department is headed by the chief financial officer (CFO) (sometimes called the vice-president finance). b. The CFO typically reports directly to the chief executive officer (CEO). c. The CFO usually is assisted by a comptroller and treasurer. d. The comptroller and treasurer often have managers under them responsible for specific functions such as patient accounts management and cash management. e. All of the above statements are correct. e. All of the above statements are correct. Which of the following statements about hospitals is most correct? a. Patients at general acute care hospitals typically have long patient stays, often 30 or more days. b. The optimal size for a hospital is roughly 50 beds. c. The majority of hospitals are public or not for profit (as opposed to investor owned). d. Most physicians involved with hospital services are hospital employees. c. The majority of hospitals are public or not for profit (as opposed to investor owned). Which of the following statements about healthcare providers is incorrect? a. Traditional outpatient settings include clinics, medical practices, hospital outpatient departments, and emergency rooms. b. Long-term care includes both healthcare and personal care services. c. There are many more hospitals than there are nursing homes, but nursing homes tend to have a greater number of beds. d. Patients with chronic illnesses are best treated by a single case manager regardless of the provider setting. c. There are many more hospitals than there are nursing homes, but nursing homes tend to have a greater number of beds. In the U.S., the highest proportion of healthcare expenditures is for: a. Prescription drugs b. Nursing home care c. Hospital care d. Dental care Which of the following statements about regulatory and legal issues is most correct? a. States require licensure of certain healthcare providers to limit the number of providers. b. The goal of certificate of need (CON) regulation is to ensure that there are a sufficient number of clinical workers at each hospital and nursing home. c. Clinicians who are employees of hospitals do not require personal licenses, as they can practice under the umbrella of the hospital's license. d. For most providers, the primary legal concern is professional liability. d. For most providers, the primary legal concern is professional liability. Accounting is best described as: a. Backward looking, and reports what has already happened. b. Governed by both local and international accounting standards. c. Focuses on generating the information needed to aid decision making within the organization, forward looking. d. Summarizing financial data taken from the organization’s accounting records and publishing in the form of annual (or more frequent) reports for the benefit of external users. c. Focuses on generating the information needed to aid decision making within the organization, forward looking Which statement below best characterizes a federal hospital? a. organized for the sole purpose of providing inpatient healthcare services. b. serves special purposes such as veterans c. is a public hospital d. represent 50% of all hospitals b. serves special purposes such as veterans Recent surveys of members of the American College of Healthcare Executives and Healthcare Financial Management Association indicate several critical concerns and challenges. Which of the following concerns did they identify? a. Adequate reimbursement from government payers b. Balancing clinical and financial issues c. Recruitment of physicians d. Answers (a) and (b) e. Answers (a), (b), and (c) True or False: The four Cs (character, capability, charisma, and courtesy) summarize the attributes needed to be a good financial manager. True or False: The role of finance in healthcare organizations has increased in importance over time because the finance function must support a multitude of activities such as cost containment, payer negotiations, and joint venture activities. True or False: Many studies have demonstrated that integrated delivery systems are able to provide higher-quality care at lower cost than can stand-alone specialized provider organizations. True or False: Healthcare finance consists of accounting and financial management functions within health services organizations. True or False: Ambulatory care is provided to inpatients at acute hospitals. True or False: The primary legal concern of healthcare providers is reimbursement fraud. False What are the benefits of an integrated delivery system? Patient are kept in the corporate network of services. Providers have access to mangerial and funcitonal specialist. Information system tracks all aspect of care. Larger, multipurpose organizations have better access to capital Enhanced ability to recruit management and professional staff One stop shopping Full range of services Incencentives encourage collobration What are two important issues facing healthcare managers today? Finanical challenges (level of reimbursement, bad debt loss, billing and collections, capital acquistion) Balancing clinical and finanical issues Finance activities at health services organizations are summarized by the four C’s. What are they? What role does regulation play in the healthcare industry? Regulation protects consumers and providers by ensuring they are licensure by a certified board or state. Which of the following activities are business characteristics? a. Raises money in the capital markets. b. Uses money raised to purchase assets such as land, buildings, and equipment. c. Uses the purchased assets to create goods and/or services. d. Sustains itself financially by selling the goods and/or services produced. e. All of the above are business characteristics. e. All of the above are business characteristics. Which of the following statements about the legal forms of for-profit business organization is most correct? a. Corporations are easier to form than are proprietorships. b. Partnerships are applicable when there are more the three owners, while proprietorships are used when there are three or less owners. c. Corporations have the advantage of limited liability to owners. d. Hybrid forms of business cannot be used by healthcare organizations. e. With corporations, income is taxed only once and hence they typically are more tax efficient than proprietorships or partnerships. c. Corporations have the advantage of limited liability to owners. Which of the following statements about investor-owned (for-profit) corporations is incorrect? a. Investors become owners by purchasing shares of stock. b. Owners have a claim on the business's residual earnings. c. Owners exercise control by voting for the board of directors (the proxy mechanism). d. When an individual sells his or her stock, the company receives the proceeds from the sale. e. An investor (owner) cannot lose more than the amount of his or her investment. d. When an individual sells his or her stock, the company receives the proceeds from the sale. Which of the following statements about not-for-profit corporations is most correct? a. They can issue tax-exempt (municipal) debt. b. They pay federal income taxes. c. They pay local and state taxes. d. Community residents exercise control of such corporations by voting for the board of directors (trustees). e. They pay dividends to owners. a. They can issue tax-exempt (municipal) debt. Which of the following individuals (or groups) are stakeholders in for-profit corporations? a. Suppliers b. Patients c. Managers d. Stockholders e. Employees Assume that Jane Adams pays income taxes at a 35 percent rate. What would be the after-tax amount on $100 of interest income that she receives? a. $100 b. $75 c. $65 d. $35 e. $15 Assume that John Richards pays income taxes at a 30 percent rate. He currently owns a not-for-profit (municipal) bond that pays 5 percent interest. What interest rate would have to be set on a for-profit (corporate) bond to produce the same amount of usable (after-tax) income? a. 5.0% b. 5.7% c. 6.6% d. 7.1% e. 8.4% Which of the following is not a hybrid form of business: a. Limited partnership b. Limited liability partnership or company c. Professional corporation d. Publicly held for profit corporation d. Publicly held for profit corporation Stockholders are owners of investor owned corporations. Which of the following is not a basic right: a. Right of control b. A claim on earnings c. Interest free loans d. Claim on liquidation proceeds Non profit businesses have the following characteristics except: a. Owned by individuals b. Controlled by board of trustees c. Exempt from most taxes d. Profits are reinvested back into the busines The primary obstacle of shareholder wealth maximaxation in large investor owned corporations is: a. B corporation status b. Agency problem c. People cost (salaries, bonuses, and fringe benefits) d. Inabillity to generate a profit Which of the following statements about benefit corporations (B corporations) is most correct? a. They are not-for-profit corporations. b. They provide tax benefits that are not available to stockholders in regular corporations (C corporations). c. They allow corporate boards and managers to sacrifice shareholder value for the greater good. d. They eliminate the problem of double taxation on corporate income. e. They are not allowed to pay dividends. c. They allow corporate boards and managers to sacrifice shareholder value for the greater good. True or False: From a financial perspective, businesses and pure charities are identical (operate in a similar fashion). True or False: The primary goal of not-for-profit corporations generally is expressed in a mission statement and often involves service to the community. True or False: Because the organizational and financial goals of for-profit and not-for-profit provider organizations differ, their financial decision making processes lead to very different decisions. True or False: A proprietorship is a business owned by 3 people or less. True or False: Businesses are budgetary organizations in that their funding is constrained by external forces (contributions or appropriations) True or False: A proprietorship is a business owned by 3 people or less. True or False: All earnings of a proprietorship are taxed as personal income to the owner. True or False: A partnership is owned by at least 2 people. True or False: A major advantage of the partnership is its low cost and ease of formation. True or False: The tax treatment of partnership earnings is the same as corporation in that it’s taxed at corporate income tax rates. True or False: Standard for profit corporations are double taxed – first at corporate level and then again at personal level. True or False: An S Corporation tax status can avoid double taxation. True or False: Stockholders can sell their shares to other individuals True or False: Non profit corporations can pay dividends to their owners. True or False: Non profit businesses operate exclusively for the public or community at large. True or False: The primary goal of large publicly held corporations is generally assumed to be maximization of owners’ wealth. True or False: Form 990 is a report filed with state regulators that is used to rank hospitals on the basis of patient satisfaction. Name the 4 disadvantages to owning a partnership or proprietorship: Selling an ownership in the business is difficult Unlimited personal liability Life of the business is limited Difficulty in attracting large amounts of capital Name the 4 advantages that a corporation can provide: Unlimited life Transfering ownership is easy Limited limability Ease of raising capital What is a closely held company? A for-profit corporation whose stock is owned by a small number of individuals and is not publicly traded To be workable, insurance must have which of the following characteristics? a. Pooling of losses b. Payment only for random losses c. Risk transfer d. Indemnification e. All of the above Which of the flowing statements about adverse selection and underwriting provisions is incorrect? a. Adverse selection means that those individuals with greater risk are more likely to purchase insurance. b. Adverse selection occurs because of asymmetric information. c. Insurers minimize adverse selection by using underwriting provisions. d. Health insurers typically include pre-existing condition clauses. e. Health insurers have unlimited power to set underwriting provisions. e. Health insurers have unlimited power to set underwriting provisions. Which of the following statements about fee-for-service reimbursement is incorrect? a. Payment may be cost based. b. Payment may be charge based. c. Payment may be on a prospective basis (specified beforehand) d. Payment may be based on the number of covered lives. e. Payment may be on a per visit basis. d. Payment may be based on the number of covered lives. Pay-for-performance (P4P) plans typically: a. Reward providers for meeting specified quality standards. b. Reward providers for reducing costs. c. Reward insurers for lowering premiums. d. Reward insured individuals for using less healthcare services. e. Reward insured individuals for not engaging in risky behaviors such as smoking. a. Reward providers for meeting specified quality standards. Which of the following statements about the Medicare payment system for hospital inpatient care (IPPS) is most correct? a. The basis for payment is the patient's diagnosis as specified by DRG. b. The DRG payment is adjusted for severity. c. Payments are increased for patients with very high costs (outliers). d. Payments are adjusted for the hospital's local conditions (wage rates). e. All of the above statements are correct. e. All of the above statements are correct. From a provider's perspective, which of the following third-party payment methods has utilization risk? a. Charge based b. Capitation c. Per diem d. Diagnosis (DRG) based e. Cost based Which of the following statements about Medicare reimbursement of physicians is most correct? a. The payment is based on relative value units (RVUs). b. The payment is based on patient age. c. The payment amount is the same for an identical service regardless of where the physician is located. d. The payment is based on patient gender. e. The payment for an office visit is the same regardless of physician specialty. a. The payment is based on relative value units (RVUs). Which of the following statements about coding is incorrect? a. Coding is the first step in the reimbursement process. b. ICD codes are used to classify diseases and injuries. c. CPT codes are used to specify medical procedures (treatments). d. Coders typically are registered nurses who receive special training. e. Codes typically are assigned on the basis of a clinician's notes. d. Coders typically are registered nurses who receive special training. The spreading of losses over a large group of individuals is: a. Indemnification b. Risk transfer c. Random loss d. Pooling The passing of risk from one individual or business to another is: a. Indemnification b. Risk transfer c. Random loss d. Pooling When a patient agrees to an expensive test even though the test is not medically necessary, this is an example of: a. adverse selection b. insurance c. moral hazard d. indemnification What type of payers are the insurers that reimburse health service organizations? a. Patients b. Providers c. Third parties d. None of the above Medicare has four major parts. Which part below is not one of those major parts? a. Managed care b. Inpatient services c. Vision and dental services d. Outpatient services e. Prescription drugs c. Vision and dental services Insurance taken out by Medicare beneficiaries that pays many of the costs not covered by Parts A and B is: a. Medicaid b. HMO’s c. Part D d. Medigap When providers are paid a set amount based on number of members assigned to that provider, this reimbursement method is called: a. Capitation b. Prospective Payment c. Cost based d. Value based When providers are paid for the costs incurred in providing services to the insured population, this reimbursement method is called: a. Capitation b. Prospective Payment c. Cost based d. Value based When providers are paid billed charges (either full or negotiated), this reimbursement is called: a. Capitation b. Prospective Payment c. Charge-based d. Value based When a single price is paid for all services within an episode, this is most likely called: a. Bundled b. Per diem c. Charge-based d. Value based What is the primary purpose of Patient Protection and Affordable Care Act of 2010? a. Increase quality b. Decrease costs c. Increase insured d. None of the above Which of the following statements about accountable care organizations (ACOs) is most correct? a. ACOs must include the following set of providers: hospital, physician group, urgent care center, and home health agency. b. ACOs need only a minimum of managerial systems in place because the payer (primarily Medicare) assumes most of the managerial functions. c. ACOs can distribute bonuses when targets are met and impose penalties when targets are missed. d. ACOs are radically different from other attempts to improve the delivery of health services. e. ACOs are established and owned by insurance companies. c. ACOs can distribute bonuses when targets are met and impose penalties when targets are missed. True or False: Moral hazard is the risk that a health insurer will not pay for covered services. True or False: There are several types of managed care organizations (MCOs). Regardless of type, all MC0s have the incentive to reduce utilization. True or False: Insurance companies try to minimize risk by diversification. A large proportion of provider revenue comes from patients. True or False: Medicare is a federal insurance program that covers poor individuals. True or False: Medicaid is a joint federal-state insurance program that primarily covers the low-income individuals and families. True or False: PPO’s tend to exercise more control over types and amounts of care provided and HMO’s tend to be less controlling. True or False: Risk of utilization under fee for service reimbursement is borne by insurer. True or False: Critics argue that capitation discourages unneeded services and reduced costs. True or False: Most fee for service reimbursements are based on medical codes. True or False: ICD 10 codes are currently used in U.S. True or False: ACO’s will receive a fixed payment from Medicare that covers the full costs of care for an entire population. True or False: A medical home (patient-centered medical home) is a team-based model of care led by a personal physician who works collaboratively with the team's other healthcare professionals to provide continuous, coordinated, and integrated care throughout a patient's lifetime. What are 4 basic characteristics of insurance? 1. pooling of losses 2. payment only for random loss 3. risk transfer 4. indemnification the dollar amount that must be spent on healthcare services before any benefits are paid by the insurer a fixed cost to the patient each time a service is rendered a sharing of costs between the patient and the insurer What is the primary advantage and disadvantage for value-based purchasing? Improve quality and reduce costs What is the difference between an ICD code and CPT code? ICD is used by the hospital to specify inpatient diagnoses Which one of the following statements regarding the role of the financial manager is correct?Answer and Explanation: The true statements: a. The financial manager is responsible for making decisions that are in the best interest of the firm's owner.
Which of the following is the definition of accounting in regards to healthcare finance?Of the two specialties in healthcare finance, accounting and financial management can often be blurred together. However, accounting is defined as when an organization records their expenses and economic history to determine their resources, operations, and overall financial standing.
Which of the following would most likely be considered non operating income?Examples of non-operating income include dividend income, asset impairment losses, gains and losses on investments, and gains and losses on foreign exchange transactions.
Which of the following items are part of a business's set of financial statements?The three main types financial statements are the balance sheet, the income statement, and the cash flow statement. These three statements together show the assets and liabilities of a business, its revenues and costs, as well as its cash flows from operating, investing, and financing activities.
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Which of the following statements about regulatory and legal issues is most correct?
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