test 1 Flashcards
(82 cards)
1
Q
GAAP (Generally Accepted Accounting Principles)
A
a set of accounting standards that is used in the preparation of financial statements
what is/isnt acceptable to write off
2
Q
Healthcare is a ______________ trillion dollar industry
A
2.6 trillion
3
Q
501 (C) 3
A
code by IRS for non-profit
4
Q
pro forma
A
business plan made of assumptions for revenue, volume and expenses
5
Q
Accounts Payable
A
money owed by a company to vendors
6
Q
2 documents to review to see if you’re burning through cash
A
- balance sheet
- statement of operations
7
Q
Balance Sheet
A
snapshot in time of financial condition
assists - liabilities = net assets
end of month
see if you’re burning thru cash
8
Q
3 types of hospitals
A
- non-for profit (501(C)3)
- investor owned (traded on market, make profit for shareholders)
- government owned (VA, military)
9
Q
contractural allowances
A
discounts via insurance
10
Q
uses for financial information
A
- eval financial condition &stewardship
- assess efficiency & effectiveness of operations
- eval by jco and leap frog
- determine compliance
11
Q
Statement of Operations
A
another name for the income statement
rev-expenses= P or L
12
Q
Depreciation
A
an expense but noncash
13
Q
cash flow statement
A
look at beginning & ending balance
14
Q
most sensitive accounts for audits
A
- contractural adjustments
- provisions for bad debt
- accounts receivable
- allowance for contractural adjustments
- allowance for doubtful accounts
- 3rd party settlement
15
Q
Strategic Financial Plan
A
1) financial position
2) growth —-> volume (most important)
3) debt (highly leveraged)
4) assess reasonableness ( competition scouting=environmental scan)
16
Q
ratios
A
for comparison
17
Q
tactics to achieve strategic plan
A
external enviro/strategic needs
18
Q
What assumption is most critical?
A
Volume, drives everything
19
Q
days cash on hand, must have..
A
bond covnace (loan agreement)
20
Q
current ratio
A
tells you..
can I pay off my debts for a year?
21
Q
Debt Service Coverage Ratio
A
annual net operating income after expenses divided by the annual debt service
22
Q
most important part of revenue cycle
A
registration or preregistration
23
Q
medicare
A
A federal program of health insurance for persons 65 years of age and older
24
Q
Medicaid
A
A federal and state assistance program that pays for health care services for people who cannot afford them.
25
ACA expanded
medicaid
26
Part A
hospitals
| funded thru trust fund, social security tax, employee contributions
27
Part B
outpatient, physician services
| -funded thru patient premiums & federal treasury
28
Part C
```
Medicare Advantage
from Balanced Budget Act
-"gap" insurance medicaid managed care
-expansion of HMO & PPO plans to cover hospitalization
-can replace A&B
```
29
Balance Budget Act of 1997
legislation intended to reduce Medicare spending, create incentives for development of managed care plans, encourage enrollment in managed care plans, an limit free for service payment an programs
30
Part D
Prescription drug coverage
by Bush
funding from part A trust funds and beneficiaries premiums
31
funding for medicaid
joint, ran by state
32
1965
Johnson's title 18&19 (medicare &medicaid)
| social security act
33
funding for medicare
federal
34
financial management has its own
all the above
35
finance committee of the board
standing committee, focused on finance
| has prominence, has the ultimate decision
36
what does the finance committee look at?
balance sheet
statement of operations
statement of cash flow
37
GDP in 2015
$18 trillion
38
funding for part A
trust fund financed by social security tax- 3% wages
39
Funding for part B
thru patient premiums
40
funding for part C
medicare advantage plans--- funded thru federal treasury now pays for part of part B
41
funding for part D
trust fund D
42
Which enrollment is growing @ the fastest rate?
medicare part A enrollees
43
biggest fear of BBA?
baby boomers retiring
| medicare system could go bankrupt
44
FFS
fee for service
45
RVU
how physicians bill
46
medicaid
state run , jointly- funded , state administered
47
what did BBA do in 1997
cut home health
48
1999 Balanced Budget Refinement Act (BBRA)
2000 benefits improved
49
Medicare Modernization Act 2003
new drug provision, incentives from hospitals to provide quality data
50
Medicare Advantage in part C
use of HSAs (health savings account), putting money aside into fund to pay for medical bills -tax free, but loose it if not spent at end of the year
51
ACA in 2010
establishment of ACOs
52
preparation for audit
lots of prep
time consuming
lot of effort
53
SOX
top 10 salary earners reported
54
cost to charge ratio
just an estimate/ratio
55
ratios are used for
- comparison, local vs national
- used to make decisions
- will not predict how u will do at end of year , just if you are in range (they can change!)
56
2009 GDP%
17
57
business plans, developing budgets, pro forma, strategic planning are based off...
ASSUMPTIONS, then VOLUME
58
assumption that drives calculation the most in pro forma
volume
59
finance committee of the board gets power by
by-laws
| -all the above, standing board
60
what is financial management
Strategizing the organization’s financial direction as well as the performance of its day to day financial operations
61
considered a financial player?
```
Treasurer of the Board
Sr. V.P. of Finance or CFO (chief financial officer)
V.P. of Finance
or
V.P. of Revenue Cycle
Controller
Director of Patient Accounts
Director of Revenue Cycle
Director of Budget
```
62
ratios are most important in
F
63
most effective legislation on healthcare spending
BBA
64
Price increase is based as a function of
change in Volume, Severity and Expense
65
health care is a
$2.6 trillion dollar industry
66
Nowicki’s 6 Major Objectives of Health care financial management
To generate income
To respond to regulations
To facilitate relationships with 3rd party payers
To influence method and amount of payment
To monitor physicians
To protect the organization's tax status
67
pro forma
has projected income
It contains a series of assumptions
These lead to a go or no go decision
Decision based on net present value(NPV$) or internal rate of return (IRR %)
Organization may have a “hurdle rate”- minimal threshold that the organization determines is acceptable
68
3 Major Types of Health Care Organizations
Not for profit- no ownership, self sustaining
Investor owned- Tenet, HCA – traded on the NY Stock Exchange
Government – VA , military hospitals , city and county owned hospitals
69
6 Basic Accounting Concepts
Entity-corporate structure is capable of taking economic actions apart from the individuals running the entity
Transactions-Requires all financial transactions to be included in accounting records and reports
Cost valuation-All financial transactions recorded as cost ( price paid to acquire)
Double entry- 2 entries (change in asset and liability)
Accrual-revenues recorded when realized, expenses recorded when contributed to operation
Matching-revenues and expenses match in monthly records
70
5 Uses of Financial Information
Evaluating the financial condition of an entity
Evaluating the Stewardship within an entity
Assessing the efficiency of operations
Assessing the Effectiveness of operations
Determining the compliance of operations
71
Major Stakeholders Using Financial Statements
```
Governing Board
Senior Management
Department Managers
Investment bankers, rating agencies, bondholders
Community
Benefactors
Equity Investors
```
72
5 Basic Financial Statements in Health Care Organizations
```
Balance Sheet (page 40)
Statement of Operations (page 42)
Depreciation (page 45)
Statement of Cash Flow (page 50)
Notes to the Financial Statement (page 52)
```
73
balance sheet
snapshot of financial condition of hc org at single point in time
Total Liabilities and Net Assets
74
statement of operations
- summarized revenues and expenses of org, resulting in profit or loss
- Net Patient revenue ( gross revenues are based on “charges” thus allowances need to be subtracted),Total Expenses=Net Profit
75
statement of changes in unrestricted net assets
presents a summary of financial elements that caused a change in net assets during a given period of time
76
statement of cash flows
- summary of the assets and liabilities that caused a change in the main cash balances during a given period of time
- Gives info on organization’s sources and uses of cash
77
notes to the financial statement
-presents disclosure & discussion of the info underlying the numbers reported on the financial statements
-Presents a summary of financial elements that cause a change in net assets during a given time period
Least used financial statement
78
Bad Debt
Estimated amount of gross charges that the provider will not collect
79
Bad debt expense
Estimated number of Patients who are unwilling to pay for services
80
Charity Care write off
Patients who are unable to pay for services
81
Depreciation
periodic portion of cost of building the physical plant and purchasing of all capital equipment used within it
Non cash expense on Statement of Operations
Impact on organization’s bottom line
82
Financial Statement Ratios
a good way to determine financial viability and ability to repay principle and interest on a bond repayment
