Health Care Finance 1 Practice Test

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• There are several types of managed care organizations (MCOs). What is true about all MCOs?
• Why is "payer mix" significant in health care?
• When a business uses cash to pay for supplies ordered on credit, what happens to the accounts on the balance sheet?
• Which of the following best describes financial sustainability in health care organizations?
• Name a common payment model used in health care finance.
• If total assets are $500,000 and total liabilities are $300,000 with a $20,000 write-off due to obsolescence, what is the new total equity?
• How do financial incentives impact health care delivery?
• Which of the following statements about cash versus actual accounting is most correct?
• What analysis often includes benchmarking for effectiveness?
• Which statement about operating income is most correct?
• Which financial safeguard involves regular assessments of financial reports?
• According to surveys among healthcare executives, which concern is frequently identified?
• Which statement about net income in not-for-profit businesses is correct?
• What is a common outcome of capitation payment models for healthcare providers?
• What does "financial forecasting" involve in health care?
• What is the most correct statement about benefit corporations (B corporations)?
• Which of the following statements about Medicare reimbursement of physicians is most correct?
• If Carter Health System has a profit margin of 5.4% on sales of $4 million, what is its return on equity if it has total assets of $2 million and debt of $800,000?
• What is the role of financial governance in health care organizations?
• Which statement about the balance sheet is true?
• Who are considered "third-party payers" in health care?
• Is the statement "Like the income statement, the balance sheet reports the status of an organization over some period" true or false?
• What does the term "denial management" primarily aim to achieve?
• What does financial condition analysis primarily assess?
• Explain the term "utilization review."
• In a financial report, what does a high debt ratio suggest?
• What indicates that common-size financial statements are created incorrectly?
• Assuming Reginald Worthington pays 40 percent in income taxes and contributes $100,000 to a not-for-profit hospital, what will his tax bill be?
• Is the return on equity ratio relevant for not-for-profit organizations?
• Financial statements being largely historic means they are most useful for evaluating:
• If an organization's non-operating and operating activities are profitable, which statement is most correct?
• What tactic can health care organizations employ to reduce financial fraud?
• Under accrual accounting, what does the reported revenue on the income statement represent?
• What is the purpose of the current ratio in financial analysis?
• How does payer mix typically impact a health care organization's finances?
• What is meant by the term 'financial leverage'?
• What is the term used for the set of rules and regulations that govern financial statements?
• Which of the following best describes the process of fundraising for not-for-profit organizations?
• Which statement about the requirement for financial accounting information is true?
• What role do financial ratios play in health care organizations?
• How does operating analysis differ from financial statement analysis?
• Which of the following is a key purpose of financial safeguards in health care organizations?
• What interest rate would need to be set on a for-profit bond to match the after-tax income of a not-for-profit bond paying 5 percent interest for John Richards, who is taxed at 30 percent?
• In health care finance, what is the consequence of failing to implement effective financial safeguards?
• Which of the following can impact the effectiveness of financial safeguards in health care finance?
• Regular monitoring of cash flow is an example of which aspect of financial management?
• What is the primary goal of implementing a comprehensive financial policy in health care?
• What is a principal reason behind the establishment of financial incentives in healthcare?
• What does the term "managed care" refer to?
• What does "nonprofit status" imply for a health care organization?
• What misconception exists about the relation between hospitals and nursing homes?
• Which statement concerning net income is most correct?
• What would a lower liquidity ratio indicate for an organization?
• Which of the following statements about accountable care organizations (ACOs) is most correct?
• Which of the following is NOT a characteristic activity of businesses?
• Explain the importance of "transparency" in health care pricing.
• Which financial statement provides information about cash inflow and outflow?
• What is the correct accounting identity equation?
• What does "patient access" refer to in health care finance?
• Which of the following describes how payments are adjusted in the Medicare payment system?
• What does A/R stand for in health care finance?
• What is the correct characterization of payment adjustments for patients classified as outliers in the Medicare IPPS?
• Describe "value-based purchasing."
• What is a primary goal of not-for-profit organizations?
• Which financial statement summarizes a company's revenues and expenses over a specific period?
• What is "denial management" in health care finance?
• Which individuals are NOT considered stakeholders in not-for-profit corporations?
• Which of the following statements is true about financial analysis?
• The fundamental nature of financial ratios is that:
• If the value of diagnostic equipment falls due to obsolescence, how is the balance sheet affected?
• What is meant by risk adjustment in health care finance?
• What is "total margin" in health care finance?
• What is one of the primary reasons for maintaining financial reserves in a health care setting?
• Which analysis uses data from financial statements to evaluate financial condition?
• Which two ratios are considered rough measures of liquidity?
• What is the primary purpose of claims management in health care finance?
• Which of the following is NOT a characteristic of workable insurance?
• Why is financial forecasting important in health care organizations?
• What is the most accurate statement regarding income statement expenses?
• Which of the following is not a limitation of ratio analysis?
• In terms of financial reporting, what does the term 'cash flow' represent?
• What method do analysts use to interpret financial ratios effectively?
• What is the difference between fixed and variable costs in health care?
• What does "cost-sharing" refer to in health insurance?
• Which statement about the current ratio is most accurate?
• In the Medicare payment system for hospital inpatient care, what is the basis for payment?
• If two hospitals are identical except for age, what is true about their comparative financial statement analysis?
• What is the primary legal concern for most healthcare providers?
• Which statement about funding sources in healthcare is generally true?
• Is it always easy to determine whether a given financial ratio value is 'good' or 'bad'?
• What is commonly true about the financial management structure in healthcare organizations?
• Which assertion about financial statements is most correct?
• Is fund accounting used by investor-owned businesses to manage different types of funds?
• What type of analysis does not utilize comparative analysis?
• What is true about accumulated depreciation?
• What is the most correct statement about the legal forms of for-profit business organization?
• Which statement about debt management ratios is incorrect?
• Which of the following can be classified as a financial safeguard in health care?
• What overall trend can be seen in the healthcare finance landscape?
• What does depreciation expense account for?
• In the context of health care finance, what does PDA stand for?
• Which report is required to be filed by not-for-profit organizations to demonstrate transparency regarding financial activities?
• How has the role of finance in healthcare organizations evolved over time?
• What does the term "collective bargaining" refer to in health care finance?
• What is the primary goal of not-for-profit corporations?
• Which statement regarding the finance department of large healthcare organizations is correct?
• Which of the following statements about healthcare reform is incorrect?
• Which form of business organization allows owners to have limited liability for company debts?
• Define "operating margin" in health care finance.
• Which statement regarding non-operating income is most correct?
• Which department typically assists the CFO in a healthcare organization?
• What does "billing compliance" refer to in health care finance?
• A business's set of financial statements includes which of the following items?
• What is the purpose of a financial audit in health care organizations?
• What does the term "balance sheet" represent in health care finance?
• What does the term 'equity' refer to in financial reporting?
• Which of the following statements about for-profit and not-for-profit organizations is true?
• Describe the concept of "value-based care."
• Which of the following items would most likely be classified as an asset on a healthcare organization's balance sheet?
• What is considered when calculating net revenue for healthcare organizations?
• Why is pooling of losses essential in an insurance context?
• Which statement regarding investor-owned (for-profit) corporations is incorrect?
• What role does the "board of directors" play in health care finance?
• How are common-size financial statements created?
• In accrual accounting, when is patient service revenue recognized?
• Which of the following describes accrued expenses?
• Which of the following statements about income statements is most correct?
• Pay-for-performance plans are designed to reward providers for what?
• Which method is commonly used to detect fraud in health care finance?
• What is the most correct statement about not-for-profit corporations?
• Explain what is meant by "patient-centered care" in health finance.
• What is the relationship between the statement of cash flows and the other financial statements?
• What is the impact of the Affordable Care Act on health care finance?
• What is the primary effect of lease expenses on the income statement?
• Moral hazard is the risk that a health insurer will not pay for covered services. What is the correct perspective on this statement?
• Which statement about net patient revenue is correct?
• If Jane Adams pays income taxes at a 35 percent rate, what would be her after-tax amount on $100 of interest income?
• Which factor significantly limits the effectiveness of a single ratio value in financial analysis?
• Which of the following statements most accurately describes equity?
• If Grady Home Health has a profit margin of 15% on sales of $20 million, what is Grady's return on assets?
• What does the term 'liquidity' refer to in finance?
• What does “total cost of care” refer to in health care finance?
• What effect does operating at a loss have on equity?
• What is the outcome of a financial condition analysis?
• Which type of healthcare expenditure accounts for the highest proportion in the United States?
• What does a debt-to-equity ratio of 0.67 indicate?
• Which term is used to describe costs incurred for additional patient services?
• Define "profit margin" in health care.
• What is the primary purpose of a balance sheet?
• What is the primary role of finance in healthcare organizations?
• Financial statement analysis is typically used to evaluate which aspect of an organization?
• Which of the following would be considered a liability for a healthcare organization?
• Which financial metric indicates how well a hospital utilizes its assets to generate income?
• Why is compliance with financial regulations crucial in health care finance?
• Define "reimbursement models" in health care finance.
• Which of the following is an example of cash flow?
• Which of the following statements about coding is incorrect?
• What impact do out-of-pocket maximums have on patients?
• Define the term "revenue cycle" in health care finance.
• Effective financial safeguards in health care can lead to what overall benefit?
• What does KPI stand for in financial terms?
• What is the significance of budgeting in health care finance?
• What type of training is essential for staff to minimize financial risks in health care settings?
• Which account is affected when a business pays salaries using cash?
• What does the acronym HMO stand for in health care finance?
• What does cost per discharge measure in health care finance?
• What is a clinical pathway in health care finance?
• What would NOT be included in financial condition analysis?
• How does the Centers for Medicare and Medicaid Services (CMS) influence health care finance?
• What is the assertion about the four Cs—character, capability, charisma, and courtesy—in financial management?
• Which of the following financial practices is NOT characteristic of a not-for-profit organization?
• Which of the following activities is not classified as a finance activity?
• Which factor does NOT influence the financial decision-making processes of healthcare organizations?
• What is the relationship between preventive care services and health care costs?
• What are "direct costs" in health care finance?
• What is a common consequence of financial mismanagement in health care organizations?
• What is the primary responsibility of a CFO in a health care organization?
• In accrual accounting, how are the expenses reported on the income statement characterized?
• What is the debt ratio of White Memorial Hospital if its debt-to-equity ratio is 0.67?
• What does "MCO" stand for in health care finance?
• What is the most accurate statement concerning net income versus cash flow?
• Which statement about healthcare providers is incorrect?
• In health care finance, what are employee benefits costs?
• Which of the following best describes collective bargaining in healthcare?
• Define "cost accounting" in the context of health care.
• Which of the following is a limitation of financial condition analysis?
• What is a typical outcome of operating analysis?
• Which of the following best describes the organization of the balance sheet?
• What are financial safeguards in health care finance primarily designed to protect?
• What type of bond typically offers lower interest rates due to tax advantages?
• What is a "capitation payment"?
• How does depreciation impact the net book value of an asset?
• What is the objective of financial performance benchmarking in healthcare?
• In health care finance, what does "net revenue" represent?
• What is the primary goal of health care finance?
• What does "quality improvement" involve in health care finance?
• What is the predominant ownership status of hospitals in the United States?
• What is the best way to assess the liquidity of an organization?
• Which statement about accounting rules and regulations is accurate?
• Why is financial accounting information required?
• In health care finance, what is a major consequence of poor billing compliance?
• What is one role of Managed Care Organizations?
• Define the term "underwriting" in health insurance.
• What role do internal controls play in health care finance?
• What is the primary goal of the Patient Protection and Affordable Care Act?
• What does charity care refer to in health care finance?
• What is typically the focus of performance indicators in health systems?
• Which statement about fee-for-service reimbursement is incorrect?
• What is a medical home (patient-centered medical home)?
• What can be inferred about the profitability of a business when its balance sheet shows retained earnings?
• If Carlisle Clinic reports an equity balance of $1 million on its balance sheet, what was its equity balance one year prior, given a net income of $200,000?
• Which of the following factors contributes to the rising cost of health care?
• What are "financial reserves" in a health care organization?
• What is the definition of "marginal cost" in health care services?
• Which of the following statements about financial analysis is correct?
• What is the primary advantage of integrated delivery systems over stand-alone specialized providers?
• In terms of tax implications, what benefit do not-for-profit organizations often have?
• What type of third-party payment method is associated with utilization risk from a provider's perspective?
• What is an incorrect statement about adverse selection and underwriting?
• Which of the following is most accurate regarding asset classification on a balance sheet?