CHAP Financial Management & Budgeting Flashcards

What is a 'charge master' (chargemaster) in hospital financial management?

Answer: A comprehensive list of all billable services and their standard prices

The chargemaster is a comprehensive database listing all services, procedures, medications, and supplies a facility can bill for, along with their associated standard charges.

Which financial ratio measures an organization's ability to pay short-term obligations with its most liquid assets?

Answer: Current ratio

The current ratio (current assets divided by current liabilities) measures short-term liquidity, indicating whether an organization can cover its near-term financial obligations.

What does 'cost-benefit analysis' help healthcare administrators determine?

Answer: Whether a proposed project's benefits justify its costs

Cost-benefit analysis compares the total expected costs of a project or program against its anticipated benefits to determine if it is a worthwhile investment.

In healthcare financial management, what is the 'break-even point'?

Answer: When revenues exactly equal expenses, resulting in neither profit nor loss

The break-even point is where total revenues equal total expenses, meaning the organization covers all costs but generates no profit or loss.

What is the function of an internal audit in a healthcare organization?

Answer: To independently assess financial controls, compliance, and operational efficiency

Internal audits independently evaluate the adequacy of financial controls, compliance with policies and regulations, and the efficiency of organizational operations.

Which financial document shows a healthcare organization's assets, liabilities, and equity at a specific point in time?

Answer: Balance sheet

The balance sheet (statement of financial position) shows what an organization owns (assets), what it owes (liabilities), and its net worth (equity) at a specific date.