CHAP Financial Management & Budgeting Flashcards

What is the primary purpose of an operating budget in a healthcare organization?

Answer: To project day-to-day revenues and expenses for a specific period

An operating budget outlines projected revenues and routine operational expenses (salaries, supplies, utilities) for a defined period, typically one fiscal year.

Which financial statement shows a healthcare organization's revenues, expenses, and net income over a specific period?

Answer: Income statement

The income statement (also called profit and loss statement) summarizes revenues and expenses over a period, showing whether the organization generated a profit or loss.

In healthcare finance, what does 'accounts receivable' represent?

Answer: Money owed to the organization for services already rendered

Accounts receivable represents money owed to the healthcare organization by patients, insurers, or other payers for services that have already been provided.

What is the purpose of a variance analysis in healthcare financial management?

Answer: To compare actual financial performance against the budgeted projections

Variance analysis compares actual revenues and expenses against budgeted amounts to identify discrepancies and understand what drove any differences.

Which cost category remains constant regardless of patient volume in a healthcare facility?

Answer: Fixed costs

Fixed costs (such as rent, salaried staff, and equipment leases) remain constant regardless of how many patients are seen or services provided.

What does the term 'days in accounts receivable' measure?

Answer: The average number of days it takes to collect payment after services are rendered

Days in accounts receivable (days in A/R) measures the average number of days between providing a service and collecting payment, indicating billing and collection efficiency.