Financial Management Flashcards

Which financial ratio best measures a hospital's ability to meet short-term obligations?

Answer: Current ratio (current assets ÷ current liabilities)

The current ratio measures short-term liquidity by comparing current assets (expected to convert to cash within one year) to current liabilities (due within one year).

Medicare's Hospital Outpatient Prospective Payment System (OPPS) reimburses hospitals for outpatient services using:

Answer: Ambulatory Payment Classifications (APCs) grouping similar services into payment bundles

OPPS reimburses hospital outpatient services using APCs, which group clinically similar services with comparable resource costs into a single bundled payment.

In healthcare financial management, variance analysis compares:

Answer: Actual financial results to budgeted expectations to identify and explain differences

Variance analysis compares actual financial performance to the budget, identifying favorable or unfavorable variances and investigating their causes.

A healthcare organization pursuing a cost leadership strategy would focus on:

Answer: Achieving the lowest cost structure in the market while maintaining acceptable quality

Cost leadership strategy aims to achieve the lowest cost of production and delivery among competitors, enabling sustainable competitive advantage through operational efficiency.

The Internal Rate of Return (IRR) in healthcare capital investment analysis represents:

Answer: The discount rate at which the net present value of an investment equals zero

The IRR is the discount rate that makes the net present value of all cash flows from a project equal to zero, effectively the expected annual return on the investment.

Which healthcare reimbursement model places the greatest financial risk on providers?

Answer: Full capitation

Full capitation pays providers a fixed monthly amount per member regardless of services used, placing complete financial risk on the provider to manage costs.