CHFM CHFM - Certified Healthcare Facility Manager Finance and Budgeting 2

Question 1

In healthcare facility management, what is a capital expenditure (CapEx)?

Accepted Answer

A long-term investment in assets such as equipment or building improvements with a useful life greater than one year

Answer

Capital expenditures are funds used to acquire, upgrade, or maintain long-term physical assets such as building systems, equipment, or major renovations. They are capitalized on the balance sheet and depreciated over the asset's useful life.

Question 2

What is the purpose of a life cycle cost analysis (LCCA) in healthcare facility financial planning?

Accepted Answer

To evaluate the total cost of owning and operating an asset over its entire useful life, not just the initial purchase price

Answer

LCCA considers all costs associated with an asset from acquisition through disposal, including installation, energy, maintenance, and replacement costs, to determine the true economic cost of alternatives and support better purchasing decisions.

Question 3

Which financial metric measures the percentage of a department's budget that has been spent at a given point in the fiscal year?

Accepted Answer

Budget variance or budget-to-actual percentage

Answer

Budget variance tracks the difference between budgeted and actual expenditures, expressed as a percentage or dollar amount, allowing managers to identify overspending or underspending trends and adjust operations accordingly.

Question 4

In healthcare facility management, what is a 'maintenance reserve' or 'reserve fund'?

Accepted Answer

Funds set aside over time to pay for future major repairs, replacements, or capital needs

Answer

A maintenance reserve or capital reserve fund is a long-term financial strategy where money is set aside annually to accumulate funds for future major asset replacements, avoiding large unplanned capital expenditures.

Question 5

What does 'deferred maintenance' mean, and why is it a concern for healthcare facility managers?

Accepted Answer

Maintenance work that has been postponed beyond its recommended schedule, increasing the risk of failure and long-term cost

Answer

Deferred maintenance is the backlog of maintenance work that has not been performed when scheduled, often due to budget constraints. It increases asset deterioration, raises the risk of unexpected failures, and typically costs more to address the longer it is deferred.

CHFM - Certified Healthcare Facility Manager Practice Test

CHFM - Certified Healthcare Facility Manager Practice Test

CHFM CHFM - Certified Healthcare Facility Manager Finance and Budgeting 2