CHFM - Certified Healthcare Facility Manager Finance and Budgeting Flashcards

A healthcare facility manager is preparing a business case for a boiler replacement. Which financial analysis demonstrates the payback period?

Answer: Dividing the initial investment by the annual cost savings to determine how many years until the investment is recovered

The payback period is calculated by dividing the total initial investment by the annual savings or benefit generated, expressing how many years it will take for cumulative savings to equal the initial cost.

In healthcare facility financial management, what is the Facility Condition Index (FCI)?

Answer: The ratio of deferred maintenance costs to the current replacement value of the facility, expressed as a percentage

FCI = Deferred Maintenance Cost / Current Replacement Value x 100. An FCI under 5% indicates good condition, 5-10% fair condition, and above 10% indicates a building in poor condition requiring significant capital investment.

Which type of maintenance strategy is most cost-effective for critical healthcare building systems according to reliability-centered maintenance (RCM) principles?

Answer: Condition-based maintenance triggered by equipment performance data and monitoring

Reliability-centered maintenance (RCM) optimizes maintenance strategies by matching the maintenance approach to the consequence of failure. For critical systems, condition-based monitoring detects deterioration before failure, reducing unplanned downtime more cost-effectively than fixed-interval PM.

What does 'cost per square foot' measure in healthcare facilities management benchmarking?

Answer: The total annual facility operating cost divided by the gross square footage of the facility

Total cost per square foot is a comprehensive benchmarking metric that expresses total annual facility operations cost relative to the facility's total square footage, enabling comparison across facilities and industry benchmarks.

In healthcare facility management, what is the purpose of a 10-year capital plan?

Answer: To systematically project and budget for major asset replacements and facility improvements over a decade

A 10-year capital plan identifies major systems and infrastructure that will need replacement or significant investment over the next decade, enabling strategic financial planning and avoiding emergency capital requests.

A healthcare facility manager is evaluating an energy services contract with an ESCO (Energy Service Company). What is the key feature of a performance contract?

Answer: The ESCO guarantees that energy savings will be sufficient to repay the project cost, bearing the risk if savings fall short

In an energy performance contract, the ESCO guarantees a specific level of energy savings and assumes the financial risk if savings fall short of projections, typically funding the project through the guaranteed savings over a defined contract term.