CHL Financial Planning and Budgeting 5

Question 1

Which of the following best describes the role of a strategic financial plan versus an operating budget in healthcare?

Accepted Answer

The strategic financial plan aligns long-term capital and resource allocation with mission; the operating budget manages day-to-day revenues and expenses

Answer

Strategic financial plans project multi-year capital needs and strategic investments, while operating budgets focus on annual revenues and expenses from ongoing operations.

Question 2

A CHL is analyzing payer mix shift as a financial risk. Which scenario would most negatively impact operating margin?

Accepted Answer

Increase in Medicare Advantage patients replacing commercial insured patients

Answer

Medicare Advantage typically reimburses at rates closer to traditional Medicare (lower than commercial), so shifting from commercial to Medicare Advantage reduces per-case reimbursement and operating margin.

Question 3

What does the term 'charity care' represent in healthcare financial reporting?

Accepted Answer

Services provided at no charge to patients who cannot afford to pay

Answer

Charity care refers to services deliberately provided free of charge to patients who qualify based on financial need, before any billing is attempted.

Question 4

A department manager submits a budget based solely on last year's spending plus 3%. Which budgeting method is being used, and what is its main weakness?

Accepted Answer

Incremental budgeting; it perpetuates inefficiencies from prior years

Answer

Incremental budgeting adds a percentage to the prior year's budget without questioning whether existing expenditures are justified, embedding past inefficiencies into future budgets.

Question 5

In healthcare cost accounting, what is the purpose of allocating indirect costs (overhead) to departments or service lines?

Accepted Answer

To provide a full picture of the true cost of delivering each service

Answer

Overhead allocation ensures that the full cost of a service — including shared resources like administration, utilities, and housekeeping — is captured in cost analyses and pricing decisions.

CHL - Certified Healthcare Leader Practice Test

CHL - Certified Healthcare Leader Practice Test

CHL Financial Planning and Budgeting 5