CMC Financial Management & Budgeting 4 — Questions and Answers
Question 1: A cardiac nurse manager is comparing actual FTEs used versus budgeted FTEs. This analysis is part of which type of budget report?
- Capital variance report
- Staffing or labor variance report (Correct answer)
- Revenue cycle report
- Purchased services report
Correct answer: Staffing or labor variance report
A staffing or labor variance report compares actual versus budgeted FTEs and associated labor costs to identify workforce spending variances.
Question 2: Under a bundled payment model for coronary artery bypass graft (CABG) surgery, which party bears financial risk if total episode costs exceed the bundled payment amount?
- The patient's insurance carrier
- CMS regardless of contract terms
- The provider or provider group accepting the bundle (Correct answer)
- The hospital's medical staff office
Correct answer: The provider or provider group accepting the bundle
In a bundled payment arrangement, the provider accepting the bundle is at financial risk for costs exceeding the predetermined episode payment.
Question 3: Which financial ratio measures the ability of a cardiac hospital to meet short-term obligations using its most liquid assets?
- Debt-to-equity ratio
- Operating margin
- Current ratio (Correct answer)
- Days cash on hand
Correct answer: Current ratio
The current ratio (current assets ÷ current liabilities) measures short-term liquidity and ability to meet near-term financial obligations.
Question 4: A cardiac program's accounts receivable days outstanding (A/R days) has increased from 42 to 58 days. This change MOST likely indicates:
- Improved revenue cycle efficiency
- Increased cardiac procedure volume
- Slowed collections or billing process delays (Correct answer)
- Higher average reimbursement per case
Correct answer: Slowed collections or billing process delays
Rising A/R days indicate that collections are taking longer, which may reflect billing delays, payer denials, or revenue cycle inefficiencies.
Question 5: Which depreciation method allocates equal expense amounts for a cardiac imaging asset in each year of its useful life?
- Accelerated depreciation
- Sum-of-years-digits method
- Straight-line depreciation (Correct answer)
- Units-of-production method
Correct answer: Straight-line depreciation
Straight-line depreciation spreads the cost evenly over the asset's useful life by deducting the same amount each year.
Question 6: A hospital cardiac quality team is evaluating whether to implement a rapid response protocol that costs $180,000 annually but is projected to prevent 6 cardiac arrests per year at a cost of $50,000 each. What is the net financial benefit?
- $30,000 annual loss
- $120,000 annual benefit (Correct answer)
- $300,000 annual benefit
- $50,000 annual benefit
Correct answer: $120,000 annual benefit
6 arrests × $50,000 = $300,000 avoided cost minus $180,000 program cost = $120,000 net annual benefit.
Question 7: In cardiac program financial planning, the term 'contribution margin' is calculated as:
- Total revenue minus total operating expenses
- Net income divided by total assets
- Revenue per case minus variable cost per case (Correct answer)
- Fixed costs divided by procedure volume
Correct answer: Revenue per case minus variable cost per case
Contribution margin = revenue per unit minus variable cost per unit, representing the amount each case contributes toward covering fixed costs.
CMC Financial Management & Budgeting 4
A cardiac nurse manager is comparing actual FTEs used versus budgeted FTEs.
This analysis is part of which type of budget report?