CMD Financial Management & Budgeting in Healthcare 2

Question 1

A medical director reviews a budget variance report showing actual labor costs are 12% above budget. Which action is MOST appropriate as a first step?

Accepted Answer

Analyze the root cause by reviewing overtime data, staffing ratios, and census trends

Answer

Root cause analysis of variance drivers (overtime, staffing mix, volume changes) must precede any corrective action.

Question 2

Which metric BEST reflects the relationship between a hospital's short-term assets and short-term liabilities?

Accepted Answer

Current ratio

Answer

The current ratio (current assets divided by current liabilities) measures short-term liquidity.

Question 3

A long-term care facility is considering purchasing new therapy equipment for $250,000. The medical director wants to evaluate this using capital budgeting principles. Which tool compares the present value of expected cash inflows to the initial investment?

Accepted Answer

Net present value (NPV)

Answer

NPV discounts future cash flows back to present value and compares them to the initial capital outlay.

Question 4

Which type of cost remains constant per unit as volume increases but decreases in total when activity rises?

Accepted Answer

Fixed cost

Answer

Fixed costs remain constant in total regardless of volume, but fixed cost per unit decreases as volume increases.

Question 5

A medical director is told the facility's accounts receivable days are 68, up from 52 last quarter. What does this indicate?

Accepted Answer

The facility is taking longer to collect payments after services are rendered

Answer

Higher days in accounts receivable means the facility is waiting longer to collect revenue, indicating a cash flow concern.

(CMD) Certified Medical Director Practice Test

(CMD) Certified Medical Director Practice Test

CMD Financial Management & Budgeting in Healthcare 2