Healthcare Finance & Operations Flashcards
7 cards from real CPE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Healthcare Finance & Operations flashcards as text
A hospital's operating margin is 2%, but its total margin is 6%. The most likely explanation is:
Answer: Significant investment income or non-operating revenue
Total margin includes non-operating income such as investment returns and donations, which can significantly exceed the thin margins typical of clinical operations.
A physician executive is asked to evaluate a proposed physician compensation plan. Which scenario represents a potential Stark Law violation?
Answer: A hospital pays a physician above fair market value with compensation that increases based on volume of referrals to the hospital
Stark Law prohibits compensation arrangements where payment exceeds fair market value or is tied to the volume or value of referrals to the paying entity.
When analyzing a proposed merger between two health systems, a physician executive should prioritize assessing:
Answer: Whether the merged entity can sustain quality and access while achieving financial synergies
Successful mergers balance financial synergies with preservation of quality, patient access, and workforce stability — physician executives must champion the clinical perspective.
A hospital's payer mix shifts toward Medicaid from commercial insurance. The most immediate financial consequence is:
Answer: Reduced net revenue per case due to lower Medicaid reimbursement rates
Medicaid typically reimburses below cost and well below commercial rates, so a payer mix shift toward Medicaid compresses net revenue per encounter.
Which statement best describes the financial impact of readmissions under the Medicare Hospital Readmissions Reduction Program (HRRP)?
Answer: Hospitals face payment penalties on all Medicare discharges if readmission rates exceed benchmarks
HRRP reduces base Medicare payments across all discharges—up to 3%—for hospitals with excess readmissions in specified conditions.
In zero-based budgeting, department budgets are constructed by:
Answer: Justifying every expense from scratch each budget cycle
Zero-based budgeting requires departments to justify all expenditures anew each cycle, eliminating incremental assumptions from historical spending.
A physician executive is evaluating a hospital's pro forma for a new oncology service line. The analysis shows positive NPV but relies heavily on downstream referral capture assumptions. The most appropriate response is to:
Answer: Conduct sensitivity analysis on referral capture rate assumptions before approving
Referral capture assumptions are highly uncertain; sensitivity analysis reveals how robust the positive NPV is to changes in that critical variable.