CPE Healthcare Finance & Operations 2 — Questions and Answers
Question 1: A hospital's accounts receivable days outstanding increases from 45 to 68 days. Which action most directly addresses this operational problem?
- Hiring more clinical staff
- Accelerating charge capture and claims submission (Correct answer)
- Expanding the emergency department
- Reducing supply chain costs
Correct answer: Accelerating charge capture and claims submission
Faster charge capture and claims submission directly shortens the revenue cycle and reduces days in accounts receivable.
Question 2: Under a global capitation contract, a physician executive's primary financial risk management strategy should be to:
- Maximize fee-for-service billing volume
- Control total cost of care through utilization management (Correct answer)
- Negotiate higher per-member per-month rates only
- Shift risk entirely to hospitals
Correct answer: Control total cost of care through utilization management
Under capitation, the health system receives a fixed payment per member, so controlling utilization and total cost is the essential financial strategy.
Question 3: Which financial metric best measures a hospital's ability to service its long-term debt obligations?
- Current ratio
- Days cash on hand
- Debt service coverage ratio (Correct answer)
- Operating margin
Correct answer: Debt service coverage ratio
The debt service coverage ratio compares operating income to annual debt payments, directly measuring capacity to meet long-term obligations.
Question 4: A medical group is evaluating whether to bring lab services in-house versus continuing to outsource. This analysis is best performed using:
- Break-even analysis comparing fixed/variable costs at projected volume (Correct answer)
- Patient satisfaction surveys
- Physician credentialing metrics
- Marketing budget allocation
Correct answer: Break-even analysis comparing fixed/variable costs at projected volume
Break-even analysis identifies the volume at which in-house costs equal outsourcing costs, informing the make-or-buy decision.
Question 5: Medicare's Two-Midnight Rule primarily affects which type of hospital reimbursement?
- Physician professional fees
- Outpatient facility fees
- Inpatient vs. observation status classification (Correct answer)
- Skilled nursing facility payments
Correct answer: Inpatient vs. observation status classification
The Two-Midnight Rule requires a physician to expect a patient to need care spanning two midnights for inpatient admission to be appropriate under Medicare.
Question 6: When a hospital negotiates a carve-out with a commercial payer, it means:
- All services are bundled under one rate
- Certain high-cost services are excluded from the base contract and reimbursed separately (Correct answer)
- The hospital accepts only Medicare patients
- Physician fees are included in the facility rate
Correct answer: Certain high-cost services are excluded from the base contract and reimbursed separately
A carve-out removes specific services (e.g., implants, cancer drugs) from the global rate so they can be reimbursed at actual cost or a separate fee schedule.
Question 7: An organization's contribution margin per case is $1,200 and fixed costs are $600,000. What is the break-even volume?
- 250 cases
- 500 cases (Correct answer)
- 720 cases
- 1,200 cases
Correct answer: 500 cases
$600,000 fixed costs ÷ $1,200 contribution margin = 500 cases needed to break even.
CPE Healthcare Finance & Operations 2
A hospital's accounts receivable days outstanding increases from 45 to 68 days.
Which action most directly addresses this operational problem?