Healthcare Analyst Financial Management & Budgeting Flashcards

What is the purpose of a healthcare organization's capital budget?

Answer: To plan for major long-term investments in equipment and facilities

The capital budget plans for significant, long-lived assets such as medical equipment, building renovations, or technology infrastructure.

Which financial ratio measures a healthcare organization's ability to meet short-term obligations?

Answer: Current ratio

The current ratio (current assets ÷ current liabilities) assesses whether the organization can cover its near-term financial obligations.

In healthcare cost accounting, what is a 'cost center'?

Answer: A department or unit where costs are tracked separately for management purposes

A cost center is an organizational unit whose costs are tracked and managed independently to support budgeting and accountability.

Which of the following is an example of a variable cost in a hospital setting?

Answer: Medical supplies consumed per patient

Medical supplies consumed per patient are variable costs because they change proportionally with the volume of patients treated.

What does 'net present value (NPV)' analysis help healthcare analysts determine when evaluating a capital project?

Answer: Whether the future cash flows of a project exceed its initial cost in today's dollars

NPV discounts projected future cash flows to present value and subtracts the initial investment to determine if a project creates financial value.

A hospital's 'charge master' (chargemaster) primarily serves what function?

Answer: It is the comprehensive list of all services and their standard prices used for billing

The chargemaster is a complete listing of every billable service, supply, and procedure with its associated price, serving as the foundation for claims submission.