ACHE Board of Governors Examination in Healthcare Management (FACHE) — Questions and Answers

Question 1: Which budgeting approach starts from a zero base each period, requiring all expenses to be justified anew?

Zero-based budgeting (Correct answer)
Incremental budgeting
Activity-based budgeting
Rolling budget

Correct answer: Zero-based budgeting

Zero-based budgeting requires managers to justify every expense from scratch each budget cycle, rather than simply adjusting prior-year figures.

Question 2: In healthcare strategic planning, environmental scanning primarily serves to:

Evaluate employee performance
Identify external trends and forces that may impact the organization (Correct answer)
Review the electronic health record system
Audit the physical facility environment

Correct answer: Identify external trends and forces that may impact the organization

Environmental scanning identifies external forces — demographic, economic, regulatory, technological — that may create opportunities or threats for the organization.

Question 3: Which of the following best describes a 'sentinel event' as defined by The Joint Commission?

An unexpected occurrence involving death or serious physical or psychological injury (Correct answer)
Any adverse event requiring a root cause analysis
A hospital-acquired infection reported to the CDC
A near-miss that was caught before reaching the patient

Correct answer: An unexpected occurrence involving death or serious physical or psychological injury

The Joint Commission defines a sentinel event as an unexpected occurrence resulting in death or serious harm, signaling the need for immediate investigation.

Question 4: The 'S' in the SMART goal framework for quality improvement stands for:

Specific (Correct answer)
Strategic
Systematic
Sequential

Correct answer: Specific

SMART goals are Specific, Measurable, Achievable, Relevant, and Time-bound, providing clear targets for improvement initiatives.

Question 5: What is 'accounts receivable days' (AR days) used to measure in healthcare finance?

The total outstanding debt of the organization
Monthly payroll processing time
How quickly a hospital pays its vendors
The average number of days to collect payment after a service is rendered (Correct answer)

Correct answer: The average number of days to collect payment after a service is rendered

AR days (days in accounts receivable) measures on average how many days it takes a healthcare organization to collect payment after providing a service.

Question 6: In healthcare financial management, what does 'accounts receivable' most commonly represent?

Funds the hospital owes to suppliers
Cash on hand for daily operations
Long-term investments in medical equipment
Money owed to the hospital by patients and payers (Correct answer)

Correct answer: Money owed to the hospital by patients and payers

Accounts receivable represents revenue earned for services provided but not yet collected from patients, insurers, or other payers.

Question 7: A healthcare organization is implementing a matrix organizational structure. What is the primary management challenge associated with this design?

Reduced communication channels between departments
Employees reporting to multiple supervisors, creating potential authority conflicts (Correct answer)
Increased bureaucracy that slows clinical decision-making
Elimination of functional expertise within departments

Correct answer: Employees reporting to multiple supervisors, creating potential authority conflicts

Matrix structures create dual reporting relationships, which can produce role ambiguity and authority conflicts if not managed carefully.

Question 8: A healthcare organization implements daily safety huddles where frontline staff report near-misses and safety concerns. This practice primarily supports which patient safety principle?

Regulatory compliance
Sentinel event reporting
High reliability organization (HRO) culture (Correct answer)
Retrospective analysis

Correct answer: High reliability organization (HRO) culture

Daily safety huddles exemplify HRO principles of preoccupation with failure and sensitivity to operations, building a proactive safety culture.

Question 9: Surrogate decision-making for an incapacitated patient is guided primarily by the standard of:

Financial impact on the patient's family
Best interest of the treating physician
Substituted judgment—what the patient would have wanted (Correct answer)
Clinical consensus of the care team only

Correct answer: Substituted judgment—what the patient would have wanted

Substituted judgment asks surrogates to decide as the patient would have decided, based on the patient's known values and prior expressed wishes.

Question 10: A 'referral marketing' strategy in healthcare focuses on:

Advertising in medical journals
Paying patients for recommending friends
Building relationships with physicians and specialists who send patients (Correct answer)
Running TV ads during prime time

Correct answer: Building relationships with physicians and specialists who send patients

Referral marketing cultivates physician and specialist relationships to drive patient referrals, a key volume driver for hospitals and specialty practices.

Question 11: What was the primary goal of the Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009?

To mandate the public reporting of hospital quality metrics on the Hospital Compare website.
To establish national standards for the security of electronic health information.
To promote the adoption and 'Meaningful Use' of electronic health records through financial incentives. (Correct answer)
To allow the sharing of patient safety data through Patient Safety Organizations (PSOs).

Correct answer: To promote the adoption and 'Meaningful Use' of electronic health records through financial incentives.

The primary goal of the HITECH Act was to stimulate the adoption of certified electronic health records (EHRs) and supporting technology in the United States. It created the 'Meaningful Use' program, which provided billions of dollars in financial incentives to healthcare providers who demonstrated they were using EHRs to achieve goals like improving care coordination, quality, and patient engagement.

Question 12: A healthcare administrator is evaluating total cost of ownership (TCO) for a new EHR. Which cost category is MOST commonly underestimated during initial budgeting?

Software licensing fees
Ongoing training, optimization, and support costs (Correct answer)
Hardware procurement
Implementation consulting fees

Correct answer: Ongoing training, optimization, and support costs

Post-go-live training, workflow optimization, and ongoing support consistently represent the largest underestimated costs in EHR TCO analyses.

Question 13: Which planning horizon is typically considered 'long-range' in healthcare strategic planning?

3-5 years (Correct answer)
1-3 months
10-20 years
6-12 months

Correct answer: 3-5 years

Healthcare strategic plans typically cover a 3-5 year long-range horizon, balancing near-term feasibility with meaningful future direction.

Question 14: Which concept describes the ethical obligation of healthcare administrators to be answerable to stakeholders for their decisions and actions?

Transparency
Veracity
Fidelity
Accountability (Correct answer)

Correct answer: Accountability

Accountability is the obligation of administrators to answer to their organization, patients, communities, and regulators for the outcomes of their decisions.

Question 15: The Anti-Kickback Statute (AKS) criminalizes offering or receiving remuneration to induce referrals for services covered by federal healthcare programs. Which of the following is a recognized 'safe harbor'?

Discounts that are properly disclosed and reflected in the cost reports submitted to the government (Correct answer)
Paying physicians above-market rates for medical directorships
Providing free equipment to physicians who refer patients
Waiving copayments for all Medicare patients as a marketing strategy

Correct answer: Discounts that are properly disclosed and reflected in the cost reports submitted to the government

The discount safe harbor protects properly disclosed price reductions provided to purchasers that are accurately reported to the government.

Question 16: Which motivational theory suggests that employees are motivated by the belief that effort leads to performance, and performance leads to valued outcomes?

Expectancy Theory (Correct answer)
Goal-Setting Theory
ERG Theory
Equity Theory

Correct answer: Expectancy Theory

Vroom's Expectancy Theory holds that motivation depends on expectancy (effort → performance), instrumentality (performance → reward), and valence (reward value).

Question 17: What is the 'Stark Law' in the context of US healthcare regulation?

A regulation governing nursing home staffing ratios
A law mandating electronic health record adoption
A federal law prohibiting physician self-referral to entities with which they have a financial relationship (Correct answer)
A state law requiring price transparency in hospital billing

Correct answer: A federal law prohibiting physician self-referral to entities with which they have a financial relationship

The Stark Law (Physician Self-Referral Law) prohibits physicians from referring Medicare/Medicaid patients to entities in which the physician or immediate family has a financial interest.

Question 18: The Medical Department Journal should contain all of the following EXCEPT as a part of the chronological record of events pertaining to the Medical Department.

Personnel entered onto or deleted from the binnacle list
Reports of personnel casualties, injuries, or deaths
Medical histories of personnel
Training lectures to stretcher bearers (Correct answer)

Correct answer: Training lectures to stretcher bearers

The Medical Department Journal is intended to be a chronological record of significant medical events, personnel status, and patient care. While training is crucial, specific lectures to stretcher bearers are typically considered administrative or operational activities, rather than direct medical events or personnel status updates that belong in the official medical journal's chronological record.

Question 19: Which financial statement shows a healthcare organization's revenues, expenses, and net income over a specific period?

Statement of equity
Balance sheet
Cash flow statement
Income statement (Correct answer)

Correct answer: Income statement

The income statement (also called the profit and loss statement) reports revenues, expenses, and net income over a defined accounting period.

Question 20: Which of the following quality measures is considered a 'process measure' rather than an 'outcome measure'?

Patient satisfaction score
Rate of hospital-acquired pressure injuries
Percentage of AMI patients receiving aspirin at discharge (Correct answer)
30-day all-cause mortality rate

Correct answer: Percentage of AMI patients receiving aspirin at discharge

Aspirin administration at discharge is a process measure—it tracks whether a recommended clinical action was performed, not the ultimate patient outcome.

Question 21: The Resource-Based Relative Value Scale (RBRVS) is used by Medicare to determine payments for:

Skilled nursing facility care
Prescription drugs under Part D
Physician professional services (Correct answer)
Hospital inpatient stays

Correct answer: Physician professional services

RBRVS assigns relative value units (RVUs) to physician services based on work, practice expense, and malpractice costs, forming the basis of Medicare Part B physician payment.

Question 22: A county health department wants to measure the burden of premature death in its population. Which metric is MOST appropriate?

Years of Potential Life Lost (YPLL) (Correct answer)
Standardized mortality ratio
Case fatality rate
Crude death rate

Correct answer: Years of Potential Life Lost (YPLL)

YPLL quantifies premature mortality by summing years not lived due to early death, weighting deaths at younger ages more heavily than deaths at older ages.

Question 23: Under the Emergency Medical Treatment and Labor Act (EMTALA), what management responsibility does a hospital have when a patient presents to the emergency department?

Obtain physician authorization before initiating any triage assessment
Transfer the patient to a public hospital if they are uninsured
Perform a medical screening exam and stabilize emergent conditions regardless of ability to pay (Correct answer)
Provide treatment only if the patient has verified insurance coverage

Correct answer: Perform a medical screening exam and stabilize emergent conditions regardless of ability to pay

EMTALA requires hospitals with emergency departments to perform a medical screening exam and stabilize any emergency medical condition regardless of insurance status or ability to pay.

Question 24: An MHA student reads about 'organizational ambidexterity.' This concept refers to an organization's ability to:

Simultaneously exploit existing capabilities and explore new innovations (Correct answer)
Manage both inpatient and outpatient services effectively
Operate across two geographic markets simultaneously
Comply with dual federal and state regulatory requirements

Correct answer: Simultaneously exploit existing capabilities and explore new innovations

Organizational ambidexterity is the capacity to simultaneously optimize current operations (exploitation) while pursuing new opportunities (exploration).

Question 25: Which federal law requires nonprofit hospitals to conduct a Community Health Needs Assessment (CHNA) every three years?

The Hill-Burton Act
EMTALA
HIPAA
The Affordable Care Act (ACA) (Correct answer)

Correct answer: The Affordable Care Act (ACA)

The Affordable Care Act added IRC Section 501(r), requiring tax-exempt hospitals to conduct CHNAs and develop implementation strategies every three years.

Question 26: A hospital conducting a community health needs assessment (CHNA) is fulfilling which primary requirement?

HIPAA compliance
CMS Meaningful Use criteria
IRS 501(c)(3) tax-exempt status requirements for nonprofit hospitals (Correct answer)
Joint Commission accreditation

Correct answer: IRS 501(c)(3) tax-exempt status requirements for nonprofit hospitals

The ACA requires nonprofit hospitals to conduct CHNAs every three years to maintain their IRS 501(c)(3) tax-exempt status.

Question 27: A healthcare administrator is developing new protocols for the hospital's patient advocacy program. Which of the following initiatives best exemplifies the ethical principle of beneficence?

Ensuring patient demographic data is never used to discriminate in the provision of care.
Creating a clear process for patients to provide informed consent for all procedures.
Implementing a proactive program to identify and assist patients with navigating complex care plans to improve their health outcomes. (Correct answer)
Establishing a policy that allows competent patients to refuse any recommended medical treatment.

Correct answer: Implementing a proactive program to identify and assist patients with navigating complex care plans to improve their health outcomes.

Beneficence is the ethical principle of acting for the benefit of others or 'doing good.' A program designed to proactively help patients manage their care and achieve better health outcomes is a direct application of this principle. The other options relate to autonomy (A, D) and justice (B).

Question 28: A hospital is implementing predictive analytics to identify patients at risk for sepsis. Which type of clinical decision support is being deployed?

Passive reference information
Order set recommendations
Dose range checking
Proactive alerting with predictive model output (Correct answer)

Correct answer: Proactive alerting with predictive model output

Sepsis prediction tools use machine learning models to proactively alert clinicians when a patient's data patterns indicate elevated sepsis risk.

Question 29: A hospital is implementing a new EHR system. Under HIPAA's Security Rule, which of the following is required?

Obtaining patient consent before storing health information electronically
Storing ePHI only on servers located within the United States
Conducting a risk analysis to identify potential vulnerabilities to ePHI (Correct answer)
Encrypting all PHI at rest in all circumstances without exception

Correct answer: Conducting a risk analysis to identify potential vulnerabilities to ePHI

The HIPAA Security Rule requires covered entities to conduct an accurate and thorough risk analysis of potential risks and vulnerabilities to ePHI confidentiality, integrity, and availability.

Question 30: A collection of guidelines and regulations created to safeguard employees from negative repercussions.

State/regional ems guidelines
Strategic plan
Standard operating procedures (SOP)
Exposure control plan (ECP) (Correct answer)

Correct answer: Exposure control plan (ECP)

An Exposure Control Plan (ECP) is a written program mandated by regulatory bodies like OSHA, specifically designed to protect employees from occupational exposure to hazardous materials, such as bloodborne pathogens. It outlines procedures, training, and protective measures to minimize risks and safeguard employees from negative health repercussions. This plan is crucial for workplace safety and compliance.

Question 31: Which metric is most commonly used to evaluate the financial health of a hospital's revenue cycle?

Operating margin only
Nurse-to-patient ratio
Length of stay
Days in accounts receivable (DAR) (Correct answer)

Correct answer: Days in accounts receivable (DAR)

Days in Accounts Receivable measures how long it takes a hospital to collect payment after services are rendered — lower DAR indicates a healthier, more efficient revenue cycle.

ACHE Board of Governors Examination in Healthcare Management (FACHE)

The Board of Governors Examination is a comprehensive 230-question multiple-choice exam required to earn the Fellow of the American College of Healthcare Executives (FACHE) credential, testing knowledge across 10 healthcare management domains including finance, human resources, quality improvement, law, and governance.

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40 min

Time Limit

70%

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