Nurse Executive Test Financial Management & Budgeting Flashcards

Which of the following best describes a zero-based budget?

Answer: A budget where all expenses must be justified from scratch each budget cycle

Zero-based budgeting requires every expense to be justified anew rather than automatically continuing prior year allocations.

What are productive FTE hours in nursing workforce management?

Answer: Hours spent directly on patient care activities

Productive FTE hours represent time actually spent on direct patient care, excluding paid time off and other non-productive paid time.

In nursing budget management, the term 'cost center' refers to:

Answer: A specific department or unit whose costs are tracked independently

A cost center is any department where expenses are tracked separately to monitor financial performance and ensure accountability.

What is the purpose of a break-even analysis when proposing a new nursing program?

Answer: To identify the point at which the program's revenue equals its expenses

Break-even analysis determines the minimum service volume at which a program covers all its costs with no profit or loss.

Which of the following is an example of a variable cost in nursing unit operations?

Answer: Medical supplies consumed per patient

Variable costs fluctuate directly with patient volume, such as supplies consumed based on the actual number of patients treated.

What is the purpose of a charge description master (CDM) in hospital financial management?

Answer: To catalog all billable services, procedures, and supplies with assigned charge codes

The CDM ensures accurate billing by maintaining a comprehensive list connecting every service and supply to the appropriate charge code.