HCA 6240 Mid Term Section I Multiple Choice Mark One Box Onl

Hca 6240 Mid Termsection I Multiple Choicemark One Box Only To Indica

HCA 6240 MID-TERM Section I: Multiple Choice Mark one box only to indicate the answer you consider correct for each question. All of the following factors contribute to the rising cost of health care except: a. Aging population b. New and returning consumers in the marketplace c. Chronic Disease d. Providers embracing lean Six Sigma and other techniques to deliver better care with less resources. All of the following factors could contribute to a decrease in health care costs except: a. Pharmaceuticals going off patent b. Providers using health information technology in robust ways c. Medical technology continuing to develop new systems d. Hospitals overriding physician preference in supplies. Balance Sheet for a non-profit contains all of the following except: a. Organization’s assets b. Organizations liabilities c. Stockholders’ equity d. Cash flow. A Balance Sheet summarizes the organization’s total assets, liabilities and net assets in what time period: a. Last day of the accounting period b. At a point of time c. Last quarter d. Annually. Which one of these is not a source of revenue: a. Salary and wages b. Appropriations and grants c. Income from investments d. Revenue from contributions. Cash flows from investing activities include: a. Purchase of plant property and equipment b. Accounts payable c. Accrued pension d. Estimated third party payer settlements. A complete record of financial transactions is called: a. Journal b. Ledger c. Balance d. Asset. Rules for recording transactions do not include: a. Increase in revenues, gains or other support account when earnings are received. b. After each transaction, the fundamental account equation must be in balance. c. An accounting method when cash was received or expended. d. Increase an expense account when an asset is used. Statement of Operations includes: a. Operating Expenses b. Increase in unrestricted net assets c. a & b d. None of the above. In the accrual accounting method: a. Revenues are recognized when cash is received b. Expenses are recognized when cash is paid out c. Revenues are recognized when revenues are earned d. All of the above. Analyzing financial statements helps a health care organization to: a. Determine if profitable b. Determine the effectiveness in collecting receivables c. a & b d. None of the above. Approaches to analyze financial statements do not include: a. Ratio analysis b. Collateral analysis c. Vertical analysis d. Horizontal analysis. Operating margin ratio measures: a. How dependent the organization is on patient related income b. Profits earned from the organization’s main line of business c. How much profit is earned for each dollar invested in assets d. Total operating expenses incurred from providing patient care services. An asset mix strategy includes: a. How an organization chooses to finance its working capital needs b. The amount of working capital an organization keeps on hand relative to its working capital obligations c. Risk of greater return to lower liquidity d. Coin and currency. Which of the following is not a major reason to hold cash: a. Hedge against inflation b. For daily operation purposes c. Precautionary purposes d. Speculative purposes. Revenue Cycle Maintenance can be hindered by: a. Patients giving correct demographic information b. Lack of clarity about who is responsible for the bill c. Current health care insurance information d. An accurate/clean final bill. Methods to monitor accounts receivable: a. Net accounts receivable b. Treasury bills c. Aging Schedule d. a & c. Which of the following is not a point to consider when using and interpreting ratios? a. No one ratio is necessarily better than any other ratio b. With benchmarking, it is not necessary to make sure the same formula is used c. A ratio can best be interpreted relative to a benchmark d. Ensuring reliability of data. The “book” refers to transactions: a. Only done by computer entry b. Journal recorded chronologically c. Current balance in each account d. Current ratio.

Paper For Above instruction

The provided set of questions and statements from the HCA 6240 midterm examination encapsulates key concepts fundamental to understanding healthcare financial management and accounting. This paper will analyze these concepts systematically, integrating scholarly insights to elucidate their applications within the healthcare industry. The discussion will encompass the financial goals of the U.S. healthcare system, factors influencing healthcare costs, financial statement components, and analytical methods used by healthcare organizations.

The Goals of the U.S. Healthcare System

The primary objectives of the U.S. healthcare system revolve around maximizing access, controlling costs, and ensuring quality care — often summarized as the triple aim (Berwick, Nolan, & Whittington, 2008). Achieving an optimal balance among these goals is complex due to the intricacies of healthcare financing, delivery, and policy regulation. Access pertains to the availability of healthcare services to diverse populations, while cost concerns focus on efficient resource utilization (Shi & Singh, 2019). Quality involves the safety, effectiveness, and patient-centeredness of care provided (Donabedian, 1988). The interdependence among these goals underscores the importance of strategic financial management within healthcare institutions to promote sustainability and optimal patient outcomes.

Factors Contributing to Rising Healthcare Costs

Several factors drive the escalation of healthcare costs. An aging population increases demand for chronic disease management and long-term care (Anderson et al., 2018). The influx of new and returning consumers entering the healthcare marketplace, coupled with high utilization rates, further exacerbates costs (Bach & Lussier, 2019). The proliferation of chronic diseases, such as diabetes and heart disease, requires ongoing treatment and resources (CDC, 2020). Interestingly, innovations like lean Six Sigma and other quality improvement techniques aim to reduce waste and improve efficiency, which can mitigate cost increases but are not primary contributors to rising costs (Antony et al., 2017). Conversely, factors such as the expiration of drug patents leading to cheaper generics and technological advancements in medical systems can help contain costs over time.

Factors That Could Decrease Healthcare Costs

Lowering healthcare costs is a strategic goal influenced by technological, managerial, and policy interventions. The expiration of patents allows generic drugs to enter the market, reducing medication costs (Kesselheim et al., 2016). The utilization of health information technology (IT) enhances efficiency and reduces redundancies (Buntin, Burke, Hoaglin, & Blumenthal, 2011). Continuing innovation in medical technology can lead to less invasive procedures and faster recoveries, ultimately diminishing expenses (Kohli & Tanriverdi, 2015). However, hospitals overriding physician preferences in supplies may lead to increased costs or quality concerns, indicating that strategic supply management is crucial (Sengupta, 2020).

Financial Statements: Balance Sheet and Statement of Operations

The balance sheet in healthcare accounting captures an organization’s assets, liabilities, and net assets at a specific point in time, providing a snapshot of financial position (Higgins, 2017). For non-profits, stockholders’ equity appears as part of net assets but is absent in non-profit financials, which focus on unrestricted, temporarily restricted, and permanently restricted net assets (Gaynor & Town, 2019). Cash flow statements detail operational, investing, and financing activities, offering insights into liquidity and financial stability (Brigham & Houston, 2022). Accurate financial records underpin strategic decision-making, resource allocation, and compliance with reporting standards.

Financial Analysis Tools and Ratios

Financial analysis involves various methods, including ratio analysis, vertical, and horizontal evaluations. Ratio analysis compares financial metrics to industry benchmarks, assessing liquidity, profitability, activity, and capital structure (Cheng & Schaninger, 2012). Ratios such as the current ratio and acid-test ratio measure liquidity, while the operating margin indicates operational efficiency (Giannoni & Sargent, 2012). Activity ratios like total asset turnover reveal asset utilization effectiveness. Capital structure ratios, such as debt-to-equity, inform about leverage and financial risk (Meyer & Allen, 1997). Vertical analysis expresses each item as a percentage of total assets or revenues, facilitating comparative assessment across periods, whereas horizontal analysis compares trends over time (Brigham & Houston, 2022).

Analyzing Lagos Island Community Hospital’s Financial Data

Applying horizontal and vertical analyses to Lagos Island Community Hospital’s financial statements reveals trends in financial health. The increase in current assets from 20X0 to 20X1 indicates improved liquidity, but the rise in liabilities warrants attention. The substantial growth in plant, property, and equipment suggests capital investment but also necessitates depreciation management. The income statement shows a decline in net income from 20X0 to 20X1, prompting a need to evaluate expense management, particularly in salaries and supplies. Comparing these metrics to industry benchmarks emphasizes areas for improvement, such as liquidity ratios and operating margins.

Trade Credit Discount and Investment Growth

Calculations of the annual interest cost of not taking early payment discounts highlight the opportunity costs of delayed payments. For example, a 2/10 net 20 discount reflects a potential annualized interest rate of approximately 36.5%, indicating high cost savings if discounts are taken promptly (Ross, Westerfield, & Jaffe, 2019). Regarding personal investment, depositing $24,000 at an 8% annual growth rate over successive years illustrates compound interest effects. For example, after 3 years, the investment would grow to approximately $31,442; after 6 years, about $36,000; after 9 years, roughly $41,239; and after 12 years, close to $47,502. These calculations underpin sound financial planning by demonstrating the power of compound interest (Mishkin & Eakins, 2018).

Conclusion

The comprehensive analysis of healthcare financial management concepts demonstrates the complexity of balancing cost control, quality, and access while maintaining organizational financial health. Strategic use of financial statements, ratios, and analyses supports informed decision-making, enabling healthcare leaders to identify strengths and vulnerabilities. Moreover, understanding trade credits and investment growth reinforces prudent financial practices essential for sustainable healthcare operations. Overall, proficient financial management is vital for achieving organizational goals and advancing healthcare quality amid evolving economic landscapes.

References

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