1. HSM 340 Full Class Health Services Finance
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HSM 340 Assignment Week 1 DeVry
Financial Laws and Regulations
Complete an APA formatted 2 page paper (not including the title and reference pages) answering
the following questions:
What are five elements pertaining to the establishment of a false claim under the False Claims
Act?
HIPAA privacy standards were designed to accomplish what three broad objectives? Explain
each.
Stark II laws prohibit physician referrals to entities in which the physician has a financial
relationship. What are 10 specific designated health services (DHS) for which referrals by
physicians who have financial relationships with the entity providing the DHS are prohibited?
Discuss the following:
Qui tam
HIPAA Privacy Rule

2. EMTALA
Compliance programs
Preview:
… HIPAA, or the Health Insurance Portability and Accountability Act, was passed by Congress
in 1996. The purpose of HIPAA includes ensuring that health care fraud and abuse cases are
reduced; offers the ability to transfer and continue health care insurance coverage for…
A financial relationship between the physician and an entity pertains to “investment or
ownership interests and compensation relationships” (Cleverly, Song, Cleverly, 2011, p. 92) that
the two entities…
HSM 340 Assignment Week 5 DeVry
Capital Budgeting Process
Complete an APA-formatted two-page paper (not including the title and reference pages)
answering the following questions.
1. Organizations that decide to issue bonds generally go through a series of steps. Discuss
the six steps.
2. An alternative to traditional equity and debt financing is leasing. Leasing is undertaken
primarily for what purposes?
3. Discuss the two major types of leases.
4. Discuss the terms short-term borrowing and long-term financing.
5. What are the primary sources of equity financing for not-for-profit healthcare
organizations?
6. The capital budgeting process occurs in several stages, but generally includes what?
7. Discuss and list the three discounted cash flow methods.
Preview:
1. Organizations that decide to issue bonds generally go through a series of steps.
Discuss the six steps.
The bond issuance process may take a year to a year and a half before the recipient receives the
cash. This is because of the long and arduous process it takes to complete the whole decision
and funds releasing process. For healthcare units that are tax-exempt, bonds remain to be the top
source for long-term financing requirements. Following are the steps:
Step 1. “The health care borrower updates its capital plan, measures its debt capacity, and
attempts to ‘get its house in order’” (Zelman, McCue, & Glick, 2009). Prior to the actual bond
issuance process, the health care provider…

3. HSM 340 Assignment Week 6 DeVry
Cash and Working Capital
Complete an APA-formatted two-page paper (not including the title and reference pages)
answering the following questions.
1. What are four general phases of the working capital cycle?
2. What are the three primary sources of short-term funds?
3. An organization’s short-term investment options for idle cash include what four areas?
List and provide their characteristics.
4. Discuss the term float.
Preview:
The working capital cycle involves decisions that that affects an organization’s cash flow
operations. The main goal of the process is to facilitate and speed up the collection of cash from
customers, but to slow down disbursement of payment to suppliers. This strategy is just part of a
firm’s investment management plan in order to maximize and optimize the size of their
investment portfolios. In the case of hospitals, about…
HSM 340 Quiz Week 2 DeVry
(TCO 2) The heading of every financial statement should contain the:
Name, title, and place of business
Name, title, and specific date of statement
Title, name, type of ownership, and unit of measurement
Title of statement, name of entity, and unit of measurement
Name, title, specific date of statement, and unit of measurement
(TCO 2) Two major methods of asset valuation are:
Historical cost and future cost
Historical cost and acquisition cost
Historical cost and replacement cost
Acquisition cost and future cost

4. (TCO 2) _____ is the most important financial metric to review to determine long-term
financial viability.
Return on equity
Total margin
Days cash on hand
Hospital cost index
None of the above
(TCO 2) Which of the following is not one of the four critical questions that must be
answered for dashboard reporting?
What is the firm’s strategic vision?
What is most important to the firm’s success?
What are the critical drivers that influence performance attainment?
What are the most relevant measures that reflect critical driver relationships?
(TCO 2) What are the major reasons for accrual accounting?
Some of the major reasons for the accrual basis of accounting are: 1. Matching the expenses
and…
(TCO 2) What is an audit (in the context of financial accounting)?
An audit is an assessment of an individual, process, system, company, organization,
institution,….
(TCO 2) For restating financial statements to convert to constant dollars, what index is
required by the Financial Accounting Standards Board?
The 3 categories of net assets are: 1. Unrestricted net assets are a group of items owned by the…
HSM 340 Quiz Week 3 DeVry
(TCO 3) The breakeven point occurs where:
Total fixed costs and total revenue intersect
Total costs and total revenue intersect

5. Total profit margin and total costs intersect
Total variable costs and total revenue intersect
Total revenue outpaces total avoidable fixed costs
(TCO 3) Increasing marginal volume for cost payers makes economic sense if:
Cost payers account for 100 percent of your present volume and fixed costs are high.
Bad debts are low.
Fixed costs are high and present cost payer volume is small.
All of the above.
(TCO 3) You increased rates by 10 percent across all services and profits decreased by 5
percent. Cost per unit remained constant. What could account for this change?
Positive price elasticity
Negative price elasticity
High proportion of fixed price payers
High proportion of cost payers
TCO 3) Estimate the total variable cost (i.e., including both routine and ancillary) per
MSDRG 505 using the departmental cost/charge ratios and variable cost percentages.
(Your answer might be slightly different due to rounding. Pick the closest.)
Your hospital has been approached by a major HMO to perform all their MSDRG 505
cases (foot surgeries). They have offered a flat payment of $8,000 per case. You have
reviewed your charges for MSDRG 505 during the last year and found the following
profile:
Average Charge: $11,300
Average LOS: 4.5 Days
Cost/Charge Variable Cost %
Routine Charge $3,200 0.75 65
Operating Room 1,850 0.70 80
Anesthesiology 210 0.70 75
Lab 575 0.65 40
Radiology 275 0.65 50

6. Cost/Charge Variable Cost %
Medical Supplies 3,220 0.60 85
Pharmacy 955 0.55 85
Other Ancillary 1,015 0.75 55
Total Ancillary $8,100 0.70 75
$5,213
$3,892
$7,613
$5,452
$8,070
TCO 3) David Jones, the new administrator for a surgical clinic, was trying to determine
how to allocate his indirect expenses. His staff was complaining that the current method of
taking a percentage of revenues was unfair. He decided to try to allocate utilities based on
square footage of each department, administration based on direct costs, and laboratory
based on tests. Use the information in the chart below to answer the question.
Square Footage Direct Expenses Lab Tests
Utilities 200,000
Administration 2,000 500,000
Laboratory 2,000 625,000
Day-op Suite 3,000 1,400,000 4,000
Cystoscopy 1,500 350,000 500
Endoscopy 1,500 300,000 500
Total 10,000 3,375,000 5,000
Based on the scenario above, what are the Day Op Suite’s total expenses?
What are the Day Op Suite’s total expenses?
What are the Cystoscopy Department’s total expenses?
What are the Endoscopy Department’s total expenses?
(TCO 3) Your hospital has been approached by a major HMO to perform all their MS-
DRG 470 cases (major joint procedures). They have offered a flat price of $10,000 per case.

7. You have reviewed your charges for MS-DRG 470 during the last year and found the
following profile:
Average Charge $15,000
Average LOS 5 Days
Routine Charge $3,600 Cost/Charge 0.80 Variable Cost % 60
Operating Room 2,657 0.80 80
Anesthesiology 293 0.80 80
Lab 1,035 0.70 30
Radiology 345 0.75 50
Medical Supplies 4,524 0.50 90
Pharmacy 1,230 0.50 90
Other Ancillary 1,316 0.80 60
Total Ancillary $11,400 0.75 50
In the above data set, assume that the hospital’s cost to charge ratio is 0.80 for routine
services and 0.75 for all other ancillary services. Using this information, what would the
average cost of MS-DRG 470 be?
(TCO 3) Describe and explain the difference between fixed costs and variable costs?
Fixed costs are costs, which do not vary in total but vary…
HSM 340 Midterm Exam DeVry
(TCO 4) Budgets normally cover a period of:
5 years
2 years
3 years
1 year
(TCO 4) The following is an example of a _____________ budget:
“The budget for the radiology department is different at 90 percent occupancy than at 80
percent occupancy.”
Rolling
Flexible

8. Forecast
Fixed
(TCO 4) Efficiency is a relationship between:
Outputs and organizational goals
Inputs and outputs
Inputs and organizational goals
None of the above
(TCO 3) Which of the following is the first step in any budgetary process?
Define standard treatment protocols
Define required departmental volumes
Define standard cost profiles
Define volumes of patients
(TCO 3) You increased rates by 10 percent across all services and profits decreased by 5
percent. Cost per unit remained constant. What could account for this change?
Positive price elasticity
Negative price elasticity
High proportion of fixed price payers
High proportion of cost payers
(TCO 2) A statement that reports inflows and outflows of cash during the accounting
period in the categories of operations, investing, and financing, is called a(an):
Income statement
Statement of retained earnings
Balance sheet
Statement of cash flows

9. Report of management
(TCO 2) Which of the following is the BEST example of a financial metric?
Degree of innovation
Employee empowerment
Accreditation by the Joint Commission on Accreditation of Healthcare Organizations
Total margin
Length of stay
(TCO 4) Basedon the below information, what dollar effect did the increased admission
rate have on cost?
You have been asked by management to explain the variances in costs under your inpatient
capitated contract. The following data is provided. Use the following data to calculate the
variances.
Budget Actual
Inpatient Costs $12,568,500 $16,618,350
Members 42,000 42,000
Admission Rate 0.070 0.095
Case Mix Index 0.90 0.85
Cost per Case (CMI
= 1.0)
$4,750 $4,900
(TCO 4) Basedon the information below, what rate must be set to generate the required
$80,000 in profit in the preceding example?
You have been askedto establish a pricing structure for radiology on a per-procedure
basis. Present budgetary data is presented below:
Budgeted Procedures $10,000
Budgeted Cost $400,000
DesiredProfit $80,000
It is estimated that Medicare patients comprise 40 percent of total radiology volume and
will pay on average $38.00 per procedure. Approximately 10 percent of the patients are
cost payers. The remaining charge payers are summarized below:

10. Payer Volume% Discount%
Blue Cross 20 4
Unity PPO 15 10
Kaiser 10 10
Self Pay 5 40
50%
What rate must be set to generate the required $80,000 in profit in the preceding example?
Desired revenue = Budgeted Cost + Desired profit = $400,000+…
(TCO 4) What is the amount of variance that is attributed to the difference between the
budgeted and actual wage rate per hour?
Use the following data to calculate the variances.
The following information has been prepared for a home health agency.
Budget Actual
Wage Rate per Hour $16.00 $17.00
Fixed Hours 320 320
Variable Hours per Relative
Value Unit (RVU)
1.0 1.1
Relative Value Units
(RVUs)
1,000 1,200
Total Labor Hours 1,320 1,640
Labor Costs $21,120 $27,880
Cost per RVU $21.12 $23.23
Budgeted costs at actual volume would be $25,344 ($21.12 × 1,200), and the total variance
to be explained is $2,536 Unfavorable ($27,880 – $25,344). Be sure to specify whether the
variance is favorable or unfavorable.
Budgeted costs at actual volume would be…
(TCO 2) Explain the difference between the accrual basis of accounting and the cash basis
of accounting?
Accrual basis of accounting is a system that recognizes…

11. (TCO 2) What are the double-entry accounting systemand the duality concept? How are
they related?
The double-entry accounting system has evolved from the duality concept. Every transaction
affects at…
(TCO 1) What are social responsibility and ethics as they relate to business-oriented
organizations? How should social responsibility and ethics affect the decisions of evenfor-
profit companies?
Social responsibility is the concept that businesses should be partly responsible for, and thus bear
the…
(TCO 2) List and describe the three categories of net assets.
The three categories of net assets are:…
Unrestricted net assets would reflect, among other things, unrestricted monetary donations to the
organization as well as…
HSM 340 Quiz Week 7 DeVry
(TCO 7) Coordination of benefits refers to:
A penalty assessed for going out of network
Assessing payment responsibility when multiple payers exist
Benefit plan list of covered services
Vertical integration of health plans
(TCO 7) Capitation plans are more common for physician payment because:
They can better control utilization
Physicians want more risk in their payment plans

12. They are concerned about adverse selection
Physicians have larger reserves and can assume more risk
(TCO 7) Employer premium costs for health care coverage are often lowest in which type
of health plan:
HMO
PPO
POS
High deductible health plans with savings options
(TCO 7) Suppose that AT&T had made an offer to acquire Merck Pharmaceuticals.
Ignoring potential antitrust problems, this merger would be classified as a:
Cross-border merger
Horizontal merger
Conglomerate merger
Vertical merger
(TCO 7) A nursing home contracts with an HMO for skilled nursing care at $2.00 PMPM.
If costs are expectedto average $120 per day, what is the maximum utilization of days per
1,000 members that the nursing home can experience before it begins to lose money?
(TCO 7) A hospital incurs $10 million of cost to treat Medicaid patients and receives $7
million in payment. Actual charges for these Medicaid patients were $20 million. The net
community benefit expense that would be reported in Schedule H of IRS Form 990 would
be?
(TCO 7) Why is tax-exempt financing cited as a benefit received by not-for-profit
healthcare providers?
HSM 340 Discussions Week 1-7 All Posts 502 Pages DeVry
HSM 340 Finance and the Regulatory Components and Reimbursement and Payment
Determination Discussions Week 1 All Posts 80 Pages DeVry

13. HSM 340 Finance and the Regulatory Components Discussions 1 Week 1 All Posts 41
Pages DeVry
Are there any other types of information besides financial that may be useful in making financial
decisions? Identify the major components of a corporate compliance plan, including the
establishment of internal controls relating to the finances of an organization. How does legal and
regulatory issues shape and define good financial management of a health care organization?
What about compliance and internal control? What are they important? Why does financial
management need to be conscious of various legal issues? What defines a well-written
compliance plan? nternal control is a key focus of financial management. Things will be out of
control and chaotic if there are no compliance rules and information to the staff . Also, healthcare
is a very delicate industry and the welfare of employees is at stake here. The government is also
the biggest insurer and it must look after the welfare of its citizens. Does the government have
too many rules which make it harder on providers to meet all the requirements and stay in
business?…
HSM 340 Reimbursement and Payment Determination Discussions 2 Week 1 All Posts 39
Pages DeVry
Discuss the major reimbursement methods used in health care. Discuss the major aspects of
Medicare benefits. List some of the important considerations when negotiating a health plan
contract. We know in healthcare there are various reimbursement methods. One major payer is
Medicare which is a government entity that is a major player in the reimbursement field. What
about commercial plans and how do they negotiate with providers? Fee for Service. This method
has pros and cons, but we see that fewer reimbursement methods use this type of payment. Why
do you see that happening? Reimbursement is a major financial task as it determines the revenue
coming in to keep the doors open. Looking at other financial aspects, management needs to
establish internal control principles and abide by them to protect the assets and ensure the firm is
running efficiently. All these rules and regulations must be established and followed by
managers and employees. But who is in charge of ensuring that these rules are being followed?
Does management really have to do that? As we see now, bundled payment is becoming
popular. What does that mean and how is is going to help, the provider or the insurer?…
HSM 340 Accounting Conventions and Methods and Financial Performance Discussions
Week 2 All Posts 73 Pages DeVry
HSM 340 Accounting Conventions and Methods Discussions 1 Week 2 All Posts 42 Pages
DeVry

14. Discuss the accounting conventions that affect the application of accounting principles.
Materiality allows treatment in accordance to GAAP (Generally Accepted Accounting
Principles). More than that, it has a certain significance because it makes it necessary for
material expenses to be booked in the appropriate time period. What happens if it is not and
why not? Historical cost convention is one important factor. If an asset is purchased 5 years ago
and recorded at cost, it must be kept recorded at cost in the books. The reason why costs are not
updated and changed to market value is the fact that assets fluctuate in value. Do you agree with
the cost concept or are there suggestions to treat it differently? A dollar today is worth more than
a dollar in a year, mainly due to inflation, but are there any other reasons? If the firm is not
consistent on how to book its transactions, it can create a problem and make the financial
statements not comparable or even useable. Outside auditors have to check and certify. What
other roles does the audit firm play here? What about internal audits versus external?…
HSM 340 Financial Performance Discussions 2 Week 2 All Posts 31 Pages DeVry
Explain why it is important to know the scope of business being reviewed when using financial
statements. I look forward to reading your responses and to discuss Health Services Finance.
Reviewing financial statements is important and we need to keep our focus on the healthcare
area . Being aware of the scope of business puts things more in perspective. Different scopes
have different measures of performance. A clear understanding leads to more success and that is
why we say that we need to continuously develop the analysis and make it relevant. . Managers
who do not have this understanding cannot perform as desired. Who is in charge of ensuring that
managers have the understanding of the scope of business? It is important to understand the
business to manage the finances. We try to stress that to our managers. It is not only important to
stay within budget but it is also important to understand why you go over budget. Let’s take a
look at the Study Tools section in the lecture. What ratio is the most useful to express or discuss
this concept?…
HSM 340 Cost Categories and Cost Information Discussions Week 3 All Posts 74 Pages
DeVry
HSM 340 Cost Categories Discussions 1 Week 3 All Posts 38 Pages DeVry
Discuss the role of direct and indirect cost in the overall costing process. How does each type
affect the decisions made in expense control and analysis. Healthcare entities classify their cost
as direct and indirect. What is the meaning and significance of these cost categories. How do
they influence the costing and also the decisions made based on these classification. Focus on
our TCO, lesson and text to try to understand these concepts and come-up with your
answer. Indirect costs are administrative costs and they can also be the cost of services provided
to the entity at large. Take IT services, they cannot be directly linked to a patient, but we know

15. that no patient care can be completed without IT support. What other major areas do you feel
can be classified as overhead? What about fixed and variable costs? Housekeeping is one cost
that comes to mind. Why is it called indirect even if workers clean and maintain patient
treatment rooms?…
HSM 340 Cost Information Discussions 2 Week 3 All Posts 36 Pages DeVry
Describe how cost information relates to the three key activities of management: planning,
budgeting, and control. Cost information is useful in the three categories mentioned in this
question. We know that all the activities need cost information and especially in this current
healthcare environment where many decisions are based on cost data. Let’s discuss how cost is
related to these categories and how they are used in management decision-making? How are
planning and control related? Our TCO this week focuses on cost control. Also, in the course
objectives it asks to explain what is meant by cost behavior, and differentiate between the five
general types of cost behavior. How is cost behavior determined to be fixed or variable. Which
type of cost is easier to control in the short-run or the long-run? What is the break-even in
patient days for this nursing home, assuming no profit is required? How is that information
needed for planning and control?….
HSM 340 Financial Sources and Variance Analysis Discussions Week 4 All Posts 68 Pages
DeVry
HSM 340 Financial Sources Discussions 1 Week 4 All Posts 34 Pages DeVry
List the major nonhospital and nonphysician sectors of the healthcare industry.
We know that hospitals and physicians are dominant sectors in the industry. What are some other
sectors and what is their role ? How do they compare to the main sectors. Does the fact that
healthcare entities buy services on behalf of patients make the cost containment harder
sometimes? As we see, the new healthcare system encourages preventive care. It will reduce
cost in the long run. But, why are you covering non-physician sectors? Which do qualify as
that?…
HSM 340 Variance Analysis Discussions 2 Week 4 All Posts 34 Pages DeVry
Variance analysis is crucial to understand why the actual is different from the budget . The
concepts of financial analysis are the same, but we should understand that within the overall
health care industry, operating and financial indicators vary by health sector, e.g. hospitals,
nursing homes, medical groups, health plans. It’s important to use the appropriate benchmark to
evaluate performance.”. I look forward to our discussion of this important topic. Variance
analysis is part of the investigation process. Management should look to this analysis to make
decisions and take corrective action. We need to know why there are differences between the
budget and prior year. Which one do you see as more important? When you produce a flexed
budget, does that make the static budget less relevant?…

16. HSM 340 Capital Investments and Future and Present Value Discussions Week 5 All Posts
77 Pages DeVry
HSM 340 Capital Investments Discussions 1 Week 5 All Posts 34 Pages DeVry
List some of the kinds of information that is needed to evaluate a capital investment project. As
you know, healthcare requires a lot of equipment. This week,let’s talk about capital budgets.
Since this is usually a big investment, a lot of information is needed for the analysis. Let’s talk
about the data and information needed to make the proper decision. What would be needed to do
this job most appropriately? I look forward to a lively discussion about this important topic. How
is cash flow estimated? However, from a financial point of view, cash is scarce and the returns
are not as high. We focus on high returns and our mission. If the project is not consistent with
our mission, we do not accept it because cash is not always available. What other considerations
do you see?…
HSM 340 Future and Present Value Discussions 2 Week 5 All Posts 33 Pages DeVry
List some of the pros and cons of retiring debt early. Some firms decide to retire debt early.
Generally, it seems like a good idea. Let’s discuss how and when it is done. What do we need to
consider when the decision is made? Interest rates, the availability of excess cash play a major
role. When does it make sense to retire debt early? Retiring debt early needs to be always
evaluated. For businesses it has to be supported by calculations and math. When the debt is paid
off, how can they buy assets? To finance the purchases, there has to be some debt incurred. So,
retiring the debt means there is no prospective investment and in this case, there is no need or no
point to invest. Do you agree?…
HSM 340 Cash and Assets and Cash Resources Discussions Week 6 All Posts 65 Pages
DeVry
HSM 340 Cash and Assets Discussions 1 Week 6 All Posts 39 Pages DeVry
List and describe where cash is generated by an organization and where an organization uses its
cash. We always say that operating cash flow is the most important source of cash, why is that?
Is it possible for a firm not to have positive operating cash flow? How can a healthcare firm try
to reduce the utilization of lines of credit? How can cash flow be managed to generate cash from
operation? How can that be done? We said that many banks give their commercial customers
lines of credit to meet situations like that. How does this help firms meet their cash needs? Are
short-term loans better?…
HSM 340 Cash Resources Discussions 2 Week 6 All Posts 26 Pages DeVry
List and explain the criteria that should be used when investing an organization’s cash in the
short term. We know that cash needs to be managed and handled properly to ensure there is
enough liquidity but to also earn some fair return. We need to understand the criteria that a
healthcare entity should consider when cash is invested and managed. There has to be a balance
between risk and safety/liquidity. We try not to take risk when we invest for the short-term.

17. When we talk about marketability, what do we really mean and consider here? Cash
management is an essential task that can affect performance and survival. Why would firms
invest short-term? How is yield considered and evaluated when making an investment? We
know that short-term investments have a lower yield. Why do we even consider that option?…
HSM 340 HMO, MCO and Health Plans and Financial Policy Discussions Week 7 All Posts
65 Pages DeVry
HSM 340 HMO, MCO and Health Plans Discussions 1 Week 7 All Posts 38 Pages DeVry
Discuss legal and regulatory issues that affect MCOs. Negotiations with HMO’s are important
but they can also be challenging. It is all about proper business and clinical management working
together. There are also a lot of legal and regulatory aspects that need to be watched and
monitored. Doctors and hospitals need to work together more than ever before. Will the new
healthcare system change things? It is all about negotiations and competition. Sometimes are
satisfied and sometimes they are not very happy. It is all about negotiations. Do you see the new
healthcare system changing things in this area? How is that going to take shape? We know that
there is an impact on reimbursement, especially after the Affordable Care Act was passed. Do
we see the MCO role changing as a result? Comprehensive net work organization and proper
alignment is very crucial here. Quality is gaining more visibility and importance. What do you
see as the challenges for MCO’s and their organization?…
HSM 340 Financial Policy Discussions 2 Week 7 All Posts 27 Pages DeVry
Describe the relationship between financial planning and strategic planning. We all heard of
financial and strategic planning. How are these two similar and how they are different? How do
healthcare entities engage in these types of planning aspects and how are they affected over the
short and long-run? If there is no ability to raise capital, should financial plans be scrapped? Are
there other alternatives? What type of correction plan do you see a healthcare entity adopting to
improve performance? What methods do you see healthcare firms adopt to raise capital?…
HSM 340 Final Exam
(TCO 2) Define and describe the purpose of fund accounting (now called net assets).
(Points : 30)
Fund accounting is a system in which an entity’s assets and liabilities are segregated in the
accounting records. Each fund…
(TCO 1) What are primary uses of financial information? (Points : 30)
Financial information is important in the decision making process. In some areas….
(TCO 1) What are the six stages of the revenue cycle? (Points : 30)
Healthcare firms are for the most part business-oriented organizations. Their ultimate…

18. (TCO 1) How does the Stark Law impact physicians? (Points : 30)
Stark Law prohibits them from referring patients to any place that they have a “financial
relationship” with. So, if a physician is…
(TCO 4) You have been askedto establish a pricing structure for radiology
on a per-procedure basis. Present budgetary data is presented below:
Budgeted Procedures 10,000
Budgeted Cost$400,000
DesiredProfit $80,000
It is estimated that Medicare patients comprise 40 percent of total radiology
volume and will pay on average $38.00 per procedure. Approximately 10
percent of the patients are cost payers. The remaining charge payers are
summarized below:
Payer Volume % Discount %
Blue Cross 20 4
Unity PPO 15 10
Kaiser 10 10
Self Pay 5 40
50%
What rate must be set to generate the required $80,000 in profit in the
preceding example? (Points : 5)
Weighted Discount = (0.4 x 0.04) + (0.30 x 0.10) +….
(TCO 3) Assume that a certain nursing home has two categories of payers. Medicaid pays
$60.00 per day and private pay patients pay the established per diem, but approximately 10
percent of private-pay charges are not collected. If 50 percent of the patients are Medicaid
and 50 percent are private pay, what rate must be set to generate $150,000 in profit?
Variable costs are $45.00 per day and fixed costs are expected to be $1,000,000. Expected
volume is 50,000 patient days. (Points : 5)
Medicaid = $60 X 50,000 = $3,000,000/ 0.50 = $1,500,000
Break even =….
(TCO 5) What are the disadvantages to a tax-paying entity in issuing debt as opposed to
equity?

19. Some of the disadvantages:
1. Debt has fixed obligation. It is to be repaid at some point of time.
2. Companies with…
(TCO 6) What is an unsecured loan? (Points : 15)
An unsecured loan is a loan that is issued and…
(TCO 6) Compare and contrast the advantages and disadvantages of short- and long-term
borrowing to meet working capital needs. (Points : 10)
Working capital is a major element in computing total future asset needs. In computing…
(TCO 7) Why is tax-exempt financing cited as a benefit received by not-for-profit
healthcare providers? (Points : 10)
Not-for-profit providers are able to issue tax-exempt bonds and…
(TCO 1) What are the three factors that influence pricing? (Points : 10)
The three factors influencing pricing are:
1. Desired net…
(TCO 5) Why is a dollar today worth more than a dollar received in the future? (Points :
10)
Because dollar today can be…