Week Three Health Care Financial Terms Worksheet
Understanding health care financial terms is a prerequisite for both academic and professional success. This assignment is intended to ensure you understand some of the basic terms used in this course.
Complete the worksheet below according to the following guidelines:
In the space provided, write each term’s definition as used in health care management. You must define the term in your own words. In the space provided after each term’s definition, summarize a health care management scenario that illustrates the importance of the skill, concept, procedure, or tool to which the term refers. In the scenario, you may wish to consider the following:
o Why is the skill, concept, procedure, or tool necessary for accurate record keeping, operational efficiency, excellent patient services, employee management, regulatory compliance, reducing costs, forecasting, and so forth? o What successes are enabled by an adequate understanding or appropriate application of the skill, concept, procedure, or tool? o What risks or failures are associated with an inadequate understanding or inappropriate application of the skill, concept, procedure, or tool?
Save the completed worksheet as a Microsoft Word document with your name in the file name. Submit the file to your instructor.
|Term |Definition |Scenario | |Capital expenditure |A capital expenditure budget is a budget that is |An example of the capital expenditure budget is the following: | |budget |used to prepare an organization’s investment |The project will last for 4 years. Each year you will have | | |activities. Developing a capital budget can help |revenues of $230,000 and expenses of | | |management make decisions regarding the purchase |$100,000. The project will require new equipment valued at | | |of new assets. |$80,000. This equipment will be depreciated to zero using the | | | |straight-line method over a 4-year life. You will also sell the | | | |equipment for $10,000 in year 4. Working capital at the firm will| | | |have to rise to $20,000 from | | | |the current level of $10,000 immediately. It will go down to | | | |$15,000 in year 2 and to $10,000 in year 4. Forecast all of the | | | |incremental cash flows for this project and compute its NPV based| | | |on a discount rate of 10%. Your tax rate is 33%. | |Direct cost |Direct costs are an expense that can be directly |An example of direct costs is if a company produces x-ray | | |related to a particular cost center, department, |machines. A production manager is hired to oversee the | | |labor, expenses or production of a product. |production of the machine; the production manager’s salary is | | | |considered a direct cost. | |Flexible budget |A flexible budget is based on expenses and revenue|An example of a flexible...