Question

1. Define/distinguish between: (a) direct cost (b) indirect cost.
2. For what does the acronym DRG mean and what is their purpose?
3. What are the four major activities for finance?
4. What are the four C’s of finance?
5. What is the purpose of accounting?
6. What are ambulatory care facilities?
7. The term third-party refers to which of the following: Procedure, provider, patient, payer?
8. With all things being constant, one FTE for a hospital means what and equates to how many hours?
9. If the cost of a medical visit/process/diagnostic test increases, how does this effect the demand for the item?

Answer 1

1) a) Direct costs: are business expenses that can be directly applied to producing a specific cost object, like a good or service. Cost objects are items that costs are assigned to. Examples of direct costs include direct labor, direct materials, and manufacturing supplies.

b) Indirect costs: are expenses that apply to more than one business activity. Unlike direct costs, you cannot assign indirect expenses to specific cost objects. Examples of indirect costs include rent, utilities, general office expenses, employee salaries, professional expenses, and other overhead costs.

2) Diagnosis- related group

The DRGs are a patient classification scheme which provides a means of relating the type of patients a hospital treats (i.e., its case mix) to the costs incurred by the hospital.

3) Major Financial activities may include buying and selling of products or assets, organizing and maintaining accounts, issuing stocks or bonds, arranging loans, or other business activities with specific monetary objectives.

The Four Major financial statements are the income statement, balance sheet, statement of cash flows, and statement of retained earnings. Your financial statements are dynamic reports full of insights just waiting to be extracted and used to achieve your business objectives.

4) The first C is character—reflected by the applicant's credit history. The second C is capacity—the applicant's debt-to-income ratio. The third C is capital—the amount of money an applicant has. The fourth C is collateral—an asset that can back or act as security for the loan

5) The main objective of accounting is to record financial transactions in the books of accounts to identify, measure and communicate economic information

6) Ambulatory care refers to medical services performed on an outpatient basis, without admission to a hospital or other facility

7) Payer: Third-party payers include insurance companies, governmental payers, like Medicare, and even employers (self-insured plans).

8) Full-time equivalent (FTE) is a way to measure a worker's involvement in a project, or an assigned task for his or her organization. The definition of FTE is the number of working hours that represents one full-time employee during a fixed time period, such as one month or one year.

9) Hospitals comes under the essential part for the checkup and so there shoul be no change in the demand with the hike in prices