Fundamentals of Healthcare Financial
Management Question and answers
correctly solved 2025/2026
What is the average bed-count in a hospital? - correct answer ✔The average bed-count per hospital in
the US is 250 beds.
What percentage of hospitals in the US are NFP? - correct answer ✔Just a little over 50%
True or False: For the same service (i.e an MRI), outpatient contractual is typically more than inpatient
contractual? - correct answer ✔FALSE: Reimbursement from Medicare, Medicaid, Managed Care, and
others is typically LESS for the same service, if provided on an outpatient basis, as opposed to inpatient.
What are common types of "other operating income" for a hospital? - correct answer ✔Cafateria
revenue, revenue from drugs sold to patients, selling the silvery in old x-ray film, and rebates from
large/volume discounts from vendors
The Salaries line item on the P/L is for what type of work? - correct answer ✔This would be for wages
paid to employees that are subject to EMPLOYMENT TAXES.
What are purchased services? - correct answer ✔This is typically outside, third party management for
various types of departments (housekeeping, laundry, etc..)
What classifies as a bad debt write off in a healthcare organization? - correct answer ✔This is when a
patient can't pay out of pocket for the entire, or partial expense, or a deductible./co-insurance. Typically
bad debts do not relate to MCO's (insurance companies) or Medicaire/Medicaid payers. They are mostly
for out of pocket expenses the patient is liable for.
What do Professional Management Fees entail? - correct answer ✔External Auditors, Attorneys, and
Consultants
,What are the 3 major ways an organization can manipulate it's depreciation expense? - correct answer
✔1) Nonstandard estimated useful life: However the American Hostpial Association created general
rules for establishing asset's useful lives. Also Medicare reimbursement based on costs needed a
standard to hold hospitals to.
2) Accelerated depreciation schedule
3) Capitalization policy that differs from the industry norm: Current CMS regulations (for acute, inpatient
care) stipulate that any expense over $5,000, with a useful life of 2+ years can be capitalized. Of course,
capitalizing a purchase means that you can't record the full amount as an expense, and instead must
expense it over time via depreciation.
What is the most common depreciation method? - correct answer ✔Straight LIne - Total cost divided
by remaining years of useful list
True or False: Medicare is now almost completely non-cost based? - correct answer ✔True
Will a loan's principal payments be included on the income statement? - correct answer ✔NO: This is
recorded as a reduction of a liability (i.e notes payable) on the balance sheet. It is also recorded as a
cash outflow on the Statement of Cash flows.
What is a Medical Executive Committee? - correct answer ✔This is a group of physician representatives
that can decide which physicians can be approved to practice at the organization and also the kinds of
medicine practiced. Many times, there is conflict between the organization's board and the MEC. For
example, the board may want to begin practicing new types of medicine whereas the MEC may not
accept new treatment types not approved by the state's licensing board.
When was the double-entry accounting system created? - correct answer ✔In 1492
, Why are Third Party Settlements not as relevant or sensitive on/ healthcare companies Balance Sheets
as they used to be? - correct answer ✔This item represents an amount potentially owed to a third
party (liability), or additional reimbursement that could be owed to the provider (asset). Having this
account on the balance sheet is only required if there is a cost-based and retrospective reimbursement
system in place. This means that all payments throughout the year aren't official until adjustments are
made, based on a year-end cost report. However, nowadays, nearly all providers are reimbursed on a
prospective system. This means that all rates are set for the year beforehand, so no adjustments should
be required.
Why do large healthcare providers in communities have an advantage and disadvantage when
negotiating their managed care contracts with insurers? - correct answer ✔They have an advantage in
knowing the cost of care for it's own employees (for their employer sponsored insurance policy).
However, they must negotiate with these same insurers when creating their third party payor contracts.
Why are healthcare workers charged a higher monthly premium than workers in other industries? -
correct answer ✔Historically, Healthcare workers have utilized more insurance-covered healthcare
services, because they are exposed to those services everyday and realize the benefits.
How can PPO's be more advantageous over HMO's? - correct answer ✔PPO's have their own network
of healthcare providers that you can receive care from at a discounted price - however, the restrictions
are much less for seeing healthcare providers outside of your network. Your PPO insurance will still pay
for you to see a non-network provider, but it will be at a lower rate. You also can see a doctor/specialist
without having to see a Primary Care Physician first.
What are a few of the major billing/payment methods that the ACA created? - correct answer ✔1)
Bundling all patient services into one bill to Medicare (bundle payments)
2) Creating Accountable Care Organizations (similar to HMO's, but the patient doesn't have to choose a
PCP)
3) New penalties under a category known as value based purchasing. These penalties are for failing to
provide good enough quality outcomes to patients.
What is an adjusted patient day? - correct answer ✔This is a formula that attempts to convert
outpatient revenue into an equivalent inpatient day.
Management Question and answers
correctly solved 2025/2026
What is the average bed-count in a hospital? - correct answer ✔The average bed-count per hospital in
the US is 250 beds.
What percentage of hospitals in the US are NFP? - correct answer ✔Just a little over 50%
True or False: For the same service (i.e an MRI), outpatient contractual is typically more than inpatient
contractual? - correct answer ✔FALSE: Reimbursement from Medicare, Medicaid, Managed Care, and
others is typically LESS for the same service, if provided on an outpatient basis, as opposed to inpatient.
What are common types of "other operating income" for a hospital? - correct answer ✔Cafateria
revenue, revenue from drugs sold to patients, selling the silvery in old x-ray film, and rebates from
large/volume discounts from vendors
The Salaries line item on the P/L is for what type of work? - correct answer ✔This would be for wages
paid to employees that are subject to EMPLOYMENT TAXES.
What are purchased services? - correct answer ✔This is typically outside, third party management for
various types of departments (housekeeping, laundry, etc..)
What classifies as a bad debt write off in a healthcare organization? - correct answer ✔This is when a
patient can't pay out of pocket for the entire, or partial expense, or a deductible./co-insurance. Typically
bad debts do not relate to MCO's (insurance companies) or Medicaire/Medicaid payers. They are mostly
for out of pocket expenses the patient is liable for.
What do Professional Management Fees entail? - correct answer ✔External Auditors, Attorneys, and
Consultants
,What are the 3 major ways an organization can manipulate it's depreciation expense? - correct answer
✔1) Nonstandard estimated useful life: However the American Hostpial Association created general
rules for establishing asset's useful lives. Also Medicare reimbursement based on costs needed a
standard to hold hospitals to.
2) Accelerated depreciation schedule
3) Capitalization policy that differs from the industry norm: Current CMS regulations (for acute, inpatient
care) stipulate that any expense over $5,000, with a useful life of 2+ years can be capitalized. Of course,
capitalizing a purchase means that you can't record the full amount as an expense, and instead must
expense it over time via depreciation.
What is the most common depreciation method? - correct answer ✔Straight LIne - Total cost divided
by remaining years of useful list
True or False: Medicare is now almost completely non-cost based? - correct answer ✔True
Will a loan's principal payments be included on the income statement? - correct answer ✔NO: This is
recorded as a reduction of a liability (i.e notes payable) on the balance sheet. It is also recorded as a
cash outflow on the Statement of Cash flows.
What is a Medical Executive Committee? - correct answer ✔This is a group of physician representatives
that can decide which physicians can be approved to practice at the organization and also the kinds of
medicine practiced. Many times, there is conflict between the organization's board and the MEC. For
example, the board may want to begin practicing new types of medicine whereas the MEC may not
accept new treatment types not approved by the state's licensing board.
When was the double-entry accounting system created? - correct answer ✔In 1492
, Why are Third Party Settlements not as relevant or sensitive on/ healthcare companies Balance Sheets
as they used to be? - correct answer ✔This item represents an amount potentially owed to a third
party (liability), or additional reimbursement that could be owed to the provider (asset). Having this
account on the balance sheet is only required if there is a cost-based and retrospective reimbursement
system in place. This means that all payments throughout the year aren't official until adjustments are
made, based on a year-end cost report. However, nowadays, nearly all providers are reimbursed on a
prospective system. This means that all rates are set for the year beforehand, so no adjustments should
be required.
Why do large healthcare providers in communities have an advantage and disadvantage when
negotiating their managed care contracts with insurers? - correct answer ✔They have an advantage in
knowing the cost of care for it's own employees (for their employer sponsored insurance policy).
However, they must negotiate with these same insurers when creating their third party payor contracts.
Why are healthcare workers charged a higher monthly premium than workers in other industries? -
correct answer ✔Historically, Healthcare workers have utilized more insurance-covered healthcare
services, because they are exposed to those services everyday and realize the benefits.
How can PPO's be more advantageous over HMO's? - correct answer ✔PPO's have their own network
of healthcare providers that you can receive care from at a discounted price - however, the restrictions
are much less for seeing healthcare providers outside of your network. Your PPO insurance will still pay
for you to see a non-network provider, but it will be at a lower rate. You also can see a doctor/specialist
without having to see a Primary Care Physician first.
What are a few of the major billing/payment methods that the ACA created? - correct answer ✔1)
Bundling all patient services into one bill to Medicare (bundle payments)
2) Creating Accountable Care Organizations (similar to HMO's, but the patient doesn't have to choose a
PCP)
3) New penalties under a category known as value based purchasing. These penalties are for failing to
provide good enough quality outcomes to patients.
What is an adjusted patient day? - correct answer ✔This is a formula that attempts to convert
outpatient revenue into an equivalent inpatient day.
