CHFP STUDY SET EXAM QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTIONS VERIFIED
Comprehensive Medical Office Budget includes...
1. Statistics
2. Operating Expenses and Revenues
3. Capital Expenditures
4. Cash Flows
Control Budgets
Three types: 1. Operating Budget
2. Capital Budget
3. Cash Budget
Cleverley's components of a capital project:
1. Information on alternatives available
2. Information on resources available
3. Cost data
4. Benefit data
5. Data regarding prior performance
6. Risk projection information
Payback method
,How many years it takes to recoup an initial investment based on new income the
investment generates (includes negative cash flow of initial investment). Does not
consider time value of money.
Return on Investment
Net Present Value / Initial Investment
Debt Service
Principal + Interest
Annual Debt Service
Principal + Interest for a given year
Total Debt Service
Sum of all debt service payments
Joint Venture
An additional source of capital: Benefits: attracts physician and for-profit groups as
investors; allows entities to spread the risk; allows viable entities to be competitive in the
marketplace. Drawbacks: if the deal loses money, all lose money; rewards have to be
shared; tax-exempt status could be put at risk; Medicare/Medicaid fraud and abuse
could be alleged
Leases
arrangement that allows for the payment and ownership of a capital asset as a
contractual obligation to be executed over time rather than at the time of possession.
Capital Lease
, Contains a bargain purchase option; transfers ownership at end of term; term is equal to
75% of the equipment's useful life; present value of the payments are greater than 90%
of the fair market value of the item
Operating Lease
one in which the lessee is liable for the cost for the term of the lease. No ownership
rights at the end. Payments may add up to more than if one had purchased the item
outright.
Budgeting Techniques
High-level strategic goals and objectives must be translated into department-specific
budgets. Three components of an operating budget:
Statistical
Revenue
Expense
Variance Types
Volume, Rate, Price, and Efficiency
Operating margin (%)
(total operating revenue - total operating expenses) / total operating revenue
Return on Assets
Excess of revenues over expenses / Total Assets
Excess margin (%)
(total operating revenue - total operating expenses
+ nonoperating revenue) / (total operating revenue + non-operating revenue)
Debt service coverage ratio (x)
COMPLETE SOLUTIONS VERIFIED
Comprehensive Medical Office Budget includes...
1. Statistics
2. Operating Expenses and Revenues
3. Capital Expenditures
4. Cash Flows
Control Budgets
Three types: 1. Operating Budget
2. Capital Budget
3. Cash Budget
Cleverley's components of a capital project:
1. Information on alternatives available
2. Information on resources available
3. Cost data
4. Benefit data
5. Data regarding prior performance
6. Risk projection information
Payback method
,How many years it takes to recoup an initial investment based on new income the
investment generates (includes negative cash flow of initial investment). Does not
consider time value of money.
Return on Investment
Net Present Value / Initial Investment
Debt Service
Principal + Interest
Annual Debt Service
Principal + Interest for a given year
Total Debt Service
Sum of all debt service payments
Joint Venture
An additional source of capital: Benefits: attracts physician and for-profit groups as
investors; allows entities to spread the risk; allows viable entities to be competitive in the
marketplace. Drawbacks: if the deal loses money, all lose money; rewards have to be
shared; tax-exempt status could be put at risk; Medicare/Medicaid fraud and abuse
could be alleged
Leases
arrangement that allows for the payment and ownership of a capital asset as a
contractual obligation to be executed over time rather than at the time of possession.
Capital Lease
, Contains a bargain purchase option; transfers ownership at end of term; term is equal to
75% of the equipment's useful life; present value of the payments are greater than 90%
of the fair market value of the item
Operating Lease
one in which the lessee is liable for the cost for the term of the lease. No ownership
rights at the end. Payments may add up to more than if one had purchased the item
outright.
Budgeting Techniques
High-level strategic goals and objectives must be translated into department-specific
budgets. Three components of an operating budget:
Statistical
Revenue
Expense
Variance Types
Volume, Rate, Price, and Efficiency
Operating margin (%)
(total operating revenue - total operating expenses) / total operating revenue
Return on Assets
Excess of revenues over expenses / Total Assets
Excess margin (%)
(total operating revenue - total operating expenses
+ nonoperating revenue) / (total operating revenue + non-operating revenue)
Debt service coverage ratio (x)
