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:
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? What successes are enabled by an adequate understanding or appropriate application of the skill, concept, procedure, or tool? 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.
Capital expenditure budget
A budget that can cover one year or multiple years and has a more futuristic view. If the economy is expected to go into a recession that may last several years a company may need a capital expenditure budget. One that may show a plan for the financial survival over the next few years. Things like plans to spend less on expensive or unnecessary supplies or switch to more generic brands are good examples of what could be taken into consideration when making a capital expenditure budget.
Cost that is directly related to the production of goods or services. Costs related to Materials used for production or labor costs are examples of direct costs because they are directly related to producing goods or services.
Budget that is made by using budgeted revenue and cost amounts and can be adjusted according to expected outputs. If a business has had busy Summers in the past and may have another busy Summer they may want to plan for a higher workload and more staff. This requires them to have a flexible budget so they can adjust the budget according to the rising activity level or volume of business.
Budget that deals with short term revenues and expenses that are needed to keep an organization operating. When a business needs supplies to be able to provide services and needs to pay staff to provide services as well the money that is being spent on the wages of the staff and the supplies is part of the operating budget because those things are needed to operate the business.
Center that is responsible for managing costs or costs and revenues. Cost centers are responsibility centers that are responsible for costs and profit centers are responsibility centers that are responsible for managing revenues and costs. Being responsible makes them “Responsibility” centers.