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92 Cards in this Set
- Front
- Back
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Full Time Equivalent (FTE)
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Measure that expresses the equivalent of an employee or position that is full time (40 hours per week)
Equivalent of one flu-time employee paid for one year, including both productive and non-productive time Tells manager cost and measurement of staffing |
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Annualizing Method
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Annual cost of position because employees eligible for benefits (>50% time) will not be on duty for full number of hours
Allows full cost of position computed through burden approach |
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Burden Approach
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Net hours desired are inflated in order to arrive at gross number of paid hours that will be needed to obtain desired number of net hours of duty
Determines actual cost of staff member per year |
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Productive Time
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Hours that the employee is actually at work
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Non-Productive Time
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Paid for time when the employee is not on rudy
ex: vacation days, sick days, personal leave days |
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Financial Performance Scorecards
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Provide tools for evaluating financial condition of healthcare facilities
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Balanced Scorecard
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Report that provides information on performance in key number of areas
Performance indicators or metrics defined by senior leadership |
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Dashboard Reporting
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Subset of balanced scorecard
Focus: critical areas or indicators Used to monitor indicators that best represent factors tied to success |
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Operating Margin
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Operating Margin= operating income/revenues
Financial Success |
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Equity
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Value of property greater than the amount owed
Assets-Liabilities=Net Worth Can finance resources by debt or equity (pay cash or borrow) |
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Primary Financial Objective
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Equity growth- add new investments
Add to value of organization Invest in renovation and replacement of facilities Expand delivery to stay competitive |
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Growth Rate in Equity
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Net income/equity
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Financial Analysis
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1. Establish facts about org
2. Compare facts about org over time to similar orgs 3. Use perspective and judgement to make decision regarding comparisons |
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Balance Sheet
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Shows the organization's financial position as a specific point in time, typically end of accounting period
Assets, liabilities, net assets |
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Asets
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Economic resources that provide or are expected to provide benefit to the organization
Assets= liabilities + Net assets |
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Current Assets
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Economic resources that the organization expects to consume in less than one year
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Net Receivables
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Money due to organization from patients and third party payers for services already provided
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Inventory
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Cost of food, fuel, drugs and other supplies purchased by the hospital but not yet consumed
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Prepaid Expenses
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Expenditures for services or goods that have not yet been consumed
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Long Term Investments
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Economic resources that the hospital owns that the hospital intents to hold for at least one year
Mature in more than one year Long term assets Ex: corporate bonds and government securities |
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Net Plant and Equipment
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Economic resources (land, buildings, equipment) - amount that has been depreciated over the life of buildings and equipment
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Liabilities
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Economic obligations, or debt, of organization
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Current Liabilities
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Economic obligations, or debts, that are due in less than a year
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Accounts Payable
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Amounts the hospital owes to suppliers and other trade creditors for merchandise and services purchased from them, but for which hospital has not paid
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Income Statement
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Summarizes net revenues, expenses, and acess of net revenues
Assets= liabilities + net assets + (net revenue-expenses) |
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Temporarily Restricted Net Assets
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Donor-restricted net assets the org can use for donor's specific purpose once org has met donor's restriction
Ex: passage of time, action by organization |
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Permanently Restricted Net Assets
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Donor-restricted net assets with restrictions that never expire
Ex: endowment funds |
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Shareholders Equity
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Difference between assets and liabilities in for-profict healthcare organizations
Represents ownership interest of stockholders |
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Common Stock
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Money invested in organization by its owners
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Retained Earnings
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Income earned by organization from operations-dividents
dividends: paid to stockholders |
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Gross Patient Services Revenue
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Total amount of charges for patients utilizing hospital, regardless of amount actually paid
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Net patient Services Revenue
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Money generated providing patient care - amount organization will not collect as a result of discounting charges
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Premium Revenue
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Money generated from capitation (per person) arrangements that must be reported separately from patient services revenue
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Other Operating Revenue
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Money generated from services other than health services to patents and enrollees
(cafeteria, gift shop) |
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Operating Expenses
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Money spent on operations to generate revenue
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Interest
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Expenses incurred from borrowing money
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Bad Debt
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Accounting recognition of how much money the organization has billed but will not collect
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Charity Care
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Services hospital provided with no expectation of payment
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Operating Income
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Money earned from providing patient care services
=total revenue, gains, and other support - total expenses |
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Non Operating Income
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Money earned from non-patient care services
Ex: investment income |
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Operating Indicators
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Outpatient revenue as a percentage of total patient revenue
Average length of stay Occupancy rate |
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Profitability Ratios
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Reflects organization's ability to exist by measuring relationship of revenues to expenses
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Asset Efficiency Ratio
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Measures relationship between revenue and assets
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Capital Structure Ratios
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Long-term liquidity, used by banks to determine credit-worthiness
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Estimate
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Implies a judgement, considered or casual, that preceded or takes the place of actual measuring or counting or testing out
Amount, value, size Less than perfectly accurate |
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4 Common Uses of Estimates
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1. Timeliness: deadlines, results needed fast (board/legislative body)
2. Cost/benefit considerations: manager's decision if project is worth the effort 3. Lack of data: when not enough info to do full forecasting 4. Internal monthly statements: when actual info is not available; derived from ratios and percentages of last year |
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Weighted Average Inventory
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Weighted average cost= cost of goods available for sale/number of units available
result is an estimate |
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Benchmarking
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Continuous process of measuring products, services and activities against best levels of performance
Identify performance gaps Financial variable reported in accounting system; not in accounting system; nonfinancial variable |
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Parametric Analysis
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Characteristics or attributes of similar services or products are examined
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Process Analysis
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Process that serves as a standard for comparison examined in detail to learn why and how it performs the way it does
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Opportunity Assessment
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Used for strategic planning and process engineering to provide info about the way things should or could be
Compares how things are to the highest standard |
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Pareto Analysis
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An analytic tool that employs the Pareto principle and helps explore continuous quality improvement
80% of organizations problems are caused by 20%% of the possible causes "80/20" rule Majority of problems are caused by a small number of identifiable components |
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Time Value of Money
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Value of identified number is going to change over time
Value of the dollar is decreasing Evaluates the use of money |
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Unadjusted Rate of Return
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Return on investment method estimate
avg annual net income/avg investment amount |
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Present Value Analysis
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Based on time value of money
Value of a dollar today is more than the value of a dollar in the future |
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Internat Rate of Return
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Restate rate of return represents maximum rate of interest that can be paid for capital over entire span of investment without loss
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Payback Period
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Length of time required for cash coming in from investment to equal amount of cash spent when investment was acquired
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Not for Profit Organizations
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IRS codes: exist to further educational, charitable, or worthwhile goal to not be subject for taxes
Favorable tax status Donations are tax deductable EX: NFL NCAA dance marathon, childrens hospital, UIowa, |
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Electronic Health Records
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An electronic record of health-related info on individual that
-includes patient demographic and clinical health info -has capacity to provide clinical decision support, support physician order entry, capture and quary info relative to healthcare and quality, exchange electronic health info |
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Situational Analysis
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Reviews organizations internal operations for strengths and weaknesses and explores external environment for opportunities and threats
SWOT analysis |
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International Classification Of Diseases: ICD-10
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Promote consistency in the collection and processing of information
68,000 diagnosis codes 87,000 procedure codes- very specific |
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Prescriber
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Physician, dentist, or other person licensed registered or permitted to issue drugs
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Dispenser
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Person registered to practice or entity is located to provide drug product use on prescription
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Investments
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Recorded as current assets or long term assets on balance sheets
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Liquid Assets
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Can be liquidated (sold) and turned into cash on hand on short notice
Can earn interest but available when needed |
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Actual Cash
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Currency (whats in your wallet)
Money in checking/savings accounts CDs Tbills and Tnotes Money market funds Short term investments, very liquid, low risk |
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Federal Deposit Insurance Corporation (FDIC):
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Insures deposits in banks and thrift institutions, identify and monitor risks, limit effect on economy when bank fails
Covers: checking accounts, savings, certificates of deposit Not cover: mutual funds (stock, bond, money market mutual fund), annuities |
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Bond
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Long term investment instrument under which a borrower agrees to make payments of interest and principal on particular dates to the holder
Interest paid throughout term, principal paid at maturity |
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Municipal Bond
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Long term obligations used to finance capital projects by states and political subdivisions (roads, bridges)
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General Obligation Bonds
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Backed/secured by full faith and credit of municipaality issuing the bond. Backed by taxing authority of city or state
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Revenue Bonds
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Secured by revenues generated by particular project.
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Debentures
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Unsecured bonds. Backed by revenues that the issuing organization can east
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Subordinated Debentures
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Even further unsecured, cannot be paid until all senior debentures have been paid
Paid last after all other obligations are paid |
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Stocks
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Represent equity, or net worth in a company.
Stockholder is an investor in the company (bondholder is creditor b/c liabilities) |
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Common Stock
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Purchaser expects to receive a portion of net income from the company that issues the stock (dividend)
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Preferred Stock
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Preference over common stock in payment of dividends. Generally fixed rate dividend payment
Receives payment before holders of common stock Ex: employees in ESOP plan |
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Stock Warrants
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Allow the owner to purchase additional shares of stock at a particular price prior to an expiration date
Do not pay dividends |
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Privately Held Companies
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Small, stock is closely held
Common stock not traded Family based |
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Public Companies
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Stock publicly owned
Listed on one of several stock exchanged (NY stock exchange) |
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US Securities and Exchange Commission (SEC)
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Protect investors, maintain fair orderly efficient markets and facilitate capital formation
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Mutual Funds
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Professionally managed collective investment program that pools money from many investors
Registered with SEC open end (most common)- must buy back shares from investors at end of each day Closed end- issued once Unit investment trust- issued once for limited span of time |
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Gross Domestic Product
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Output of goods and services produced by labor and property located in the United States
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Business Plan
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Document that contains info about
-Proposed projects organization -marketing -financial aspects Prepared to obtain funding/financing organization, marketing, and financial plan |
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Knowledgeable Reader Approach to Business Plan
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Plan should answer questions that would occur to a knowledgeable reader
Reflect choices you made in selecting assumptions for financial analysis |
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Primary Regulatory Issues
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Medicare reimbursement
Certification of providers Payment for an item or service Condition of participation |
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Healthcare Reform
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Increased number eligible for Medicaid
Increase in disproportionate share hospital payments Medicaid state financing: greater state accountability Claims for cost of Medicaid scrutinized more closely |
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False Claims Act
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Governments primary civil remedy for improper or fraudulent claims
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Qui Tam Actions
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False claims acts may be brought by anyone. When an action is brought by an individual
Person is entitled to 15-25% amount recovered |
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Stark Law
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Prohibits physician from referring a patient for certain "designated health services" to an entity with which the physician has a financial relationship with
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HIPAA
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Encouraged development of standard electronic transaction standards
Established privacy rule Defines/limits circumstances in which entitites uses and disclose PHI Establish individual rights Require covered entities to adopt admin safeguards to protect confidentiality and privacy of PHI |
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Federal "Conditions of Participation"
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Rules regarding standards of compliance for receiving payment for caring for patients on Medicare
Contained in CFR |
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Emergency Medical Transfer and Active Labor Act: EMTALA
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"anti dumping act"
Prohibits hospitals from transferring emergency patient to another hospital because patient is unable to pay |
