Health Care Finance Lecture Summary

Flashcards covering key concepts from the Health Care Finance lecture, focusing on cash flows, financial analysis, and cost behavior.

Statement of Cash Flows

A financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company.

Purpose of the Statement of Cash Flows

To provide information about the cash inflows and outflows of a business across a certain period.

Cash flows from operating activities

Cash flows that arise from the primary operations of a business, including revenues from sales and cash payments to suppliers.

Cash flows from investing activities

Cash flows related to the acquisition and disposal of long-term assets, such as property and equipment.

Cash flows from financing activities

Cash flows that result from transactions with the company's owners and creditors, including issuing debt or equity.

Reconciliation of cash

The process of matching and comparing figures from financial records to ensure the accuracy of cash statements.

Debt Ratio

A financial ratio that indicates the proportion of a company's assets that are financed by debt.

Operating Indicator Analysis

The use of operational data to explain a business's financial condition and performance.

Profit Indicator: Profit per Discharge

A measure of profitability calculated by taking total inpatient profit and dividing by total discharges.

Capitation payment

A payment arrangement in which a healthcare provider is paid a set amount for each enrolled patient regardless of the services provided.

Cost Behavior

The way total costs change in relation to a change in volume of services provided.

Direct Costs

Costs that can be directly attributed to a specific department or activity.

Indirect Costs

Costs that are not directly attributable to a specific department and are typically shared across multiple departments.

Cost Driver

A factor that causes changes in the cost of an activity, used in the cost allocation process.

Breakeven Analysis

The evaluation of the point at which total revenues equal total costs, indicating no profit or loss.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, used to cover fixed costs and generate profit.

Fixed Costs

Costs that do not change with the volume of services produced.

Variable Costs

Costs that change in direct proportion to the volume of services produced.