Quiz CONSOLIDATIONS MERGERS AND CAPITAL FORMATION
docx
keyboard_arrow_up
School
Liberty University *
*We aren’t endorsed by this school
Course
323
Subject
Finance
Date
Feb 20, 2024
Type
docx
Pages
13
Uploaded by MasterMetal13142
Quiz: Consolidations, Mergers, and Capital Formation
An HMO has just proposed to promote your facility as the region's “Center of Excellence” for obstetrical deliveries. The HMO covers 700,000 lives in the community served by your facility. The HMO has provided the following information for your consideration: The hospital cost for a normal uncomplicated child delivery is $1,800 and for a complicated cesarean delivery is $3,500. Furthermore, the annual rate per 100,000 lives for a normal uncomplicated delivery is 6.0 while for a complicated cesarean delivery is 1.5. The HMO proposes a capitated per member per month (PMPM) premium to the hospital to provide obstetrical services to their members. What would the break-even premium be?
$0.01783 PMPM
$0.01830 PMPM
$0.01336 PMPM
$0.016050 PMPM
None of these is correct.
From a hospital's perspective, what is most likely to be the highest risk arrangement with a payer?
DRG/per case
Capitation
Per diem
Discounted charges
None of these is correct.
SKF Primary Care Clinic is deciding whether to purchase MRI equipment that would enable it to perform MRI imaging services in-house rather than sending its patients to its competitor's hospital 3 miles away. From a financial position, if SKF were to make its decision without using net present value analysis, the clinic would need to know (or at least reasonably estimate) which of the following information?
NOT. Unavoidable fixed cost, volume, variable costs, and indirect costs
Variable costs, volume, avoidable fixed cost, and total revenue
Total unit cost, indirect costs, profit, and volume
Revenue per unit, indirect costs, volume, and total revenue
Avoidable fixed costs, revenue per unit, volume, and contribution margin
Calculate the break-even price from the following information.
Quantity of services = $3,000
Fixed costs = $45,000
Average cost per unit = $150
Required profit = $30,000
NOT $175
$300
$135
$310
$160
When considering how changes in volume affect total fixed costs, it is important to consider:
the relevant range.
the variable cost per unit.
price.
the relevant range and the variable cost per unit.
The break-even point occurs where:
total fixed costs and total revenue intersect.
total costs and total revenue intersect.
total profit margin and total costs intersect.
total variable costs and total revenue intersect.
total revenue outpaces total avoidable fixed costs.
Which of the following is the primary source of information regarding what future costs will be and is therefore of critical importance?
Specific DRG
Encounter of care
Historical costs
Existing costs
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Which of the following represents the final level of bundling in which risk is fully shifted to the provider?
Capitation
Episode level
Encounter level
Individual service arrangements
Which of the following is the underlying core of ABC cost systems?
Accountability
Responsibility
Traceability
NOT Reproducibility
What phase of operations involves a translation of the product-line decisions made earlier into a set of resource expectations?
Planning phase
Budgeting phase
Control phase
Production phase
Which of the following is the primary cost object in most healthcare firms?
Specific DRG
Encounter of care
Episode of care
NOT A covered life
The statistics budget:
forecasts operating revenues that will be earned during the budget period.
identifies the amount of service that will be provided by departmental area
.
represents an organization's expected cash inflows and outflows based on the previous years' cash flows.
identifies operating expenses that are expected to be incurred during the budget period.
Because prices are often fixed in the healthcare industry, it is increasingly important to:
measure effectiveness
.
measure efficiency.
control costs.
None of these is correct.
Flexible budgets vary from static (or forecasted) budgets on the basis of:
revenues.
expenses.
income.
cash flow.
volume
.
Which budgetary issue causes the most strife in all areas of a healthcare organization?
Setting volume levels
Setting prices
Allocation of indirect costs
Deciding whether to use a fixed or flexible budget
Effectiveness is a relationship between:
outputs and organizational goals.
NOT inputs and outputs.
inputs and organizational goals.
None of these is correct.
Which of the following is an important analytical tool that has become useful to managed care firms that are seeking to monitor and control their costs?
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Cost analysis
Volume analysis
Efficiency analysis
Variance analysis
Successful use of which of the following requires a sound system of standard setting, or budgeting, and a related system of cost accounting?
Utilization analysis
Volume analysis
Efficiency analysis
Cost variance analysis
Measuring which of the following has become increasingly important in the healthcare industry as a result of the emphasis on cost containment?
Efficiency
Productivity
NOT Competency
Profitability
Which of the following reflect the quantity of resources that should be used and the prices that should be paid for those resources to produce a specific departmental output unit, defined as a service unit?
Standard cost profiles
Actual cost profiles
Budgeted cost profiles
Expected cost profiles
Which of the following most likely will lead to an increase in costs, but this increase in costs may be offset by an increase in revenues, and profits may actually improve?
Increase in enrollment
Increases in utilization
Changes in patient mix
Changes in efficiency
What type of merger involves firms engaged in unrelated business activity?
Horizontal mergers
Vertical mergers
Conglomerate mergers
Leveraged mergers
Which of the following is defined as the price or value paid for a business less
than the fair market value of the tangible assets acquired?
Goodwill
Book value
Market value
Enterprise value
What type of transaction occurs if the shares are owned exclusively by the acquiring party rather than third-party investors and there is no market for trading its shares?
Going private
Joint venture
NOT Leveraged buyout
Management buyout
Which of the following has continued to lead all healthcare sectors for M&A activity?
Urgent care clinics
Ambulatory surgery centers
Long-term care facilities
NOT Pharmacy benefit management
Which of the following represents the value of all capital invested in the business or organization?
Book value
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Market value
Terminal value
Enterprise value
What type of financing has been the largest source of capital for the hospital industry for the last 30 years, although this type is primarily available to nonprofit facilities?
Microloans
Crowdfunding
Venture capital
Tax-exempt financing
Which of the following is defined as the fixed return of a long-term debt instrument?
Coupon rate
Discount rate
Variable rate
Ordinal rate
What section in an indenture defines the conditions that must be satisfied before a firm can issue any additional debt?
Depreciation reserve
Debt service reserve
Additional parity financing
Case statement
Which of the following is the process of voiding existing indenture covenants and removing the bonds from the issuer's financial statements?
Refunding
Defeasance
Malfeasance
Nonmaleficence
In a merger or acquisition, the easiest task for the managers is the integration of the two firms.
True
False
A conglomerate merger is one in which a buyer buys a closely related firm.
True
False
Leveraged buyouts (LBOs) involve the purchase of the entire public stock interest of a firm, or division of a firm, financed primarily with equity.
True
False
A merger produces an economic gain only if the two firms are worth more together than apart.
True
False
A vertical merger involves two firms operating in the same kind of business.
True
False
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Related Documents
Related Questions
Pls help
arrow_forward
Please answer all the subparts.Thanks in advance
arrow_forward
Subject: acounting
arrow_forward
Lutheran Regional Hospital uses a planning process to define a new radiology service line. The decision matrix gave it a high priority, and administrators want to evaluate its financial feasibility. Estimated fixed costs are $1 million, and the estimated net reimbursement level is $1,500 per procedure. Physician and other provider salaries on a direct basis are $340 per procedure, and total operating expenses will add another $160 per procedure. If Lutheran Regional discovered a way to reduce the total initial investment to $600,000, causing the average pricing level to fall to $1,200 and the other assumptions to stay the same, how many procedures would be required to break even?
arrow_forward
Instructions:
Your hospital is considering the purchase of a CT scanner. You, as the administrator for the Imaging Department, have been asked to conduct a financial analysis on
the proposed purchase. Given the information and assumptions below, use Microsoft Excel to conduct a net present value analysis of a capital equipment request.
When complete, think of some areas of the analysis where you might be able to make changes to improve the performance of the project. What are your thoughts on
how you can positively influence this project?
The information below is provided for your use in conducting the analysis on the CT Scanner. All prices and expenses are current as of year 0. Any planned growth will
occur in year 1.
CT Scanner Initial Purchase price
Delivery, installation, and training
Annual maintenance contract
Estimated annual volume
Supply cost per scan¹
Technician salary and benefits²
Average charge per scan³
Discount rate
4
1,750,000
175,000
25,000
2,000
130
84,000
325 -
8.00%…
arrow_forward
Below are the projected revenues and expenses for a new clinical nurse specialist program being established by a hospital. Nurses would provide education while the patient is in the hospital and home visits after patient discharge on a fee-for-service basis. Should the hospital undertake the program if its required rate of return is 12%?
Year 1
Year 2
Year 3
Year 4
Total
Revenue costs
100,000
150,000
200,000
250,000
700,000
150,000
150,000
150,000
150,000
600,000
(50,000)
0
50,000
100,000
100,000
arrow_forward
Lutheran Regional Hospital uses a planning process to define a new radiology service line. The decision matrix gave it a high priority, and administrators want to evaluate its financial feasibility. Estimated fixed costs are $1 million, and the estimated net reimbursement level is $1,500 per procedure. Physician and other provider salaries on a direct basis are $340 per procedure, and total operating expenses will add another $160 per procedure. Calculate the breakeven point for this potential new service line.
arrow_forward
Please need answer the financial accounting question
arrow_forward
You are a consultant with 10 years experience in the health care insurance industry. A group of 20 doctors is considering forming a new medical group. The group has asked you to prepare a report on whether it should build a facility within 30 miles of the downtown center of a city with a population of 500,000 for $100 million dollars. Prepare a report for the management team of the doctor’s group on your proposed $100 million expenditure plan. In your report, reflect on the key course objectives as well as the financial, legal, and alternative health care models. In addition, reinforce your knowledge of strategic planning and capital budgeting by using an electronic spreadsheet to display the financials.
arrow_forward
You conducted an outreach activity to help the needy in your community and have solicited
952,000.00. You wanted to propose a plan on how o equally divide the money and the possible
relief goods that will be included. Ifyou will make a proposal what plan will you do? Show your
plan by filling up the form below.
OUTREACH PROPOSAL
Total amount Solicited:
Rational Function Model
Possible number of beneficiaries, amount allocated. and relief included.
Option 1
Option 2
Option 3
Number of
Beneficiaries
Amount
Allocated per
beneficiary
Relief goods
included and
breakdown
Cost of each
goods
Categories
Budgeting
Excellent (3)
Excellent
Fair (2)
Poor (1)
Some understanding Little
in in creating a plan for understanding
to
no
understanding
creating a plan for spending the money creating a plan for
spending the money
The goal set
achievable
in
spending the money
Planning
is The goal set is hard The goal set is not
and to achieve
achievable and not
realistic
realistic
Accuracy of Solution The…
arrow_forward
. A hospital director is considering two alternative investment programs. Both have costs of $5,000 in year 1 only. Project 1 provides benefits of $2,000 in each of the first 4 years only. Project 2 provides benefits of $ 2,000 for years 6 to 10 only. a. Compute the net benefits using a discount rate of 6 percent. b. Knowing that the calculations are dependent on the discount rate, conduct a sensitivity analysis by re - calculating with a discount rate of 12 percent. Based on your calculations, which investment program should the director choose?
arrow_forward
Need answer the financial accounting question please solve this one
arrow_forward
1) Why did you make the choices you did? What are the costs and benefits of these choices?
2) What will you need to do to ensure that you carry out this plan to fidelity?
3) What potential pitfalls do you need to avoid?
4) What obstacles, personal and systemic, might you face trying to implement your plan?
PLEASE HELP AND ANSWER THESE QUESTIONS.
arrow_forward
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
arrow_forward
The hospital and the health insurance carrier has agreed that the hospital will receive $6000 for every day the consumer is in the hospital. This is an example of what unit of payment?
A)Hospital DRG
B)FFS
C)Global budget
D)Capitation
E)Per diem
arrow_forward
Assume that you are the financial manager for Healthy Body Hospital and you have been asked to explain about the cost of capital to a group of non-financial managers who are also employed at this hospital. In advance of your presentation, you have been given the following three questions. Write a paragraph of approximately 100 words in response to each of these questions that will help guide your explanation to the group that you will be addressing.
Because you will be speaking to a group of non-financial managers, in your own words, explain what exactly is meant by the term “cost of capital”. Prior to undertaking any capital budget project, is it important for a financial manager to understand the cost of capital? Why or why not?
What are we referring to when we discuss the “optimal capital structure” of a business? Why is the optimal capital structure also referred to as the “target capital structure”?
For a health care entity, in particular, what are some factors that you must…
arrow_forward
A community public works project will cost $92,000 and will benefit five different individuals.
Individual
Individual Benefit ($)
Individual Cost ($)
1
4,500
6,000
2
18,500
15,000
3
19,000
17,000
4
30,000
24,000
5
29,000
30,000
Is this project economically feasible? Please show work in an Excel spreadsheet that lists the benefit for each individual.
Would this project be approved by a majority at a community referendum?
arrow_forward
SEE MORE QUESTIONS
Recommended textbooks for you

Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Related Questions
- Lutheran Regional Hospital uses a planning process to define a new radiology service line. The decision matrix gave it a high priority, and administrators want to evaluate its financial feasibility. Estimated fixed costs are $1 million, and the estimated net reimbursement level is $1,500 per procedure. Physician and other provider salaries on a direct basis are $340 per procedure, and total operating expenses will add another $160 per procedure. If Lutheran Regional discovered a way to reduce the total initial investment to $600,000, causing the average pricing level to fall to $1,200 and the other assumptions to stay the same, how many procedures would be required to break even?arrow_forwardInstructions: Your hospital is considering the purchase of a CT scanner. You, as the administrator for the Imaging Department, have been asked to conduct a financial analysis on the proposed purchase. Given the information and assumptions below, use Microsoft Excel to conduct a net present value analysis of a capital equipment request. When complete, think of some areas of the analysis where you might be able to make changes to improve the performance of the project. What are your thoughts on how you can positively influence this project? The information below is provided for your use in conducting the analysis on the CT Scanner. All prices and expenses are current as of year 0. Any planned growth will occur in year 1. CT Scanner Initial Purchase price Delivery, installation, and training Annual maintenance contract Estimated annual volume Supply cost per scan¹ Technician salary and benefits² Average charge per scan³ Discount rate 4 1,750,000 175,000 25,000 2,000 130 84,000 325 - 8.00%…arrow_forwardBelow are the projected revenues and expenses for a new clinical nurse specialist program being established by a hospital. Nurses would provide education while the patient is in the hospital and home visits after patient discharge on a fee-for-service basis. Should the hospital undertake the program if its required rate of return is 12%? Year 1 Year 2 Year 3 Year 4 Total Revenue costs 100,000 150,000 200,000 250,000 700,000 150,000 150,000 150,000 150,000 600,000 (50,000) 0 50,000 100,000 100,000arrow_forward
- Lutheran Regional Hospital uses a planning process to define a new radiology service line. The decision matrix gave it a high priority, and administrators want to evaluate its financial feasibility. Estimated fixed costs are $1 million, and the estimated net reimbursement level is $1,500 per procedure. Physician and other provider salaries on a direct basis are $340 per procedure, and total operating expenses will add another $160 per procedure. Calculate the breakeven point for this potential new service line.arrow_forwardPlease need answer the financial accounting questionarrow_forwardYou are a consultant with 10 years experience in the health care insurance industry. A group of 20 doctors is considering forming a new medical group. The group has asked you to prepare a report on whether it should build a facility within 30 miles of the downtown center of a city with a population of 500,000 for $100 million dollars. Prepare a report for the management team of the doctor’s group on your proposed $100 million expenditure plan. In your report, reflect on the key course objectives as well as the financial, legal, and alternative health care models. In addition, reinforce your knowledge of strategic planning and capital budgeting by using an electronic spreadsheet to display the financials.arrow_forward
- You conducted an outreach activity to help the needy in your community and have solicited 952,000.00. You wanted to propose a plan on how o equally divide the money and the possible relief goods that will be included. Ifyou will make a proposal what plan will you do? Show your plan by filling up the form below. OUTREACH PROPOSAL Total amount Solicited: Rational Function Model Possible number of beneficiaries, amount allocated. and relief included. Option 1 Option 2 Option 3 Number of Beneficiaries Amount Allocated per beneficiary Relief goods included and breakdown Cost of each goods Categories Budgeting Excellent (3) Excellent Fair (2) Poor (1) Some understanding Little in in creating a plan for understanding to no understanding creating a plan for spending the money creating a plan for spending the money The goal set achievable in spending the money Planning is The goal set is hard The goal set is not and to achieve achievable and not realistic realistic Accuracy of Solution The…arrow_forward. A hospital director is considering two alternative investment programs. Both have costs of $5,000 in year 1 only. Project 1 provides benefits of $2,000 in each of the first 4 years only. Project 2 provides benefits of $ 2,000 for years 6 to 10 only. a. Compute the net benefits using a discount rate of 6 percent. b. Knowing that the calculations are dependent on the discount rate, conduct a sensitivity analysis by re - calculating with a discount rate of 12 percent. Based on your calculations, which investment program should the director choose?arrow_forwardNeed answer the financial accounting question please solve this onearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning

Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning