University of Phoenix Material

Week Two Health Care Financial Terms Worksheet

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:

o Why the skill, concept, procedure, or tool is necessary for accurate record keeping, operational efficiency, excellent patient services, employee management, regulatory compliance, reducing costs, forecasting, and so forth o Successes enabled by an adequate understanding or appropriate application of the skill, concept, procedure, or tool o Risks or failures 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.

Worksheet

Submitted By:

Marianne Lewis

|Term |Definition |Scenario |
|Balance sheet |The Balance Sheet of an organization is a financial |The balance sheet for Dr. Smith’s practice at the end of the year |
| |statement which is a listing of all the assets, |shows that he did have a suitable return on assets and they were |
| |liabilities as well as the equity of that |allocated properly, and his net worth has grown from the last |
| |organization at a specific point in time and its |fiscal year. |
| |main use is to calculate the net worth of an | |
| |organization. | |
|Statement of |The Statement of revenue and expenses of an |Dr. Smith’s practice used this statement to compare his practice to|
|revenue and |organization is a financial statement that lists all|Dr. Well’s practice and implied that Dr. Smith’s practice had |
|expense |of the revenue or money coming in the door as well |better management, operation of and eye on profitability. |
| |as the expenses or things that need to get paid such| |
| |as wages, insurance, operating costs such as | |
| |utilities and shows what is the net profit for a | |
| |period of time. | |
|Revenue cycle |The definition of the revenue cycle is all of the |Dr. Smith’s revenue cycle involves the front end staff collecting |
| |administrative as well as clinical functions that |any applicable co payment due from the patient, the nursing staff |
| |would contribute to the management, capture and |and doctor’s submitting the patient charges to the billing |
| |collection of patient services—the entire life of a |department and the billing department coding, entering and |
| |patient account from the creation of the account to |submitting the bills to the insurance carriers for payment, then |
| |the actual payment. This revenue cycle processes |posting those payments to the patient accounts and balance billing |
| |need to flow into and affect one another. |the patient if applicable. |
|Payer mix |The definitions of payer mix as the mix of entities,|The billing department of an organization will bill the patient’s |
| |other than the patient themselves, which would |insurance companies weekly and submit bills to Medicare, Medicaid, |
| |finance or reimburse the cost of the health care |Private insurance providers or third party payers. |
| |services rendered. Mainly these would be the | |
| |insurance carriers, any other third party payers | |
| |such as workman’s comp insurance or auto liability | |
| |insurance, health plan sponsors which could be the | |
| |employer or union. | |
|Revenue |The definition of revenue is the total proceeds or |When a doctor’s office sees 10 patients charging each 100 per |
| |income that is received by an organization during a |visit, the revenue would be 10 x 100 or $1,000 |
| |specific time period. | |