Financial Healthcare

Answer the following questions:

1. Finance activities can be summarized by the Four Cs. List and describe these activities.

2. Describe Sole Proprietorship, Partnership, and Corporation. Include who owns (how many owners), how taxed, how earnings are allocated, and liability.

3. Describe the 4 distinct characteristics of insurance. HINT: The first is "Pooling of losses".

• Pooling of losses

• Payment only for random losses

• Risk transfer

• Indemnification

4. What is adverse selection? Describe two methods insurers use to control adverse selection? What is moral hazard? Describe two methods insurers use to control moral hazard.

5. Lexington Hospital has the following departments:

- Administration

- Housekeeping

- Marketing

- Medical/Surgical Unit

- Intensive Care Unit (ICU)

List each of the three-cost allocation methods and use diagrams to describe each. What cost driver would you use to allocate costs for each of the non-revenue producing departments? Why did you choose each cost driver?

6-How is breakeven analysis used? What is the difference between accounting breakeven and economic breakeven?

The reference is:

Required Texts

Gapenski, Louis C. (2013).Fundamentals of Healthcare Finance, 2nd edition. Chicago, IL: Health Administration Press. IBSN 978-1-56793-475-5