ASHE Financial Stewardship in Healthcare 2 — Questions and Answers
Question 1: Which financial metric best measures the efficiency of a healthcare facility's maintenance department by comparing actual costs to planned costs?
- Return on Investment (ROI)
- Budget Variance (Correct answer)
- Net Present Value (NPV)
- Payback Period
Correct answer: Budget Variance
Budget variance compares actual maintenance costs against planned/budgeted costs, directly measuring departmental financial efficiency.
Question 2: When evaluating energy retrofit projects, which analysis method accounts for the time value of money by discounting future cash flows?
- Simple Payback Analysis
- Net Present Value (NPV) (Correct answer)
- Break-Even Analysis
- Cost-per-Square-Foot Analysis
Correct answer: Net Present Value (NPV)
NPV discounts all future cash flows to their present value, properly accounting for the time value of money in capital project evaluations.
Question 3: A hospital's Facility Condition Index (FCI) is calculated by dividing deferred maintenance costs by what figure?
- Annual operating budget
- Current replacement value of the facility (Correct answer)
- Original construction cost
- Total asset depreciation
Correct answer: Current replacement value of the facility
FCI = Deferred Maintenance Cost / Current Replacement Value; a higher FCI indicates poorer facility condition.
Question 4: Under a full-service (gross) lease for healthcare facility space, which party is responsible for paying operating expenses such as utilities and maintenance?
- Tenant (healthcare organization)
- Landlord/lessor (Correct answer)
- Both parties split 50/50
- A third-party facilities manager
Correct answer: Landlord/lessor
In a full-service or gross lease, the landlord covers all operating expenses including utilities, taxes, and maintenance.
Question 5: Which cost accounting method allocates overhead costs to departments based on their proportional use of shared resources in a healthcare facility?
- Direct costing
- Activity-Based Costing (ABC) (Correct answer)
- Standard costing
- Marginal costing
Correct answer: Activity-Based Costing (ABC)
Activity-Based Costing allocates overhead by identifying cost drivers and assigning costs based on actual resource consumption by each department.
Question 6: What is the primary purpose of a healthcare facility's capital reserve fund?
- To cover day-to-day operational expenses
- To fund planned future major repairs and equipment replacements (Correct answer)
- To pay employee salaries during budget shortfalls
- To offset revenue losses from uninsured patients
Correct answer: To fund planned future major repairs and equipment replacements
A capital reserve fund accumulates money over time specifically to fund predictable large expenditures like roof replacements or major equipment overhauls.
Question 7: In healthcare facility management, 'total cost of ownership' (TCO) for a piece of medical equipment includes which of the following beyond the purchase price?
- Only the installation cost
- Only the annual maintenance contract cost
- Purchase price, installation, maintenance, training, and disposal costs (Correct answer)
- Purchase price and warranty costs only
Correct answer: Purchase price, installation, maintenance, training, and disposal costs
TCO encompasses all costs throughout an asset's lifecycle including acquisition, installation, operation, maintenance, training, and eventual disposal.
